On March 23, the Federal Trade Commission (“FTC”) announced a notice of proposed rulemaking that would significantly revise the legal framework governing automatically renewing subscriptions. The proposal would amend the FTC’s existing Negative Option Rule to provide specific disclosure, consent, and cancellation requirements applicable to all negative options in all media. The Rule would formalize many of the guidelines from the FTC’s October 2021 Enforcement Policy Statement Regarding Negative Option Marketing (“Policy Statement”) and incorporate new requirements not previously addressed at the federal level such as renewal reminders. Continue Reading FTC Proposes to Rewrite Negative Option Rule with Expansive Notice of Proposed Rulemaking
In February, the Federal Trade Commission (“FTC”) published a blog post that elucidated key security principles from recent FTC data security and privacy orders. Specifically, the FTC highlighted three practices that the Commission regards as “effectively protect[ing] user data.” These practices include: (1) offering multi-factor authentication (“MFA”) for consumers and requiring it for employees; (2) requiring that connections within a company’s system be both encrypted and authenticated (e.g., deploying a “zero trust” methodology); and (3) requiring companies to develop data retention schedules. The FTC noted that while these measures “are not the sum-total of everything the FTC expects from an effective security program, they are a sample of provisions [that the FTC has] seen recently that speak directly to the idea of attacking things at their root cause to produce uniquely effective results.”Continue Reading FTC Publishes Blog Post on Data Security Practices for Complex Systems
On February 1, the Federal Trade Commission (“FTC”) announced its first-ever enforcement action under its Health Breach Notification Rule (“HBNR”) against digital health platform GoodRx Holdings Inc. (“GoodRx”) for failing to notify consumers and others of its unauthorized disclosures of consumers’ personal health information to third-party advertisers. According to the proposed order, GoodRx will pay a $1.5 million civil penalty and be prohibited from sharing users’ sensitive health data with third-party advertisers in order to resolve the FTC’s complaint.
This announcement marks the first instance in which the FTC has sought enforcement under the HBNR, which was promulgated in 2009 under the Health Information Technology for Economic and Clinical Health (“HITECH”) Act, and comes just sixteen months after the FTC published a policy statement expanding its interpretation of who is subject to the HBNR and what triggers the HBNR’s notification requirement. Below is a discussion of the complaint and proposed order, as well as key takeaways from the case.Continue Reading FTC Announces First Enforcement Action Under Health Breach Notification Rule
On January 13, the FTC announced a settlement with WealthPress, an online service provider that recommends trades in financial markets. The settlement resolved allegations that WealthPress violated both the Restore Online Shoppers’ Confidence Act (ROSCA) and Section 5 by making false and misleading claims about how much consumers could earn with the company’s trading recommendation services. The action is noteworthy for two reasons. First, building upon the FTC’s prior MoviePass settlement, the FTC’s ROSCA allegations focus not on the terms of the subscription service offered, but rather on the failure to clearly disclose material information about the company’s services. Second, this is the FTC’s first settlement imposing civil penalties for alleged earnings claims violations predicated upon a Notice of Penalty Offenses issued in October 2021. The settlement provides for $1.3 million in consumer redress, $500,000 in civil penalties, and injunctive relief.Continue Reading FTC Relies on ROSCA and Notices of Penalty Offenses to Police Deceptive Conduct in Settlement with WealthPress
On November 3, the FTC announced that it entered into a significant $100 million settlement with Vonage to resolve allegations relating to the internet phone service provider’s sales and autorenewal practices. The FTC alleged that Vonage violated both the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA) by failing to provide a simple cancellation mechanism, failing to disclose material transaction terms prior to obtaining consumers’ billing information, and charging consumers without consent.Continue Reading FTC Flexes ROSCA Muscle With $100 Million “Dark Patterns” Settlement with Vonage
Last week, the FTC announced its release of a staff report discussing key topics from the April 29, 2021 workshop addressing dark patterns. The report states that the FTC will take action when companies employ dark patterns that violate existing laws, including the FTC Act, ROSCA, the TSR, TILA, CAN-SPAM, COPPA, ECOA, or other statutes and regulations enforced by the FTC. The report highlights examples of cases in which the FTC used its authority under these laws and regulations to bring enforcement actions against companies that allegedly used dark patterns. Accordingly, the report builds upon the FTC’s historical approach of using its existing authority to bring enforcement actions in this context.Continue Reading New FTC Report on Dark Patterns
Today, the Federal Trade Commission (FTC) announced that it anticipates proposing a privacy rulemaking this month, with comments closing in August. This announcement follows the agency’s statement in December that it planned to begin a rulemaking to “curb lax security practices, limit privacy abuses, and ensure that algorithmic decision-making does not result in unlawful discrimination.” …
Last week, Senators Richard Blumenthal (D-CT) and Marsha Blackburn (R-TN) introduced the bipartisan Kids Online Safety Act (“KOSA”), which would impose new safeguards, tools, and transparency requirements for minors online. The bill applies to entities that are a “commercial software application or electronic service that connects to the internet and that is used, or is…
2021 was another busy year for data privacy regulatory enforcement and litigation. With some distance to reflect on last year, we have prepared this post identifying and describing important trends from 2021 that can help provide insight into what to expect in the data privacy landscape in 2022.
Data Privacy Regulatory Enforcement Trends
Federal Trade Commission (FTC) and state enforcement action in 2021 centered on several key areas, including protecting children.
An FTC enforcement action last year alleged that the maker of an online coloring book application violated the Children’s Online Privacy Protection Act (COPPA) by collecting personal information about children who used the app without notifying their parents and obtaining their consent. The allegations note that the app included a “Kids” category that was targeted to children. The FTC further claimed that the app’s social media features collected personal information from users and that some parents, lacking knowledge of these features, may have inadvertently permitted their young children to use the app.
Continue Reading 2021 Trends in Privacy Regulatory Enforcement and Litigation
In a new post on the Covington Digital Health blog, our colleagues discuss recently announced Federal Trade Commission (“FTC”) guidance meant to help companies determine their obligations under the Health Breach Notification Rule (the “Rule”). The guidance follows the FTC’s September 2021 Policy Statement, which expanded the Rule’s application to the developers of health…