On March 26th Federal Trade Commission (FTC) Chairman, Joe Simons, issued a statement regarding the FTC’s continuing efforts to protect consumers during the coronavirus pandemic. The statement came the day before nearly three dozen bipartisan senators signed a letter asking the FTC to clarify what efforts were being taken to prevent COVID-19-related fraud targeting consumers, particularly the elderly. Continue Reading FTC Statement On Coronavirus Enforcement

In light of the COVID-19 pandemic, the U.S. Food and Drug Administration (FDA) has announced several steps to maintain the safe supply of food while adjusting the regulatory burden on food manufacturers. The FDA also announced that there is no evidence of transmission of the virus via food or packaging and stated that food manufacturers would not be required to hold or recall product if they have an infected employee.

In this update, we provide a summary of recent FDA actions, discuss the need to reassess food safety plans and preventive controls to address the impact of COVID-19, and offer guidance on how food manufacturers can ensure they remain compliant and protect workers and consumers during the pandemic. Read the full article

The FDA and FTC recently issued joint warning letters to seven sellers of products that claimed to treat or prevent “Novel Coronavirus Disease 2019,” known as COVID-19.

According to FDA Commissioner Stephen Hahn, “The FDA considers the sale and promotion of fraudulent COVID-19 products to be a threat to the public health.”  FTC Chairman Joe Simons noted, “There already is a high level of anxiety over the potential spread of coronavirus.”

The products named in the warning letters included teas, essential oils, tinctures and colloidal silver.  Warning letters were sent to the following companies:

The companies receiving the warning letters were provided 48 hours to respond with specific actions taken to address the agencies’ concerns.

According to the FDA’s statement, there are currently no vaccines or drugs approved to treat or prevent COVID-19. The FDA and FTC noted that they will “continue to monitor social media, online marketplaces and incoming complaints to help ensure that the companies do not continue to sell fraudulent products under a different company name or on another website.”

In a February blog post, the FTC warned that scammers were following the COVID-19 headlines and cautioned that “scammers are taking advantage of fears surrounding the Coronavirus.”

FDA has set up a cross-agency task force to monitor for fraudulent products purporting to treat or prevent COVID-19.  The FDA has announced that more than three dozen of such products have been removed from major retailers and online marketplaces.

Takeaways:

  • Marketers should ensure that they have competent and reliable scientific evidence to support any COVID-19-related advertising and labeling claims about their products before such claims are made. Practically speaking, marshalling such evidence may be difficult at this time as much remains unknown about the virus responsible for COVID-19 and effective treatments for the disease.
  • Advertising that a product can prevent, mitigate, cure, or treat COVID-19 may result in the product being qualified as an unapproved new drug sold in violation of the Federal Food, Drug, & Cosmetic Act.

Leaders of the U.S. House of Representatives have requested that the FTC take action against price gouging related to the coronavirus (COVID-19) and have indicated that they would assist with appropriate legislation.

Almost every state has issued emergency declarations which, in many states, trigger prohibitions against price gouging.

As the coronavirus pandemic evolves, retailers should be aware of these laws and monitor FTC and legislative action relating to price gouging. Read the full article.

Operators of the LendEDU website entered into a settlement agreement with the Federal Trade Commission (FTC) in response to allegations that LendEDU misled consumers by claiming that its website provided objective, unbiased rankings of financial products, when in fact they offered better ratings to companies that paid for the endorsement.

LendEDU promoted its website as a resource for people to compare and shop for financial products, such as student loans, personal loans, and credit cards, using rankings that LendEDU claimed were based on “objective,” “honest,” “accurate,” and “unbiased” information about the quality of the product being offered, and not based on financial compensation. But, according to the FTC’s complaint, LendEDU solicited payments from financial service companies in exchange for better product ratings, and adjusted the rankings on its website based on the amount of compensation received. The FTC complaint also alleges that LendEDU misrepresented that positive consumer reviews on its website and other third-party websites reflected the actual experiences of impartial customers, when the reviews were actually written by LendEDU employees or individuals with personal or professional relationships with LendEDU. Continue Reading LendEDU Agrees to Settle FTC Charges Alleging Deceptive Advertising Practices

Yesterday, the FDA belatedly released a report in its progress towards CBD enforcement, as required by Congress.

Although the report repeats the FDA’s concerns regarding CBD safety, and fails to offer a useful timeline for a reasonable regulatory pathway for the CBD market, it also affirms a desire for a nuanced “risk-based” approach to CBD enforcement.

Read the full article for a review of the report and insights on what CBD businesses need to know.

Class action plaintiffs filed a lawsuit in February against Gojo Industries, Inc., the maker of Purell hand sanitizers, alleging that Gojo’s marketing and advertising claims on its website and social media accounts give consumers the impression that Purell products “are effective at preventing colds, flu, absenteeism and promoting bodily health and increased academic achievement.”

This lawsuit follows a January 17, 2020 warning letter sent by the Food and Drug Administration (FDA) to Gojo regarding the same claims. In the letter, the FDA warned Gojo that claims that Purell products “are effective in preventing disease or infection from pathogens such as Ebola, MRSA, VRE, norovirus, flu, and Candida auris, and in preventing the spread of infection” implies that their products are FDA-approved drugs. Similarly, the FDA states that claims that Purell products “are effective in reducing illness or disease-related student and teacher absenteeism” are unsubstantiated. Continue Reading Lawsuit Filed Against Makers of Purell For Hand Sanitizer Disease Prevention Claims

Over the past few years, we have seen increasing legislative and regulatory activity around the globe on the issue of digital accessibility. Most recently, the French government issued a new law and corresponding technical order (known as the General Accessibility Reference for Administrations, or RGAA) last year that impose a broad range of accessibility obligations on businesses earning more than €250 million in annual revenue in France (as averaged over the prior three years). The RGAA requires covered businesses to make websites, mobile apps, and other online services that have been localized for France accessible to people with disabilities. Specifically, these online services must comply with the Web Content Accessibility Guidelines version 2.1, Levels A and AA, or ETSI/EN 301 549 v.2.1.2 (2018-08). In addition to meeting this accessibility requirement, covered businesses must satisfy a number of other testing, notification, training, and documentation requirements. Websites created on or after October 1, 2019, are already subject to the RGAA, but websites created before October 1, 2019, will need to be compliant by October 1, 2020, and compliance obligations will become effective for mobile apps, software, and other online services on July 1, 2021.

For the second year in a row, Washington State is considering the “Washington Privacy Act,” legislation that would regulate the collection and use of consumer data and have Washington join a chorus of states looking to legislate privacy. The bill (SB 6281) passed the Washington Senate with near-unanimous approval on February 14 and has until March 6 to be approved by the House of Representatives.

The bill mirrors existing privacy laws, like the GDPR and CCPA, in its treatment of consumer rights and restrictions on data use and regulates the use of facial recognition technology. It has attracted criticism from a variety of stakeholders, including some who argue it insufficiently protects consumers.

What’s in the Washington Privacy Act (as of February 18, 2020)?

Scope: The Washington Privacy Act would apply to “legal entities” that conduct business in Washington or offer products or services targeted to Washington residents and (i) control or process personal data of 100,000 or more consumers annually or (ii) derive over 50% of gross revenue from the sale of personal data and process or control the personal data of 25,000 or more consumers. The bill carves out certain organizations (e.g., state agencies, local government, and tribes) and types of information (e.g., information covered by GLBA or HIPAA) from the scope. The bill does not apply to employment data and delays application to higher education and non-profit organizations for 3 years.

Restrictions on Covered Businesses: The bill uses a controller/processor structure similar to the GDPR and assigns responsibilities based on the business’s role. Controllers must (1) publish a privacy policy, explaining why and how they use data; (2) limit collection of personal data to only that data reasonably necessary to the purposes for which it was collected (“purpose specification”); (3) minimize the data collected and maintained (“data minimization”); (4) avoid secondary uses of the data; and (5) maintain reasonable data security practices. They must also conduct data protection assessments for certain data processing activities. Processing of sensitive data (which includes specific geolocation data and genetic or biometric data) requires the consumer’s consent.

Consumer Rights: The bill provides Washington consumers with rights to access, correct, and delete their personal data. They also have the right to data portability. Consumers can opt out of the processing of their personal data for targeted advertising, sale, or profiling in furtherance of decisions that produce legal effects concerning the consumer.

Facial Recognition: The bill’s section on facial recognition requires processors offering facial recognition technology to make their technology available for controllers or third parties to conduct independent tests for accuracy and unfair performance bias. If independent testing finds inaccuracies or bias, the processor must implement a mitigation plan. Controllers using facial recognition technology in public must post a notice. Consent must be obtained from a consumer prior to enrolling an image of the consumer in a facial recognition service, subject to exceptions. Meaningful human review is required prior to making decisions using facial recognition technology that produce legal effects on consumers.

Enforcement and Effective Date: The attorney general would have exclusive authority to enforce the law; there is no private right of action. Civil penalties are available, up to $7,500 per violation. The Act would supersede local laws, ordinances, and regulations. The Act would take effect on July 31, 2021.

What happens between now and March 6?

The bill is currently proceeding through the House of Representatives. There are a number of “cut-off” deadlines the bill has to meet in order to progress.

  • By February 28, the bill needs approval by the House Committee on Innovation, Technology and Economic Development.
  • By March 2, the bill needs approval by the House Appropriations Committee.
  • By March 6, the bill needs approval by a vote on the House floor.
  • By March 12, the House and Senate need to resolve any differences in the version passed by the Senate on February 14 and the version passed by the House.

In the 2019 legislative session, the Washington Privacy Act received approval from the Senate but underwent extensive amendment in the House, where it ultimately failed to move forward. This year may be a repeat of the last, as the House did not advance the companion bill to this session’s Washington Privacy Act, HB 2742, and significant debate animates stakeholders, including consumer privacy groups, particularly regarding the treatment of facial recognition technology. With just three weeks remaining in the 2020 legislative session, an uphill battle remains for the Washington Privacy Act.

The FTC recently requested public comments on questions related to its Endorsement Guides (the Guides).

While the FTC has periodically updated the FAQs associated with the Guides, it has not directly updated the Guides since 2009.  Given the changes to influencer and social media marketing over the years, the FTC is seeking input on a range of issues related to endorsements, influencers, reviews, and affiliate marketing.  For example, the FTC asks the following questions in the proposed Federal Register notice:

  • Are any specific provisions of the Guides no longer necessary, and, if so, which provisions and why are they no longer necessary?
  • What is the degree of compliance with the Guides, and do the Guides support industry self-regulation or voluntary standards?
  • Should the information in FAQs be incorporated into the Guides?
  • What changes are needed to address technological, economic, or environmental changes?
  • How well are advertisers and endorsers disclosing material connections on social media?
  • How do children understand disclosures of material connections?
  • How do incentives like free or discounted products bias consumer reviews even when reviewers are not required to make a positive review and whether/how those incentives should be disclosed?
  • Should the Guides address affiliate links, and, if so, how?
  • What disclosures, if any, do advertisers or the operators of review websites or review platforms need to make about the creation, collection, processing, or publication of reviews or ratings in order to prevent deception or unfairness?

The FTC’s announcement follows its November 2019 “Disclosures 101 for Social Media Influencers” and recent cases related to fake reviews and fake indicators of online influence.  In addition, the FTC staff indicated this month that the FTC is continuing to investigate influencer activities, and more cases are in the pipeline regarding deceptive reviews and the failure to disclose material connections between influencers and brands.  Bottom line:  good influencer practices are essential for brands and influencers, and the FTC continues to focus on influencer marketing.

Key Takeaways:

  • The FTC is seeking comments from interested parties within 60 days after publication in the Federal Register.
  • The comments could result in updates to the Endorsement Guides or related FTC guidance.
  • Endorsements and influencers continue to be an enforcement priority for the FTC, so brands should audit their endorsement and influencer policies (and associated monitoring and training programs) for influencers, marketers, agencies, and employees.