On June 3, 2022, the FTC made a request for comments about .com disclosures, including the increased use of dark patterns, manipulative user interface design, and other forms of digital deception that pose unique risks to consumers online and in the mobile space. The FTC is considering updating and reissuing its guidance document “Dot Com Disclosures: Information about Online Advertising,” last revised in March 2013.
To encourage transparency and compliance with the Federal Trade Commission (FTC) Act and address current practices and trends, the FTC first published the Guides Concerning the Use of Endorsements and Testimonials in Advertising (Guides) in 1980 and then amended them in 2009. The Guides reflect the FTC’s position on applying the FTC Act to endorsement-related issues.…
- The Federal Trade Commission (FTC) issued two new guides for platforms and marketers to help ensure transparency in online reviews and address soliciting, moderating, and reporting reviews, and the use of third-party “reputation boosting” services.
- The FTC has actively enforced against companies responsible for publishing deceptive reviews and blocking honest reviews, and recently announced a proposed $4.2 million settlement with online retailer Fashion Nova over the retailer’s practice of review-gating.
‘Tis the season for retailers to set best practices to avoid class actions, regulatory enforcement actions, and competitor claims. Ring in the new year with these top five U.S. advertising and marketing law takeaways.
- On October 4, 2021, California passed an amended automatic renewal law that will require businesses to follow stricter cancellation and notice requirements for subscription-based products and services.
- The updated law goes into effect on July 1, 2022.
- FTC sends Notice of Penalty Offenses to advertisers warning that unfair and deceptive acts and practices related to endorsements could trigger penalties of up to $43,792 per violation.
- Advertisers should review and refresh their policies, trainings, and compliance programs for endorsements, influencers, and consumer reviews to ensure compliance with the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides) and related FTC guidance and notices.
- The FTC is prioritizing investigations into and actions against false and misleading advertisements in healthcare markets.
- Companies with healthcare products, especially those advertising medical treatments, should take care to ensure they do not overstate the efficacy of those treatments and back up advertising with necessary scientific evidence.
- Brands should honor advertised product benefits and avoid techniques to block product use.
- Under the Restore Online Shoppers’ Confidence Act (and state auto-renewal laws), advertisers must disclose material terms and conditions and obtain consumers’ express consent before charging a payment card or account.
The FTC and MoviePass recently settled related to allegations that the company used deceptive tactics to prevent subscribers from using its service and insecurely held subscribers’ private information. The FTC’s complaint alleged that MoviePass used three tactics, described below, in a perceived attempt to save money on their $9.95 per month subscription service that was advertised as providing unlimited access to certain films in theaters.
Limiting Subscribers’ Usage: The FTC alleged that MoviePass, its parent company Helios and Matheson Analytics, Inc. (Helios), and its principals Mitchell Lowe and Theodore Farnsworth, scrambled at the high demand for the subscription service and took steps to prevent users from receiving the advertised “one movie per day” that they had paid for in order to cut costs. The FTC listed the following deceptive or unfair tactics that MoviePass operators allegedly engaged in to set up roadblocks for consumers:…
Continue Reading MoviePass Settles with the FTC Regarding Limitations on Subscribers’ Usage
- The Federal Trade Commission (FTC) is actively using the COVID-19 Consumer Protection Act to protect consumers, with a new case alleging the defendant failed to timely deliver masks and failed to process refunds or cancellation requests. The complaint also alleges the defendant promised N95 masks but delivered cloth masks instead.
- The FTC’s Mail Order Rule requires a seller to notify customers when a delay is discovered, make adjustments to website content to give appropriate notice, and offer the right to cancel with an adequate refund.
- The FTC’s Jewelry Guides require marketers to make clear and conspicuous disclosures to truthfully represent the origin of lab-grown diamonds and gemstones (i.e., distinguishing mined diamonds and gemstones from man-made substitutes) and otherwise comply with the Jewelry Guides (see below for additional compliance considerations).
- Advertising claims for lab-grown diamonds and gemstones are subject to scrutiny by regulators, competitors (including adverse trade associations), and consumers, so companies should consult with legal counsel when developing any such claims.