Another new year begun, so it’s time for retailers to revisit advertising and marketing law compliance strategies to avoid class actions, regulatory enforcement actions, and competitor challenges. We share our picks for the top five U.S. marketing law topics that deserve your attention in 2023.
FTC Seeking Public Input to Modernize Digital Advertising Guidance
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.
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FTC Proposes Updated Guidance for Influencer and Consumer Review Programs
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.
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FTC Guidance for Platforms and Marketers Utilizing Online Customer Reviews
Key Takeaways:
- 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.
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Ad Law Resolutions for 2022
‘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.
California Passes Updated Automatic Renewal Law
Key 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.
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FTC Issues Notice of Penalty Offenses Warning Companies to Comply with Endorsement Requirements
Key Takeaways:
- 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.
FTC Follows Through on Prioritizing Investigations into False Advertising in Healthcare Markets
Key Takeaways:
- 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.
MoviePass Settles with the FTC Regarding Limitations on Subscribers’ Usage
Key Takeaways:
- 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:
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FTC Brings Action Alleging False PPE Delivery Claims
Key Takeaways:
- 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.
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