�鶹��ý

Steely Dan may be one of the best duos of the rock era. (Sorry, Donnie and Marie fans.) Their song “Hey Nineteen” reminds us to mention some FTC consumer protection developments that could be of interest to your company or clients in 2019. As “Any Major Dude Will Tell You,” when you’re “Reelin’ in the Years” – or at least recapping the past one – consider this non-exhaustive and in-no-particular-order case compilation.

Health claims. In 2019, you can count on the FTC to continue to challenge unsubstantiated health claims. The agency’s recent efforts have spanned the demographic spectrum from products raising safety concerns for kids to so-called treatments for serious illnesses affecting older consumers. Cases against Regenerative Medical Group, Cellmark, iV Bars, and Nobetes challenged unproven representations for products promising to treat Parkinson’s disease, macular degeneration, cancer, multiple sclerosis, and diabetes. Other actions addressed deceptive claims aimed at Boomer Consumers – for example, Telomerase’s anti-aging promises and representations that MSA 30X was “independently tested to help you hear up to 30 times better.” A $2 million settlement with ad agency Marketing Architects reminded advertising professionals of the weighty consequences of false diet claims. And joint warning letters from the FTC and FDA targeted unproven representations for treating opioid addiction and the sale of nicotine-laced liquids for e-cigarettes in packaging that mimicked kids’ candy and treats.

Made in USA. When evaluating competing products, many consumers consider country-of-origin information in deciding what goes in the basket and what stays on the shelf. FTC actions against mattress seller Nectar, backpack purveyor Sandpiper of California, and Patriot Puck – which touted its hockey disks as “100% American Made!” – allege the companies made Made in USA claims for products actually made in other countries. The FTC said Bollman Hat Company made similar statements about its headgear despite the fact that more than 70% of its styles were wholly imported as finished products. But Bollman took the additional step of setting up a subsidiary to market its “American Made Matters” seal to other companies. The FTC alleged the seal falsely conveyed that an independent organization had objectively evaluated the products for compliance.

Automobiles. The daily cost of getting from here to there remains a major line item on consumers’ budgets, which is why the FTC pays close attention to allegations of deception in how cars are marketed. A settlement with Los Angeles-based Sage Auto Group for misleading yo-yo financing and add-on charges resulted in more than $3.5 million back for consumers. In a pending action against Tate’s Auto Group, the FTC alleges the company falsified consumers’ income on financial forms and made deceptive financing claims in ads. You may recall the FTC’s action against Passport Auto for sending out fake “urgent recall” notices to lure consumers into the showroom. The FTC also sued the marketing firm that worked with Passport on the promotion. For used car dealers, January 28, 2018, marked the date they needed to display the revised Buyers Guide in vehicle windows.

Fintech. Developments in financial technology have the potential to help consumers get a better deal when borrowing, but only if companies honor established consumer protection principles. The FTC’s pending action against Lending Club alleges the company advertised loans with “no hidden fees,” but then charged consumers additional amounts that weren’t clearly disclosed. In a proposed settlement with SoFi, the FTC says the online student loan refinancer deceptively used inflated numbers when advertising how much money borrowers have saved or would save by refinancing with the company. Among other counts, an action against Venmo alleged that the peer-to-peer payment service now owned by PayPal failed to disclose material information about the availability of consumers’ funds. But companies and consumers aren’t the only ones to flock to new financial technologies. Fraudsters often try to sneak in the side door, which is why the FTC hosted a national workshop, Decrypting Cryptocurrency Scams, to discuss what can be done to empower and protect consumers from questionable cryptocurrency promotions.

Social media marketing and customer reviews. The use of influencers, native advertising, and consumer reviews remain hot enforcement topics. For example, the FTC alleged public relations firm Creaxion Corporation and sports magazine publisher Inside Publications promoted a brand of insect repellent using endorsements by Olympic gymnasts and “advertorials.” But according to the complaint, the material connection between the athletes and the manufacturer wasn’t clearly disclosed. If 2017 was the Year of the Selfie Seal – certifications that falsely appear to come from independent groups – 2018 may go down as the Year of the Selfie Star. In the Creaxion-Inside Publishing settlement and an unrelated action against the marketer of the insect repellent Aromaflage, the FTC alleged that company insiders, their family, or friends gave the products five-star reviews on major retail sites without disclosing their connections to the company. While we’re talking about consumer reviews, a federal judge ruled that Roca Labs’ use of gag clauses in an effort to stop consumers from talking about their products was an unfair practice under the FTC Act. And the FTC brought its first case under the Consumer Review Fairness Act.

Data security and privacy. One notable observation about 2018 is the number of cases raising both privacy and data security concerns. For example, the complaint against connected toymaker VTech alleged the company failed to provide direct notice of its policies to parents – a typical count under the Children’s Online Privacy Protection Rule  – but also charged a violation of of the Rule, which requires COPPA-covered companies to “establish and maintain reasonable procedures to protect the confidentiality, security, and integrity of personal information collected from children.” (Read the blog for details about how a hacker stole personal information about kids and parents who used the company’s products.) The complaint against smartphone maker BLU challenged the company’s privacy and security promises, especially as they related to the undisclosed transfer of customers’ personal information to a third-party service provider in China. Announced last year, the FTC’s proposed settlement with Uber initially addressed both privacy and security issues. But it turns out that in the middle of that investigation, Uber experienced another data breach that it didn’t disclose to the FTC until much later. The FTC nixed that settlement and entered into an expanded order with the company. In other developments, the FTC announced a total of five settlements alleging that companies made misrepresentations about their participation in the EU-U.S. Privacy Shield. Then there’s the granddaddy of all data security and consumer privacy statutes, the Fair Credit Reporting Act, which the FTC has been enforcing for almost 50 years. The latest action – a $3 million settlement with tenant screening company RealPage – alleged the company’s failure to follow reasonable procedures to assure maximum possible accuracy caused big problems for consumers unfortunate enough to have names or birthdates similar to people with criminal records. Other developments that will impact business in 2019: a new credit freeze law that gives consumers the right to freeze and unfreeze their credit for free, designed especially for small businesses, and the announcement of the next PrivacyCon on June 27, 2019.

ROSCA. We had hoped 2018 would be the year the internet was free of deceptive “free trial” offers that violate the Restore Online Shoppers’ Confidence Act, but it wasn’t to be. A district court order imposing a $5.2 million judgment in the Credit Bureau Center case delves into ROSCA’s requirement that online sellers of products with a negative option feature must clearly and conspicuously disclose the material terms of the transaction up front and must obtain the consumer’s “express informed consent” to the charges. And lawsuits against Triangle Media Corporation and Apex Capital Group are pending against marketers alleged to have violated (among other things) ROSCA and the FTC Act.

Practices targeting small businesses and entrepreneurs. 2018 saw an uptick in FTC lawsuit to protect small businesses and prospective business owners from deceptive practices. Operation Main Street was a coordinated initiative involving 24 civil and criminal actions against pitch people who targeted small entities with office supply scams, bogus dunning notices, and other shady B2B schemes. According to the FTC’s ongoing action against Point Break Media, the defendants – who falsely claim to be affiliated with Google – contact small businesses, threaten then with removal from Google search results, and then falsely promise they can help the company become one of the top Google results – for a hefty fee, of course. 2018 also saw cases against companies that deceptively pitch business opportunities or other money-making ventures. The FTC says Vision Solutions Marketing used misleading claims to sell their business “coaching” services and Amazing Wealth Systems’ “system” was based on deceptive representatives about making mammoth money by selling products on Amazon. Sellers Playbook, another “big bucks on Amazon” outfit, settled charges brought by the FTC and Minnesota AG. The order includes lifetime bans to prevent the defendants from using similar tactics in the future. An ongoing action against MOBE also challenges pie-in-the-sky promises about making big money by working from home.

Financial injury. Here’s a prediction for 2019: The FTC will continue to bring cases that challenge financial deception in its myriad forms. The breadth of actions brought in 2018 illustrates that point. For example, MoneyGram agreed to pay $125 million to settle charges it failed to take steps required by an FTC order to crack down on fraudulent transfers. The FTC, AGs from all 50 states, the District of Columbia, American Samoa, Guam, and Puerto Rico, and 16 additional state agencies that oversee charities joined forces to announce Operation Donate with Honor, a coordinated effort targeting deceptive fundraising for military and veterans causes. And 1.1 million consumers who did business with online payday lender AMG received checks totaling more than $505 million. In addition, the fight against illegal robocalls continues on all fronts, including an action brought with the Florida Attorney General against debt relief ringleader Kevin W. Guice. That case resulted in a $23 million judgment and a lifetime ban from telemarketing. We also filed suit against James Christiano and NetDotSolutions, defendants charged with facilitating billions of illegal calls. Misleading lead generation practices continue to be a focus, including a case against Sunkey Publishing and others that mimicked the look of military recruiting sites – including using URLs like army.com, air-force.com, and navyenlist.com – to generate sales leads for post-secondary schools. And FTC cases like Advance Mediation Group and ongoing actions against Hylan Asset Management and Campbell Capital – both brought with the New York Attorney General – illustrate efforts to enforce the Fair Debt Collection Practices Act.

There’s more, of course, including a unanimous opinion in FTC v. AT&T Mobility LLC, ruling in the FTC’s favor on a key issue involving the agency’s jurisdiction, and the ongoing Hearings on Competition and Consumer Protection in the 21st Century. for insights into developments in 2019.