Hunton Retail Law Resource

Resuming its efforts to combat unscrupulous cash advance practices, on November 5, 2024, the FTC filed a complaint against Dave, Inc. (“Dave”), a Delaware fintech corporation that operates a mobile application it advertises as offering “instant” short-term advances. 

In a significant move, the Federal Trade Commission (FTC) has issued its final “Click-to-Cancel” Rule aimed at streamlining the cancellation process for subscription services. This Rule is a critical development for retailers, particularly those utilizing negative option marketing—where customers are automatically enrolled in subscriptions and must actively cancel to stop payments.

Coming on the heels of its Social Media Data Practices report, the FTC announced that it will hold a virtual workshop on February 25, 2025 examining “The Attention Economy: Monopolizing Kids’ Time Online.” The event will convene researchers, technologists, child development and legal experts, consumer advocates and industry professionals to discuss design features that keep children and teens engaged online. The topics to be covered include research relating to whether certain features lead to more engagement, the psychological and physical impacts of design features on youth well-being, and the intersection between design, well-being, and the law. The FTC is taking expressions of interest from potential panelists until November 15, 2024.

The FTC has settled a case with a company operating an artificial intelligence-enabled “writing assistant” service. Among the use cases Rytr LLC offered was one that would craft testimonials and reviews, allowing users to select desired tone (e.g., “formal,” “funny,” “convincing”), keywords and phrases, level of creativity (e.g., “optimal,” “high,” “max”), and the number of reviews sought. Based on this user input, Rytr’s AI service would then generate genuine-sounding, detailed reviews quickly and with little user effort.

Fake reviews and testimonials for services and products have been under the watchful eye of the Federal Trade Commission (FTC) for decades. With the proliferation of online bots and generative Artificial Intelligence (AI) tools, reviews and testimonials have been even easier to fake in recent years. On August 14, 2024, the FTC announced the Final Rule on the Use of Consumer Reviews and Testimonials, prohibiting fake reviews and testimonials from being sold or purchased by businesses. Importantly, the Final Rule enables the FTC to seek civil penalties against knowing violators.

On Friday, August 2, 2024, the United States sued ByteDance, TikTok, and its affiliates for violating the Children’s Online Privacy Protection Act of 1998 (“COPPA”) and the Children’s Online Privacy Protection Rule (“COPPA Rule”). In its complaint, the Department of Justice alleges TikTok collected, stored, and processed vast amounts of data from millions of child users of its popular social media app.

Earlier this week, the Federal Trade Commission (FTC) and Food and Drug Administration (FDA) sent cease-and-desist letters to several companies warning them that their products, which were marketed to mimic popular children’s snacks, ran the risk of unintended consumption of the Delta-8 THC by children. In addition to the FDA’s concerns regarding marketing an unsafe food additive, the agencies warned that imitating non-THC-containing food products often consumed by children through the use of advertising or labeling is misleading under Section 5 of the FTC Act. The FTC noted that “preventing practices that present unwarranted health and safety risks, particularly to children, is one of the Commission’s highest priorities.”

The FTC recently updated its “Made in USA” business guidance (see our prior reporting on the agency’s finalizing its “Made in USA” Labeling Rule). The updated business guidance reiterates the longstanding “all or virtually all” standard and explains that companies have an ongoing obligation to review their Made in USA claims in marketing materials, both to comply with the Made in USA Labeling Rule (for claims made on product labels) and with the FTC’s Made in USA Policy Statement (for claims generally). The FTC also applies the “Made in USA” standards to domestic origin statements like “Manufactured in USA,” “Built in USA,” “USA,” “true American quality,” and “Our products are American-made.” The staff provides new examples in the guidance to help businesses understand what kinds of Made in USA claims are covered.

The FTC is once again taking issue with hidden fees, suing Adobe, Inc., alleging the company and two corporate executives deceived consumers by hiding the early termination fee for a popular subscription plan and making it difficult for consumers to cancel their subscriptions.

On January 26, 2024, the FTC announced that it had entered into an agreement with tractor maker Kubota North America Corporation, settling allegations that Kubota falsely labeled some of its replacement parts as “Made in USA” despite manufacturing those parts entirely overseas. The FTC’s complaint was filed along with a consent order that requires Kubota to pay a $2 million civil penalty, the largest penalty ever assessed for violations of the FTC’s Made in USA Labeling Rule. The consent order also requires Kubota to comply with the FTC’s requirements for Made in USA claims.

The Federal Trade Commission has announced that it will hold an informal hearing on February 13, 2024 on the agency’s proposed rule banning fake reviews and testimonials. As we reported in July 2023, the FTC is proposing to ban business from using illicit review and endorsement practices such as using fake reviews, suppressing honest negative reviews and paying for positive reviews, which deceive consumers looking for real feedback on a product or service and undercut honest businesses.

As we reported Friday, the FTC has proposed a rule to ban misleading and hidden fees. While that initiative is pending, California Governor Gavin Newsom signed similar legislation, SB 478, into law. Effective July 1, 2024, the California statute prohibits advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges other than taxes or fees imposed by a government on the transaction, or postage or carriage charges that will be reasonably and actually incurred to ship the physical good to the consumer. The legislation takes aim at ...

The FTC announced a Notice of Proposed Rulemaking (NPRM) targeting misleading and hidden fees, commonly known as “junk fees,” and how businesses may advertise and market prices to consumers. The NPRM was drafted based on over 12,000 public comments to the FTC’s Advance Notice of Proposed Rulemaking published in November 2022.

BBB National Programs’ Children’s Advertising Review Unit (CARU) has released new Guardrails for Child-Directed Advertising and Privacy in the Metaverse. As explained in a BBB press release, the Guardrails are intended to provide companies with best practices as they navigate the complexities of engaging with children in metaverse experiences. The Guardrails offer “actionable recommendations” on developing metaverse experiences directed to children, complying with existing advertising and privacy law, and engaging responsibly with children online. These guidelines build on earlier CARU guidance regarding metaverse activities.

The FTC announced an enforcement action against online shoe seller Hey Dude, Inc. (a subsidiary of Crocs, Inc.) alleging Hey Dude suppressed more than 80% of consumer reviews that provided less than four out of five stars. The complaint also alleges multiple violations of the FTC’s Mail Order Rule between 2020 and 2022. A proposed consent order would require Hey Dude to pay nearly $2 million and take certain steps to prevent future violations.

The FTC recently announced a Notice of Proposed Rulemaking (NPRM) aimed at curbing deceptive consumer reviews and endorsements. The NPRM primarily aims to expand the Commission’s ability to seek civil penalties against businesses using false and misleading reviews online, which the FTC maintains can cause significant harm to consumers and competitors.

As reported on Hunton's Privacy and Information Security Law Blog, on May 31, 2023, the Federal Trade Commission announced a proposed order against home security camera company Ring LLC (“Ring”) for unfair and deceptive acts or practices in violation of Section 5 of the FTC Act.

On May 22, 2023, the Federal Trade Commission (FTC) announced its first monetary settlement with celebrity endorsers for a combined $1.7 million.

The complaint filed by the FTC and the Utah Division of Consumer Protection (DCP) against Response Marketing Group, LLC and its principals, also named two real estate celebrities as defendants—Scott Yancey, star of the home-flipping show Flipping Vegas on A&E, and Dean R. Graziosi, author of Millionaire Success Habits. The complaint alleged that defendants used false promises to sell consumers expensive real estate investment training programs, which Yancey and Graziosi promoted. Yancey and Graziosi were also allegedly involved in efforts to bury online customer complaints that said Response Marketing was a scam and cost consumers more than $400 million.

The FTC announced a settlement with Cycra, Inc., a manufacturer of motocross and ATV parts, and the company’s owner for falsely claiming their products were made in the USA while importing parts from Asia and Europe. The proposed consent order imposes an $872,577 judgment and requires the respondents to comply with the FTC’s requirements for marketing products as made or assembled in the United States.

Nearly 700 companies (670 to be exact) are recipients of a letter from the Federal Trade Commission, putting the companies on formal notice that failing to have proper substantiation for health claims (the Substantiation Notice) or engaging in misleading use of testimonials or endorsements (the Endorsement Notice) could result in civil penalties.

On March 23, 2023, the FTC issued a notice of proposed rulemaking aimed at deceptive and unfair practices involving recurring charges for automatically renewing subscriptions and memberships. The proposed rule is part of a broader FTC initiative designed to crack down on “dark pattern” tactics that retailers employ to aid in customer acquisition and retention, among other things. Difficult cancellation procedures for subscription-based services are one such tactic identified as problematic by the FTC and targeted by the new proposed rule.

On March 16, 2023, the Federal Trade Commission announced it issued orders to eight social media and video streaming platforms seeking Special Reports on how the platforms review and monitor commercial advertising to detect, prevent and reduce deceptive advertisements, including those related to fraudulent healthcare products, financial scams and the sale of fake goods. The FTC sent the orders pursuant to its resolution directing the FTC to use all available compulsory process to inquire into this topic, and using the FTC’s Section 6(b) authority, which authorizes the FTC to conduct studies that do not have a specific law enforcement purpose.

Williams-Sonoma, Inc., has agreed to pay $1 million to the FTC in settlement of claims that the home furnishing company made false and unsubstantiated representations that certain products were made in the United States. In its complaint, the FTC alleged that Williams-Sonoma—also doing business as Pottery Barn, West Elm, Rejuvenation, Outward, Mark & Graham and other brands—deceptively claimed that the company’s Goldtouch Bakeware products, Rejuvenation-branded products and Pottery Barn Teen- and Pottery Barn Kids-branded upholstered furniture were made in the USA. In reality, many of these products were wholly imported or contained significant imported materials.

On March 6, 2020, the FTC announced a settlement with Teami, LLC and its owners over allegations that the company falsely promoted its Teami brand tea products as capable of curing serious health conditions and causing significant weight loss, supported by endorsements by well-known social media influencers who did not adequately disclose that they were being paid to promote their products. According to the FTC, after receiving a warning letter from the FTC in 2018, Teami implemented a social media policy requiring informative hashtags, but failed to enforce it, resulting in ...

On February 12, 2020, the FTC announced its intention to review its Endorsement Guides (formally known as the “Guides Concerning the Use of Endorsements and Testimonials in Advertising”). These guides, first enacted in 1980 and revised in 2009, provide guidance to businesses, influencers and endorsers on how to make sure endorsements or testimonials abide by the requirements of the FTC Act. While advisory in nature, the Commission can take action under the FTC Act if an endorsement or testimonial is inconsistent with the Guides.

On February 5, 2020, the FTC announced two settlements totaling nearly $3.4 million against Quantum Wellness Botanical Institute, LLC and their principals for claims made to older adults that the “ReJuvenation” pill was an “anti-aging wonder drug.” For example, they represented that the pill could boost HGH levels and add stem cells to the body, thereby repairing age, cell, and heart attack damage; reversing deafness or blindness; and reversing damage from any disease, including Alzheimer’s, Parkinson’s, and Crohn’s disease. The FTC’s complaint alleged ...

On February 3, 2020, the FTC announced a $350,000 settlement with Shop Tutors Inc., d/b/a LendEDU, a website that ranks and rates consumer financial products such as student and personal loans. The FTC’s complaint alleged that LendEDU and its principals violated the FTC Act by misleading consumers into believing that their website offered consumers “objective,” “accurate” and “unbiased” information, despite the fact that the company was alleged to be selling rankings and ratings to the highest bidder. The FTC also alleged that LendEDU touted unbiased positive reviews of its website, when the vast majority of those reviews had been written by persons closely associated with the company or were altogether fabricated.

On December 5, 2019, the Federal Trade Commission (FTC) announced a $4.1 million settlement against A.S. Research, LLC (ASR), the marketer of the dietary supplement Synovia. The Commission alleged that ASR misled consumers by purporting Synovia could dramatically reduce or cure chronic joint pain, stiffness and swelling caused by arthritis, carpal tunnel syndrome, tennis elbow and muscular atrophy.

New Hart-Scott-Rodino (HSR) reporting requirements took effect September 25, 2019. The Federal Trade Commission (FTC) recently made changes to the HSR form. Retail clients exploring a merger or acquisition should be aware that the FTC requires updated codes for Item 5 of the HSR form. Clients will need to provide 6-digit North American Industry Classification System (NAICS) codes and 10-digit North American Product Classification System (NAPCS) codes when reporting manufacturing revenues. The FTC will require 2017 NAICS codes for reporting non-manufacturing revenues ...

As reported on the Blockchain Legal Resource Blog on August 27, 2019, The Federal Trade Commission reached a settlement with the promoters of chain-based cryptocurrency schemes—Thomas Dluca, Louis Gatto, Eric Pinkston and Scott Chandler—in which the defendants promised recruits big rewards in exchange for a small payment of bitcoin or Litecoin.

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The Federal Trade Commission has stepped up enforcement of the Consumer Review Fairness Act of 2016 (CRFA) which prohibits companies from barring honest consumer reviews of their products and services. While enforcement of the CRFA was initially slow, that changed this year.

The FTC and the FDA jointly sent warning letters to four manufacturers of flavored e-liquid products, citing the absence of particular disclosures in paid social media endorsements as potentially in violation of the Federal Food, Drug, and Cosmetic Act and the FTC Act.

The Federal Trade Commission entered proposed final orders settling June 2018 charges filed against several online marketers of e-cigarettes, dietary supplements and skin creams for deceptively advertising “risk free” trial offers.

In continued enforcement of the Consumer Review Fairness Act (CRFA), the Federal Trade Commission entered consent decrees against two rental management companies that mandated non-disparaging reviews in their consumer contracts.

Branded keyword advertising (“BKA”)—bidding for your company’s website to feature prominently near a search engine’s results for branded or trademarked terms—has been around for over a decade. Under this practice, search engines auction off keywords, and the highest bidders receive advertising space adjacent to search results for those terms. Brand owners commonly bid on their own keywords and those of their competitors and related third parties.

Concerns that BKA runs afoul of trademark, false advertising, and unfair and deceptive trade practices laws were largely put to rest in 2013 and 2014, when a wave of court decisions held that, on its face, the practice does not constitute trademark infringement or cause customer confusion. However, a new challenge to BKA emerged earlier this year with the filing of Tichy v. Hyatt Hotels Corp., No. 1:18-cv-01959 (N.D. Ill.). In Tichy, a putative class of online consumers alleges that six major hotel chains violated antitrust laws by conspiring with each other and with third-party online travel agencies like Expedia and Priceline to refrain from bidding on each other’s branded keywords.