Monday, October 25, 2021

Bureau of Competition and FTC Operations

  • The FTC issued a policy statement restoring its pre-1995 practice of requiring parties under a merger consent decree to obtain the Commission’s permission before pursuing additional acquisitions in that market. This “Prior Approval” policy is designed to protect consumers and deter “clearly anticompetitive” deals, per Holly Vedova, the Director of the Bureau of Competition. The FTC will consider a number of factors when deciding whether to permit a deal, including (1) the nature of the transaction, (2) the level of market concentration and the degree to which the transaction increases market concentration, (3) the degree of pre-merger market power, (4) the parties’ history of acquisitiveness, and (5) evidence of anticompetitive market dynamics. The Commission approved the statement by a vote of 3-2; the Commissioners voting against the policy subsequently issued a dissenting statement.

Tuesday, October 26, 2021

Deceptive or Misleading Conduct & Consumer Protection

  • The FTC issued Notices of Penalty Offenses to over 1,100 companies who pitch money-making ventures to consumers. These pitches, which include multi-level marketing ventures, investment coaching, and “gigs” promising a large or steady income, have proliferated in the wake of the pandemic, and the FTC is concerned that these ventures could be used to prey on consumers. The Notices summarize deceptive or unfair practices that have been deemed unlawful in prior administrative cases, including false representations about potential profits or earnings, false reassurances to consumers that they do not need experience or must act immediately to participate, and using testimonials to mislead consumers about the rewards of participating. In addition, recipients of these Notices also received a Notice of Penalty Offenses concerning endorsements and testimonials, which was issued on October 13, 2021, because the FTC observes that these companies frequently use testimonials to advertise money-making opportunities. The FTC emphasized that the recipients of the Notices are not being accused of engaging in deceptive or unfair conduct; rather, the Notices warn recipients that engaging in such conduct could subject them to civil penalties.

Wednesday, October 27, 2021

Deceptive or Misleading Conduct & Consumer Protection

  • The FTC announced an updated “Safeguards Rule” which requires non-banking financial institutions to create and maintain comprehensive security systems to protect consumer data. Such institutions include mortgage brokers, motor vehicle dealers, and payday lenders, who must not only put safeguards in place, but must also explain their information sharing practices and designate a specific individual to oversee the security program. The rule is designed to address problems such as widespread data breaches and cyberattacks that have financially harmed consumers.

Competition and Consumer Protection

  • The FTC and the DOJ Antitrust Division will hold a virtual workshop on December 6th and 7th entitled “Making Competition Work: Promoting Competition in Labor Markets.” The two-day event will address many topics, including labor monopsony, increased use of restrictive contractual clauses in labor agreements, information sharing among competing employers, the role of federal agencies in ensuring fair competition, and the relationship between antitrust law and collective bargaining efforts in the “gig economy.” The agencies are currently seeking public comments on the topics to be covered by the workshop, which may be submitted at this link.

FTC Commissioner Chair Profile

  • FTC Commissioner Lina Khan recently sat down for an interview with New York Magazine to discuss her vision for the agency, explaining that she sees her tenure as representing “change in a whole host of dimensions.” The magazine profile traces Khan’s path through journalism and law school to her position as FTC Chair and documents internal changes that Khan has already made in her four-month tenure. The article notes that Khan “will soon have to start making difficult decisions about headline cases” while taking into account the FTC’s resources and Congress’s “strong opinions” about how she spends those resources.

Thursday, October 28, 2021

Advertising and Marketing: Negative Option Marketing, Robocalls and Telemarketing

  • Responding to a rise in complaints about deceptive sign up tactics, the FTC issued a new enforcement policy statement warning companies against deploying illegal “dark patterns” that trick consumers into signing up for negative option subscription services which can be difficult to cancel. The statement outlines three key requirements that businesses must follow to avoid risk of law enforcement action or potential civil penalties: (1) disclose, clearly and conspicuously, all material terms of the product or service; (2) obtain the consumer’s express informed consent before charging them for a product or service, and (3) provide a simple cancellation mechanism to the consumer. With this new statement, the FTC appears poised to ramp up its enforcement against illegal subscription practices.

Bureau of Consumer Protection: COVID-19

  • The FTC sued Xlear, Inc., a Utah-based company, alleging that the company’s marketing of its saline nasal sprays violated the COVID-19 Consumer Protection Act. According to the complaint, the FTC alleges that Xlear and its founder Nathan Jones widely advertised that the company’s nasal sprays could prevent or treat COVID-19, despite lacking any factual basis, such as clinical trials, to support these claims. The complaint cites several social media comments from consumers showing that they believed the company’s claims that the nasal sprays prevented or treated COVID-19. The lawsuit follows a July 2020 letter from the FTC to Xlear warning that its deceptive advertising violated the FTC Act and COVID-19 Consumer Protection Act.