Ad Law Insights - Legal and Regulatory Updates
FTC + state attorneys general digital marketing compliance, investigation + enforcement advocacy by FTC lawyer to Internet business community
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On March 24, 2026, FTC attorneys announced that Air AI will be banned from marketing business opportunities as part of a settlement with the Federal Trade Commission over charges the company misled entrepreneurs and small businesses with deceptive claims about business growth, earnings potential, and refund guarantees.
The FTC’s August 2025 complaint against Air AI, five related companies, and their owners alleged that, since at least February 2023, the company and its owners:
- Falsely claimed that people who purchase their services will or are likely to make substantial earnings;
- Falsely claimed that purchasers of the Air AI Access Card or licenses are protected by a refund or buy-back guarantee;
- Misrepresented the performance, efficacy, nature, or central characteristics of their services, their refund policies, or the risk, earnings potential, or profitability of its services, in violation of the Telemarketing Sales Rule (TSR); and
- Failed to provide consumers with required disclosure documents and earnings claims statements, made false claims about the profitability of the investment and their refund and cancellation policies, and failed to provide refunds when consumers met the refund policy requirements, in violation of the Business Opportunity Rule.
The proposed order against Air AI includes a monetary judgment of $18 million, which will be largely suspended based on the company’s and operators’ inability to pay the full amount, requiring the operators of Air AI to pay $50,000 to the FTC for consumer relief.
Under the proposed order,
Strike-through pricing is a popular marketing technique where a higher “regular” price is listed on marketing materials and crossed out immediately adjacent to a lower, “discounted” sale price. The practice is policed when “unfair or deceptive” by federal and state regulatory agencies, as well as private plaintiffs.
Marketers should consult with a strike through pricing lawyer to minimize exposure to legal regulatory action and class action claims.
FTC Deceptive Pricing Guides
Section 233.1 of the Federal Trade Commission’s Guides Against Deceptive Pricing addresses comparison pricing.
First, it addresses former price comparisons. If the former price is the actual, bona fide price at which the article was offered to the public on a regular basis for a reasonably substantial period of time, it provides a legitimate basis for the advertising of a price comparison. Where the former price is genuine, the bargain being advertised is a true one. If, on the other hand, the former price being advertised is not bona fide but fictitious—for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction—the “bargain” being advertised is a false one; the purchaser is not receiving the unusual value he expects. In such a case, the “reduced” price is, in reality, probably just the seller’s regular price.
A former price is not necessarily fictitious merely because no sales at the advertised price were made. Advertisers should consult with a strike through pricing lawyer and take care,
Marketers that utilize Made in USA claims on their websites, Amazon listings and other marketing materials should take care not to overstate the extent to which certain products are made in the United States.
In most instances, unqualified U.S.-origin claims in marketing materials – including claims products are “Made” or “Built” in the USA – likely suggest to consumers that the advertised products are “all or virtually all” made in the United States.
Depending upon the content, the Federal Trade Commission may analyze a number of different factors to determine whether a product is “all or virtually all” made in the United States, including the proportion of total manufacturing costs attributable to U.S. parts and processing, how far removed any foreign content is from the finished product, and the importance of the foreign content or processing to the product’s overall function.
The “all or virtually all” standard is codified in the Made in USA Labeling Rule, 16 C.F.R. § 323 (the “MUSA Labeling Rule”). Effective August 13, 2021, it is a violation of the MUSA Labeling Rule to label any covered product “Made in the United States,” as the MUSA Labeling Rule defines that term, unless the final assembly or processing of the product occurs in the United States, all significant processing that goes into the product occurs in the United States, and all or virtually all ingredients or components of the product are made and sourced in the United States. Pursuant to 15 U.S.C.
On February 10, 2026, the New York City Department of Consumer and Worker Protection announced that it filed filing a lawsuit against a national publicly-traded self-storage company that operates approximately 60 locations across New York City.
According to DCWP, after reviewing more than 100 complaints the agency’s investigation found that the company “consistently fails to provide the quality of services it advertises and uses predatory practices that exploit consumers and violate NYC’s Consumer Protection Law.” To address the company’s alleged illegal bait-and-switch scheme, DCWP is seeking to hold the company accountable for its alleged misconduct in New York by pursuing restitution for aggrieved consumers and civil penalties for thousands of violations of City law.
This is the first lawsuit DCWP is bringing against a self-storage company.
“This lawsuit aims to shut down [the company’s] deceptive bait-and-switch scheme, recover full restitution for consumers, and send a clear message to the self-storage industry that exploiting New Yorkers comes with serious consequences,” said Commissioner and DCWP attorney Sam Levine. “This Fee Free February and every month, false advertisements, hidden late fees, other and predatory practices are on our radar. The era of exploiting New Yorkers is over.”
“For too long, self-storage companies like Extra Space have used deceptive tactics to lure New Yorkers in with low introductory rates, only to jack up prices and hit them with hidden fees. This kind of behavior drains consumers’ wallets and undermines affordability in our city,”
As previously covered here and here, the Federal Trade Commission has recently warned businesses to comply with the FTC Consumer Review Rule.
On December 22, 2025, the FTC announced that it sent warning letters to alert a number of companies of potential violations of the Rule on the Use of Consumer Reviews and Testimonials (the “Consumer Review Rule”). The letters warn of potential violations of the agency’s Rule, which prohibits certain deceptive or unfair conduct related to the use of product reviews in advertising and marketing.
These letters confirm, for example, that companies violating the Consumer Reviews Rule may be subject to FTC enforcement actions, civil penalties of up to $53,088 per violation, consumer redress and other remedial measures. Consult with a FTC CID lawyer for how the FTC Consumer Review Rule may impact you or your business.
The Consumer Reviews Rule prohibits reviews and testimonials that misrepresent whether a reviewer’s experience was positive or negative, or whether the reviewer used the product or service at all. It also prohibits businesses from conditioning compensation or other incentives on reviewers expressing a particular sentiment, either positive or negative, or from failing to disclose when reviews are written by company insiders or their immediate relatives. The Rule contains additional provisions relating to company-controlled review websites, suppressing certain reviews, and misusing indicators of social media influence like the number of followers or views.
To focus of this article by a leading FTC Consumer Review Rule lawyer is on the FTC Consumer Review Rule prohibition on “insider consumer reviews and consumer testimonials” (16 CFR 465.5).
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About This Blog and Hinch Newman’s Advertising + Marketing Practice
Hinch Newman LLP’s advertising and marketing practice includes two decades successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. As FTC attorneys, the firm possesses superior compliance knowledge and deep legal advocacy experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. It has also been selected to author the Consumer Protection Section of the prestigious American Lawyer Media International Federal Trade Commission: Law, Practice and Procedure Treatise, a comprehensive resource for developments of concern to advertisers, marketers and legal professionals that practice before the Commission. Through these advertising and marketing law updates, Hinch Newman LLP provides commentary, news and analysis on issues and trends concerning developments of interest to digital marketers, including FTC and state attorneys general advertising compliance, civil investigative demands (CIDs), and administrative/ judicial process.