Advertising & Marketing
On June 16, 2025 the Federal Trade Commission announced that U.K.-based payment processor, Paddle.com Market Limited, and its subsidiary, Paddle.com, Inc., will pay $5 million and be permanently banned from processing payments for tech-support telemarketers. The foregoing is in settlemetn of a Federal Trade Commission action alleging that Paddle abused the U.S. credit-card system and enabled deceptive foreign operators to access it, costing consumers millions of dollars.
According to the complaint, the FTC alleged that Paddle and its subsidiary processed payments for deceptive tech-support schemes that targeted U.S. consumers including older adults.
“Paddle provided foreign-based tech-support schemes with access to the U.S. payment system, allowing these companies to harm consumers,” said FTC lawyer Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “The FTC will hold accountable payment companies that knowingly facilitate payments for scammers or look the other way when faced with red flags about their clients’ conduct.”
The complaint charges that: (i) Paddle allegedly opened merchant accounts claiming to be a “merchant of record” or software “reseller,” then allegedly used these accounts to process card payments on behalf of numerous, unrelated third-party merchants; (ii) Paddle allegedly enabled overseas schemes to access the credit card system and collect payments from U.S. consumers, and to allegedly evade detection by merchant banks and card networks; (iii) Paddle allegedly facilitated schemes, like Restoro-Reimage, that allegedly used fake virus alerts and pop-up messages to impersonate familiar brands,
In March 2025, Office of the Attorney General for the State of New York introduced the Fostering Affordability and Integrity Through Reasonable (“FAIR”) Business Practices Act in the State Senate and State Assembly. The proposed legislation is intended to revise Article 22-A of New York’s General Business Law.
The FAIR Act is designed to expand and strengthen consumer and small business protections, in part, by amending New York’s General Business Law §349 to also cover “unfair” and “abusive” practices, rather than just “deceptive” practices. Many other states have already enacted UDAP statutes. The bill may foreshadow what is to come from numerous state consumer protection enforcers as federal consumer protection enforcement is being rolled back and policy under the current administration remains uncertain.
As drafted, the program bill would provide the New York Attorney General and private plaintiffs the ability to seek enhanced civil penalties and restitution in amounts significantly more than available statutory damages pursuant to New York General Business Law Section 349. The FAIR Act would significantly increase statutory damages available under GBL §349 from $50 to $1,000, and permit recovery of actual and punitive damages. Penalties for unfair, deceptive or abusive practices could potentially include penalties of up to $5,000, per violation. Knowing or willful violations could result in penalties totaling the greater of $15,000 or three times the amount of restitution, per violation. Prevailing plaintiffs in private actions would also be permitted to recover attorneys’ fees and costs.
On May 9, 2025, the Federal Trade Commission voted to defer the compliance deadline for the amended Negative Option Rule (“Click-to-Cancel”) Rule by sixty (60) days. The amended Rule expands the scope of the prior version to cover any goods or services involving a negative option, automatic renewal plan, free trials and subscriptions. Additionally, it imposes restrictions that in some instances are more onerous that various state automatice renewal laws.
Of note, the recent amendments to the Negative Option Rule (f/k/a “Click-to-Cancel”), which went into effect on January 19, 2025, provide that misrepresenting any material facts while offering any good or service with a negative-option feature is an unfair or deceptive act or practice in violation of Section 5 of the FTC Act. This applies regardless of whether the misrepresentation is related to the negative option feature, or not. This feature of the amended Negative Option Rule already became effective in January 2025. It, as well as other features of the amended Rule, are presently the subject of judicial challenge.
The rest of the amended Rule pertaining to disclosures, consent and cancellation of negative option features were to become effective May 15, 2025. However, the FTC has now deferred enforcement of these provisions through July 2025. Starting then, in the absence of judicial intervention, covered businesses will be required to be in full compliance with the amended Negative Option Rule. .
“But the Commission’s decision to defer enforcement necessarily acknowledged that compliance entailed some level of difficulty,”
The FTC’s Rule on the Use of Consumer Reviews and Testimonials went into effect on October 21, 2024 and addresses deceptive and unfair conduct involving consumer reviews and testimonials. You can also review the FTC’s other guidance on reviews and testimonials, including FAQs relating to the agency’s Endorsement Guides.
Here are 10 things that marketers must be aware of concerning the Rule in order to avoid liability exposure, including the initiation of regulatory investigations. Consult with an FTC review and testimonial rule lawyer if you or your company have received an access letter, a civil investigative demand (CID) or if you are interested in discussing the implementation of preventative compliance measures.
- The Rule authorizes courts to impose civil penalties for knowing violations and is important because fake, false or otherwise deceptive reviews and testimonials have, according to the agency, polluted the marketplace. There is no private right of action under the Rule.
- There is a difference between a consumer review and a testimonial. A consumer review is a consumer’s evaluation, or a purported consumer’s evaluation, of a product, service, or business that is submitted to and published on a website or platform dedicated in whole or in part to receiving and displaying such evaluations. So, consumer reviews could appear, for example, on a site dedicated to consumer reviews or on product pages of retailer websites. A testimonial, one type of endorsement, is an advertising message that consumers are likely to believe reflects the opinions,
As contemplated by FTC defense lawyer in December 2024, the Federal Trade Commission’s operations during the first two months under the second Trump Administration have been chaotic. Unsurprisingly, the policy focus appears to be de-regulation and an enforcement focus on bread-and-butter fraud and deception (for example and without limitation, bogus business opportunity offers, unsubstantiated earnings claims and unlaw debt collection), privacy, telemarketing, big technology moderation and the protection of competition in labor markets.
Last week, President Trump fired the remaining two Democratic commissioners. Both have stated that they believe their termination is unlawful and may challenge the dismissals judicially. Two Republican commissioners remain to make regulatory, investigation and enforcement-related decisions.
The Federal Trade Commission has traditionally been considered an independent agency. However, President Trump recent issued an Executive Order seeking to vest control of various federal agencies and financial regulator within his control, including the FTC. In doing so, the Trump administration seemingly seeks to exert some degree of control over the strategic priorities of the agencies and regulators.
Historically, an FTC commissioner may only be removed by the President for “inefficiency, neglect of duty or malfeasance in office.” In fact, in Humphrey’s Executor v. United States (1935), the Supreme Court ruled that FTC commissioners cannot be removed over policy differences.
Importantly, however, in Selia Law v. CFPB (2019), the Supreme Court held that restricting removal of the Consumer Financial Protection Bureau director to “for cause” only is unconstitutional.
On the eve prior to its effective date, the FCC’s One-to-One Consent Rule which sought to redefine the meaning of “prior express written consent” under the Telephone Consumer Protection Act, was postponed for one year by order of the FCC’s Consumer and Government Affairs Bureau. Just minutes thereafter, the rule was struck down by the U.S. Court of Appeals for the Eleventh Circuit.
Background
The Telephone Consumer Protection Act (TCPA) , in part, requires callers to possess “prior express consent” when making non-emergency telephone calls to cell phones using an automatic telephone dialing system, or artificial or prerecorded voice; and telephone calls to residential telephone lines using an artificial or prerecorded voice (with limited exceptions).
In 2012, the Federal Communications Commission established that the foregoing calls (including SMS text messages) for marketing purposes must have “prior express written consent,” defined as “an agreement, in writing, bearing the signature of the person called that clearly authorizes the seller to deliver or cause to be delivered to the person called advertisements or telemarketing messages using an automatic telephone dialing system or an artificial or prerecorded voice, and the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.”
The Federal Communication Commission Government Affairs Bureau Postpones Effective Date of the TCPA One-to-One Consent Rule
On January 24, 2025, the FCC announced that it has postponed the effective date of the one-to-one consent rule. “By this Order,
The Federal Trade Commission’s initial findings from its surveillance pricing market study revealed that details like a person’s precise location or browser history can be frequently used to target individual consumers with different prices for the same goods and services.
The staff perspective is based on an examination of documents obtained by FTC staff’s 6(b) orders sent to several companies in July aiming to better understand the “shadowy market that third-party intermediaries use to set individualized prices for products and services based on consumers’ characteristics and behaviors, like location, demographics, browsing patterns and shopping history.”
Staff found that consumer behaviors ranging from mouse movements on a webpage to the type of products that consumers leave unpurchased in an online shopping cart can be tracked and used by retailers to tailor consumer pricing.
“Initial staff findings show that retailers frequently use people’s personal information to set targeted, tailored prices for goods and services—from a person’s location and demographics, down to their mouse movements on a webpage,” said FTC Chair Lina M. Khan. “The FTC should continue to investigate surveillance pricing practices because Americans deserve to know how their private data is being used to set the prices they pay and whether firms are charging different people different prices for the same good or service.”
The FTC’s study of the 6(b) documents is still ongoing. The staff perspective is based on an initial analysis of documents provided by Mastercard,
On January 1, 2025, an amendment to California’s existing false advertising law will become effective. The amended legislation takes aim at deceptive digital ad representations that lead consumers to believe that they are purchsing owership rights in a product when, in fact, only a revocable license is being conveyed.
With limited exception., AB 2426 prohbitis sellers of digital goods from using terms such as “buy,” “purchase” or similar terms when the net impression thereof objectively leads a reasonable person to believe that they are purchasing an unrestrictice ownership interest. The exception to the foregoing restriction is when a seller of digital products obtains affirmative acknowledgement from the buyer of a complete list of restrictions and conditions of the license, and that access to the digital product may be unilaterally revoked by the seller (e.g., if the seller no longer has the right to license). Additionally, prior to completing the sale, the seller must provide the buyer with a hyperlink, QR code or other means of accessing the license terms and conditions, a a clear and conspicuous disclosure that purchase of the digital product merely constitutes a license.
The new legistlation defines “digital goods” broadly. The law also sets forth exclusions, such as any distribution of television, video or radio service. The new law also does not apply to specifically enumerated subscription-based services and digital goods such as those advertised for no monetary consideration.
Violation of the amended statute can result in civil penalties of up to $2,500 per violation. It couls also potentially exposure a violator to class action litigation pursuant to California’s UCL law.
On December 19, 2024, the Federal Trade Commission announced that a group of 10 car dealerships and their parent company will be required to pay $20 million to settle allegations they systematically defrauded consumers looking to buy vehicles as a result of a lawsuit by the Federal Trade Commission and state of Illinois.
In addition to paying $20 million, which will be used to refund harmed consumers, the proposed settlement also would require the companies to make clear disclosures of a car’s offering price—the actual price any consumer can pay to get the car, excluding only required government charges—and get consent from buyers for any charges.
The $20 million proposed monetary judgment is the largest the FTC has secured against an auto dealer.
“Working closely with the Illinois Attorney General, we are holding these dealerships accountable for unlawfully extracting millions of dollars from consumers through a textbook bait-and-switch scheme, and bolstering their poor reputation with fake reviews,” said FTC lawyer Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We will continue our work to ensure that consumers are not being overcharged for cars, and that honest dealers do not need to compete with firms that cheat.”
“This dealership network engaged in bait-and-switch tactics by luring consumers into their dealerships with lower prices only to either require consumers to purchase allegedly pre-installed add-on products or charge consumers for those products without their knowledge or permission,” said Illinois Attorney General Kwame Raoul.
On December 18, 2024, the Federal Trade Commission announced that it approved a final consent order against a seller of an AI “testimonial and review” service – settling allegations that the service it sold provided subscribers with the means of generating false and deceptive online reviews.
The FTC’s September 2024 complaint alleges that the service generated detailed reviews that contained specific, often material details that had no relation to the user’s input, so would purportedly be false for the users who copied them and published them online. Accordingly, the complaint charges that the company violated the FTC Act by providing subscribers with the means to generate false and deceptive written content for reviews. It also alleges the company engaged in an unfair business practice by offering a service that is likely to pollute the marketplace with a glut of fake reviews.
The final order settling the Commission’s complaint prohibits the comapny from engaging in such conduct and bars the company from advertising, promoting, marketing or selling any service dedicated to – or promoted as – generating consumer reviews or testimonials.
The Commission voted 3-2 to approve the final consent order and letters to eight public commenters. Commissioners Melissa Holyoak and Andrew Ferguson previously issued separate dissenting statements.
In his dissent, Commissioner Ferguson states, in pertinent part, “I dissent from the filing of the complaint and consent agreement because I do not have reason to believe that [the company] violated Section 5,
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About This Blog and Hinch Newman’s Advertising + Marketing Practice
Hinch Newman LLP’s advertising and marketing practice includes successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. The firm possesses superior knowledge and deep legal experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. Through these advertising and marketing law updates, Hinch Newman 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. This blog is sponsored by Hinch Newman LLP.