Ad Law Insights - Legal and Regulatory Updates
Latest FTC and state attorneys general compliance, investigation and enforcement developments of concern to advertisers and marketers
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.
Analogous to federal policy,
In New England Country Foods, LLC v. VanLaw Food Products, Inc., the California Supreme Court recently held that California Civil Code section 1668 prohibits contractual limitation of liability clauses that limit liability for harm caused by intentional misconduct.
In pertinent part, Section 1668 provides:
“All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”
Manufacturer VanLaw was sued by a barbecue sauce company that it provided manufacturing services on behalf of, for for allegedly trying to copy its barbecue sauce and sell it to Trader Joe’s. New England Country Foods’ claims sounded both in contract and tort. In response, VanLaw argued that a contract between the parties limited damages for injuries caused by intentional actions and were therefore against public policy.
In response, the plaintiff asserted that the contractual limitation of liability provision was not enforceable pursuant to California Civil Code Section 1668 because it it permitted the defendant to engaged in intentional tortious conduct with impunity.
The applicable limitation on damages clause stated, in pertinent part:
“In no event will either party be liable for any loss of profits, loss of business, interruption of business, or for any indirect,
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.
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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.