Ad Law Insights - Legal and Regulatory Updates
Latest FTC and state attorneys general compliance, investigation and enforcement developments of concern to advertisers and marketers
One of the key issues relating to the NPRM pertains to consent being sent directly to/obtained by one seller at a time.
The FCC has now circulated its proposed rule. It has not been adopted yet but it looks like it will be in December when voted upon. It looks like the rule will become effective in or around August or September of 2024.
In pertinent part, the FCC ruling would require terminating mobile wireless providers to block all texts from a particular number when notified by the FCC of illegal texts from that number; codify that the National Do-Not-Call Registry’s protections extend to text messages; and close the lead generator loophole by making unequivocally clear that comparison shopping websites must get consumer consent one seller at a time.
Additionally, as amended “prior express written consent” shall be revised to read, as follows: “The term prior express written consent means an agreement, in writing, that bears the signature of the person called that clearly and conspicuously authorizes no more than one identified 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.” The “seller” is not the a lead generator. It is the provider of the products or services
Moreover, “calls must be logically and topically associated with the interaction that prompted the consent and the agreement must identify the telephone number to which the signatory authorizes such advertisements or telemarketing messages to be delivered.” “[R]obotexts and robocalls that result from consumer consent obtained on comparison shopping websites must be logically and topically related to that website.
On October 18, 2023, the Federal Trade Commission announced that it has agreed to a $3.4MM settlement with New Jersey for-profit Sollers College over alleged deceptive ads that lured prospective students into unlawful contracts, purportedly falsely touting relationships with prominent employers and inflating job placement rates. The charges were brought by the FTC and the state of New Jersey.
According to the FTC’s complaint, Sollers, and its parent company, used their website, social media, and email campaigns to falsely advertise their partnerships with prominent employers in the fields of information technology, clinical research and drug safety. According to the complaint, Sollers falsely claimed that its partnerships with prominent employers, such as Pfizer, Weill Cornell Medicine, and Infosys, resulted in jobs for its graduates at those companies. Many of the businesses featured on Sollers’ website had no partnership with the school at all, says the FTC.
The complaint states that, since at least 2018, Sollers advertised that the vast majority of Sollers graduates are placed in jobs. For example, the company purportedly advertised, “90% of our students are placed within 3 months of graduation,” on its website. In reality, the job placement rate for Sollers graduates is substantially lower than the 80 percent, 82 percent, 90 percent or “near perfect” rates featured prominently on its website and in its advertising campaigns, the FTC states. According to the FTC, the school’s own data suggests that the current job-placement rate for graduates of its Life Sciences programs remains as low as 52 percent.
On October 10, 2023, California Governor Gavin Newsom signed the Delete Act (SB 362). The Act is new legislation that requires businesses that meet the definition of “data broker” to provide detailed disclosures about its practices, register with the state and delete any personal information relating to a California resident upon receiving a verifiable deletion request.
The Act requires the California Privacy Protection Agency to establish a simple deletion mechanism that permits individuals to submit deletion requests that data brokers must adhere to starting August 1, 2026. Importantly, beginning in 2028 data brokers will be subject to audits intended to demonstrate compliance with the Act.
What Businesses are Covered Under the Act?
The Delete Act defines “data broker” as a business that knowingly collects and sells personal information of a consumer that it does not have a direct relationship with, to third parties. Excluded are certain entities that may be covered by various federal and state laws relating to data, such as the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Health Insurance Portability and Accountability Act, the Confidentiality of Medical Information Act and the California Insurance Information and Privacy Protection Act.
Data brokers must register with the CPPA and pay registration fees, as well as fees for access to the deletion mechanism.
What are the Applicable Registration and Disclosure Requirements?
Data brokers are required to register with the CPPA on or before January 31 for each year that they meet the statutory definition of “data broker.” In fact,
On September 21, 2023, the Federal Trade Commission announced that it has joined the Federal Communications Commission in signing a renewed memorandum of understanding (MOU) between public authorities who are members of the Unsolicited Communications Enforcement Network (UCENet). The MOU aims to promote cross-border collaboration to combat unsolicited communications, including email and text spam, scams, and illegal telemarketing.
“The FTC is committed to using all of its tools to fight robocalls and other unsolicited communications that try to prey on consumers,” said FTC attorney and Chair Lina M. Khan. “This scourge does not respect borders, and our recommitment to this MOU underscores the importance of international communication and cooperation to combat this problem.”
UCENet members agreed to renew and make evergreen the MOU, a non-binding instrument which the FTC and its partners signed in 2016.
The 2016 MOU was aimed at facilitating information sharing, capacity building, and enforcement assistance among the partners. For the past seven years, it also has facilitated communication about emerging threats and complaint trends related to spam, scams, and illegal telemarketing.
The UCENET MOU is part of the FTC’s continuing to work to fight harms that can arise from unwanted messages. According to the announcement, unsolicited communications in the form of illegal and spoofed robocalls, text messages, and emails are often the source of scams that harm millions of consumers in the United States each year. The revised MOU also has been signed by UCENet partners in Canada,
On August 22, 2023, the Federal Trade Commission announced that as a result of an FTC lawsuit, a federal court has temporarily shut down an alleged business opportunity scheme that purportedly lured consumers to invest $22 million in online stores, using alleged unfounded claims about income and profits.
The operators of Automators also claimed to use artificial intelligence to ensure success and profitability for consumers who agreed to invest with Automators, according to the agency.
In addition to offering consumers high return as “passive investors” in profitable e-stores, Automators, which previously used the names Empire and Onyx Distribution, also offered to teach consumers how to successfully set up and manage e-stores themselves using a “proven system” and the powers of artificial intelligence, according to the FTC.
“The defendants preyed on consumers looking to provide for their families with promises of high returns and the use of AI to power such returns,” said FTC attorney Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Their lies caused consumers to lose tens of thousands of dollars, with many losing their life savings. The FTC is working to hold defendants accountable and to secure redress for their victims.”
The FTC’s complaint against defendants Roman Cresto, John Cresto, and Andrew Chapman, through their companies Automators AI, Empire Ecommerce and Onyx Distribution, claims that the vast majority of defendants’ clients did not make the promised earnings or even recoup their investment. Instead, most clients allegedly lost significant amounts and Amazon and Walmart have routinely suspended or terminated the stores that defendants operated for repeated policy violations,
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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.