Ad Law Insights - Legal and Regulatory Updates
Latest FTC and state attorneys general compliance, investigation and enforcement developments of concern to advertisers and marketers
The FTC has made no secret about its recent focus upon anticompetitive practices related to repair marketers and ensuring that consumers have options when it comes to repairing products. Those that offer product warranties should take a close look at their warranty terms and related communications to ensure that they comply with the Magnuson Moss Warranty Act and developing federal and state laws specific to right to repair.
Product Repair Restrictions Workshops, Reports and Policy Statements
In 2019 Federal Trade Commission lawyers held a workshop to discuss manufacturer restrictions on proposed state consumer good repair rights legislation. For example, making it unreasonably difficult – if not impossible – for a consumer or an independent third-party – to make product repairs. Various approaches were proposed by panelists, including federal guidance on the right to repair; a requirement that manufacturers disclose product information with everyone, and not only certified repair shops; state right to repair legislation; and permitting consumers to pay for repairs.
Subsequently, in 2021, the FTC cited a report stating that there is “scant evidence to support manufacturers’ justifications for repair restrictions.” A strong statement toward legislation mandating that manufacturers ensure that consumer goods are able to be repaired without consumers having to incur extra costs.
In 2021 Federal Trade Commission attorneys approved the adoption of a policy statement reflecting aggressive enforcement against manufacturer restrictions that prevent consumers and businesses from repairing their own products. The policy statement also sanctions more aggressive enforcement of the Magnuson-Moss Warranty Act.
In July 2024, a U.S. District Court for the Northern District of Texas entered a preliminary injunction enjoining the enforcement of the Federal Trade Commission’s recently announced ban on noncompete clauses. Importantly, the injunction is limited to the plaintiff and intervenors in the lawsuit, including, but not limited to, the U.S. Chamber of Commerce.
What is the FTC NonCompete Ban?
In January 2023, the FTC announced a notice of proposed rulemaking pertaining to a ban on employers entering into and utilizing noncompete clauses. In April 2024, FTC commissioners voted on the final rule, including a limited exception for “senior executives.” The effective date for the new rule was anticipated to by September 2024.
FTC policy supporting the ban includes, without limitation, purported economic benefits that would result from banning noncompetes. A number of dissenting statements by Commissioners resulted in various challenges to the rule, and perhaps the federal court order referenced herein.
How has the FTC NonCompete Ban Rule Been Challenged?
Following the FTC adoption of the final rule, a Texas-based tax firm Ryan LLC filed various legal challenges in the US District Court for the Northern District of Texas. In doing so, the plaintiff sought a stay of the effective date and to preliminarily enjoin enforcement of the rule. Subsequently, the U.S. Chamber of Commerce sought almost identical relief in the Eastern District of Texas on behalf of itself and other business associations, ultimately intervening in the Ryan matter.
As previously blogged about here, the Federal Communications Commission recently published the final, single-seller, one-to-one lead generator consent rule (the “Rule”). The Rule amends the definition of “prior express written consent” for purposes of the Telephone Consumer Protection Act and will dramatically impact the lead generation industry.
How Does the New One-to-One, Single Seller Rule Impact Lead Generation?
When utilizing regulated technologies such as automatic telephone dialing systems (“ATDS”), artificial or prerecorded voice telephone calls, artificial intelligence voice telephone calls, outbound interactive voice response, and voicemail technology using artificial or pre-recorded voice messages, consumers will be required to select each “seller” – the ultimate provider – of a product or service from whom they want to receive telephone calls from.
Note that manual dialing may not provide cover, including insofar as telephone numbers on a do-not-call registry and various state legal regulations are concerned.
Further note that single “seller” consent does not encompass lead generators and other intermediaries, with potentially limited exception. Furthermore, it also appears that sharing consent across corporate affiliates will also be considered a Rule violation.
The cost of violating any of the Rule’s provisions are potentially devastating. Plaintiffs’ attorneys will be ready to pounce. Do not attempt to secure compliance on your own. Contact an FTC lawyer to discuss legal regulatory considerations for keeping you and your business from becoming low hanging fruit.
The effective date for the single seller provisions of the Rule is January 2025.
On June 18, 2024, the Federal Trade Commission released a statement regarding the agency’s referral to the Department of Justice a complaint against TikTok, the successor to Musical.ly, and its parent company ByteDance Ltd.
The FTC’s investigation of these companies began in connection with its order compliance review of Musical.ly following a 2019 settlement with the company for alleged violations of the Children’s Online Privacy Protection Act. The FTC also investigated additional potential violations of COPPA and the FTC Act, according to the statement.
The investigation uncovered reason to believe named defendants are violating or are about to violate the law and that a proceeding is in the public interest, so the FTC has voted to refer a complaint to the DOJ, according to the procedures outlined in the FTC Act.
The FTC does not typically make public the fact that it has referred a complaint. Here, however, the agency states that it has “determined that doing so here is in the public
interest.”
Richard B. Newman is an FTC defense lawyer at Hinch Newman LLP. Follow FTC defense attorney on X.
Informational purposes only. Not legal advice. May be considered attorney advertising.
On June 7, 2024, the New York Attorney General announced that it applauds the passage of two legislative bills designed to protect children online and address the youth mental health in conjunction with the use of social media.
The bills, sponsored by Senator Andrew Gounardes and Assemblymember Nily Rozic, and advanced by Attorney General James in October 2023, are designed to protect children by prohibiting online websites from collecting and sharing their personal data and ”limiting addictive features of social media platforms that are known to harm their mental health and development. The nation-leading legislation will serve as a model for other states to follow as governments work to curb the most dangerous aspects of social media to protect children online.”
“Our children are enduring a mental health crisis, and social media is fueling the fire and profiting from the epidemic,” said Attorney General James. “The legislation my team worked on and supported along with bill sponsors Senator Gounardes and Assemblymember Rozic will help address the addictive features that have made social media so insidious and anxiety-producing. I applaud Governor Hochul, Senate Majority Leader Stewart-Cousins, Assembly Speaker Heastie, and the legislative majorities for supporting this legislation and for agreeing that protecting children’s mental health must be a top priority. New York state is once again leading the nation, and I hope other states will follow suit and pass legislation to protect children and put their mental health above big tech companies’ profits.”
According the New York AG’s office,
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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.