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FTC Testifies Before Congressional Subcommittees About Consumer Protection Work

In recent testimony before the House Appropriations Subcommittee on Financial Services and General Government, the Federal Trade Commission described its work to protect consumers and promote competition.

Testifying on behalf of the Commission, FTC attorney and Chairman Joseph Simons, along with Commissioner Rohit Chopra outlined the FTC’s work in areas that include, without limitation, privacy, data security, and consumer fraud.

According to the Commission, through the third quarter of FY 2019, FTC actions resulted in over $789 million being returned to consumers. The agency reports that it returned more than $459 million in redress to consumers, and that FTC defendants paid more than $317 million through self-administered consumer refund programs required by prior FTC settlements.

FTC attorneys have aggressively pursued privacy and data security cases in myriad areas, including children’s privacy, financial privacy, health privacy and the Internet of Things. The FTC’s recent settlement with Facebook resolved a six-count complaint that the company violated a 2012 FTC administrative order by deceiving users about their ability to control the privacy of their personal information. In addition to the $5 billion penalty, the settlement placed restrictions and obligations on Facebook’s business operations as they relate to privacy.

The testimony also covered the FTC’s fraud program to stop illegal robocalls, sham charities, or deceptively pose as the government or well-known tech companies, and the agency’s efforts to challenge false and unsubstantiated health claims.

FTC Seeks Public Comment on Ways to Improve Negative Option Marketing Requirements

The FTC recently announced that it is seeking public comment on ways to improve its existing regulations for negative option marketing.

Negative option marketing is a form of marketing whereby the absence of affirmative consumer action constitutes consent to be charged for goods or services. Such marketing is widely used and is a favorite of the FTC when it comes to FTC enforcement actions and CIDs. Triggers include, without limitation, failing to make adequate disclosures, billing consumers without their consent, or making cancellation difficult or impossible.

Over the years, the Commission has sought to address these problems through individual law enforcement cases and various regulatory requirements, including the FTC’s current Negative Option Rule, which addresses only pre-notification plans and does not reach other common forms of modern negative option marketing (e.g., automatic renewals).

The FTC also relies on other statutes (e.g., the Restore Online Shoppers’ Confidence Act) and regulations (e.g., the Telemarketing Sales Rule) to address harmful negative option practices. However, these various requirements do not provide industry and consumers with a consistent legal framework across different media and types of plans. Moreover, current regulations may lack the specificity necessary to deter deceptive practices.

As detailed in an Advance Notice of Proposed Rulemaking (ANPR), the FTC is seeking public comment on ways to improve existing regulatory requirements, including whether the agency should use its rulemaking authority under the FTC Act to expand the scope and coverage of the existing Negative Option Rule. The Commission seeks any suggestions or alternative methods for improving current requirements, in an effort to more effectively protect consumers from negative option violations.

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Attorney Advertising. Informational purposes only. Not legal advice.

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Richard B. Newman

Richard B. Newman is an Internet Lawyer at Hinch Newman LLP focusing on advertising law, Internet marketing compliance, regulatory defense and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

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