It has been two weeks or so since the FTC announced that it is going to take a close look at whether and how to revise the Dot com Disclosure Guides. For those who are new to this, the dot com guides (technically and annoyingly titled the “.com” guides) are a helpful source document to look at when you are trying to figure out how and when to make disclosures, particularly in digital advertising. Unlike the recent request for comments on the Endorsement Guides, which provided specific changes the agency was proposing, the Dot com request is more generalized, asking a series of questions about broad areas for consideration.
We spend many of our working hours – and far too many of our nonworking hours – talking about Federal Trade Commission (FTC or Commission) issues, and we can confidently state that no one has ever said to us, “I sure do wish the agency would issue yet another policy statement.” With that, we turn to the latest public Commission meeting – where, yes, another policy statement emerged.
But first, let’s talk about the latest FTC report, this one on the use of artificial intelligence (AI) to combat certain online harms, including scams, fake reviews, disinformation and hate crimes. Sometimes the FTC will do reports on its own initiative (such as the recently announced pharmacy benefit managers (PBMs) study), but other times, Congress will, through legislation, require the Commission to prepare a report on a specific topic, and that is often done as part of the agency appropriation process. Today’s report was one of those congressionally mandated studies.
Many of us have become accustomed to the fact that every June, with the calendar signaling LGBTQ+ pride month, we get the inevitable onslaught of corporate logos incorporating the colors of the rainbow flag. And at the end of June, the logos revert to their less colorful versions. The cynics among us like to focus on the July 1 reversion to the old corporate logos, but many of us are mindful of the fact that these yassified logos – even just for a month – are an enormous change from where we were not too long ago, when so few corporations were publicly recognizing this important month.
Last week, the Federal Trade Commission’s (FTC) tech blog quietly published a post that could have broad implications – for privacy practitioners and beyond. In this post, the agency takes the novel position that if consumer data is compromised in a security incident and the company does not provide consumer notice, that could in and of itself be considered a violation of the FTC Act. The post states that “[i]n some instances, the FTC Act created a de facto breach disclosure requirement because the failure to disclose will, for example, increase the likelihood that affected parties will suffer harm.” This was news to many, and I wondered if I was being gaslighted just a bit. And keep in mind, unlike agency policy statements, a blog post like this is not voted on or even reviewed by the commissioners (except, perhaps, the chair’s office).
As we reported yesterday, the FTC has issued its proposal for an update to the Testimonial & Endorsement Guides. These are not THE LAW, because (1) guides are not law and (2) even if we treat them as such, this is a proposal. That said, the changes are an important indication of what the agency is currently thinking, and it is certainly possible for the agency to take an aggressive enforcement posture and indicate that the draft changes put industry on notice. So it is important to look closely at the changes and evaluate whether your Company might want to make any modifications to its current practices.
In February 2020, the Federal Trade Commission (FTC) announced that it was going to reexamine the Endorsements and Testimonial Guides (Guides) and sought comment on whether and how the Guides should be changed, including addressing issues involving reviews, affiliate links, children’s perceptions and changes in technology. Two very long years later, the FTC has proposed some real changes to the Guides, which will be subject to another round of comment. Also on the agenda was a policy statement proclaiming that ed tech is a priority area for agency Children’s Online Privacy Protection Act (COPPA) enforcement. This basically was the equivalent of scheduling a meeting to discuss future meetings – and of course, the first meeting with a full commission for Commissioner Alvaro Bedoya.
When a new commissioner arrives at the Federal Trade Commission (FTC or Commission), there are some changes to expect as that new person gets up to speed and learns how different it is to be at the FTC versus watching what the Commission does from the outside. But the addition of a new commissioner can be far more significant when that commissioner is the missing piece needed to create a new majority. Since October 2021, we have had a Commission with two Democrats and two Republicans. And any Commission action requires a “yes” vote from a majority of the Commission – three people. And now Chair Lina Khan and Commissioner Rebecca Slaughter have what should be a reliable third vote for their agenda. Now, to be clear, we would never want to suggest that a new commissioner will be a rubber stamp and automatically vote with his party commissioners, but historically, that has been the case at the FTC. There have been exceptions over the years, but generally the party in charge will stick together to implement the chair’s agenda.
In Part I and Part II of this blog series, we introduced and discussed per- and polyfluoroalkyl substances (PFAS), commonly referred to as “forever chemicals,” which have been recent targets of consumer class actions and regulatory enforcement due to their alleged human health risks. As a quick refresher, PFAS includes a class of more than 4,700 man-made chemical compounds used in a wide range of products – including cosmetics, food packaging, textiles, carpeting and nonstick cookware – due to their water- and stain-resistant properties. PFAS do not easily break down and therefore persist in the environment. While we previously covered legislation that would phase out or ban PFAS in such products over the coming years, several of these chemicals currently are subject to consumer product warning requirements under California’s Safe Drinking Water and Toxic Enforcement Act of 1986 – commonly known as Proposition 65.
At last week’s public Federal Trade Commission (FTC) meeting, the commissioners unanimously voted for possible changes to the Telemarketing Sales Rule (TSR). Given the intense interest in FTC rulemaking and the important role the TSR plays in FTC enforcement, we thought this warranted a closer look.
First off, this is a very different rulemaking process than what we have been discussing recently. In the past few months, the agency initiated two Mag-Moss rulemakings, one on imposter fraud and one on earnings claims. And all signs indicate that the agency will initiate rulemaking on some as-yet-undefined privacy issues once (and if) Alvaro Bedoya gets confirmed as the fifth commissioner. Those three rulemakings utilize Mag-Moss rulemaking procedures that are quite cumbersome. It is the default rulemaking process that the FTC must use in the absence of other congressional authority.
A recent survey of FTC employees put forward some interesting numbers. In 2020, FTC staff were asked if their senior leaders “maintain high standards of honesty and integrity” and 87 percent answered positively. In November 2021, the same staff were asked the same question and the positive responses dropped by 34 points to 53 percent. When staff were asked whether they have a high level of respect for senior leaders, positive responses dropped by 35 points. Do senior leaders inspire motivation and commitment? Down from 80 percent to 42 percent. Not a rousing vote of confidence. We are here to break this down for you – in particular, what it means for companies appearing before the FTC.
For those who aren’t familiar with the Federal Employee Viewpoint Survey (FEVS), it is a large, annual survey of the federal workforce. For at least the past decade, the FTC has ranked exceedingly high in job satisfaction and views of senior leadership for medium-sized agencies, regardless of the party in charge. The agency is often number one or number two in most key categories. At this time, survey results from other agencies have not been published, so we do not yet know the rankings. But a review of the raw data looks quite troubling, and pretty much guarantees that the overall ranking of the FTC among agencies will plummet. There is quite simply no way to polish this thing.