Edge of ‘17

Just like the white winged dove sings a song,” you can count on the BCP Business Blog to celebrate the “Edge of Seventeen” – 2017, of course – with a recap of in-case-you-missed-it developments from 2016. (Sorry, Stevie Nicks. That was a stretch.) In no particular order, here is our take on ten noteworthy consumer protection actions from the year gone by.

Green claims.  Any recap has to highlight the historic $10 billion partial settlement with Volkswagen Group of America for false “clean diesel” claims. The FTC also settled four cases that challenged “all natural” claims for personal care products made with stuff like dimethicone and phenoxyethanol. A fifth complaint resulted in a Commission opinion ruling that California Naturel had falsely advertised its sunscreen as “all natural.”

Business opportunities. The FTC’s settlement with multilevel marketer Herbalife will return $200 million to distributors injured by the company’s allegedly deceptive practices. What’s more, the orders against Herbalife and MLM Vemma mandate top-to-bottom changes in how the companies are structured.

Debt collection.  We ended 2016 with 139 individuals and companies on the Banned Debt Collector List, a host of cases stemming from the ground-breaking Operation Collection Protection sweep, and a reinvigorated relationship with federal, state, and local law enforcement partners, united in the fight against illegal debt collection practices.

Automobiles.  The FTC filed suit against Sage Auto Group and affiliated companies, alleging among other things that the company engaged in yo-yo financing – using deception or other unlawful high-pressure tactics to coerce consumers who have signed contracts and driven off the lot into accepting a different deal. The FTC settled cases with CarMax, General Motors, and four large dealerships alleging that the companies touted how rigorously they inspected their used cars without clearly disclosing that some were subject to unrepaired safety recalls.

Health claims.  The settlement with Learning Rx is the latest action to focus on deceptive cognition claims. “Slash your risk of cancer” by using a tanning bed? That was the representation the FTC challenged in Mercola.com. Mars Petcare found itself in the doghouse for life extension claims for Eukanuba dog food. An action against Aura Labs challenged misrepresentations the company made for its Instant Blood Pressure app. (If you have clients in the health app arena, tell them about two new compliance tools.) And members of the homeopathic products industry will want to read the Enforcement Policy Statement on Marketing Claims for OTC Homeopathic Drugs.

Financial matters.  A federal court in Nevada entered a record-setting $1.3 billion ruling against Scott Tucker and AMG for a host of illegal practices related to their online payday lending operation. A judge in Seattle found Amazon liable for billing parents without their authorization for kids’ in-app charges. The FTC is in litigation against NetSpend, challenging – among other things – the company’s claims that users of their reloadable prepaid cards would have “immediate access” to their funds. 2016 was the year light was shed on the behind-the-scenes lead generation industry. Cases like Gigats, KFJ, and Vacation Station demonstrate just a few of the ways in which people are affected by lead generation. Read the FTC Staff Perspective for insights on the implications for consumers.

Consumer privacy.  Law enforcement actions against Turn and InMobi emphasize the importance of honoring consumers’ privacy preferences. (InMobi also alleged violations of the Children’s Online Privacy Protection Rule.) The Practice Fusion settlement focused on the intersection of health privacy and user cpntent. We convened our first PrivacyCon and have a second one set for January 12, 2017. The FTC also looked at the consumer privacy impact of new technologies like drones and smart TV.

Data Security.  The FTC alleged that Ashley Madison’s “100% secure and anonymous” claim was deceptive and challenged the company’s security practices as unfair. The FTC’s action against Henry Schein Practice Solutions alleged that dental practice software provider promised to encrypt patient data, but failed to live up to established standards. The intersection of data security and the Internet of Things was the subject of a settlement with ASUS, which challenged security lapses in the company’s home routers. Looking for compliance advice? We updated Protecting Personal Information: A Guide for Business, issued a brochure about Data Breach Response, and continued the Start with Security effort. The FTC also debuted identitytheft.gov, a site where victims can report ID theft and get a personal recovery plan.

Social media and endorsements.  The FTC followed the 2015 issuance of its Enforcement Policy Statement on Deceptively Formatted Advertisements with a settlement challenging a native advertising campaign Lord & Taylor ran in Nylon magazine. In addition, the complaint charged that Lord & Taylor had fashion influencers post on Instagram wearing a Lord & Taylor dress without disclosing that the department store had paid them. The FTC’s action against Warner Bros. Home Entertainment also took on an allegedly undisclosed influencer campaign – this time for paid pitches touting the “Shadow of Mordor” game that Warner Bros. deceptively claimed were independent reviews.

Claims by education companies.  2016 ended with the announcement of a $100 million settlement with DeVry for misleading claims about graduates’ employment prospects and income levels. The FTC’s complaint against Stratford Career Institute, which challenges allegedly deceptive claims about its online high school “diploma” course, is ongoing in federal court.

Those are just a few of the topics of interest. We didn’t have room to touch on the Chemence Made in USA settlement, the Fair Credit Reporting Act case against Credit Protection Association, and the $10 million settlement with Inbound Call Experts for a telemarketing tech support scheme. Also, note that revisions to the User Car Rule and the Telemarketing Sales Rule took effect in 2016.

 

Comments

Dear FTC, thank you so much for protecting the consumer. I would ask that FTC forces MLM Companies to disclose at front what their Business Opportunity is about and that they are indeed an MLM Company. Most MLM companies claim a distributor can make thousands a month Part Time when that is not the case. They also do not disclose at front that a distributor must have minimum inventories or pay fees for online services. The steps made with Herbalife was great but we need to expand similar rules to all MLM Companies. Thank You

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