Chair of the firm's Advertising, Marketing & Promotions Group and Co-Chair of the firm’s Brand Management & Protection Group Andrew Lustigman will participate in a panel entitled “A New Era of Endorsements, Testimonials, and Consumer Reviews: Navigating the FTC’s Final Rule and Emerging Areas of Risk for Enforcement and Penalties” as part of ACI’s 8th Annual Legal, Regulatory, and Compliance Forum on Advertising Claims Substantiation on February 6, 2025, at 1:00 P.M. at the New York City Bar Association in NYC.
Given consumers' increasing reliance on customer reviews for online purchases combined with the increasing use of AI, we can expect more regulatory (and likely plaintiff’s attorney) enforcement combating false or manipulated consumer reviews. Recognizing these trends, the FTC’s recently-effective Final Rule on the Use of Consumer Reviews and Testimonials focuses heavily on fake reviews and negative review suppression. Indeed, the Final Rule explicitly bans publishing reviews and testimonials from someone who does not exist, such as AI-generated reviews, fictional people and those with no actual experience with a business’s products or services. The rule also bars businesses from suppressing negative reviews or misrepresenting that the reviews represent all or most of the reviews submitted if negative reviews have been suppressed.
As the world awaits the next term of Donald Trump, marketers and advertisers are contemplating the potential changes in consumer protection regulations. While certain aspects of federal regulation and enforcement may have been relaxed during Trump’s first term, the Federal Trade Commission’s (“FTC”) consumer protection enforcement mandate is expected to remain a significant priority, although the pathways may differ significantly from the Kahn Commission.
The Consumer Financial Protection Bureau (“CFPB”) has survived a Supreme Court challenge that threatened to render its source of funding unconstitutional. In CFPB v. Community Financial Services Assoc. of America, the Supreme Court, by a ruling of 7-2, approved the ability of the Federal Reserve to provide operational funds to the CFPB. Opponents of the CFPB unsuccessfully argued that the only permissible means of funding should be a congressional appropriation.
In the constantly changing and confusing world of consumer privacy laws, it is more important than ever for businesses to evaluate and reevaluate their collection and use of personal data. There is currently no comprehensive federal consumer privacy law, but as the first quarter of 2024 comes to a close, comprehensive state consumer privacy laws have gone into effect in California, Colorado, Connecticut, Virginia and Utah. Three more states – Texas, Oregon and Montana – have enacted privacy laws that go into effect in 2024, and six states – Delaware, Iowa, New Hampshire, New Jersey, Tennessee and Indiana – have enacted privacy laws going into effect in 2025 and 2026. Seventeen additional states have active privacy law bills and are likely to pass their own privacy laws within the years to come. What this means is that consumer privacy laws are here to stay, and companies who conduct business in the United States cannot ignore their obligations under these laws. Any business that collects personal data from residents of these states may need to comply with these laws, regardless of where that business is located.
New law takes effect just prior to the holidays
On December 10, 2023, a new law takes effect in New York that will mandate a grace period that will allow consumers three months to use up their credit card rewards points prior to a change in their loyalty program. New York General Business Law § 520-e was enacted in 2021 with a delayed effective date. The new law provides that before a credit card rewards program can be modified, cancelled or terminated, the consumer must be provided with at least 90 days’ notice of the forthcoming change and therefore an equally long window of opportunity to “redeem, exchange, or otherwise use” the previously accumulated points. The notice must go out no later than 45 days after the change has been decided upon by the credit card issuer.
TCPA liability reduced to $500 for Gold’s Gym
A recent ruling out of the Central District of California will prove to be very useful for telemarketers faced with class actions under the Telephone Consumer Protection Act (“TCPA”). In Bustillos v. West Covina Corporate Fitness, Inc., United States District Judge Stanley Blumenfeld, Jr. denied an order seeking class certification where it was clear that the call in question violated the TCPA.
Olshan Intellectual Property/Brand Management and Protection partner Mary Grieco was quoted in a recent Bloomberg Law article (subscription required) entitled, “Russian IP Animus Fuels Risk, Uncertainty as Firms Recalibrate.”
Andrew Lustigman, Chair of the firm's Advertising, Marketing and Promotion's Group and Co-Chair of Brand Management & Protection Group, was quoted in Law360 (subscription required).
Olshan Advertising attorneys Andrew Lustigman, Scott Shaffer, Mary Grieco and Morgan Spina presented a webinar for the Consumer Protection Monthly Update hosted by the American Bar Association Antitrust Law Section.
Andrew Lustigman, head of Olshan’s Advertising, Marketing & Promotions Practice Group, was quoted in Law360 on major upcoming U.S. Supreme Court fights concerning consumer protection, namely, the Federal Trade Commission’s (FTC) ability to seek monetary restitution for bad marketplace behavior under Section 13(b) of the Federal Trade Commission Act. Specifically, the Court’s arguments scheduled for January 13 in AMG Capital Management LLC et al. v. FTC challenge allegations that payday loan companies engaged in predatory loan practices. Mr. Lustigman described disgorgement as an “enormous hammer” for the FTC, as a monetary fine equal to sales of a targeted product neglects to take into account a company's other expenses, like taxes and advertising. "There's no setoff," he explained. "They're saying you have to give up everything you took in."
Olshan Advertising attorneys Andrew Lustigman, Safia Anand, Claudia Dubón, Katelyn Patton, and Morgan Spina will give a telephonic presentation for the Consumer Protection Monthly Update on June 18, 2018, hosted by the American Bar Association. This monthly update, which will be moderated by Andrew Lustigman, will summarize the significant developments in consumer protection law that occurred during May 2018. The presentation will include cases, settlements, and other initiatives at the federal and state levels, as well as consumer class actions, Lanham Act litigation, and National Advertising Division case decisions.
Changes to the NAD’s procedures have been generally positive and have improved the efficiency of the self-regulatory process
Many think that the Federal Trade Commission will no longer be the significant enforcement power it has been in recent decades. While time will tell how things play out with the new administration and, presumably, new FTC Commissioners, it is likely that the FTC will remain a very powerful and thoughtful consumer protection agency, focused on protecting consumers from harm. What constitutes consumer harm, however, and the appropriate remedy for noncompliance, may change under the current administration.
As part of its recent bankruptcy proceeding, RadioShack sought to auction off its vast collection of personal information about its customers. However 38 states and the FTC objected to the sale on the grounds that it violated RadioShack's existing privacy policy. The limitations on the transfer of data RadioShack agreed to in an eventual deal with the states shows that companies need to be forward thinking regarding future transfers of data when crafting their data privacy policies.
Olshan Partner Andrew Lustigman authored an article published by Inside Counsel entitled, "An overview and the impact of the Consumer Privacy Bill of Rights."
Case marks the first enforcement action against a crowdfunded project that has not delivered the goods promised.
By William MacDonald*
Yesterday Connecticut Attorney General George Jepsen announced a $7 million settlement with Google over its unauthorized collection of data from unsecured wireless networks nationwide through Google's Street View vehicles.