The FTC "click-to-cancel" rule and California's automatic renewal law amendments give the FTC and private plaintiffs new leverage in challenging advertising claims for any company selling products on an auto-renewal or continuous service basis, say Venable lawyers. Shahin Rothermel, Ari Rothman and Claudia Lewis blogged Tuesday that the additional leverage has "potentially business-ending implications" as the two provide new rights of action where companies could face millions of dollars in liability for allegedly false or misleading claims about products or services. However, multiple challenges of the FTC rule (see 2410240001) could delay its implementation date of 180 days after publication in the Federal Register, they said.
The FTC should use its investigatory powers to study “cancel culture,” deplatforming and the denial of financial services, Commissioner Melissa Holyoak said Wednesday during a George Mason University Mercatus Center virtual discussion.
The FTC should investigate whether OpenAI violated federal law when it offers unfair and deceptive services, the Electronic Privacy Information Center said in a complaint filed with the agency Tuesday. EPIC argued that OpenAI directly and indirectly enabled unfair and deceptive trade practices, a violation of the FTC Act, through application programming interface integrations and its GPT Store, where customers can buy custom versions of ChatGPT. In addition, OpenAI has not shown its AI products “meet established public policy standards for responsible development and use of AI systems,” including standards detailed in President Joe Biden’s executive order on AI, said EPIC. The lack of review and curation associated with its “mass data scraping often leads to false, offensive, biased, and discriminatory data being included in the training dataset,” said EPIC: This means biases and negative stereotypes “are baked into their models and difficult to effectively remove without retraining the models.” OpenAI didn’t comment. The FTC confirmed receiving the complaint.
The FTC violated the Constitution and exceeded its rulemaking authority when it issued a rule aimed at making it easier for consumers to cancel subscriptions, the U.S. Chamber of Commerce, NCTA, the Interactive Advertising Bureau and other industry groups said in three different lawsuits filed Tuesday in three separate appeals courts.
FCC commissioners, along party lines, released a notice of inquiry Wednesday examining how easy -- or not -- it is to cancel cable, broadband, satellite TV and voice services and whether cancellation should be as simple and straightforward as enrolling often is. The NOI, adopted 3-2 Oct. 10, also raises the idea of the FCC requiring live customer service representatives. Comments are due Nov. 22, replies Dec. 9, in docket 24-472.
DOJ will push to end Google’s distribution agreements with companies like Apple, but a structural breakup isn’t likely to gain traction in the department’s antitrust lawsuit against the search giant, former DOJ and FTC officials said Tuesday (see 2410090035, 2410100036 and 2410160035).
A bipartisan group of 51 attorneys general warned iDentidad Telecom Friday that they could take enforcement action should the company continue transmitting illegal robocalls. The FCC sent iDentidad a cease-and-desist letter the same day. iDentidad should immediately stop transmitting illegal traffic, said the AGs' Anti-Robocall Multistate Litigation Task Force in a letter. It warned of possible violations of state consumer protection laws and the federal Telemarketing Sales Rule, Telephone Consumer Protection Act and Truth in Caller ID Act. The FCC and FTC sent similar warnings in November (see 2401300066). Call traffic data from USTelecom’s Industry Traceback Group “shows that it issued at least 190 traceback notices to iDentidad since 2021 … for calls it originated, accepted, and/or transmitted onto and across the U.S. telephone network,” including more than 60 after the FCC and FTC warnings, wrote North Carolina Special Deputy AG Tracy Nayer in the task force letter: The notices “cited recurrent high-volume illegal and/or suspicious robocalling campaigns concerning, in part, IRS/SSA government imposters, tax relief, financial impersonation, private entity imposters, Chinese-language delivery and impersonations, and utilities disconnect scams, with iDentidad serving as the gateway provider for almost 90% of this call traffic.” Also, the company reported receiving illegal or suspicious robocalls directly from foreign service providers not listed in the FCC robocall mitigation database, said Nayer. The FCC Enforcement Bureau warned iDentidad that failure to comply “may result in downstream voice service providers permanently blocking all of Identidad’s traffic.” Also, the commission notified all U.S.-based voice providers that they are permitted to block robocalls transmitted from iDentidad if the company fails to mitigate the traffic. Chairwoman Jessica Rosenworcel said, “Federal and state cooperation is critical for protecting consumers. We cannot allow scammers to target families with fake ‘transaction alerts’ from credit card companies and money transfer services.” Separately, North Carolina AG Josh Stein (D) sued Club Exploria in state court for allegedly spamming more than 1 million people without consent. “Club Exploria broke the law to bombard North Carolinians with robocalls,” said Stein Friday.
Elon Musk has emerged as among the most enthusiastic supporters of former President Donald Trump’s presidential campaign, giving nearly $75 million in three months to his pro-Trump America PAC. Musk has danced at a Trump rally wearing a “dark MAGA” hat and announced Wednesday he would support Trump in a series of appearances throughout Pennsylvania.
The FTC on Wednesday announced finalization of a rule establishing civil penalty authority for the agency to prevent companies from misrepresenting consumers’ subscription cancellation options (see 2303230055). The commission voted 3-2 to publish a final rule modifying the agency’s Negative Option Rule, which regulates industry practices surrounding automatic subscription renewals. Republican Commissioners Melissa Holyoak and Andrew Ferguson dissented. The rule is set to take effect 180 days after publication in the Federal Register. FTC Chair Lina Khan said the rule will help stop companies from making consumers “jump through endless hoops just to cancel a subscription. ... Nobody should be stuck paying for a service they no longer want.” The final rule bans companies from “misrepresenting any material fact” in related marketing. It requires companies “clearly and conspicuously disclose material terms prior to obtaining a consumer’s billing information in connection with a negative option feature.” They must “obtain a consumer’s express informed consent to the negative option feature before charging the consumer” and “provide a simple mechanism to cancel the negative option feature and immediately halt charges.” Holyoak issued a dissenting statement saying the FTC’s rule exceeds its statutory authority and “may not survive legal challenge.” Khan rushed finalization of the rule to follow through on a campaign pledge of Vice President Kamala Harris, Holyoak said. The rule, Holyoak argued, fails to specifically define the acts or practices that are unfair or deceptive, or that these activities are “prevalent,” as required under agency rulemaking procedure. The U.S. Chamber of Commerce called the subscription rule the “latest power grab by the Commission in its pursuit to micromanage business decisions.” Chief Policy Officer Neil Bradley said: “Not only will this rule deter businesses from providing sensible, consumer-friendly subscriptions, but it will leave Americans with fewer options, higher prices, and more headaches.” Sen. Brian Schatz, D-Hawaii, welcomed the new rule but urged that Congress craft legislation. “Free trials should be free, but instead some companies have used that model to lure and trap customers into subscriptions with costly monthly charges they never meant to make." He urged passage of the Unsubscribe Act, which he introduced with Sens. John Thune, R-S.D.; Raphael Warnock, D-Ga.; and John Kennedy, R-La.
Gail Slater, an economic adviser to Sen. JD Vance, R-Ohio, is in consideration to serve as FTC chair if Donald Trump becomes president again, but the two sitting Republican commissioners will likely get first consideration, former FTC and White House officials told us in interviews this week.