Good morning! This is the twenty-ninth edition of the Compliance Connect newsletter.
The goal is simple: to keep you in the loop on what the FTC and other regulatory agencies are up to so that you can protect yourself.
These newsletters will land in your inbox twice a week – Mondays and Thursdays.
Remember: this is NOT legal advice, only information!
Here’s the rundown today…
- 🎓 Education Companies Accused Of Deceptive Marketing…
- ⏳ The FTC Wins A Case After 7 Years…
- 🤔 Trump Announces New FTC Leader – What We Know…
- 💰 How Much Does The FTC Cost?
- ⚠️ What Happens If You Impersonate A Government Agency…
Compliance Digest: What You Should Read Today
Lawsuit Claims ‘Deceptive Marketing” By Literacy Publishers & Educators
Parents in Massachusetts have filed a class-action lawsuit against reading curriculum creators Lucy Calkins, Irene Fountas, Gay Su Pinnell, and their publishers, accusing them of deceptive marketing practices.
These are companies which help teach kids how to read.
The lawsuit basically alleges that the publisher’s products did NOT align with the claims used to sell them.
The lawsuit alleges that these programs falsely claimed to be “research-backed” and “data driven” while excluding critical foundational skills like phonics, which are essential for literacy success.
Plaintiffs argue that these misleading claims caused reading delays and harm to students. They continued to sell them after they knew their claims were false, violating consumer-protection laws.
Critics note that many education products lack rigorous efficacy studies, making “research-based” claims difficult to substantiate.
FTC Wins Case Against Dietary Supplement Maker After 7 Years
7 years ago, the FTC and New York Attorney General sued Quincy Bioscience for allegedly deceptive marketing of Prevagen.
This was marketed as a supplement that improved memory and cognitive functions.
The FTC and New York Attorney General claimed it lacked scientific evidence to support its effectiveness.
After the case wound its way through the courts, including a jury trial, the FTC prevailed and the court ordered the company to stop making false claims about Prevagen.
Here is an article from when the case was first announced, including Quincy’s denial.
Meet The New FTC Chair: Andrew Ferguson
Andrew Ferguson has been appointed as the new chair of the Federal Trade Commission (FTC) by President-elect Donald Trump.
Ferguson is a commissioner on the FTC. That means he doesn’t need to be confirmed by the United States Senate. He will likely take over soon after President-elect Trump takes office.
According to a leaked document, Ferguson expressed his priorities as FTC chair.
Revising Enforcement Policies:
- Proposes a rollback of regulations that he believes hinder business clarity and innovation. This might include controversial new rules like the ban on non-competes, which he dissented on. He also opposed the “Click to Cancel” Rule.
- Scaling back efforts to block mergers, emphasizing the benefits of fostering competition and innovation.
- Ending initiatives aimed at regulating artificial intelligence and reducing enforcement in consumer protection cases. For example, you can read his dissent on one of the recent AI cases.
Targeting Big Tech:
- Investigate alleged anti-competitive behavior by major technology companies.
- Reviewing claims of censorship on digital platforms to ensure compliance with antitrust laws.
Focus on Speech:
- Reconsidering FTC investigations into “disinformation” and “hate speech” policies on digital platforms.
- Examining corporate practices around DEI (Diversity, Equity, Inclusion) and ESG (Environmental, Social, Governance) standards for potential anti-competitive collusion.
Streamlining FTC Operations:
- Advocating for a more limited role of the FTC in privacy enforcement, preferring comprehensive federal privacy legislation.
- Reducing the agency’s reliance on broad regulatory enforcement in favor of specific legislative solutions.
Implications for Digital Marketers
The most relevant quote to us is…
“No more novel and legally dubious consumer protection cases. Demand honesty and fairness to consumers, but businesses should not fear that the FTC will punish them for honest conduct that offends the sensibilities of beltway bureaucrats.”
At first this might suggest that the FTC will be less active with its investigations. However, this is probably not true.
Remember: most of the decisions around investigations and lawsuits are made by career attorneys at the agency.
Also, Ferguson did NOT file a dissent in most of the cases we’ve covered in this newsletter. In many cases his dissents focused on technical points rather than the meat of the case.
Bottom line: It’s unlikely that your risk of getting investigated or sued for non-compliant marketing will actually go down.
Did You Know…
The FTC’s budget in FY2024 is $425.7 million.
Quick Compliance Tip: The Impersonation Rule
I wanted to discuss this rule because the FTC just announced a case against a bogus student loan servicing company based on it.
The FTC’s new impersonation rule is designed to protect consumers from scams where fraudsters pretend to be government officials, businesses, or their representatives.
The rule makes it illegal to…
Pretend to be a government entity or official:
- Using fake government seals, logos, or names.
- Sending emails, letters, or making calls falsely claiming to represent a government agency.
Pretend to be a business or its representative:
- Using a business’s name, logo, or branding without permission.
- Setting up fake websites, emails, or phone numbers to impersonate a real company.
Lie about affiliations or endorsements:
- Claiming to be sponsored, endorsed, or connected to a government agency or business when that isn’t true.
The rule was created because scammers use impersonation to trick people into giving money or personal information.
The rule gives the FTC the power to impose fines and recover money for victims of these scams.
The rule does NOT cover non-commercial activities, such as parody, artistic expression, or costumes.