Crowell attorneys attended the National Association of Attorneys General (NAAG) 2024 Consumer Protection Spring Conference in San Francisco, California on May 15. As usual, the conference included receptions and other networking events allowing the Crowell attorneys in attendance to engage with multiple attorneys general and a host of their respective staff members. The Consumer Protection Spring Conference included a panel session titled Developments at the FTC: Rulemakings. Assistant Attorney General Elizabeth Blackston, Illinois Attorney General's Office, moderated the panel of two speakers: Thomas Dahdouh, Staff Attorney (former attorney advisor to Commissioner Chopra), Federal Trade Commission (FTC) and Lartease Tiffith, Executive Vice President for Public Policy, Interactive Advertising Bureau. Below please find some key takeaways:
- FTC & State Attorneys General Relationship: The presentation focused on the importance of the relationship between the FTC and state attorneys general, specifically the willingness of these regulators to work alongside one another. The FTC issued a report, "Working Together to Protect Consumers: A Study and Recommendation on FTC Collaboration with the State Attorneys General," regarding the federal and state relationship and recommendations for further collaboration on April 10, 2024. Since January 1, 2020, the FTC has brought 33 joint enforcement actions with either state attorneys general offices or more localized district attorneys.
- Remedies of the Regulators: The FTC cannot seek damages pursuant to Section 13(b) of the FTC Act due to the 2021 ruling in AMG Capital Management LLC v. FTC. The FTC can seek damages from courts for trade regulation rule violations. Specifically, the FTC can seek consumer redress under Section 19 for all trade regulation rule violations and civil penalties under Section 5(m)(1)(a) for knowing trade regulation rule violations. The AMG ruling is why, at least partially, that the FTC has intentionally focused on rulemakings recently, especially in the Bureau of Consumer Protection (see below discussion of rules). However, state attorneys general are likely able to seek such redress under state unfair or deceptive acts or practices laws or other consumer protection laws. The availability of such remedies for state attorneys general amplifies the FTC's desire to work in partnership with the state enforcers.
- Click to Cancel Rulemaking (update to the Negative Option Rule): The FTC is focused on an alleged increase in consumer difficulties with subscription services. The FTC seeks to require sellers to provide an easy and simple cancellation process, that is at least as easy as the sign-up process. Further, the proposed updated rule would require sellers to disclose material terms, to provide clarity about free trials or other offers that transition into regularly-occurring charges, and to stop sellers from making it difficult for consumers to cancel services. Presently, the FTC relies upon a number of existing rules that apply to negative option marketing, including the current Negative Option Rule, the Telemarketing Sales Rule, and the Restore Online Shoppers' Confidence Act (ROSCA). The Notice of Proposed Rulemaking was issued on April 24, 2023.
- Fake Reviews Rulemaking: The FTC believes the Endorsement Guides alone have not successfully eliminated the proliferation of fake consumer reviews. As such, the FTC has also proposed a rule to address the misleading treatment of consumer reviews. Mr. Dahdouh specifically discussed how the proposed rule would bar sellers from 1) buying reviews, 2) manipulating reviews, 3) negative review suppression 4) selling fake social media indicators (e.g., fake followers and fake views), and 5) failing to disclose material connections related to reviews, among other requirements that the rule specifically outlines in seven categories. The Notice of Proposed Rulemaking was issued on July 31, 2023.
- COPPA Rulemaking: The Children's Online Privacy Protection Rule (COPPA) went into effect over two decades ago and requires online service providers that collect personal information from children under the age of 13 to both notify and obtain consent from parents prior to collecting, using, or disclosing children's data. The FTC seeks to expand COPPA to implement further limitations on the retention of children's data and security measures for children's data, as well as to place limits on technologies, such as persistent identifiers, that encourage children to remain online. The Notice of Proposed Rulemaking was issued on January 11, 2024.
- Non-Compete Clause Rulemaking: The proposed rule would prohibit most employee non-competes, with retroactive effect. However, the rule has already faced legal challenges regarding whether the FTC has the legal authority to issue such a rule. Mr. Dahdouh focused on the FTC's perceived authority for unfair methods of competition rulemaking via Section 6(g) of the FTC Act. Conversely, Mr. Tiffith argued the FTC's lack of authority and critiqued both the necessity and reasonableness of the rule itself. The Rule was published on May 7, 2024.
- Mr. Dahdouh's presentation did include disclosures stating that all information came from public Notices of Proposed Rulemakings and that the presentation makes no suggestions, express or implied, that the proposed rules will be approved by the FTC either as originally proposed or with modifications.
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