The Advertising Law Blog provides commentary and news on developing legal issues in advertising, promotional marketing, Internet, and privacy law. This blog is sponsored by the Advertising, Marketing & Promotions group at Olshan. The practice is geared to servicing the needs of the advertising, promotional marketing, and digital industries with a commitment to providing personal, efficient and effective legal service.
The National Advertising Division of the Council of Better Business Bureaus (“NAD”) recently reviewed claims made by subscription-based meal kit company Blue Apron related to its subscription cancellation process. In doing so, NAD has provided additional guidance as to what is expected from companies that enroll customers in automatically renewing continuity programs from a self-regulatory perspective.
Rihanna’s lingerie company, Lavender Lingerie, LLC dba Savage X Fenty (“Savage X Fenty”), has agreed to pay $1.2 million to settle a consumer protection lawsuit brought by members of the California Automatic Renewal Task Force (“CART”) relating to the company’s automatic renewal practices.
Tom Brady and Gisele Bundchen join Kim Kardashian and Floyd Mayweather as defendants.
* Taylor Lodise is a law clerk in the Litigation practice group.
On November 9, 2022, amidst ongoing investigations by the FTC regarding “dark patterns” that Amazon allegedly employed to discourage subscribers from canceling their Amazon Prime memberships, a class-action lawsuit named Amazon as a defendant. The lawsuit was filed in United States District Court for the Western District of Washington and is styled Dorobiala v. Amazon.com, Inc.
Federal Court rules CFPB funding mechanism is unconstitutional
On October 20, 2022, the Federal Trade Commission issued an advance notice of proposed rulemaking for a rule that would seek to address so called “junk fees” – unnecessary, unavoidable, or surprise charges that inflate costs while adding little to no value to consumers.
Internet phone service provider, Vonage, has agreed to pay $100 million to settle the Federal Trade Commission’s charges that it imposed fees and made it difficult for subscribers to cancel their service. Specifically, the FTC alleged that Vonage implemented “dark patterns” to create obstacles for subscribers looking to cancel their services, often resulting in consumers being charged even after they had requested cancellation. This settlement highlights the FTC’s continued focus on “dark pattern” marketing techniques, particularly as they are applied to cancellation of automatically renewing subscription arrangements.
This is the second ruling of this type in two months
A concept that we explored in a recent article – the reduction of massive class-action awards based on fairness concerns – appears to be picking up judicial steam. In August 2022, a Northern District of California court reduced statutory damages in a consumer class action from the $91.4 million to just $8.3 million plus pre-judgment interest. That case is Montera v. Premier Nutrition Corp. The basis for lowering damages in the face of the requirements of the New York statute at issue was a 1919 Supreme Court ruling which authorized courts to set aside judgments based on statutory penalties that are “wholly disproportionate to the offense and obviously unreasonable.”
* Rachel Gold is a law clerk in the Corporate/Securities Law practice group.
Following up on its action against other celebrities who have promoted crypto investments without disclosing their compensation interest, the Securities and Exchange Commissions (“SEC”) announced “unlawful touting” charges and Order against reality star Kim Kardashian for promoting a cryptocurrency on social media without acknowledging that she was being compensated for the post. This enforcement action is a reminder that it is not just the Federal Trade Commission (“FTC”) who is enforcing compensation disclosures on social media.
Dual-purpose phones can qualify as “residential” numbers to support a TCPA action
The Telephone Consumer Protection Act (“TCPA”) and its regulations prohibit calls and text messages to residential telephone subscribers who have registered their phone numbers on the national do-not-call list maintained by the federal government. While business lines are not eligible to be registered on the national do-not-call list, in practice there is nothing that bars such registration. As a result, TCPA litigation sometimes requires a determination as to whether a phone line is used for residential or business purposes. This issue arises more frequently in the current gig-economy era, because many cell phone owners use their devices for both personal and business purposes.