It seems that every time the Federal Trade Commission (FTC) announces new guidelines or brings a new enforcement action to try to keep pace with fresh forms of consumer deception emanating from the explosive growth of online and mobile technology, another type of hucksterism arises to command its attention. The latest is “telephone cramming” (unauthorized third-party phone charges) that apparently has now migrated from the offline, wired world to the wireless domain. Mobile phone users now have to add “mobile cramming” of fake charges for phony services to their list of unscrupulous marketing tricks to watch out for on the digital advertising horizon.

Cramming has been a huge problem on landline bills for years, resulting in more than two-dozen FTC cases against the practice. Now, as part of the FTC’s efforts to extend consumer protection principles to the new frontier of mobile marketing, last month it filed its first case against mobile cramming, alleging that Wise Media LLC and its principals placed recurring unauthorized charges on mobile phone bills and should be subject to an asset freeze, consumer redress and injunctive relief.
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Last month, the Federal Trade Commission (FTC) finally gave the digital advertising world what it’s been waiting for and badly needed for years: “Dot-com Disclosures: How to Make Effective Disclosures in Digital Advertising,” to replace the sorely outdated guidelines from 2000. The revised guidelines make clear that FTC truth-in-advertising principles apply to any medium, platform or device – no matter how new or small – and attempt to offer practical advice for complying with FTC disclosure requirements in online, social media and mobile advertising.
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The ongoing battle between the Federal Trade Commission (FTC) and the billionaire owners of POM Wonderful is no longer really about whether the company over-hyped the curative powers of its popular fruit juice. Both the administrative law judge (ALJ) and the Commission, on review, agreed that a number of claims that POM juice prevented, treated or reduced the risk of heart disease, prostate cancer and erectile dysfunction were deceptive.

The Commission went farther, however, faulting the ALJ for not finding enough misleading claims and for not imposing a stricter substantiation standard of two controlled human clinical trials (RCTs). In so doing, the FTC majority went too far for Commissioner Maureen Ohlhausen, who parted ways on the issues of claim interpretation and substantiation in a thoughtful separate statement that sets the table for the next round of this heavyweight bout, to be played out in the U.S. Court of Appeals (and then, quite possibly, in the Supreme Court). Which view prevails – hers or the majority’s – will shape an important area of FTC advertising jurisprudence and the nature of health advertising for food and dietary supplements for some time to come.
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Class actions against dietary supplement sellers. Text marketers. Biz-op providers. You name it, and a class action has disturbed the peace of many a direct response marketer in recent times. Nary a weight-loss supplement client of this attorney seems to have been spared. Financially unable or unwilling to go the distance, even where meritorious defenses exist, many targets of these suits have no choice but to pay the “ransom,” most of which goes to class attorney’s fees. As is so often the case in Federal Trade Commission (FTC) suits, the suing party has all the leverage.

Perhaps in response to this consumer class action onslaught, the U.S. Supreme Court lately has been giving new heft to mandatory arbitration clauses, which also contain “class” waivers. In 2011, in AT&T Mobility LLC v. Concepcion, which addressed whether an arbitration clause could bar classwide arbitration, the court overruled a California Supreme Court decision that had said such a bar was “unconscionable” and thus unenforceable. The court held that the California rule was preempted by the Federal Arbitration Act because non-consensual class arbitration violates the Act’s “liberal policy favoring arbitration,” in that it “sacrifices arbitration’s informality,” is “more likely to generate procedural morass than final judgment,” and “greatly increases risks to defendants.”
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