FTC Updates (April 22 – May 3, 2024)

Crowell & Moring LLP


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Between its new Non-Compete Rule, warning letters against drug manufacturers, and numerous enforcement actions, the FTC has been making more headlines than usual in recent weeks.
United States Consumer Protection
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Between its new Non-Compete Rule, warning letters against drug manufacturers, and numerous enforcement actions, the FTC has been making more headlines than usual in recent weeks. The FTC's activity touches on a number of industries, including healthcare, oil and gas, pharmaceuticals, and telecommunications. These stories and more after the jump.

Tuesday, April 23, 2024

Bureau of Competition: Non-Compete Ban

  • The Commission released the final version of its Non-Compete Clause Rule, which bans most employee non-compete agreements. The final rule does not go into effect until September 4, 2024 but is already facing legal challenges. An in-depth summary of the final rule, including these challenges, is available in this recent Crowell Client Alert. On May 14, 2024 at 11 A.M. ET, the FTC will host a webinar providing an overview of the rule and how to comply after it goes into effect.

Friday, April 26, 2024

Bureau of Consumer Protection: Made in USA Labeling Rule

  • The FTC notified the Department of Justice ("DOJ") that Williams-Sonoma, Inc. was likely in violation of an order previously issued by the Commission prohibiting the company from making false, deceptive, or unsubstantiated "Made in USA" claims in violation of Section 5(a) of the FTC Act. The DOJ promptly filed a complaint and reached a settlement requiring the company to pay a record-breaking $3.17 million civil penalty. More information about the stipulated order and the FTC's Made in USA Labeling Rule is available in this recent Crowell Client Alert.

Monday, April 29, 2024

Bureau of Consumer Protection: Deceptive COVID-19 Marketing

  • The Commission obtained a stipulated order related to a complaint against Razer, Inc. in alleging that the company deceptively marketed its Zephyr facemask in violation of Sections 5(a) and 12 of the FTC Act. The complaint alleges that the company falsely marketed their mask as equivalent to an N95-certified respirator, even though the product was not N95-certified, and internal Razer emails showed that Defendants were aware that they were not permitted to make such claims because they never sought certification from any U.S. government agency. Internal tests also allegedly fell well below 95% particle filtration efficiency, the level of protection required for the N95 standard. Under the order, the company is required to pay $1.1 million to fully refund consumers and is barred from making unsubstantiated or misleading claims about COVID or protective health equipment.

Tuesday, April 30, 2024

Bureau of Competition: Orange Book Warning Letters

  • In a follow-up to its last successful campaign in November against improperly-listed Orange Book patents, the FTC filed new Orange Book patent challenges with the FDA and sent new warning letters in relation to 20 new drug products. As reported in a recent Crowell Client Alert, the last round of Orange Book challenges, which mostly focused on inhalers, autoinjectors, and anti-inflammatory multi-dose bottles, resulted in a number of drug manufacturers delisting their patents. This new set of challenges includes additional inhalers, as well as drugs used to treat diabetes and weight loss. The letter recipients have thirty days to either delist their patents or certify under penalty of perjury that the listings comply with FDA statutes and regulations.

Bureau of Consumer Protection: Agency Cooperation

  • The FTC and the Federal Communications Commission ("FCC") have signed a Memorandum of Understanding to terminate a prior 2017 MOU and to reaffirm MOUs from 2003 and 2015. In these earlier MOUs, the agencies agreed to work together to protect consumers in the telecommunications industry while avoiding duplicative or inconsistent oversight. The MOUs affirm that the agencies will share data, including via the FTC's Consumer Sentinel Network, and will designate Liaison Officers in both agencies to coordinate. The new MOU comes on the heels of the FCC's recent decision to restore Net Neutrality.

Wednesday, May 1, 2024

Bureau of Consumer Protection: Enforcement Actions

  • The Commission finalized multiple settlements in relation to complaints against multiple companies alleged to have harmed consumers.
    • First, the FTC finalized a settlement with InMarket Media in relation to a complaint alleging that InMarket collected consumer location and other data in a manner that violated the FTC Act and left consumers in the dark about the fact that the data was being used to facilitate targeted advertising. The company is banned from selling sensitive location data and must take steps to delete or obtain consumer consent for the data already collected.
    • Next, the FTC settled with BlueSnap, Inc. over a complaint that the company violated the Telemarketing Sales Rule and the FTC Act by knowingly processing millions of dollars in credit card payments for ACRO Services, a company that the FTC had shut down in 2022 over allegations that it ran a debt relief scam. The company not only allegedly ignored requests from payment processors to close ACRO Services merchant accounts, but also told the scam's principals how to continue processing fraudulent charges via a shell company. The company is required to pay $10 million to refund consumers, and it is prohibited from providing payment processing services to certain types of companies.
    • Finally, the agency settled with Aqua Finance, Inc. to resolve allegations that the company violated the FTC Act, the Truth in Lending Act, and the Fair Credit Reporting Act by having door-to-door dealers deceive consumers about financing terms for water filtering and softening products. The dealers implied that introductory rates and payments were permanent and made other misleading representations that saddled consumers with unexpectedly large debt and interest payments. The company must provide $20 million in refunds and $23.6 million in debt forgiveness to harmed consumers, and must also closely monitor dealers and provide conspicuous disclosures to consumers.

Thursday, May 2, 2024

Bureau of Competition: Gasoline Mergers

  • The FTC approved a consent order to resolve a complaint in which the FTC challenged Exxon Mobil Corporation's $64.5 billion planned acquisition of Pioneer Natural Resources Company. The order prevents Pioneer founder and former CEO Scott Sheffield from sitting on Exxon's board of directors or serving in an advisory capacity at Exxon. The complaint alleged that Mr. Sheffield's past attempts at collusion with OPEC and related entities should preclude his ability to be put in a position where he could cause U.S. consumers to pay higher prices for gas. The consent order also bars Exxon from appointing any Pioneer employees or directors other than those named in the order from serving on the Exxon board, and Exxon must comply with Clayton Act Section 8 reporting and attestation requirements. The FTC separately released an analysis of the merger and consent order in order to facilitate public comment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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