On 16 October 2024, the Federal Trade Commission (FTC) announced its final “Click-to-Cancel” Rule that applies to businesses that offer goods and services through automatically renewing payment plans, free or discounted trials that convert into full plans, or other “negative option features” that interpret a consumer’s silence as permission to keep charging them (collectively, “recurring subscriptions”). Under the finalized rule, the FTC may seek civil penalties of over USD 50,000 per violation, injunctive relief and consumer redress for companies that violate the requirements of having detailed transparent, consent and simple cancellation processes for recurring subscriptions and memberships.

On 7 November 2024, the FTC announced it will be sending refunds to 536,000 consumers deceived by Rejuvica’s and its owners’ unsupported claims that Sobrenix, a dietary supplement marketed and sold by Rejuvica, could reduce and eliminate alcohol cravings and consumption. In addition to the refunds, the FTC’s proposed order requests a permanent injunction and other relief due to violations under the FTC Act and the Opioid Addiction Recovery Fraud Prevention Act of 2018

In our final week of the Annual Compliance conference, we focussed on key issues being faced by companies on ESG, supply chain and product compliance. Specifically, we discussed the new legal landscape in the EU and UK on product compliance and liability, supply chain due diligence trends and developments, and how to manage environmental, social and governance risks and increasing legislation in the US, UK and EU aimed at cracking down on vague, misleading, or unsubstantiated green claims.

The United States Federal Trade Commission (FTC) has again shown that social media influencers, endorsements and testimonials remain an enforcement priority. The FTC sent warning letters to two trade associations and several dieticians and other online health influencers to make clear that failure to include clear disclosures that these are paid endorsements may violate the law.

If your company uses social media influencers in its advertising, you will want to consider whether your company is adequately monitoring what the social media influencers are saying about your product or service and how they are disclosing their relationship to your company in light of the updated guides and resources that the Federal Trade Commission issued very recently.
The general considerations have not changed, namely, that companies are “subject to liability for misleading or unsubstantiated statements made through endorsements or for failing to disclose unexpected material connections between themselves and their endorsers,” 16 CFR Part 255.1(d), but the requirement that companies have a reasonable program in place for monitoring their social media influencers’ compliance and what such a program should include is an important addition to the guidance.

Companies that publish or use reviews and testimonials should note the Federal Trade Commission’s new proposed “Trade Regulation Rule on the Use of Consumer Reviews and Testimonials.” The FTC’s Notice of Proposed Rulemaking would make particular customer review practices illegal, authorize courts to impose civil penalties, and strengthen FTC enforcement actions while deterring misleading marketing strategies.

The use of endorsements and reviews in advertising continues to be an area of active Federal Trade Commission (FTC) enforcement. On 29 June 2023, The FTC issued updates to its Guides Concerning the Use of Endorsements and Testimonials in Advertising and updated its practical business guidance “FTC’s Endorsement Guides: What People are Asking.”

If you sell goods and services to consumers through automatically renewing payment plans, free or discounted trials that convert into full plans, or other “negative option features” that interpret a consumer’s silence as permission to keep charging them, you should monitor and consider submitting comments on the Federal Trade Commission’s proposed Negative Option Rule. The proposed rule would impose detailed transparency, consent, simple cancellation and annual reminder requirements on companies that use any medium to offer recurring subscriptions for products or services, and allow the FTC to seek civil penalties of over USD 50,000 per violation and consumer redress for violations.

The use of endorsements and reviews in advertising continues to be an area of active Federal Trade Commission (FTC) enforcement. The FTC has proposed updates to its Endorsement Guides to strengthen advertising guides related to endorsements and reviews.

Off the Shelf, the Global Consumer Goods & Retail (CG&R) Industry Video Podcast, provides short practical legal insights into the key issues affecting consumer goods and retail businesses. Increasingly, the desire for CG&R companies to include references and claims about their sustainability stems from the demand by consumers to know more about the brands they engage with, particularly their sustainability credentials, and this is driving this trend for green/sustainability claims to be increasingly featured and promoted.