Ad Law Access | Kelley Drye Law Firm

Time 2021-09-15 14:29:13

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The future composition of the FTC became a bit clearer on Monday, as the White House announced that President Biden will nominate privacy expert and scholar Alvaro Bedoya as FTC commissioner.  If confirmed, Bedoya would take the seat currently held by Commissioner Rohit Chopra, whose nomination as CFPB Director remains pending, and serve in a term that ends in September 2026.Bedoya is currently a Visiting Professor of Law at Georgetown and is the Founding Director of Georgetown’s Center on Privacy Technology (CPT).  Before moving to Georgetown, Bedoya served as Chief Counsel of the U.S. Senate Judiciary Subcommittee on Privacy, Technology and the Law.  Bedoya’s background as a privacy expert sends a supportive signal from the White House of broader privacy initiatives at the FTC and bolsters privacy expertise at the Commission level.With bipartisan support at the Commission  for a privacy rulemaking and more aggressive agency enforcement against “data abuses,” Bedoya could push the FTC to take an even broader view of its role in privacy enforcement and policy development.  To this point, Chair Lina Khan’s statement on Bedoya’s nomination cites his “expertise on surveillance and data security” as being “enormously valuable” to the FTC.Under Bedoya’s leadership, CPT has tackled a wide range of privacy issues, including commercial practices that are squarely within the FTC’s focus.  For instance, CPT joined more than two dozen organizations on a September 2020 letter urging the FTC to “support further study of data and discrimination in any and all forthcoming 6(b) investigations undertaken by the FTC.”  (In December 2020, the FTC announced that it had sent orders to nine online platforms seeking information about their use of race, ethnicity, and several other factors for ad selection, content selection, and other purposes under Section 6(b) of the FTC Act, which authorizes the FTC to require annual or special reports from entities.)  Two years earlier, CPT joined a 2018 comment encouraging the FTC to examine the role of “tech giants” in allegedly causing or facilitating discrimination, the spread of misinformation, and other qualitative, broadly distributed hams.CPT under Bedoya’s watch has also studied privacy and data-related issues that fall outside the FTC’s ambit.  For example, CPT scored law enforcement agencies’ use of face recognition technologies along civil rights and data protection dimensions and filed an amicus brief in federal district court arguing that aerial surveillance conducted by the Baltimore Police Department is unconstitutional.  In writings published under his own name, Bedoya has criticized government agencies’ use of commercial technologies and data for law enforcement and immigration purposes.  In a September 2020 op-ed, for example, Bedoya described a “panoply” of companies that provide data and software that support federal agencies’ immigration enforcement actions.In addition to pursuing privacy and data security policy under the FTC Act, it’s also likely that Bedoya will examine how the FTC enforces specific privacy laws, such as the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act (FCRA), and related rules.  The Commission recently finalized changes to five rules implementing the FCRA. While those changes were largely technical, they serve as important reminders regarding the host of overlapping obligations imposed on entities under FCRA and FTC and CFPB implementing regulations.The timeline for Bedoya’s confirmation process is unclear and is likely to depend on further action on Commissioner Chopra’s CFPB nomination.  We will post updates as they occur.***Subscribe here to Kelley Drye’s Ad Law News and Views newsletter to see another side of the team in our second annual Back to School issue. Subscribe to our Ad Law Access blog here.As they often have done in the past, the FTC and the FDA issued joint cease and desist letters last week to 10 companies suspected of making unproven health claims – in this instance, claims that dietary supplements treat or cure diabetes. The FTC and the FDA join forces on such letters in order to deliver a strong and consistent message that unsubstantiated health claims are illegal under the laws enforced by both agencies.The FTC warned that the claims do not appear to be supported by competent and reliable scientific evidence, in violation of the FTC Act. The FDA warned that the products are being marketed as drugs that could cure, treat, mitigate, or prevent disease, but are not generally recognized as safe and effective for the marketed uses and not approved by the FDA. As such, the products are misbranded and illegal under the Food Drug and Cosmetic Act (FD C Act).  The letters demanded that the companies cease and desist from making unsubstantiated claims within 15 days.Deceptive Claims under the FTC Act To be sure, these letters are noteworthy for companies making diabetes-related claims, but their importance is not necessarily limited to that. Advertisers should pay attention more broadly to the FTC section of the letters, as it may signal the FTC testing its authority to seek penalties under Section 5(m)(1)(B).In particular, in describing how and why the claims violate the FTC Act, the letters cite to cases holding that unsubstantiated disease claims of various types are unlawful, and appear to be styled as so-called Section (5)(m)(1)(b) letters laying the groundwork for civil penalties – similar to letters the FTC has sent companies making allegedly unsubstantiated claims that their products are made from bamboo. In general, the FTC has limited authority to obtain civil penalties. However, Section (5)(m)(1)(b) of the FTC Act authorizes the agency to seek penalties when the FTC has (1) previously determined in a litigated administrative proceeding that a practice is unfair or deceptive (2) issued a final cease and desist order with respect to such practice, and (3) put a company on notice of this fact (such that it has “actual knowledge) via warning letter.It’s not clear yet whether the FTC will actually seek civil penalties based on these letters. But if it does, it would be testing the limit of its authority under Section 5(m)(1)(b). That’s because the law arguably contemplates that the “final cease and desist order” cited in a Section 5(m)(1)(b) letter be more specific to the practice being warned about than the potpourri of health cases cited in these current letters. Put another way, to confer “actual knowledge” on the companies, the cited cases should address unsubstantiated diabetes claims, not wholly different health claims about heart disease, cancer, erectile dysfunction, etc. Indeed, the language of Section (5)(m)(1)(m) and precedent from the bamboo cases support this narrower reading. Top FTC officials have called for more frequent and aggressive use of the FTC’s Section 5(m)(1)(b) authority, and this appears to be a move in that direction.Misbranding Under the FD C ActThe FDA section of the letters doesn’t break new ground, but it does provide a helpful gauge for risk and a reminder about the importance of context.Companies marketing supplements and foods to people with diabetes or pre-diabetes should review the claims cited in the letters to help assess risk of their current marketing. For example, some letters cite to claims that clearly exceed the bounds of structure function claims, e.g., claiming that the ingredients or products produced quantifiable improvements in fasting blood sugar, A1C levels, and reduced blood pressure as well as risk of heart attacks. However, other letters cite to claims that many marketers may think fall more squarely on the structure-function side of the line, e.g., “promote healthy glycemic response” and “supports healthy glucose tolerance.”  In addition to product labels and websites, the letters also cite to claims on social media – including testimonials dating as far back as 2018 – and to Amazon store fronts.As is standard, the letters cite to specific claims, but it’s important to also consider the broader context. When marketing diabetes-related products, it’s risky to position any product as the fix for a condition that likely requires medication along with constant dietary discipline and monitoring. Even if the product claims are substantiated and within structure-function limitations, the context of positioning the product as one part of an overall diabetes management plan is key to managing risk.***We will closely monitor developments in these matters, as well as the agencies’ future use of warning letters and sources of legal authority, and post updates as they occur.Subscribe here to Kelley Drye’s Ad Law News and Views newsletter to see another side of the team in our second annual Back to School issue. Subscribe to our Ad Law Access blog here.This summer, a plaintiff filed a class action lawsuit against Allbirds, alleging (among other things) that the company’s environmental claims – including claims about its “sustainable” practices, the “low carbon footprint” of its shoes, and its other “environmentally friendly” initiatives – are false and misleading.The complaint – which is based largely on a PETA article – alleges that the life cycle assessment tool Allbirds uses to identify the carbon footprint of its products does not assess the environmental impact beyond the manufacturing of the shoes. Because it excludes things like the impact of wool production on the environment, it understates the environmental impact. Moreover, the complaint alleges Allbirds bases its carbon footprint figures on “the most conservative assumption for each calculation,” so that it can make more aggressive claims.The plaintiff also argues that Allbirds makes “misleading animal welfare claims,” including by advertising “happy sheep” that live the “good life.” Based on the PETA article, the plaintiff alleges that the sheep may not be quite so content.Although the FTC’s Green Guides provide guidance on various types of environmental claims, there isn’t a lot of clarity on the types of claims mentioned in this complaint. It’s too early to predict how this case will turn out, but this case and others like it – such as the lawsuit against Coca-Cola we wrote about this summer – suggest that plaintiffs will take advantage of that lack of clarity and continue to challenge ESG initiatives.We are thrilled that Jessica Rich and Laura Riposo VanDruff have joined the firm’s Privacy and Advertising practice groups. Both attorneys are former top officials at the Federal Trade Commission (FTC), with Rich having served as Director of the Bureau of Consumer Protection (BCP) and VanDruff as an Assistant Director in BCP’s Division of Privacy and Identity Protection (DPIP).Jessica and Laura join our impressive list of former FTC officials, including the firm’s managing partner, Dana Rosenfeld, who served as Assistant Director of BCP and attorney advisor to FTC Chairman Robert Pitofsky, former Bureau Directors Bill MacLeod and Jodie Bernstein, as well as Aaron Burstein,  having served as senior legal advisor to FTC Commissioner Julie Brill.Jessica served at the FTC for 26 years and led major initiatives on privacy, data security, and financial consumer protection.  She is credited with expanding the FTC’s expertise in technology and was the driver behind FTC policy reports relating to mobile apps, data brokers and Big Data, the Internet of Things, and federal privacy legislation.  She also directed the agency’s development of significant privacy rules, including the Children’s Online Privacy Protection Rule and Gramm-Leach-Bliley Safeguards Rule. She is a recipient of the FTC Chairman’s Award, the agency’s highest award for meritorious service and the first-ever recipient of the Future of Privacy Forum’s Leadership Award.  Jessica is also a fellow at Georgetown University’s Institute for Technology Law Policy. Prior to joining Georgetown, she was an Independent Consultant with Privacy for America, a business coalition focused on developing a framework for federal privacy legislation.Laura also brings significant experience to Kelley Drye. As Assistant Director for the FTC’s Division of Privacy Identity Protection, Laura led the investigation and prosecution of matters relating to consumer privacy, credit reporting, identity theft, and information security.  Her work included investigation initiation, pre-trial resolution, trial preparation, and trial practice relating to unreasonable software security, mobile operating system security update practices, and many other information privacy and identity protection issues.  She joins the firm from AT T where she served as an Assistant Vice President – Senior Legal Counsel advising business clients on consumer protection risks, developing and executing strategies in response to regulatory inquiries, and participating in policy initiatives within the company and across industry.Jessica and Laura are an impressive duo and are sure to be an asset to our clients as they prepare for the future of privacy and evolving consumer protection law.*                      *                      *Subscribe here to Kelley Drye’s Ad Law News and Views newsletter to see another side of Jessica, Laura and others in our second annual Back to School issue. Subscribe to our Ad Law Access blog here.The August issue of Kelley Drye’s TCPA Tracker newsletter is here:TCPA (Telephone Consumer Protection Act) Tracker Newsletter is a cross-practice effort produced to help you stay current on TCPA (and related) matters, case developments and provide an updated comprehensive summary of TCPA petitions pending before the FCC.Recent NewsFCC Opens Proceeding to Determine if VoIP Providers Should Have Additional Anti-Robocall ObligationsOn August 6, 2021, the FCC adopted a Further Notice of Proposed Rulemaking to consider additional anti-robocall requirements for interconnected VoIP provider that seek direct access to telephone numbers.  Among the changes, the FCC proposes to require interconnected VoIP provider seeking access to numbers to “certify that it will use numbering resources lawfully; will not encourage nor assist and facilitate illegal robocalls, illegal spoofing, or fraud; and will take reasonable steps to cease origination, termination, and/or transmission of illegal robocalls once discovered.”  Comments on this proposal will be due 30 days after publication of the FNPRM in the Federal Register.CGB Issues its Second Annual Report on the Status of the Implementation of Call Blocking TechnologiesOn June 29, 2021 the FCC’s Consumer and Government Affairs Bureau released a Second Call Blocking Report, as required by the 2019 Call Blocking Declaratory Ruling.  This Report, a follow up to the June 2020 First Call Blocking Report, provides (1) a detailed description of call blocking services offered by voice service providers, third-party analytics companies, and device manufactures (2) an in-depth evaluation of the effectiveness of call blocking tools (3) information on the state of deployment of caller ID authentication through implementation of the STIR/SHAKEN framework and (4) an analysis of the impact of call blocking on 911 services and public safety.FCC Adopts Rules to Create an Online Portal for Private Entities to Report Robocall ViolationsOn June 17, 2021 the FCC’s Enforcement Bureau released a Report and Order implementing section 10(a) of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act), which directs the Commission to “prescribe regulations to establish a process that streamlines the ways in which a private entity may voluntarily share with the Commission information relating to violations of section 227(b) or 227(e) of the Communications Act.” The Report and Order establishes procedures for private entities may submit information about suspected robocall and spoofing violations.  The rules do not supplement the complaint procedures available to consumers, and thus the portal is not open for consumer complaints of illegal robocalls.  Similarly, government entity reports of robocall or spoofing violations should be submitted via other methods as well.FCC Issues Further Notice of Proposed Rulemaking for Implementing STIR/SHAKENOn May 20, 2021 the FCC’s Wireline Competition Bureau released a Third Further Notice of Proposed Rulemaking (FNPR) to consider accelerating its STIR/SHAKEN requirements for a subset of small voice service providers believed to be likely to originate illegal robocalls. In its Second Caller ID Authentication Report and Order, the FCC granted some small voice service providers an additional two years to implement the STIR/SHAKEN caller ID authentication framework.  According to the FCC, a subset of these providers is originating an increasingly disproportionate amount of illegal robocalls.  The NPRM outlines a proposal to “shorten the extension for small voice service providers most likely to originate illegal robocalls by one year, so that such providers must implement STIR/SHAKEN in the IP portions of their networks no later than June 30, 2022.”  It also seeks comments on (1) “how best to identify and define the subset of small voice service providers that that are at a heightened risk of originating an especially large amount of illegal robocall traffic” and (2) “whether to adopt additional measures, including data submissions, to facilitate oversight to ensure that small voice service providers subject to a shortened extension implement STIR/SHAKEN in a timely manner.” Comments were due on or before July 9, 2021; reply Comments were due on or before August 9, 2021.ZipDX Submits Letter of Intent to Serve as Registered Industry ConsortiumAs required by the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act), the FCC must annually select “a single consortium to conduct private-led efforts to trace back the origin of suspected unlawful robocalls.” On May 27, 2021 ZipDx LLC (ZipDX) submitted a Letter of Intent to apply for this role. The Enforcement Bureau released a Public Notice on June 17, 2021 seeking comments on the matter.  The current designated  registered consortium, USTelecom – the Boadband Association’s Industry Traceback Group (USTelecom ITG) was not required to file another Letter of Intent, as its initial application and certifications continue for the duration of subsequent years, however it did submit a Comment reaffirming its commitment to the role.  The Bureau will select the registered consortium by August 25, 2021.  Comments were due July 2, 2021.FCC Petitions TrackerKelley Drye’s Communications group prepares a comprehensive summary of pending petitions and FCC actions relating to the scope and interpretation of the TCPA.Number of Petitions Pending30 petitions pending1 petition for reconsideration of the rules to implement the government debt collection exemption1 application for review of the decision to deny a request for an exemption of the prior express consent requirement of the TCPA for “mortgage servicing calls”1 request for reconsideration of the 10/14/16 waiver of the prior express written consent rule granted to 7 petitionersNew Petitions FiledEnterprise Communications Advocacy Coalition – Petition for Declaratory RulingOn July 30, 2021, the Enterprise Communications Advocacy Coalition (ECAC) filed a Petition for Declaratory Ruling seeking federal preemption of portions of recently enacted Florida legislation (SB 1120), which amends the Florida Do Not Call Act and the Florida Telemarketing Act.  The ECAC contends that portions of SB 1120 imposes obligations more restrictive than the TCPA Regulations and impose additional prohibitions on calls and the use of dialing equipment that are legal under federal law.  The Petition relies upon a 2003 Commission TCPA order which states that “that any state regulation of interstate telemarketing calls that differs from our rules almost certainly would conflict with and frustrate the federal scheme and almost certainly would be preempted.”Perdue for Senate, Inc. – Petition for Declaratory RulingOn July 2, 2021 Purdue for Senate, Inc. (Purdue for Senate) filed a Petition for Declaratory Ruling, asking the FCC to confirm that the Telephone Consumer Protection Act (TCPA) does not regulate ringless voicemail technology (RVM).  Specifically, Purdue for Senate wants the FCC to rule that “the delivery of a voice message directly to a voicemail box through RVM technology does not constitute a ‘call’ subject to prohibitions on the use of an automatic telephone dialing system (“ATDS”) or an artificial or prerecorded voice under Section 227(b)(1)(A)(iii) of the TCPA or Section 64.1200(a)(1)(iii) of the FCC’s rules.”  In the lead up to the January 2021 Senate runoff elections in Georgia, Purdue for Senate employed vendors that used RVM technology to deliver voice messages directly to potential voters’ voice mailboxes.  According to Purdue for Senate, these RVM transmissions fall outside of the scope of the TCPA and other FCC rules because, not only are they not “calls,” they are also not transmitted via a wireless network, and the technology does not bill the recipients of the messages.  Purdue for Senate claims that RVM technology is a “beneficial alternative” to robocalls, in that it allows non-profit organizations to relay important information without disrupting the lives of message recipients and/or adding charges to their bills.This is the third petition to be presented to the FCC involving ringless voicemail technology.  Two prior petitions relating to ringless voicemail were filed and subsequently withdrawn by the petitioners prior to a Commission decision.Upcoming CommentsDecisions Released​Click here to see the full FCC Petitions Tracker.Cases of NoteCommon Ownership Does Not Establish Agency Relationship, Offer to Purchase Not “Telephone Solicitation” Under TCPAThe District of Arizona has held that common ownership of an agent and principal may not be enough to establish an agency relationship nor, therefore, vicarious TCPA liability. Rather, the plaintiff must plead specific facts showing that the purported agent controlled or directed the calls that plaintiff alleges violated the TCPA. It further held that an offer to purchase property—rather than an offer to sell a product or services—does not qualify as a “telephone solicitation” under § 227(c) of the TCPA.In Jance v. Homerun Offer LLC, Plaintiff filed suit against Homerun Offer alleging that he received 29 calls from the company making “a generic and cursory inquiry” into purchasing his house in violation of the TCPA. After conducting his own online research into the state corporate records, he learned of a second company, All Star Investments, owned by Homerun Offer’s registered agent, President, and CEO, that had made six property purchases between October 2019 and June 2020. Plaintiff hypothesized that the property purchases made by All Star Investments came about as Homerun Offer’s telemarketing efforts, and named both in his TCPA complaint.All Star Investments moved to dismiss, arguing that Plaintiff failed to plausibly allege that it could be held vicariously liable for Homerun Offer’s calls. Defendants also both moved to dismiss Plaintiff’s § 227(c) claim prohibiting continued “telephone solicitation” after an individual requests to be put on a company’s internal do-not-call list, arguing that the calls fell outside the statutory definition of “telephone solicitation.” As to both, the Court agreed.The Court held that Plaintiff failed to make a prima facie showing that All Star Investments had the right to substantially control Homerun Offer, and that Homerun Offer acted as All Star Investments’ agent. “The simple fact that the same individual . . . is the President and CEO of both [Defendants] as well as the parent company for both the agent and principle” was “[in]sufficient to show that All Star Investments controlled or directed Homerun Offer’s phone calls to Plaintiff.” With no agency relationship plausibly alleged in the complaint, the Court dismissed the claims against All Star Investment.Separately, the Court dismissed Plaintiff’s claim for damages under § 227(c) of the TCPA, which prohibits an entity from continuing to initiate “telephone solicitation” after an individual requests to be put on a do-not-call list. Referencing the statutory definitions of “telephone solicitation” and “telemarketing,” the Court noted that the TCPA protects individuals from calls placed with the “purpose of encouraging the purchase of . . . property, goods, or services” by the recipient. Because the calls in question constituted an offer to purchase (rather than an offer to sell), the Court found the Complaint failed to state a claim under § 227(c) and dismissed those claims.Not all Plaintiff’s claims were dismissed. His claims under § 227(b), which prohibits the use of an “automatic telephone dialing system” (ATDS) without the recipient’s consent survived. Noting that whether a defendant has used an ATDS is “often a fact exclusively within the defendants’ possession,” the Court found that Plaintiff’s allegations—that he had no business relationship with Defendants nor provided them with his contact information, that the caller’s numbers were attributed to a VoIP and had misleading caller ID information, that there was a brief pause before the caller began speaking on certain calls, and that the calls were generically formatted and scripted—were sufficient to plausibly allege use of an ATDS.Jance v. Homerun Offer LLC, No. CV-20-00482-TUC-JGZ, 2021 WL 3270318 (D. Ariz. July 30, 2021)Court Rejects Plaintiff’s Argument to Expand ATDS Definition Based on Duguid FootnoteIn Hufnus v. DoNotPay, Inc., the Northern District of California granted Defendant company’s motion to dismiss after Plaintiff alleged that he had been contacted in a manner that violated the TCPA. In the June 24, 2021 order, the court found that Plaintiff’s interpretation of footnote 7 of Facebook, Inc. v. Duguid, 141 S. Ct. 1163, 1173 (2021) conflicted with Duguid’s “holding and rationale,” since Defendant in this case did not “dial random or sequential blocks of telephone numbers,” but instead used numbers provided by consumers during the registration process.The dialing system that Defendant “used to contact [Plaintiff] merely processe[d] phone numbers supplied by consumers while signing up for [Defendant’s] services.” Plaintiff’s complaint alleged that Defendant’s dialing system stored the telephone numbers “in a random and/or sequential way; uses a random and/or sequential generator to pull from the list of numbers to send targeted text messages; and uses a random and/or sequential generator to determine the sequence in which to send messages.”  Specifically, Plaintiff relied on footnote 7 in Duguid, which states that “an autodialer might use a random number generator to determine the order in which to pick phone numbers from a preproduced list. It would then store those numbers to be dialed at a later time.” Plaintiff argued that footnote 7 expanded the definition of an ATDS to include Defendant’s dialing system.The court disagreed, stating “the [Supreme] Court employed the quoted line to explain how an autodialer might both ‘store’ and ‘produce’ randomly or sequentially generated phone numbers[.]” The court looked to the amicus curiae brief cited in footnote 7, which “makes clear that the ‘preproduced list’ of phone numbers referenced in the footnote was itself created through a random or sequential number generator.” The list of numbers used by the Defendant however, were “obtained in a non-random way (specifically, from consumers who provide them).”Thus, because the platform solely used phone numbers that had been supplied by consumers, “and not phone numbers identified in a random or sequential fashion,” the court found that Defendant’s platform did “not qualify as an autodialer under the TCPA.” The court therefore dismissed Plaintiff’s complaint with prejudice.Hufnus v. DoNotPay, Inc., No. 20-CV-08701-VC, 2021 WL 2585488 (N.D. Cal. June 24, 2021).Court Finds Standing Sufficient But Dismisses TCPA Action For Insufficient Facts AllegedIn Camunas v. National Republican Senatorial Committee, the Eastern District of Pennsylvania dismissed a TCPA case for failure to adequately plead sufficient facts showing that an ATDS was used to send the text messages at issue.Plaintiff alleged that he received “at least six messages” from a political organization, and that the messages were “generic and obviously pre-written.” The complaint further alleged that Defendant’s website “states that its opt-in messaging program communicates using ‘recurring autodialed marketing messages.’” Defendant moved to dismiss the complaint for lack of subject matter jurisdiction, arguing that Plaintiff failed to plead an injury-in-fact, and for failure to state a claim.Defendant challenged the Plaintiff’s standing to assert a claim based on a handful of text messages.  In denying Defendant’s motion to dismiss for lack of subject matter jurisdiction, the court held that Plaintiff “plausibly alleges he suffered an injury” and “also plausibly alleges that the injury is fairly traceable to [Defendant’s] conduct and that a favorable judicial decision would redress the alleged injury.” On this point, Defendant argued against Plaintiff’s position that the six messages should be sufficient for the injury-in-fact standing requirement. Defendant sought “to distinguish [Susinno v. Work Out World Inc., 862 F.3d 346 (3d Cir. 2017)], from the instant action by arguing that Susinno ‘involved a phone call and a one-minute prerecorded voicemail – not a small number of text messages’ and still ‘required the plaintiff actually assert and plead an injury – such as nuisance and invasion privacy.’” The court found that in this case, Plaintiff had similarly alleged that “he found [Defendant’s] unsolicited communication ‘annoying, disruptive, frustrating and an invasion of his privacy.’” Thus, the court found that it had subject matter jurisdiction over the claim.On the 12(b)(6) motion to dismiss for failure to state a claim, the court held that Plaintiff had not plausibly alleged that Defendant “used an ATDS to send the messages at issue.” The court found that the complaint had not identified what was contained in the text messages at issue, had not identified “the phone number from which the messages were sent,” and had failed to “indicate whether that number was a short code.” The court noted that “[i]n cases involving text messages,” courts “‘have considered the nature of the message, the length of the sending number, the number of messages, and the relationship between the parties.’” Specifically, the court pointed out that “several courts have concluded that a ‘short code’ number supports an inference of ATDS use.” As such, Plaintiff had had not alleged sufficient facts “to ‘nudge’ his claim ‘across the line from conceivable to plausible.’”Ultimately, the court denied Defendant’s motion to dismiss for lack of subject matter jurisdiction, but granted the motion to dismiss for failure to state a claim, dismissing the complaint without prejudice.Camunas v. National Republican Senatorial Committee, No. 21-1005, 2021 WL 2144671 (E.D. Pa. May 26, 2021).Subscribe to the TCPA Tracker here.*                      *                      *The 2021 back to school issue of the Ad Law News and Views newsletter will be out soon. Subscribe to get your copy.As AMG recedes further into the past, lower courts are becoming more comfortable disposing of 13(b) actions where the proceedings are attempting to obtain monetary restitution as a matter of course. In many instances below, the FTC has conceded its inability to obtain monetary relief and has focused on the injunctive relief it seeks. However, there are still outstanding cases wherein, despite AMG, the FTC refuses to concede defeat on the issue of monetary relief under Section 13(b).Latest update follows. Continue Reading Post-AMG Scorecard (Updated): FTC Claims for Monetary Relief in 13(b) Actions DwindleIn February, we posted that the Children’s Advertising Review Unit (or “CARU”) was in the process of updating its Guidelines for ads directed to children. The Guidelines had last been updated in 2006, and advertisers often struggled to figure out how to apply them in an advertising landscape that had dramatically changed since then.The new Guidelines, announced last week, should help. Although the core principles underlying the Guidelines are the same, there are some important updates. Here are some of the key changes:The new Guidelines apply to children under 13 years old across all platforms. (Previously, the Guidelines applied primarily to children under 12.)Whereas the previous Guidelines focused television, the new version better reflects today’s digital advertising landscape.The new Guidelines include a section dedicated to in-app and in-game advertising and purchases.The new Guidelines include new factors to help determine when an ad is primarily directed to children under 13. (The factors in the previous version were more TV-centric.)The new Guidelines incorporate updated FTC guidance on influencers, endorsements, and native advertising.The new Guidelines require that ads not portray or encourage negative social stereotyping, prejudice, or discrimination. (Recall that in a February blog post, CARU had encouraged advertisers to focus on diversity and inclusion in their ads.)These revised Guidelines will go into effect on January 1, 2022. At that time, CARU will begin actively investigating cases of non-compliance. Unless you take advantage of CARU’s pre-screening services, we’ll need to wait until CARU issues some decisions to determine how it will interpret some of the new provisions.With three nominations in the queue, the CPSC could be on the way to a Democrat majority. The Biden Administration recently completed its list of three nominees to serve as Chairman and Commissioners.  The list includes Alexander Hoehn-Saric as Chairman (currently Chief Counsel for Communications and Consumer Protection at the House Energy and Commerce Committee), Mary Boyle, (currently CPSC’s Executive Director, and Richard Trumka, Jr. (currently General Counsel and Staff Director at the House Oversight and Investigations Committee’s Subcommittee on Economic and Consumer Policy).The CPSC currently has one vacant seat, but a second seat will open up this October, at the termination of Commissioner Elliot Kaye’s hold-over year. A third slot will then become available at the close of Acting Chairman Adler’s term.The Senate Committee on Commerce, Science, and Transportation will need to hold one or more hearings to consider the three nominees before they can be confirmed. However, it is unlikely that one of those hearings will be held before the Senate’s August recess, making action on all three nominees likely for the fall.If the nominations are confirmed, the CPSC will have a full slate of five Commissioners for the first time since 2019.  Currently split with two Democratic and two Republican Commissioners, the CPSC will have a 3-2 split between Democrats and Republicans if the nominees are approved.Each of the three nominees has some experience on matters involving CPSC. Hoehn-Saric served as the Deputy General Counsel for the Department of Commerce after being senior counsel for the Senate Committee on Commerce, Science and Transportation. Mary Boyle, current CPSC Executive Director, has over a decade of experience at CPSC in various positions, including working on policy, agency administration, product recalls, and civil penalty negotiations. Trumka Jr., son of AFL-CIO President Richard Trumka, has assisted the subcommittee on Economic and Consumer Policy investigate consumer safety issues relating to children’s booster seats, JUUL e-cigarettes, and talc baby powder.Summer associate Elizabeth Hamner contributed to this post. Ms. Hamner is not a practicing attorney and is practicing under the supervision of principals of the firm who are members of the D.C. Bar.Over the course of about a week, the CPSC, an agency that rarely litigates, flexed its litigation muscles not once, but twice,  recently filing complaints against Amazon and Thyssenkrupp Access Corp., seeking to force both companies to conduct recalls. Both are administrative complaints.Fulfilled by AmazonThe CPSC voted 3-1 to file its complaint against Amazon for allegedly not recalling hazardous third-party products sold on its Fulfilled by Amazon platform.  Those hazardous products include flammable children’s pajamas, faulty carbon monoxide detectors, and hair dryers without protections against electrocution.  Though Amazon has stopped selling some of these potentially harmful products, the CPSC still wants Amazon to issue recalls with the Commission and to destroy any of the goods returned to them.The CPSC’s complaint reflects its ongoing challenge with how to handle massive third-party platforms while still effectively protecting consumers.  Under the Fulfilled by Amazon program, merchants can keep their products at an Amazon fulfillment center, and Amazon will pack and ship the products for them for a fee. Those merchants maintain legal titles to their products while Amazon provides its packing and shipping services. CPSC, however, emphasizes that when a consumer returns a Fulfilled by Amazon product, it goes back to Amazon, not the merchant. Amazon then examines the product to see if it can be resold. If an item cannot be resold, then the merchant can have the product mailed back to its own facility.In its complaint, the CPSC considers Amazon as a “distributor” that may be liable for the safety of the products it packs and ships.Amazon, like many similar platform providers, does not consider itself a “distributor” of these products. Indeed, the Texas Supreme Court’s Amazon.com, Inc. v. McMillan ruling this June supports Amazon’s stance. The Texas Court found that the company is not considered a “seller” of Fulfilled by Amazon products under the state s product liability law, because the platform does not actually hold title to the products.Amazon has notified consumers who purchased the products identified in CPSC’s complaint about the potential hazards and offered to refund customers with Amazon gift cards, but the CPSC said those efforts are not enough. The CPSC wants Amazon to recall the defective carbon monoxide detectors, hair dryers and youth garments and facilitate their returns so the retailer may destroy them. And the CPSC has requested documentation proving the items’ destruction as well as monthly progress reports on the process. They further ask that Amazon notify those who purchased defective items and issue them full refunds.The outcome of this case could jeopardize the existence of third party marketplaces or at least require them to completely revamp their current business models. In addition, it could have broader implications for entities that help third parties sell their products.Thyssenkrupp Access Corp.The CPSC also voted 3-1 to file the complaint against Thyssenkrupp Access Corp. (“Thyssenkrupp”), a major elevator company. The complaint alleges Thyssenkrupp’s residential elevators contain defects in the elevators’ design and installation materials, presenting a substantial product hazard.The CPSC alleges that the elevators are dangerous due to a narrow gap between the hoistway door and elevator car door. Small children can slip between the doors into that space and become trapped or fall under a moving elevator car.The lawsuit seeks to require Thyssenkrupp to inspect the elevators installed in customers’ homes and offer free installations of space guards in the elevators.In another example of CPSC’s growing willingness to take unilateral action to notify the public of a potential safety issue, Acting CPSC Chairman Adler followed the lawsuit with a notice to vacation rental platforms, including Airbnb and Vrbo, urging them to disable elevators immediately until they have been inspected.We will continue to watch this case and the ramifications it could have for companies that manufacture or distribute products for a third party’s installation.Summer associate Elizabeth Hamner contributed to this post. Ms. Hamner is not a practicing attorney and is practicing under the supervision of principals of the firm who are members of the D.C. Bar.Following the momentum of President Biden’s sweeping competition executive order, the FTC now wants in on the action. In a unanimous vote, the Commission approved to adopt a policy statement calling for more aggressive enforcement against manufacturer restrictions that prevent consumers and businesses from repairing their own products. The policy statement also pushes for more enforcement of the Magnuson-Moss Warranty Act, which restricts a company from tying a warranty to the use of a specific service provider.This policy statement flows from a two year process. As we have previously reported, in 2019, the FTC called for public comment and empirical research on repair restrictions, and in May 2021, the FTC released its “Nixing the Fix” report to Congress. Based on those results, the FTC issued this statement that it will now “prioritize investigations into unlawful repair restrictions under relevant statutes such as the Magnuson-Moss Warranty Act and Section 5 of the FTC Act.”In her prepared remarks before the vote, Chair Lina Khan stated that repair restrictions “can significantly raise costs for consumers, stifle innovation, close off business opportunity for independent repair shops, create unnecessary electronic waste, delay timely repairs, and undermine resiliency.” She expressed that the FTC “has a range of tools it can use to root out unlawful repair restrictions” and called on the public to submit complaints about potential violations.Commissioner Chopra echoed Khan’s sentiment and recommended that the Commission take steps in addition to reinvigorating enforcement: (1) engage the independent repair community, and conduct a close review on the user experience on reportfraud.ftc.gov; (2) work with other agencies to reform existing procurement policies that allow contractors to block government buyers from self-repair or seeking third-party repair services; and, (3) assist policymakers, including at the state level, to draft Right-to-Repair laws.All companies offering a product warranty should review its terms, particularly any terms limiting repairs under the warranty. As we are bound to see more activity on the state and federal levels with right to repair legislation and enforcement, we will continue to monitor these developments.Kelley Drye’s Advertising and Marketing practice has a national reputation for excellence. No other firm can match our record in advertising litigation and National Advertising Division (NAD) proceedings, our substantive strength in the area of advertising, promotions marketing and privacy law, and our experience at the Federal Trade Commission (FTC), the offices of state Attorneys General, the NAD, and the broadcast networks.

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