Kelley Drye

Practices 

Contact Information

Christie Grymes Thompson
Practice Chair

Email
Washington, D.C.
Phone: (202) 342-8633
Fax: (202) 342-8451

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FTC and State AG Investigations

Reading Between the Lines of an FTC Closing Letter

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Drawing on the strength of a nationally-recognized advertising practice, Kelley Drye attorneys help companies navigate the complexity of regulatory investigations, enforcement actions and litigation brought by the U.S. Federal Trade Commission (FTC) and state Attorneys General to achieve the best possible outcomes for clients’ business objectives. This team has an unparalleled record of success negotiating with regulators to close investigations amicably rather than initiating enforcement proceedings. Indeed, we have convinced the FTC staff not to recommend enforcement action to the Commission in dozens of cases over the past decade. In every matter, we are committed to achieving the most advantageous resolution on behalf of our clients – whether it is through closure of an inquiry, a favorable settlement negotiation or successful litigation.

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The caliber of the Kelley Drye team is evident in our breadth of experience and depth of expertise regarding the rules governing truth-in-advertising, advertising claim substantiation, and unfair and deceptive practices under Section 5 of the FTC Act. Several of the firm’s Advertising attorneys served previously at the FTC’s Bureau of Consumer Protection, including as bureau director, assistant director, and attorney advisor.  Additionally, we maintain strong relationships with attorneys at every level at the FTC and in the offices of state Attorneys General, as well as with the advertising bar across the United States. This far-reaching experience with federal agencies and regulators affords our attorneys a unique regulatory perspective, from which we draw for the benefit of our clients.

Kelley Drye attorneys provide regular counsel on compliance with federal and state consumer protection laws and defend clients against actions initiated by the FTC. We have represented companies before the FTC in connection with various information collection proceedings pursuant to Section 6(b) of the FTC Act. Over the years we have worked on numerous government investigations by individual and multi-state Attorneys General and have negotiated assurances of voluntary compliance with individual states and multi-state groups.

The firm has closed public and non-public cases without enforcement action or consent orders in investigations initiated by the FTC or state Attorneys General regarding online marketing, call center, telemarketing, environmental marketing and privacy practices, among other issues. Kelley Drye represents Fortune 500 companies and global brands across a range of industries, including consumer packaged goods, computer manufacturing, telecommunications, mobile and other technology, financial institutions, marketing and retail.

Representative Experience

Closings
  • Represented a major U.S. department store in an FTC investigation involving the alleged mislabeling of fur clothing as “faux fur.” We successfully demonstrated that the client relied in good faith on a third party’s representations and persuaded the staff to close the matter without formal action.

  • Represented a cloud-based technology provider in an FTC investigation concerning the issue of third party liability. Investigation closed without enforcement action after staff presented a proposed complaint and order.

  • Negotiated successfully with the FTC staff to close an investigation regarding concussion health and safety-related claims for one of the largest manufacturers of football helmets.

  • Represented a drugstore retailer and its wholly owned subsidiary in relation to complex negotiations with FTC staff to close an investigation, ending a potential enforcement action. The inquiry focused on substantiation for express and implied claims that its plastic trash bags were degradable, recyclable, and made with recycled content.

  • Obtained a closing letter for an FTC investigation into the environmental advertising claims of a construction materials company.

  • Represented a Fortune 100 retailer in an FTC investigation into the company’s handling of customer information. After a robust defense of the client’s privacy practices, the FTC staff closed the investigation.

  • Represented a mobile app developer in an FTC investigation concerning the company’s compliance with privacy and information security obligations. We negotiated successfully with the FTC and the matter was closed.

  • Defended an international developer and publisher of mobile video games in a regulatory investigation involving in-app purchases. The FTC staff closed the investigation.

  • Represented a major discount retail company with respect to an inquiry from the New York City Department of Consumer Affairs into the company’s handling of a merchandising promotion. Following our explanation of the advertising practices leading up to and following the launch of the campaign, the NYC DCA abandoned the investigation.

  • Represented the largest provider of pre-paid legal plans in the country in an FTC investigation regarding their advertising and privacy business practices. Kelley Drye convinced the Commission to reject the FTC staff’s proposal to file a complaint, and the FTC closed the investigation – an extremely rare result.

  • Represented a national retailer in an investigation by the U.S. Federal Trade Commission regarding compliance with the Fur Products Labeling Act. Case closed by the staff without formal action.

  • Represented a domestic shoe and boot manufacturer in an investigation by the U.S. Federal Trade Commission regarding compliance with the Made in the USA standard. Case closed by the staff without formal action.

  • Represented an insulation manufacturer in an NAD referral. Case closed by the staff without formal action.

  • Represented the maker of educational products for children in an FTC investigation regarding educational and developmental claims of a video product. The FTC staff closed the investigation.

  • Represented a telecommunications company in an FTC investigation concerning claims of unlimited web plan usage. The FTC staff closed the investigation.

  • Represented Fortune 50 computer and technology company and its financial services arm in an FTC investigation into the company’s financing promotions. The case was closed without action.

  • Represented an auto chemical manufacturer in an investigation by the U.S. Federal Trade Commission regarding substantiation for performance claims made for the product. Case initiated by a referral from the National Advertising Division of the Council of Better Business Bureaus. Case closed by the staff without formal action.

  • Represented a leading children’s specialty retailer in an FTC investigation of the company’s in-store and online privacy practices. Successful in convincing the FTC to close the investigation without pursuing law enforcement or remedial action.

  • Represented a major online retailer in an FTC investigation of Mail Order Rule violations, resulting in closing of investigation.
Settlements
  • Represented a major retailer in a settlement with the FTC regarding the Textile Act and references to bamboo fibers. Citing an infrequently-used provision of the FTC Act, the FTC relied on a synopsis of previous cases to seek civil penalties.

  • Represented a Fortune 500 paint company in a settlement with the FTC regarding green marketing claims of zero volatile organic compounds (VOCs) in some of their paint products.

  • Represented a subsidiary of the world’s largest food and nutrition company in the FTC’s first case challenging advertising for probiotics. Successfully negotiated a settlement for the case, which alleged deceptive advertising claims about the health benefits of a children’s nutrition drink.

  • Represented a national pharmacy chain in a settlement with the FTC regarding advertisements for a line of cold-and-flu treatment dietary supplements. The FTC’s allegations related to alleged unsubstantiated health claims involving cold and flu prevention and immune boosting.

  • Settled allegations brought by the Office of the Attorney General of New Jersey regarding unfair and deceptive practices related to prepaid telephone companies. Settled a similar case with the state of Florida.

  • Represented Fortune 50 computer and technology company and its financial services arm in obtaining settlement with attorneys general of 49 states, resolving allegations related to clients’ financing promotions, service contract and warranty offers, and rebate fulfillment. Case settled by payment of $4,075,000 for consumer redress, costs, penalties and disgorgement (averaging less than $85,000 per state) and implementation of injunctive relief.

  • On behalf of a large Internet company, settled allegations regarding violations of state Uniform and Deceptive Trade Practices Act (UDTAP) claims related to cancellation, reactivation, telephone billing and disclosure of terms of service with 48 state Attorneys General, with the Texas Attorney General’s office acting as the lead for the multi-state group throughout the investigation and settlement. Also settled similar allegations with the Attorneys General of Florida and New York.

  • Represented leading academic research company in separate privacy investigations by the FTC and 42 state Attorneys General, and negotiated FTC consent order and state Assurance of Voluntary Compliance.

  • Represented major telecommunications company in an FTC investigation of Fair Credit Reporting Act and Equal Credit Opportunity Act violations, resulting in negotiation of favorable settlement.

  • Represented a provider of financial services in an FTC challenge to its credit card marketing practices. The FTC also alleged that a subsidiary debt collection company engaged in deceptive conduct in marketing credit cards as part of its debt collection activities and violated the FDCPA.

  • Represented numerous companies seeking FTC support or guidance on consumer protection regulatory issues, legislation or enforcement policy.
Litigation
  • Represented a Fortune 100 telecommunications company in a lawsuit brought by the Minnesota Attorney General in Minnesota state court asserting claims under Minnesota’s consumer fraud act and deceptive trade practices act.

  • Represented a national marketer of satellite television services in litigation filed by the Department of Justice on behalf of the FTC and the states of North Carolina, Illinois, Ohio and California seeking civil penalties for violations of the FTC’s Telemarketing Sales Rule by allegedly calling telephone numbers listed on the Do Not Call Registry.

  • Defended an Internet marketer in litigation filed by the FTC seeking civil penalties and injunctive relief regarding continuity programs.

  • Represented a Fortune 50 computer and technology company in litigation initiated by the Attorney General of the State of New York (Andrew Cuomo) alleging that the company violated Sections 349 and 350 of NY’s General Business Law and Section 63(12) of NY’s Executive Law in connection with the company’s financing promotions, service contract and warranty offers, and rebate fulfillment. Negotiated a settlement providing for injunctive relief and restitution on terms that were previously agreed to with the remaining 49 state Attorneys General.

  • Defended a manufacturer of pesticides in the first effort by the FTC and eight states to obtain a preliminary injunction in a substantiation case.

  • Represented a large telecommunications company in investigation and eventual litigation against AG Nixon.

  • Represented a sub-prime lender in litigation filed by the FTC, six state Attorneys General, AARP and related consumer class actions.

  • Represented a national marketer of nutritional supplements in an investigation by the Department of Justice alleging violations of a prior FTC order.

  • Represented a national marketer of discount buying clubs in litigation brought by the FTC and 47 state Attorneys General.

  • Defended a cigarette manufacturer’s famous advertising campaign in administrative litigation that resulted in the FTC’s withdrawal of its complaint.
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Publications
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September 26, 2014

Insights From the FTC’s “Big Data” Workshop

Kelley Drye Client Advisory

Events
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February 12, 2015

Consumer Protection Priorities within the Offices of the Commissioners

American Bar Association Consumer Protection Conference

Additional Resources