April 30, 2021
Welcome to the first edition of DirectConnect, our newsletter covering legal and regulatory developments for the direct sales industry. After helping develop and deliver the inaugural Direct Sales Compliance Professional Certification Program (DSCP-CP) earlier this year, we heard from our clients and other industry members that another resource cataloguing legal and regulatory updates would be useful.

Each month, we’ll send a summary of notable news and related analysis – some of which directly relates to the direct sales industry and some of which is more broadly relevant. The big news this week remains the Supreme Court’s decision last week in AMG Capital Management, which held that Section 13(b) of the FTC Act does not allow for monetary remedies. We unpack the decision and discuss the limitations of proposed legislation to confer the FTC with authority to obtain redress in two posts below.

We also cover the FTC’s first use of its civil penalty authority for deceptive COVID-19 advertising, green claims, and monthly developments for dietary supplement and food products. We hope that you find DirectConnect useful and invite you to reach out if you have any questions.
 

Supreme Court Finds Section 13(b) Does Not Allow for Monetary Remedies

The Supreme Court released its long-awaited opinion in AMG Capital Management v. FTC and, as we predicted following oral arguments, found that Section 13(b) of the FTC Act does not allow for monetary remedies.
 

Can Congress Amend Section 13(b) to Allow for Retroactive Restitution?

The FTC is actively and aggressively seeking explicit allowance of monetary remedies. But the possibility of a legislatively revitalized Section 13(b) in the near future raises some big questions. Here’s one: if Congress amends Section 13(b) to explicitly allow for monetary remedies, would the FTC be able to use the new legislative language to pursue monetary remedies against companies whose alleged wrongful actions pre-dated the statutory change?  For defendants in the approximately 75 pending federal court cases alleging Section 13(b) violations, this is a very important question.
 

Congressional Democrats Sound the Alarm, Rally In an Effort to Restore Pre-AMG 13(b) Enforcement Authority

Less than a week after the Supreme Court’s unanimous decision in AMG Capital Management v. FTC, two Congressional committees zeroed in on the FTC’s hollowed-out Section 13(b) authority, the fate of which now lies squarely with Congress. Leading Democrats in both chambers have expressed the urgent need for legislation to clarify and strengthen the statute in AMG’s wake. As stated by House Energy and Commerce Committee Chairman Frank Pallone (D-NJ) on Tuesday, “What my colleagues and I have been saying for over a year was a problem is now an emergency.” Republicans, on the other hand – while sympathetic to the FTC’s plight – are increasingly advocating for “guardrails” to prevent unbounded use of the agency’s Section 13(b) authority, should it be restored.
 

FTC Files First Case Seeking Civil Penalties For Allegedly Deceptive COVID-19 Advertising

Recently the FTC flexed its new-found civil penalty muscle by filing the first case pursuant to the COVID-19 Consumer Protection Act, which gives the FTC authority to seek civil penalties for deceptive COVID-related acts and practices.
 

Dietary Supplement and Personal Care Product Regulatory and Litigation Highlights – March 2021

Kelley Drye produces a curated selection of highlights of regulatory and litigation developments in the dietary supplement and personal care product industries each month.
 

Food Industry Regulatory and Litigation Highlights – March 2021

Kelley Drye produces a monthly curated selection of highlights of regulatory and litigation developments in the dietary supplement and personal care product industries.
 

Earth Day = Green Guides

Earth Day is a perfect time to think about the FTC’s Green Guides, designed to help marketers develop claims about the environmental benefits of their products. The Green Guides describe the types of environmental claims the FTC may or may not find deceptive under Section 5 of the FTC Act. The FTC has brought  many actions related to green claims, including the recovery of $1.76 million regarding “organic” claims, and we expect that they will continue to bring these types of actions, particularly as the focus on climate change increases. Accordingly, advertisers should carefully review the new Guides and ensure that their green claims comply with the FTC’s standards.
 

Resources

Advertising and Privacy Law Resource Center

The Advertising and Marketing and Privacy and Information Security practice groups at Kelley Drye have organized this Advertising and Privacy Law Resource Center to help your company navigate the legal landscape. While this practical site is not exhaustive, it addresses key legal topics relevant to advertising and marketing, privacy, data security, and consumer product safety and labeling. Feel free to contact us to discuss any specific claims, privacy or data security practices, or for any other questions.
 

Advertising and Privacy Law Desktop Reference Guide

The laws regulating advertising and privacy can seem daunting. The potential for liability arising from inaccurate or misleading advertising or lax privacy practices can be significant, both as a consequence of regulatory enforcement and of litigation. The Advertising & Marketing and Privacy & Information Security practice groups at Kelley Drye & Warren LLP have organized this “Advertising and Privacy Law Desktop Reference Guide” to help your company navigate the legal landscape. While this practical guide is not exhaustive, it addresses key legal topics relevant to advertising and marketing, privacy, data security, and consumer product safety and labeling.
 

TCPA Tracker

The TCPA (Telephone Consumer Protection Act) Tracker is produced as a collaborative effort between Kelley Drye’s Litigation, Advertising/Privacy and Communications practices 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.
 

Events

Tips from the Experts - Defending TCPA Lawsuits – Using Data Analysis Strategies and Support

April 29, 2021| Webinar
Kelley Drye & Warren LLP and CompliancePoint Webinar
Lauri MazzuchettiBecca Wahlquist

If you communicate with clients and prospects through phone call, text message, or fax campaigns, you are certainly familiar with the Telephone Consumer Protection Act (TCPA) that applies to these and other areas of direct marketing and consumer contacts. With more than 3,000 TCPA individual and class action lawsuits being levied each year, the business risks and potential for significant monetary exposure have greatly increased. Join us as we discuss how to use data to defend your company from TCPA suits when they do arise and how to work with your legal team.