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AD-ttorneys Law Blog

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Cloudy with a Chance of AI: Navigating the FTC’s Regulatory Forecast

Data Counsel

Examining the Likely Impact of Washington’s My Health, My Data Act on Class Action Litigation Involving Biometric Data

The Bargaining Table

Practical Impacts of the ‘Cemex’ Decision

Carl Hittinger, Jeffry Liskov Author Legal Intelligencer Article on Antitrust Considerations in Executive Order on AI

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<a href="#CSPI">CSPI Urges Food Retailers, Congress to Make SNAP Decisions</a>

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<a href="#Elaborate">Elaborate Telemarketing Partnerships Won’t Save You</a>

<a href="#Sloppy">Sloppy Sale Announcements Provoke Class Action</a>

<a href="#Register">Register for Our Upcoming Webinar</a>

<a href="#Check">Check Out Our Latest Blog Posts</a>

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CSPI Urges Food Retailers, Congress to Make SNAP Decisions

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Marketing is as important as availability, food study finds

Keep Your Government Hands off Our Food Stamps!

SNAP—or the Supplemental Nutrition Assistance Program, to be precise—has an <a href="https://en.wikipedia.org/wiki/Supplemental_Nutrition_Assistance_Program">extraordinarily complex and persistent histor</a>y for a government program. More commonly known as “food stamps”—due to the booklets of currency like coupons that once could be redeemed for nutritious food and drink—SNAP’s predecessors appeared nearly a century ago.

Today, the program, which has abandoned the stamps in favor of electronic benefit transfer (EBT) cards, serves one of eight Americans and is responsible for meeting the nutritional needs of millions of people—especially children, seniors, and people with disabilities.

Which, to us, sounds like a pretty fine state of affairs.

Like many government benefits, however, SNAP is delivered through the marketplace, where program participants use their EBT cards to pay for food.

A recent report concluded that food purchases made by SNAP participants were heavily influenced by in-store promotions. As a result, SNAP participants purchased large quantities of packaged foods, many that offer convenience but are also less-nutrient–dense choices.

Earlier this year, watchdog group Center for Science in the Public Interest (CSPI) convened various stakeholders, including food and beverage retailers and manufacturers, SNAP participants, and public health researchers, practitioners, and advocates to discuss how best to create and support healthy food retail environments and to promote healthy food marketing in stores and online. Specifically, CSPI was concerned about certain promotional and marketing tactics that disproportionately promote less-healthy food. In October, CSPI <a href="https://www.cspinet.org/sites/default/files/2023-10/CSPI_RetailPolicyReco_2023_FINAL.pdf">published its report</a>, which offered recommendations to help SNAP participants afford and access healthy foods.

The report provides 10 key recommendations to improve the healthfulness of the retail food environment. The suggestions fall under categories including “retailer requirements,” “grant programs,” and “nutrition education.” And they offer solutions that range from mandating that online retailers display nutrition panels and ingredients to creating a common nutrition classification system to clearly communicate nutrition information to shoppers. In each instance, the impetus is clear—use marketing to help consumers make healthier purchasing choices.

Will these recommendations ever move from possible to policy?

The jury’s out, but retailers that want to get a jump on the recommendations should grab a wholesome snack and dive into the report.

Elaborate Telemarketing Partnerships Won’t Save You

Lead-generation company is on the hook for calls it paid to be transferred back to itself

Day Pacer, formerly known as Edutrek, tried to wrap itself in several layers of camouflage, but the Federal Trade Commission (FTC) saw right through them.

According to the FTC <a href="https://www.ftc.gov/system/files/documents/cases/edutrek_complaint.pdf">complaint</a> against the company filed in the Northern District of Illinois in 2019, Day Pacer purchased consumer data from operators of websites that “claim to help consumers apply for jobs, health insurance, unemployment benefits, Medicaid coverage, or other forms of public assistance” by directing consumers to complete online forms by entering personal information, including telephone numbers. But according to the FTC, these sites then sold the data to third-party telemarketers, including Day Pacer, which then called the consumers to market vocational education products. Rather than clearly and conspicuously disclosing how consumer information was utilized, these websites instead cloaked their activities in dark patterns, microscopic fine print, and prechecked boxes.

In addition to calling consumers directly, Day Pacer allegedly ran a pyramidlike scheme in which they trained and paid affiliates to make outbound calls to consumers, which would then be transferred back to Day Pacer to close the final sale. If the consumer expressed interest in educational opportunities, Day Pacer then sold the consumer’s contact information to educational institutions as a consumer lead.

In addition to the deceptive advertising practices, Day Pacer’s scheme operated in violation of the Telemarketing Sales Rule (TSR), as a substantial number of the consumers Day Pacer called had their numbers listed on the national Do Not Call Registry.

Day Pacer did not dispute that the calls occurred or that no efforts were made to comply with the TSR, including that Day Pacer neither subscribed to the Do Not Call registry nor scrubbed their call lists against it. Further, Day Pacer admitted that they ignored complaints from consumers and instructed call agents to “overcome the objections of consumers” who said they weren’t interested or were displeased about being called.

Nonetheless, Day Pacer maintained that they did not violate the TSR. How was that possible, you ask? Well, according to Day Pacer, (i) the TSR is unconstitutional or otherwise invalid; (ii) they did not offer to sell consumers anything, and therefore, the TSR doesn’t apply; and (iii) because the consumers consented to have their data sent to educational institutions, there was no violation.

We’ll spare you the “unconstitutional” and the “we didn’t do it” defenses and focus solely on the consent issue. Day Pacer argued that the TSR did not apply because they only called “consumers who solicited a conversation with them.” Yet, Day Pacer provided no evidence that such consent had been obtained—no “screenshots or other contemporaneous evidence to establish the contents of the websites on which the customers supposedly provided express written consent.”

Accordingly, in early September of this year, the court <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/edutrek_decision_and_order_granting_summary_judgment_in_part.pdf">granted the FTC partial summary judgment</a> on both counts—specifically finding Day Pacer liable for failing to receive consent for calls placed to persons on the Do Not Call registry.

Here’s the takeaway, straight from the court’s mouth: “Defendants have the burden to show consent.”

If you’re in the business of making telemarketing calls, you must obtain valid, affirmative consent from the consumer before you place that call. And it’s a good idea to keep actual records of that consent.

Also, as a word to the wise, listen to customers when they complain that they are listed on the Do Not Call Registry, and if you find out that you’ve been given leads that are on the registry, you need to cease doing business with the company that provided them.

Day Pacer is now on the hook for civil penalties, with an upcoming hearing scheduled to nail down the dollar figure.

Sloppy Sale Announcements Provoke Class Action

Online art retailer wouldn’t settle on discount or end date

Want a <a href="https://www.icanvas.com/canvas-print/california-love-drd109#1PC6-26x26-FF03">triple portrait</a> of Snoop, Doctor Dre, and Tupac sitting in a swank club room knocking back shots of “California Whiskey”? icanvas has got that. A Lucien Freud-adjacent oil painting of <a href="https://www.icanvas.com/canvas-print/anthony-bourdain-flippin-cds59#1PC6-40x26">Anthony Bourdain giving you the finger</a>? icanvas has got that. How about a Van Gogh/Tim Burton <a href="https://www.icanvas.com/canvas-print/van-gogh-never-saved-gotham-ajt413#1PC6-26x26">Batman-Starry Night mashup</a>? Yep, icanvas has got that too.

icanvas has pretty much any image you can imagine translated into faux masterpieces. So if you were wondering what exactly Tal Nelkin, lead plaintiff in a <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/11/frame-comp.pdf" target="_blank" rel="noreferrer noopener">class action lawsuit</a> against the online retailer, was purchasing from the company that set his case in motion, <a href="https://www.icanvas.com/canvas-print/sunny-day-ppm53#1PC6-26x26">here it is</a>.

When he first saw the print in early August, Nelkin noticed that all icanvas’ products were listed as 15% off. When Nelkin returned the next day to continue perusing the site, he noticed that there was a “limited time flash sale of 40% off.” So Nelkin purchased his print allegedly believing he was receiving 40% off “the regular price.”

When he returned to the site toward the end of September, the print was selling for 30% off, but the reference price for the print had increased by $10. It was then Nelkin began to suspect that icanvas’ pricing was “bogus.”

In early October, Nelkin filed suit against icanvas in the Central District of California, alleging violations of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, alongside common law claims for fraud and unjust enrichment.

If Nelkin’s accusations—and his screenshots—are accurate, icanvas has been running a single sale with fluctuating discounts that was somehow both nine months long and, at any given moment in that timespan, due to end tomorrow. Class action filings looking at sales pricing are still alive and well. This is one of those areas with a pesky patchwork quilt of different state laws defining how long goods must be sold at a “regular” price before a discounted price compared to the reference regular price is offered. The law in California (where many of these cases get filed) requires a reference price to be the “prevailing market price” for three months before advertising of a sale unless the ad clearly explains when the good was sold at the regular price. Particularly approaching the holidays, when most retailers want to promote great deals, it is a good time to take a look at whether the regular price has been appropriately established for a sufficient period of time.

<a href="https://bakerlaw.zoom.us/webinar/register/WN_czfHefHlReyNkb1-oR3IIA#/registration">Session 11: Drafting for Common Risks in Advertising and Media Deals</a>

In this presentation you will learn how to draft agreements that address the issues and risks commonly found in advertising and media deals, including deals relating to digital media, ad tech, sponsorships and endorsements.

<a href="https://www.adttorneyslawblog.com/blogs/what-you-gonna-do-with-all-that-junk-fees/">What You Gonna Do With All That Junk (Fees)?</a>

In his State of the Union address this February, President Joe Biden promised to crack down on junk fees. The Federal Trade Commission (FTC) made good on that promise in short order on Oct. 11, announcing a proposed rule to prohibit junk fees. And a few days before, on Oct. 7, California Gov. Gavin Newsom signed a bill that would similarly ban junk fees, further emphasizing the focus on this area from policymakers. The California law goes into effect in July 2024; the next step for the FTC’s proposed rule is a 60-day public comment period.

AD-ttorneys@law – November 10, 2023

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