Month: August 2022

FTC Report Highlights Dramatic Surge in Sale of Flavored Disposable E-Cigarettes and Menthol E-Cigarette Cartridges

The Federal Trade Commission’s second report on e-cigarette sales and advertising nationwide shows sales of flavored disposable e-cigarettes and menthol e-cigarette cartridges surging dramatically in 2020. This significant increase, which coincides with a federal ban on the flavored cartridges popular with young smokers, suggests that youth e-cigarette use shifted to substitute products rather than declined. The report also found that the distribution of free and discounted e-cigarettes – a practice linked to a rise in youth smoking – reached record highs.

“This report shows that youth are still at risk from flavored or deeply discounted e-cigarettes,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Marketers of e-cigarettes have proven skillful at evading FDA regulation and hooking youth on addictive products.”

The FTC has been reporting on tobacco sales annually since 1967 and smokeless tobacco sales since 1987. Last year, the agency expanded its studies of industry and published its first-ever report on e-cigarettes. E-cigarettes or vaping devices are battery-operated devices that people use to inhale an aerosol, which typically contains nicotine, flavorings, and other chemicals. The two main types of e-cigarettes are cartridges and disposables. Cartridges are rechargeable and designed to be used multiple times. Users generally replace the pre-filled cartridge when it is empty. Disposables are not rechargeable or refillable, and are thrown away once they run out of charge or e-liquid.

This year’s e-cigarette report covers sales and advertising data from 2019 and 2020, a period in which the Food and Drug Administration (FDA) published an enforcement policy banning the sale of flavored e-cigarette cartridges other than menthol. Overall, the report found that total e-cigarette sales, which had increased from $304.2 million in 2015 to $2.046 billion in 2018, grew to $2.703 billion in 2019, but then declined to $2.24 billion in 2020. The FTC report notes that the 2020 decline may not represent the market given major industry shifts. Key findings in the report include:

  • Significant shift to flavored disposable e-cigarettes: Publicly available sources indicate that the sale of disposable e-cigarettes – which are exempt from the FDA’s 2020 policy – increased substantially, with “other” flavored disposable products making up 77.6 percent of all disposables sold in December 2020. The FTC’s data did not show an increase in disposable sales. However, FTC’s data likely does not represent an accurate picture of the market for disposable e-cigarettes. Only two of the five companies submitting data for 2019-20 continued to market disposable e-cigarettes in 2020, and those that did provided more limited offerings. In order to improve the representativeness of its industry sales data for future FTC reports, the FTC recently sent orders to four additional e-cigarette companies.
  • Major increase in menthol cartridge sales: Similarly, the report found that the sale of the remaining non-FDA-banned flavored cartridge, menthol, increased significantly, to 63.5 percent of all cartridges sold in 2020.
  • Record high e-cigarette discounting: The data also reveal that price discounting for e-cigarettes reached a record high of $182.3 million in 2019, and, although it decreased slightly in 2020, such discounting still represented the largest category of ad expenditures by e-cigarette manufacturers.
  • Doubling of nearly free e-cigarette samples: The data collected for 2019-20 suggest that spending on the sampling and distribution of free and deeply price-discounted e-cigarettes more than doubled in just two years, making it the second-largest spending category in 2020. This occurred because, after the FDA banned tobacco product sampling in 2016 to limit youth access, some companies began offering e-cigarettes for $1 (or even less) in an apparent attempt to get around the ban.

The FTC’s report provides an important market snapshot of the impact of the FDA’s efforts to restrict harmful youth e-cigarette use and a roadmap for additional steps the FDA can take to combat youth addiction to nicotine. There is significant evidence that flavored e-cigarettes remain attractive for youth, increasing the serious potential for more American youth to become addicted to nicotine and its harmful effects on the human body. This report shows that partial bans on certain types of flavors for certain types of e-cigarettes are unlikely to be successful in achieving a reduction in youth addiction to nicotine via e-cigarette usage.

The FTC also is concerned about price discounting practices for e-cigarettes. Studies indicate that consumers clearly respond to price changes for tobacco products – with younger smokers responding more strongly than their older counterparts. Such studies led the U.S. Surgeon General to conclude that price discounting has resulted in an increase in youth tobacco use. The FTC considers similar discounting in the price of e-cigarettes also concerning. FDA efforts to restrict free e-cigarette samples seem to have engendered an effort by e-cigarette manufacturers to circumvent the ban by offering record-high discounting and nearly free e-cigarette products. 

The Commission vote approving the FTC’s E-Cigarette Report and related data tables for 2019-20 was 5-0.

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FTC Sues Heated Mattress Pads Marketer Electrowarmth for Falsely Claiming that Chinese Products Were Made in the USA

The Federal Trade Commission today sued Electrowarmth Products, LLC and its owner, Daniel W. Grindle, alleging that they deceptively claimed the heated fabric mattress pads they sell for truck bunks were made in the USA. The FTC charged Grindle and Electrowarmth with violating the Textile Act and the Federal Trade Commission Act. The agency’s proposed order would stop Grindle and Electrowarmth from deceptively claiming that products were Made in USA, when in fact they were made in China.

 “America’s hardworking truckers shouldn’t have to maneuver around marketers preying on their patriotism,” said Samuel Levine, Director of the Bureau of Consumer Protection. “Electrowarmth’s false claims that its goods were made in the USA can also harm competitors who tell the truth about product origin.”

Based in Ohio, Grindle and Electrowarmth sell mattress pads of varying sizes, with wires and thermostats that provide heat. According to the complaint, before 2019, Electrowarmth used U.S.-made textiles for mattress pads intended for use in truck bunks. But then in a cost-cutting move, Grindle and Electrowarmth decided to move production to China and stop using U.S.-made textiles, while continuing to market their heated trunk bunk mattress pads as “Made in USA,” “Made in the USA since 1939,” and “made-in-America products.”

The complaint alleges that Grindle instructed the Chinese manufacturer to make and package Electrowarmth’s products “exactly the same” as they were when previously manufactured in the United States.

According to the complaint, Grindle and Electrowarmth violated the Textile Act and the Federal Trade Commission Act by labeling and advertising the origin of the textiles used in their products as the United States, when these textile fiber products were wholly imported from China. The complaint alleges that the defendants harmed consumers by:

  • Failing to accurately label imported products with the country of origin. Grindle and Electrowarmth deceived consumers by failing to correctly label the country of origin of their mattress pads.
  • Falsely advertising imported products as “Made in the USA.” Grindle and Electrowarmth labeled their mattress pads as being Made in the USA even though they were entirely made in China.

 Exhibit A.

Electrowarmth warming pad package with ‘Made in USA’ label

Enforcement Action

The proposed order settling the FTC’s complaint against Grindle and Electrowarmth prohibits the conduct alleged in the complaint. Under the order, Grindle and Electrowarmth:

The order prohibits Grindle and Electrowarmth from making any country-of-origin claim about a product or service unless the claim is not misleading and they have a reasonable basis that substantiates their claim. It also requires Grindle and Electrowarmth to make certain disclosures about the country of origin of any product subject to the Textile Fiber Products Identification Act, and to provide compliance reports.

The order imposes an $815,809 monetary judgment, which is fully suspended due to Grindle’s and Electrowarmth’s inability to pay. If the Commission concludes that the respondents misrepresented or omitted any material aspect of their sworn financial statements, the amount of the entire monetary judgement will immediately become due.

The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides further guidance on making non-deceptive “Made in USA” claims. The agency’s Made in USA page features cases, instructive closing letters, and the brochure Complying with the Made in USA Standard, which answers many of the questions companies ask. The FTC’s Made in USA Labeling Rule went into effect on Aug. 13, 2021. Companies that violate the Rule from that date forward may be subject to civil penalties. Threading Your Way Through the Labeling Requirements Under the Textile and Wool Acts provides further information on labeling textile products.

The Commission vote to issue the complaint and accept the proposed consent order for public comment was 5-0. The FTC will publish a description of it in the Federal Register. Instructions for filing comments appear in the published notice. Comments must be received within 30 days of publication in the Federal Register. Once processed, comments will be posted on                                

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $46,517.

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FTC, States Sue Rental Listing Platform Roomster and its Owners for Duping Prospective Renters with Fake Reviews and Phony Listings

“Roomster polluted the online marketplace with fake reviews and phony listings, making it even harder for people to find affordable rental housing,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Along with our state partners, we aim to hold Roomster and its top executives accountable and return money to hardworking renters.”

“There is a term for lying and deceiving your customers to grow your business: Fraud. Roomster used illegal and unacceptable practices to grow its business at the expense of low-income renters and students,” said New York Attorney General Letitia James. “Unlike Roomster’s unverified listings and fake reviews, their deceptive business practices will not go unchecked. I am proud to lead this effort with the FTC to protect low-income renters and students defrauded by Roomster.”

New York-based Roomster operates a website and mobile apps where users can pay a fee to access living arrangement listings, including rental properties, room rentals, sublets, and roommate requests. The company claims to offer “authentic” and “verified” listings. However, in a complaint filed in federal court along with the attorneys general of New York, California, Colorado, Florida, Illinois, and Massachusetts, the FTC and its state partners allege that Roomster, along with Shriber and Zaks, used fake reviews and other misrepresentations to lure consumers to its platform and pay for access to listings that often turned out to be fake. The complaint also alleges that Martinez, doing business as AppWinn, deceptively promoted the Roomster platform by providing tens of thousands of fake four- and five-star reviews.

The complaint alleges that the deceptive tactics of Roomster, Shriber, Zaks, and Martinez violated the FTC Act and state laws. Many consumers rely on reviews when deciding whether to purchase a product or service. Fake reviews distort the marketplace and make it difficult for consumers to make informed decisions. The deceptive tactics alleged in the complaint include:

  • Posting fake positive reviews: Roomster’s operators, with the help of Martinez, have saturated the internet with tens of thousands of four- and five-star fake reviews, which dilute negative reviews posted by real consumers, some of whom warn that many of Roomster’s listings are fake. The complaint alleges that Roomster’s operators told Martinez to take steps to make the reviews look real. For example, Shriber urged Martinez to spread out the reviews so they were “constant and random.”
  • Claiming to offer verified and authentic listings: Roomster misrepresents that it offers millions of “verified listings” when in fact the company does not verify listings or ensure they are legitimate and authentic. For example, the FTC’s investigation found that the company immediately accepted and published a fake listing for a fictional apartment at the same address as a U.S. Post Office commercial facility.
  • Using phony listings to attract paid users: Roomster has advertised on internet sites like Craigslist using fake listings that drive consumers to Roomster’s platform. Once on the site, consumers paid fees to obtain information necessary to secure the listings, only to discover that the listings didn’t even exist. In addition, after signing up for Roomster’s service, consumers complain they are often bombarded by fraudsters with more fake listings.

This action is part of the FTC’s efforts to crack down on fake and deceptive reviews. Earlier this year, online retailer Fashion Nova paid $4.2 million to settle allegations that the company blocked negative reviews of its products from being posted to its website. In 2021, the FTC put hundreds of firms on notice that they could face significant financial penalties if they use fake reviews or other deceptive endorsements to promote their products or services.

According to the complaint, Roomster and its owners were assisted by Martinez in their efforts to deceive consumers by posting fake reviews to the app stores. In addition to cooperating with the FTC in its ongoing case against Roomster, Martinez, as part of the proposed stipulated final order with the FTC and the states, is also required to:

  • Notify the app stores: He must notify the Apple and Google app stores that Roomster paid him for posting reviews on each platform and must identify the fake reviews and approximate times they were posted;
  • Stop selling reviews: Martinez will be permanently banned from selling or misrepresenting consumer reviews or endorsements;
  • Pay $100,000: Martinez must pay a total of $100,000 to the FTC’s six state partners: New York, California, Colorado, Florida, Illinois, and Massachusetts.

The Commission voted 5-0 to authorize the staff to file the complaint against Roomster and the three individual defendants and the stipulated final order against Martinez. The complaint and stipulated final order were filed in the U.S. District Court for the Southern District of New York.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case against Roomster and its owners will be decided by the court. Stipulated final orders have the force of law when approved and signed by the District Court judge.

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FTC Releases Final Agenda for Public Forum on Commercial Surveillance and Lax Data Security Practices

The Federal Trade Commission released the final agenda for its September 8, 2022 forum seeking public comment on the harms stemming from commercial surveillance and lax data security practices and whether new rules are needed to protect people’s privacy and information. The FTC recently announced an Advance Notice of Proposed Rulemaking (ANPR) seeking public comment as it explores possible new rules cracking down on lax data security and commercial surveillance, which is the business of collecting, analyzing, and profiting from information about people. 

The Commercial Surveillance and Data Security Public Forum will explore a wide range of concerns that the FTC is seeking comment on through its ANPR. For example, some companies fail to adequately secure the vast troves of consumer data they collect, putting that information at risk to hackers and data thieves. Other concerns relate to the growing body of evidence that some commercial surveillance-based services may be addictive to children and lead to a wide variety of mental health and social harms, and the automated systems that analyze data companies collect, which are prone to errors, bias, and inaccuracy.

FTC Chair Lina M. Khan will provide opening remarks to kick off the forum. She will be followed by a staff presentation on how the ANPR process works and remarks by Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya. The event will also feature two panel discussions where the FTC will hear from industry representatives and consumer advocates. The forum will end with a public comment session.

Information about the forum’s participants can be found on the event page. The forum, which begins at 2 p.m. ET, will be held virtually and webcast on the FTC’s website. Registration is not required to watch the webcast.

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FTC Sues Kochava for Selling Data that Tracks People at Reproductive Health Clinics, Places of Worship, and Other Sensitive Locations

The Federal Trade Commission filed a lawsuit against data broker Kochava Inc. for selling geolocation data from hundreds of millions of mobile devices that can be used to trace the movements of individuals to and from sensitive locations. Kochava’s data can reveal people’s visits to reproductive health clinics, places of worship, homeless and domestic violence shelters, and addiction recovery facilities. The FTC alleges that by selling data tracking people, Kochava is enabling others to identify individuals and exposing them to threats of stigma, stalking, discrimination, job loss, and even physical violence. The FTC’s lawsuit seeks to halt Kochava’s sale of sensitive geolocation data and require the company to delete the sensitive geolocation information it has collected.

“Where consumers seek out health care, receive counseling, or celebrate their faith is private information that shouldn’t be sold to the highest bidder,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC is taking Kochava to court to protect people’s privacy and halt the sale of their sensitive geolocation information.”

Idaho-based Kochava purchases vast troves of location information derived from hundreds of millions of mobile devices. The information is packaged into customized data feeds that match unique mobile device identification numbers with timestamped latitude and longitude locations. According to Kochava, these data feeds can be used to assist clients in advertising and analyzing foot traffic at their stores and other locations. People are often unaware that their location data is being purchased and shared by Kochava and have no control over its sale or use.

In a complaint filed against Kochava, the FTC alleges that the company’s customized data feeds allow purchasers to identify and track specific mobile device users. For example, the location of a mobile device at night is likely the user’s home address and could be combined with property records to uncover their identity. In fact, the data broker has touted identifying households as one of the possible uses of its data in some marketing materials.

According to the FTC’s complaint, Kochava’s sale of geolocation data puts consumers at significant risk. The company’s data allows purchasers to track people at sensitive locations that could reveal information about their personal health decisions, religious beliefs, and steps they are taking to protect themselves from abusers. The release of this data could expose them to stigma, discrimination, physical violence, emotional distress, and other harms.

The FTC alleges that Kochava fails to adequately protect its data from public exposure. Until at least June 2022, Kochava allowed anyone with little effort to obtain a large sample of sensitive data and use it without restriction. The data sample the FTC examined included precise, timestamped location data collected from more than 61 million unique mobile devices in the previous week. Using Kochava’s publicly available data sample, the FTC complaint details how it is possible to identify and track people at sensitive locations such as:

  • Reproductive health clinics: The data could be used to identify people who have visited a reproductive health clinic and therefore expose their private medical decisions. Using the data sample, it is possible to track a mobile device from a reproductive health clinic to a single-family residence to other places routinely visited. The data may also be used to identify medical professionals who perform, or assist in the performance, of reproductive health services.
  • Places of worship: The data could be used to track consumers to places of worship, and thus reveal the religious beliefs and practices of consumers. The data sample identifies mobile devices that were located at Jewish, Christian, Islamic, and other religious denominations’ places of worship.
  • Homeless and domestic violence shelters: The data could be used to track consumers who visited a homeless shelter, domestic violence shelter, or other facilities directed to at-risk populations. This information could reveal the location of people who are escaping domestic violence or other crimes. The data sample identifies a mobile device that appears to have spent the night at a temporary shelter whose mission is to provide residence for at-risk, pregnant young women or new mothers. In addition, because Kochava’s data allows its customers to track people over time, the data could be used to identify their past conditions, such as homelessness.  
  • Addiction recovery centers: The data could be used to track consumers who have visited addiction recovery centers. The data could show how long consumers stayed at the center and whether a consumer potentially relapses and returns to a recovery center. 

Protecting sensitive consumer data, including geolocation and health data, is a top priority for the FTC. This month, the FTC announced that it is exploring rules to crack down on harmful commercial surveillance practices that collect, analyze, and profit from information about people. In July, the FTC warned businesses that the agency intends to enforce the law against the illegal use and sharing of highly sensitive consumer data, including sensitive health data. Last year, the FTC issued a policy statement warning health apps and connected devices that collect or use consumers’ health information that they must notify consumers and others when that data is breached as required by the Health Breach Notification Rule. In 2021, the agency also took action against the fertility app Flo Health for sharing sensitive health data with third parties.  

The Commission vote authorizing the staff to file the complaint against Kochava was 4-1. Commissioner Noah Joshua Phillips voted no. The complaint was filed in the U.S. District Court for the District of Idaho.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

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Federal Trade Commission Authorizes Three New Compulsory Process Resolutions for Investigations

The Federal Trade Commission has approved three omnibus resolutions authorizing compulsory process in investigations involving collusive practices, mergers, acquisitions, and transactions, and the car rental industry.

The omnibus resolutions in these three areas will eliminate the need for FTC staff to seek compulsory process in each related case. Not individually authorizing compulsory process in each matter removes an unnecessary and time-consuming barrier to staff’s pursuit of an investigation.

  • The omnibus resolution governing potentially unlawful collusive and coordinated conduct will allow FTC staff to more quickly and efficiently obtain evidence in connection with investigations involving competitors working together in an anticompetitive fashion. There is rising concern that the recent inflationary increase in prices may be giving companies cover to collude against the public interest.
  • The omnibus resolution governing proposed mergers, acquisitions, and transactions approved today will allow for quick investigations of all mergers, including those that fall below the value thresholds that require reporting to the antitrust agencies under the Hart-Scott-Rodino Act (HSR). The Commission’s 6(b) study on non-HSR reported acquisitions by technology companies highlighted how some of the largest firms in our economy have made hundreds of acquisitions that are not being reported to the FTC or DOJ.
  • The omnibus resolution relating to car rentals will allow staff to investigate unfair and deceptive practices in that industry.

The Commission vote approving the omnibus resolution governing potentially unlawful collusive and coordinated conduct, and the omnibus resolution governing proposed mergers, acquisitions, and transactions was 3-2, with Commissioners Noah Joshua Phillips and Christine S. Wilson voting no and issuing a separate dissenting statement.

The Commission vote approving the omnibus resolution relating to car rentals was 3-2, with Commissioners Noah Joshua Phillips and Christine S. Wilson voting no.

The Commission vote to make all three omnibus resolutions public was 5-0. Commissioner Alvaro Bedoya issued a separate statement, in which he was joined by Chair Lina M. Khan and Commissioner Rebecca Kelly Slaughter.

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FTC Publishes New Strategic Plan, Performance Plan, and Performance Report

The Federal Trade Commission has published its FY 2022-2026 Strategic Plan and its FY 2021-2023 Performance Report and Performance Plan as required under the GPRA Modernization Act of 2010.

The FTC Strategic Plan for Fiscal Years 2022-2026 sets the FTC’s priorities over the next five years and will serve as the foundation for annual performance reporting. The new plan was drafted after a thorough review of the agency’s goals, strategies, and metrics. Stakeholder feedback was accepted during a public comment period last fall. The new plan keeps the same three-goal structure of the previous plan, while making numerous improvements. For example, two new objectives ensure that the work of the agency benefits all Americans, including those who live in historically underserved communities.

The FY 2021 Annual Performance Report documents FTC’s performance during FY 2021, based on the goals and metrics set in the Strategic Plan for FY 2018-2022. The FY 2022-2023 Annual Performance Plan establishes strategies and targets based on the new Strategic Plan for FY 2022-2026.

The Commission vote to publish the FY 2022-2026 Strategic Plan was 3-1-1, with Commissioner Christine S. Wilson voting no and issuing a separate dissenting statement, and Commissioner Noah Joshua Phillips not participating. Chair Lina M. Khan also issued a separate statement, in which she was joined by Commissioner Rebecca Kelly Slaughter and Commissioner Alvaro M. Bedoya.

The Commission vote to submit the FY 2021-2023 Performance Report and Performance Plan to Congress was 3-1-1, with Commissioner Christine S. Wilson voting no and Commissioner Noah Joshua Phillips not participating.

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Telemarketer Fees to Access the FTC’s National Do Not Call Registry to Increase in 2023

The fees for telemarketers accessing phone numbers on the National Do Not Call (DNC) Registry will increase in FY 2023, which starts on October 1, 2022.

All telemarketers calling consumers in the United States are required to download the numbers on the National DNC Registry to ensure they do not call consumers who have registered their phone numbers. The first five area codes are free to download, and organizations that are exempt, such as some charities and political callers, may obtain the entire list for free. Telemarketers must subscribe each year for access to the Registry numbers.

The cost of accessing a single area code in the registry will be $75 in FY 2023, which is an increase of $6 from FY 2022. The maximum charge to any single entity for accessing all area codes nationwide is now $20,740 (up from 19,017 in FY 2022). The fee for accessing an additional area code for a half year will increase $3 from FY 2022, to $38.

The Commission vote authorizing publication of the Federal Register notice announcing the new fees was 5-0.

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Federal Trade Commission Returning Almost $21,000 to Consumers Nationwide Who Bought Deceptively Marketed CBD Products from Kushly Industries

The Federal Trade Commission is sending payments to 576 consumers nationwide who bought deceptively marketed cannabidiol (CBD) products from Arizona-based Kushly Industries LLC. In total, the FTC is returning almost $21,000 to consumers deceived by Kushly’s false or unsubstantiated claims about its CBD products, averaging $36 each.

Explore Data with the FTC

Consumers will receive either a PayPal payment or a check in the mail. The deadline for consumers to cash their checks is November 22, 2022. PayPal payments must be claimed by September 23, 2022. Recipients who have questions about their refund should contact the refund administrator, Analytics, Inc., at 1-866-461-4332. The Commission never requires people to pay money or provide account information to get a refund.

The FTC’s March 2021 complaint against Kushly and the company’s CEO, Cody Alt, alleged that they made false or unsubstantiated claims that their CBD products could effectively treat or cure a host of conditions—from common ailments, like acne and psoriasis, to more serious diseases, including cancer and multiple sclerosis. The complaint also alleged that the company falsely claimed that scientific studies or research had proven CBD products effectively treat, mitigate, or cure diseases, including hypertension, Parkinson’s disease, and Alzheimer’s disease.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of refunds in FTC cases. In 2021, Commission actions led to more than $472 million in refunds to consumers across the country, but the U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.

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FTC Declines to Extend Comment Period on Proposed Auto Rule, Deadline For Comments Sept. 12

The Federal Trade Commission has declined to extend the public comment period for its proposed rule that would ban junk fees and bait-and-switch advertising tactics that can plague consumers throughout the car-buying experience. The deadline for members of the public to comment remains September 12, 2022.

In its decision declining to extend the deadline, the Commission notes that it has received requests from stakeholders asking to extend the deadline, as well as from stakeholders asking to keep the deadline as is. The Commission also notes that by the time the public comment period closes, members of the public will have had 80 days to review the proposed rule.

Members of the public can submit comments on the proposed rule at

The Commission vote to decline the extension of the comment period was 5-0.

About the Proposed Rule

As auto prices surge, the Commission is seeking to eliminate the tricks and traps that make it hard or impossible to comparison shop or leave consumers saddled with thousands of dollars in unwanted junk charges. The proposed rule would protect consumers and honest dealers by making the car-buying process more clear and competitive. It would also allow the Commission to recover money when consumers are misled or charged without their consent.

In the Notice of Proposed Rulemaking, the Commission is seeking comment on proposed measures that would:

  • Ban bait-and-switch claims: The proposal would prohibit dealers from making a number of deceptive advertising claims to lure in prospective car buyers. This deal deception can include the cost of a vehicle or the terms of financing, the cost of any add-on products or services, whether financing terms are for a lease, the availability of any discounts or rebates, the actual availability of the vehicles being advertised, and whether a financing deal has been finalized, among other areas. Once in the door or on the hook, consumers face the fallout of false promises that don’t pan out.
  • Ban fraudulent junk fees:  The proposal would prohibit dealers from charging consumers junk fees for fraudulent add-on products and services that provide no benefit to the consumer (including “nitrogen filled” tires that contain no more nitrogen than normal air).
  • Ban surprise junk fees: The proposal would prohibit dealers from charging consumers for an add-on without their clear, written consent and would require dealers to inform consumers about the price of the car without any of optional add-ons.
  • Require full upfront disclosure of costs and conditions: The proposal would require dealers to make key disclosures to consumers, including providing a true “offering price” for a vehicle that would be full price a consumer would pay, excluding only taxes and government fees. It would also require dealers to make disclosures about optional add-on fees, including their price and the fact that they are not required as a condition of purchasing or leasing the vehicle, along with disclosures to consumers with key information about financing terms.

The notice includes questions for public comment to inform the Commission’s decision-making on the proposal. These include questions about provisions in the proposed rule and whether other provisions should or should not be included in the rule, as well as questions related to the costs and benefits to consumers and auto dealers of the proposed rule. In addition, the notice includes a preliminary regulatory analysis estimating that the net economic benefit of the rule would be more than $29 billion over ten years. After the Commission reviews the comments received, it will decide whether to proceed with issuance of a final rule.

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