USA - NATIONWIDE: An Introduction to Advertising: Transactional & Regulatory

A Complex System for Marketers

The continuing evolution of technology and the development of new marketing techniques, together with the shifting priorities of the current federal administration, has created a complex landscape for marketers. It is nevertheless imperative that marketers, and the legal professionals that advise them, keep abreast of current laws, regulations, and guidance that govern their practices, including the way in which such requirements are interpreted in the enforcement actions brought by the applicable federal and state regulatory bodies. In addition, while there may be a potential lessening of federal enforcement, states continue to enact new laws and enforce their own existing statutes creating a hodgepodge of compliance obligations. Herein, we highlight several developments and recent trends in the advertising law space.

The election of President Donald Trump to his second term undoubtedly created some uncertainty for businesses, as observers questioned how the anti-regulation position displayed by Trump on the campaign trail would translate to his second Administration. Now, several months into his second term, several actions taken by the Federal Trade Commission (“FTC”) suggest that in the context of consumer protection and advertising regulation, the Administration will take some cues from the Trump’s first term, but with some notable divergences.

The FTC

With Andrew Ferguson appointed to FTC Chair, some commentators initially thought that the FTC would continue the approach of the first term. Ferguson seemingly supported this concept, describing the FTC’s role as “cop on the beat,” committed to enforcing—not expanding—the law. This approach, however, has proven to only partially encapsulate the second Trump administration as the FTC has shifted its approach to antitrust and consumer protection and certain notable ways.

Structural changes

At the outset, it is important to note the structural changes taking place at the FTC. Namely, Trump unilaterally dismissed the two Democratic FTC commissioners, Rebecca Kelly Slaughter and Alvaro Bedoya, without having replacements nominated by the Democrats. The fired commissions have filed lawsuits alleging that the President does not possess the requisite power to effectuate such dismissal absent cause. Despite this move triggering certain backlash, FTC Chair Ferguson has stood firm with the President, asserting that as President, he “is vested with all the executive power in our government.” Now, with the confirmation of Republican Mark Meador to serve as a commissioner and the lawsuits of the fired Democratic commissioners pending resolution, the current makeup of the FTC is three Republicans, clearing the way for the FTC to pursue a Trump-aligned agenda.

Despite FTC Chair Ferguson dissenting against certain rules that were finalized under his Democratic predecessor, Lina Khan, and his comments on the FTC’s rulemaking practices suggesting that the FTC would not prioritize rulemaking with Ferguson at the helm, the FTC has indicated that certain rules finalized under Khan’s leadership will move forward. For example, during Khan’s tenure, the FTC revamped the outdated Negative Option Rule, with the revised final rule now identified as the the Rule Concerning Recurring Subscriptions and Other Negative Option Programs. Despite Ferguson dissenting from the FTC’s final approval of the rule, since ascending to his position as FTC Chair, Ferguson has not indicated that there will be any restriction in enforcement of the updated final rule, although the FTC extended the compliance date to July 14, 2025.

Law enforcement agenda

In fact, the Republican-only FTC has continued to prosecute its law enforcement agenda. The FTC recently initiated an enforcement action against Uber with respect to its automatic renewal practices. Although the complaint against Uber does not reference the FTC’s Rule Concerning Recurring Subscriptions and Other Negative Option Programs, the activity at the center of the complaint relates to the billing and cancellation practices employed by Uber in relation to its Uber One subscription. Specifically, the FTC alleges that many customers enrolled in the Uber One subscription say they were enrolled without consent, with at least one customer saying they were charged despite not having an Uber account. Further, the complaint alleges that consumers are charged prior to their billing date. Specifically, the FTC asserts that some customers who enrolled in a free trial were automatically charged for the service prior to the end of the free trial period. Further, the FTC claims that Uber makes it incredibly difficult for consumers to cancel their subscription, forcing those subscribed to navigate up to 23 screens and take up to 32 actions to effectuate a cancellation, allegedly adding unnecessary and inappropriate friction to the cancellation process. By electing to elevate the FTC’s case against Uber in this way, the FTC has demonstrated that it will continue in some capacity to enforce consumer protection laws.

In addition, like the Rule Concerning Recurring Subscriptions and Other Negative Option Programs, despite Ferguson’s dissent to the finalization of the rule, there has been no indication the FTC intends to pause the effective date of the FTC’s Rule on Unfair or Deceptive Fees (“Junk Fees Rule”). The Junk Fees Rule prohibits “bait-and-switch” pricing and other pricing techniques used to conceal total prices and bury junk fees in the context of live-event ticketing and short-term lodging. Moreover, likely automatic renewals, states have begun to enact price transparency laws. Marketers in these industries should ensure compliance with the requirements of the FTC rule and all applicable state laws.

Other enforcement agencies

Regardless of what is going on at the FTC, marketers must also consider the potential for actions originating with other enforcement agencies, like state Attorneys General, and private plaintiffs, including class actions. Indeed, in what is sometimes viewed as an attempt to address an enforcement chasm, the states, particularly California, have continued to enact significant consumer protection legislation and engage in wide-ranging enforcement.