Commercial Litigation Update

On August 14, 2024, the Federal Trade Commission (“FTC”) announced a new final rule aimed at regulating fake consumer reviews, testimonials, insider reviews, company-controlled websites, and fake indicators of social media influence (e.g., “likes”) (the “Final Rule”).  The Final Rule was promulgated pursuant to Section 18 of the FTC Act, which authorizes the FTC to issue rules that define acts or practices that are unfair or deceptive within the meaning of Section 5(a)(1) of the FTC Act, and it enables the FTC to seek civil monetary penalties for violations.

While it covers ground similar to the FTC’s recently updated endorsement guides (the “Guides”), which we wrote about last year, the Guides regulate the conduct of individuals who are paid or incentivized to endorse products, whereas the Final Rule applies directly to companies advertising through consumer reviews, testimonials, and social media.

The Final Rule has six primary subsections: (1) Fake or False Consumer Reviews, Consumer Testimonials, or Celebrity Testimonials (§ 465.2); (2) Buying Positive or Negative Consumer Reviews (§465.4); (3) Insider Consumer Reviews and Consumer Testimonials (§465.5); (4) Company-Controlled Review Websites or Entities (§465.6); (5) Review Suppression (§465.7); and (6) Misuse of Fake Indicators of Social Media Influence (§465.8). 

On October 27, 2023, the Federal Trade Commission (“FTC”) approved an amendment to the Safeguards Rule that requires non-banking financial institutions (e.g., mortgage companies, mortgage brokers, and creditors) to notify the FTC when certain data breaches and other security events occur.  The Safeguards Rule, promulgated by the FTC in 2002, has long required non-banking financial institutions to create, implement, and maintain a comprehensive security program to keep the information and data of its customers safe.  Now, if one of these institutions suffers a security ...

While the substantial backlog of decisions has many observers waiting for a flood of rulings, the Supreme Court is moving at its own pace. Thus, the Court has issued a single opinion today, but especially for readers who are involved in administrative law challenges to administrative agency determinations, it is an important one. And it might become even more significant to the extent that it augurs future limitations on agency autonomy.