HOT TOPICS IN CONSUMER PROTECTION ENFORCEMENT

1. a conversation with Canadian and U.S. enforcers HOT TOPICSIN CONSUMER PROTECTION ENFORCEMENT Moderator: Amy Mudge, Venable LLP Moderator: Michael Binetti, Affleck Greene McMurtryLLP Panelist: Bryan Cowell, Competition Bureau Canada Panelist: Lesley Fair, Federal Trade Commission CBA Competition Law Section’s Marketing Practices Committee ABA Section of Antitrust Law’s Advertising Disputes & Litigation and Consumer Protection Committees

2. Bryan Cowell doesn’t speak for the Competition Bureau. And Lesley Fair doesn’t speak for the FTC.

3. advertising • substantiation

4. FTC STANDARD To substantiate a health, safety, or efficacy claim, advertisers need “competent and reliable scientific evidence,” which, depending on the claim, may mean randomized clinical testing.

5. FTC v. Aura Labs, Inc. and Ryan Archdeacon (stipulated order)

6. FTC v. Breathometer, Inc. and Charles Michael Yim (stipulated final order)

7. Mars Pet Care US, Inc. (consent order)

8. more than $11 billion FTC v. Volkswagen Group of America (stipulated orders)

9. UNDER THE COMPETITION ACT: a representation will be considered misleading where it is made “to the public in the form of a statement, warranty or guarantee of the performance, efficacy or length of life of a product that is not based on an adequate and proper test thereof, the proof of which lies on the person making the representation.

10. SO WHAT IS AN ADEQUATE AND PROPER TEST? • It will depend on the general impression created by the representation. • The test must be conducted before the representation is made. • The test is conducted under controlled circumstances. • Subjectivity is removed as much as possible. • The test must support the claim being made.

11. DECEPTIVE MARKETING PRACTICES DIGEST volume 2:

12. THE BUREAU’S VW / AUDI SETTLEMENT: • Applied only to the 2.0L TDI engine; other engines (3.0L TDI) are not part of the settlement • Approximately 105,000 affected vehicles in Canada, from January 1, 2008 – September 21, 2015 • VW agreed to pay up to $2.1 billion in consumer restitution or buyback payments • VW also agreed to pay an AMP of $15M (or $7.5M each for Volkswagen and Audi) to resolve the Bureau’s concerns • One of the largest consumer settlements in Canadian history, and represents the first instance where the Bureau became actively involved in a class action matter in order to obtain an appropriate remedy Commissioner of Competition v. Volkswagen Group Canada Inc. and Audi Canada Inc. (Consent Agreement)

13. social media & • endorsements

14. FTC STANDARD If there’s a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience), the connection must be fully disclosed.

15. 7-second superscript in 30-minute ad Monita Poudyal, M.D. is board certified in internal medicine, received her training and fellowship at a top Ivy League institution, completed clinical research training at the National Institutes of Health, recently joined Mr. Apatow in matrimony, and is now assisting Supple, LLC with research and public education. FTC v. Supple LLC, Peter Apatow, Jr., and Monita Poudyal (stipulated final judgment)

16. Warner Bros. Home Entertainment, Inc. (consent order)

17. This video is sponsored by Warner Brothers.

18. No one reads this far into the description. What are you doing snooping around.

19. FTC’s April 2017 letters to influencers • Consumers looking at Instagram on mobile devices may see only first three lines unless they click “more.” Disclose material connection above the “more” button. • When multiple tags, hashtags, or links are used, readers may skip them, especially when they’re at the end of a long post – meaning that a disclosure there isn’t likely to be conspicuous. • Will consumers understand what #sp, Thanks [Brand], or partner mean in this context?

21. Consumer Review Fairness Act of 2016

22. THE COMPETITION BUREAU’S STANDARD • Online third party reviews must be both authentic and impartial. • “Authenticity” in this context means the review, endorsement or testimonial is based on actual use of the product. • “Impartiality” in this context means there is a full disclosure of any material connection between the maker of an endorsement and the provider of the product or service being endorsed, regardless of the nature of that material connection.

23. Bell Canada encouraged employees to post positive reviews and ratings of Bell’s mobile apps and other products in the iTunes App Store and on Google Play. • These employees did not disclose that they work for Bell. • Though Bell did not encourage employees to lie or make false statements in their reviews, the Bureau concluded that these ratings created the general impression that they were made by independent, impartial consumers. • Bell responded quickly, having the reviews removed as soon as it became aware of the issue. Commissioner of Competition v. Bell Canada (consent agreement)

24. DECEPTIVE MARKETING PRACTICES DIGEST volume 1:

25. data security • and privacy

26. FTC consumer privacy settlements

27. VIZIO, Inc. and VIZIO Inscape Services, LLC (consent order)

28. FTC data security settlements

29. FTC v. Ruby Corp., Ruby Life Inc., and ADL Media Inc. (Ashley Madison) (consent order)

31. pricing • representations

32. THE BUREAU’S APPROACH: • Pricing representations remain an important area of emphasis for the Bureau. • Bureau has taken two approaches to pricing representations enforcement: • Drip Pricing (Avis/Budget, Hertz / Dollar-Thrifty) • Ordinary Selling Price (Hudson’s Bay, Amazon)

33. DRIP PRICING … • …or, hiding the trust cost of a product or service by not disclosing known, non-option additional fees: • Advertisers offer an attractive up front price for a product or service. • After responding to this initially attractive offer, the consumer discovers unexpected additional costs.

34. Avis / Budget Hertz / Dollar-Thrifty The Bureau determined that certain prices and discounts initially advertised were not attainable because consumers were charged additional mandatory (non-optional) fees, which were disclosed later in the booking process Avis/Budget and Hertz/Dollar-Thrifty have agreed not to advertise car rentals or associated products at prices that are not attainable because of additional mandatory fees. Commissioner of Competition v. Aviscar Inc., and Budgetcar Inc. / Budgetauto Inc. (consent agreement) Commissioner of Competition v. Hertz Canada Limited and Dollar Thrifty Automotive Group Canada Inc. (consent agreement)

35. ORDINARY SELLING PRICE… …also called reference pricing. • Subsections 74.01(2) and 74.01(3) of the Competition Act prohibit representations to the public as to the ordinary selling price (“OSP”) of a product where that price has not been validated. • OSP is validated in one of two ways: • either a substantial volume of the product was sold at that price or higher, within a reasonable amount of time before or after the making of the representation (volume test); or • the product was offered for sale, in good faith, for a substantial period of time at that price or a higher price recently before or immediately after the making of the representation (time test). • Under both provisions, the ordinary selling price can be validated using either the volume or the time test.

36. Earlier this year, the Competition Bureau reached a consent agreement resolution with Amazon resolving concerns regarding Amazon’s pricing practices on its websites, in electronic messages, and on its mobile app, practices which implied greater savings available to consumers than what were actually available; • Amazon modified the way it advertises its list prices on its website; and • The consent agreement resolution covers all of Amazon’s products and services. Amazon now has policies and procedures in place to ensure that consumers are not misled by inaccurate savings claims. Commissioner of Competition v. Amazon (consent agreement)

37. telemarketing enforcement

38. United States v. Dish Network, LLC (order)

39. United States District Court’s June 6, 2017, Findings of Fact: Dish’s denial of responsibility and lack of regard for consumers are deeply disturbing and support the inference that it is reasonably likely that Dish will allow future illegal calls absent government pressure. $280 million civil penalty

40. anti-spam legislation • and the Bureau

41. BUREAU’S CASL MANDATE • CASL provided the Bureau with new tools. • Amendments make the Actmore technology neutral. • CASL represents evolution, not revolution for the Bureau.

42. PRIVATE RIGHT OF ACTION • Applies to the Competition Act’s civil provisions added with CASL • Allows private litigants to sue for violations and allows vicarious liability for officers and directors of corporations • The Commissioner of Competition retains the right to intervene in PRA actions • Comes into Force on July 1, 2017 POSTPONED INDEFINITELY

43. international • cooperation

44. for more • information

45. business.ftc.gov

46. Competitionbureau.gc.ca Bureaudelaconcurrance.gc.ca

47. mbinetti@agmlawyers.com amudge@venable.com bryan.cowell@canada.ca lfair@ftc.gov