FTC Points New Rulemaking Proceedings on Buyer Opinions and “Junk Charges”

Final week at its month-to-month open assembly, the Federal Commerce Fee (FTC) unveiled two new rulemaking proceedings: the primary offers with misleading buyer critiques and endorsements and the second with so-called junk charges. 

Each rulemakings are of their nascent levels. Final week’s actions—the issuance of two advance notices of proposed rulemaking (ANPRs)—merely request info from the general public on the patron harms attributable to pretend and paid critiques and junk charges. The highway from ANPR to remaining commerce rule is an extended and winding one, notably given the variety of new rulemakings upon which this FTC has embarked, which Commissioner Christine Wilson has termed “Ruleapalooza.”

Buyer Opinions

The FTC’s battle in opposition to pretend, paid, or manipulated buyer critiques has been ongoing for years, leading to a number of enforcement actions and the publication of business steering. Now, the FTC has set its sights on a proper rule. The ANPR seeks feedback on:

• Faux and/or paid critiques and followers
• Overview reuse fraud
• Insider critiques
• Overview suppression
• Faux evaluate web sites

Readers of this weblog could also be experiencing déjà vu. In any case, didn’t the FTC lately take motion on these precise points? Sure and no. In Could 2020, FTC employees proposed updates to its Endorsement Guides as a part of a typical regulatory evaluate. Nevertheless, the Endorsement Guides are interpretations of how the FTC Act applies to endorsements and testimonials in promoting and not formal guidelines. Furthermore, the ANPR tackles solely a subset of what the Endorsement Guides tackle. The choice to proceed on parallel tracks underscores how necessary this challenge is to the FTC.

Junk Charges

The pejorative and loaded time period “junk charges” incessantly is utilized by the FTC and its sister company, the Client Monetary Safety Bureau (CFPB), to explain quite a lot of charges corporations cost shoppers. The time period even made it into President Biden’s remarks to the White Home Competitors Counsel in September 2022.

Till lately, junk charges have been primarily related to undisclosed, or poorly disclosed, fees that comply with a purchase order of companies or items. On this ANPR, the FTC has outlined junk charges extra broadly to incorporate “unfair or misleading charges which can be charged for items or companies which have little or no added worth to the patron, together with items or companies that buyers would fairly assume to be included inside the general marketed worth.” 

The reference to worth right here ought to increase eyebrows. It definitely raised Wilson’s, who voted in opposition to the ANPR. In her dissenting assertion, she recognized a slew of issues with a possible rule designed to control how costs are conveyed to shoppers throughout just about each sector of the U.S. economic system. She particularly questioned whether or not the FTC was ready to find out whether or not charges correspond to companies and items shoppers worth.

To find out whether or not to proceed with a rulemaking that may classify sure charges as unfair (thus unlawful), the FTC particularly seeks feedback on:

• Pointless fees for nugatory, free, or pretend services or products
• Unavoidable fees imposed on captive shoppers
• Shock fees that push up the acquisition worth

Notably, the CFPB is also actively contemplating a rule on junk charges. In January 2022, it issued an analogous ANPR in search of public enter on charges referring to financial institution accounts, bank cards, and different monetary merchandise. Given the FTC’s and CFPB’s shared jurisdiction over many monetary service suppliers, it’s inevitable that these two proceedings will collide.

Feedback in response to each ANPRs are due 60 days after the ANPR is printed within the Federal Register. (As of October 26, it has not been printed.)

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