Last week, the Federal Trade Commission ("FTC") filed suit against several related companies in connection with a nationwide campaign of deceptive magazine and newspaper marketing and solicitation practices.
What are the nature of the allegations that the FTC has made in its deceptive marketing lawsuit?
The accusations detail an operation in which dozens of interrelated companies, often shell companies used to avoid detection from publishers and authorities, mailed magazine and newspaper subscription notices, without permission from the publishers, to millions of consumers across the country. The solicitations were designed to look like publisher subscription or renewal cards, and indicated that recipients were receiving subscriptions at the lowest possible price, despite actually offering rates significantly higher than the publisher's rates. The FTC alleges that oftentimes the companies would use consumer information they obtained to fill out authorized newspaper subscriptions, send them to publishers to obtain the subscriptions at the lower rates, and then illegally retain the difference. In connection with the lawsuit, the FTC is seeking restitution and consumer refunds for the monies paid, as well as disgorgement of ill-gotten gains and a permanent injunction against both the companies and their individual owners from any further violations of the FTC Act's prohibition against deceptive trade practices.
Best Practices to Avoid a Deceptive Marketing Lawsuit
As we have previously written, federal authorities and state attorneys general alike have been increasingly aggressive in investigating and prosecuting companies for deceptive advertising and marketing practices. Though the foregoing example may involve marketers with more sinister motives than the typical marketer, the vigorous efforts by the FTC nevertheless serve to reinforce the reality that it is ever important to make terms and conditions clear, conspicuous and accurate when transmitting solicitations. Marketers continually face a wide range of legal risks. Therefore, before undertaking a campaign, it is imperative to engage knowledgeable counsel to ensure that your marketing practices and procedures are fully compliant with all applicable laws, rules and regulations.
If you are interested in learning more about this topic, need to review your marketing practices and procedures or if you are facing an investigation from a state attorney general or other regulatory agency, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
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