United States: Regulators Share Agendas And Insight On Consumer Protection Enforcement
Last Updated: November 23 2017

Highlights from "Navigating the 'Age of Uncertainty' with Consumer Protection Enforcement" Seminar

Holland & Knight, the Word of Mouth Marketing Association (WOMMA) and the National Bar Association Commercial Law Section on Nov. 8, 2017, held an informative, half-day seminar featuring presentations and a panel discussion of regulatory trends within the retail and consumer products industry. The seminar focused on regulation trends in an uncertain regulatory environment and included insight from regulators on how a company can minimize its risk profile.

The seminar featured presentations by Karl A. Racine, District of Columbia Attorney General; Tom Pahl, Acting Director, FTC Bureau of Consumer Protection; Greg Nodler, Senior Counsel for Enforcement Policy and Strategy, Consumer Financial Protection Bureau (CFPB); and Philip Ziperman, Director, Office of Consumer Protection for the Office of the Attorney General, District of Columbia. The seminar concluded with a panel discussion that focused on the industry's perspective on regulatory trends and best practices. The panel discussion included Amber Lee Williams, Senior Associate General Counsel, U.S. Compliance, Wal-Mart Stores Inc.; Aba Rogers, Global Marketing Counsel and Worldwide Licensing Attorney, The Coca-Cola Company; and Jim Dudukovich, Marketing, Advertising and Social Media Counsel, Blue Apron. Holland & Knight Partner Kwamina Thomas Williford, a co-chair of the firm's Consumer Protection Defense and Compliance Team, served as moderator.

Key Takeaways

Opening the event, Holland & Knight Partner Tony DiResta, also a co-chair of the firm's Consumer Protection Defense and Compliance Team, offered his insight on the current consumer protection regulation environment. DiResta discussed the current uncertainty existing because of the changes in the senior leadership and agendas of many of federal and state regulators.

Setting the stage for the governmental speakers, DiResta described regulators as being a "prosecutor, judge and jury" all wrapped into one. And, while consumer protection regulation may evolve given changes in administrations and leadership, DiResta reminded participants that regulators' function very much remains the same.  

1. "Business as Usual": Federal Regulators Continue to Aggressively Pursue Agenda One Year into the Trump Administration

Pahl and Nodler advised the audience that while statements by the new administration and its appointees may suggest agencies are applying a more deferential touch, the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) continue to prosecute those believed to be engaging in predatory business practices. Pahl said that the FTC will continue to bring cases against actors it believes to be engaged in fraud. Nodler noted that the CFPB's priorities for the upcoming year include completing the third-party debt collection rulemaking announced last year. He also warned that while the proposed rule does not encompass first-party debt collection efforts, during supervisory actions CFPB examiners are on the lookout for potential deceptive, unfair or abusive practices in connection with first-party debt collection. According to Nodler, other areas that the CFPB will continue to focus on include mortgage services, payday lending and student lending.

During his remarks, Nodler echoed the CFPB's announcement (on the same day as the event) that Kristen Donoghue will fill the organization's Director of Enforcement position recently vacated by Anthony Alexis. Prior to her new position, Donoghue served as the CFPB's Principal Deputy Enforcement Director. Nodler said Donohue was a chief architect of the CFPB's current enforcement practices and, as such, indicated that it was unlikely that there will be a drastic change in the organization's enforcement practices or agenda.

2. State Regulators Are Picking Up Any Slack By Federal Regulators

Racine spoke passionately about the collaborative efforts of state attorneys general to ensure consumers – and vulnerable consumers, in particular – are protected against predatory practices. As an example, Racine described his office's efforts to prevent the federal government from rolling back protections for student lenders. Specifically, he criticized the U.S. Department of Education's recent decision to rescind the Borrower Defense Rule, and affirmed that his office will not be afraid to take the federal government to court to block actions that could strip consumers of valuable protections.

3. Social Media Marketing Remains a Priority For Government Regulators

Pahl discussed the FTC's decision to aggressively address social media marketing. Specifically, he highlighted the guidance issued by the FTC last year, as well as the warning letters that the FTC issues to a number of high-profile influencers engaged in potentially deceptive social media influencing. In his remarks, Pahl confirmed that social media marketing is subject to the same requirements as traditional marketing. He noted that many influencers do not understand their obligations under the FTC's endorsement guidelines, while others do and choose to ignore them. According to Pahl, the FTC's actions over the last year were meant to address that issue. He also warned that the FTC will seek to "progressively discipline" actors in this space that do not comply with the commission's guidelines and warnings.

During the panel discussion following the regulators' presentations, panelists and event attendees shared their perspectives and reactions with respect to social media marketing regulations. The panelists applauded the FTC's actions against influencers last year. According to them, the FTC's warning letters to influencers and issued guidance help to clarify the government's expectations in this highly evolving space. Panelists described the difficulties inherent in this space. As one panelist pointed out, a company's legal department cannot be expected to review every tweet or other posts on social media.

4. Consumers Are a Focal Point, But Regulators Are Not Only Focused on Consumer Complaints

Pahl also spent time discussing the FTC's case selection process. Before the FTC brings an action, the agency engages in a twofold inquiry: 1) is the practice at issue unlawful? and 2) if so, will the subject do it again? If the FTC believes that the answer to both questions is "Yes," then the FTC may look to bring an enforcement action. Pahl also spoke regarding the role that economists and consumer remediation plays in the FTC's case selection. He noted that when deciding what cases to bring, the FTC considers the amount of consumer harm and the commission's ability to provide refunds to consumers.

5. Transparency is Key!

Racine encouraged the industry to be proactive. In his remarks, he confirmed that regulators track industry developments and, in doing so, look for industry thought leaders that regulators can rely on to develop best practices. Nodler echoed Racine's comments, highlighting the importance of compliance with the CFPB's Responsible Business Conduct Bulletin, issued in June 2013. The Bulletin advises companies to self-police, self-report and take corrective action as needed.

6. Tips on Successfully Navigating a Regulatory Investigation From the Regulators Themselves!

The speakers shared their collective insight as to how companies may successfully navigate a regulatory investigation. Nodler advised attendees that the meet and confer, held shortly after a Civil Investigative Demand (CID) is issued, should be taken seriously. This means bringing to that meeting an individual knowledgeable about the company's document retention and retrieval capabilities. Pahl stated that FTC staff will look to examine a company's written policies and procedures. However, he advised that the FTC staff will dig deeper to determine whether they have been properly implemented.

In addition, Pahl shared his view of companies that engage in corrective action during the course of an investigation. According to him, the FTC has never viewed corrective action as an admission of unlawful conduct.   

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