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Regulatory: A new paradigm in FTC regulation

The agency is increasingly using consent order provisions to establish industry guidance and standards

This is the first in a series of three articles about Federal Trade Commission and state attorney general regulatory and enforcement trends

Corporate counsel looking to keep abreast of Federal Trade Commission (FTC) requirements and regulations need to play close attention to the consent orders coming from the commission. Although historically FTC case law, statutory provisions, trade regulation rules and guides provided the primary source of FTC jurisprudence, the agency is increasingly using consent order provisions to establish industry guidance and standards on a variety of advertising-related issues. Although technically these consent order provisions are binding only for the entities that sign them, they are often clearly designed to send a message to the entire industry regarding FTC expectations.

Last month, however, the commission reversed the ALJ’s decision and ruled that a double-blind clinical study should be required to support disease prevention and treatment claims for a food product, such as those that POM allegedly made. While the litigation surrounding this issue makes for interesting reading, what is significant from a brand perspective is that without any statutory changes or judicial rulings the FTC has been insisting on this level of substantiation for these types of claims in virtually every enforcement action it has brought in the last several years. Those who have been closely following the evolution of these consent decrees could see the writing on the wall for quite some time.

A second area in which the FTC has set new standards is that of disclosures. As many readers may know, the FTC is currently in the process of revising its Dot Com Disclosure guidelines, and recently held an industry-wide workshop to assist in that process. While the industry anxiously awaits publication of those revised guides, a recent enforcement action involving a company called Green Millionaire likely provides some guidance of what is to come and insight into what the FTC is likely to consider adequate disclosure for online offers.

Contributing Author

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Linda Goldstein

Linda A. Goldstein is a partner in Manatt, Phelps & Phillips' New York office, where she chairs the firm's advertising, marketing and media division. Her...

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