William Rothbard – Reveals Continued Conflict Within FTC Over Ad Regulation

William Rothbard - Reveals Continued Conflict Within FTC Over Ad Regulation
William Rothbard – Reveals Continued Conflict Within FTC Over Ad Regulation

SANTA MONICA, CA – Acclaimed advertising and regulatory attorney William Rothbard has commented on the continued conflict within the Federal Trade Commission over the proper standards for advertising regulation. A lawyer with experience on the subject and a former Senior FTC Official, Rothbard is a recognized expert on FTC advertising law. He has explained the details of the discord in the hope of informing the public of an important debate occurring at the highest levels of the agency that has significant implications for consumers, marketers and innovators.

Rothbard notes that the FTC is under immense pressure to understand and develop an appropriate regulatory response to the explosion of marketing for high-tech consumer gadgets. As technology continues to increase the number of ways consumers are plugged in, the agency finds itself with the difficult task of regulating what has been coined, ‘the Internet of things.’ According to tech CTO Dave Evans, 127 items are added to the internet every second. A major concern is whether regulation can keep up with a rapidly expanding virtual world and do so in a way that protects consumers from the risks of misinformation about important new products, such as health-related apps, while not running the risk of overregulating and dampening technological innovation. William Rothbard, who has an in-depth knowledge of the agency, worries that the FTC may be erring on the side of too stringent regulation – a concern shared by one side of the debate raging inside the agency.

In a recent settlement involving a family of health apps known as the ‘Mole Detective’ and the ‘Mel App,’ Rothbard has written that Republican FTC Commissioner Maureen Ohlhausen found herself at odds with the Democratic majority. The apps are intended to help consumers recognize moles that could potentially pose a risk of melanoma and encourage them to seek preventive care when needed. Ohlhausen dissented from the settlement because she felt it required too many types of claims for the apps and other health-related consumer products to be supported by randomized controlled trials, the most onerous and expensive form of scientific testing. She feared that imposing such a burden could chill innovation and the dissemination of useful, truthful health information to consumers.

With the resignation last year of the only other Republican FTC Commissioner, Rothbard writes that Commissioner Ohlhausen is now the “sole voice of restraint in this FTC’s relentless march to subject the widest possible berth of health-related claims to the requirement of controlled human clinical trials, rather than the more flexible, traditional standard of “competent and reliable scientific evidence” as determined by the experts in the relevant field. “The FTC, a non-scientific agency, is now aggressively usurping that role, deeming itself the ’expert’ and imposing a single, one-size-fits-all standard on which there is no clear scientific consensus outside the world of pharmaceutical testing.” Will consumers be worse off? Rothbard, along with Commissioner Ohlhausen, fears the answer could be yes.

William Rothbard is the founder of the Law Offices of William I. Rothbard in Los Angeles. With over 35 years of experience as an attorney with a specialization in advertising law and business litigation, and as a former Senior Official at the FTC, Rothbard is a highly respected leader in the field. Rothbard is an active speaker and writer and has served as the Editor of the California Bar journal ‘Competition’. He is a regular contributor to the Direct Response Marketing Alliance newsletter and blogs on FTC issues at www.FTCAdLaw.com

 

William Rothbard – On Avoiding FTC Actions: Presentation at Affiliate Summit West: http://www.reuters.com/article/idUSnMKWS1L4qa+1e8+MKW20150713

William Rothbard — Federal Trade Commission (FTC) Puts an End to ‘Gag Clause’: http://finance.yahoo.com/news/william-rothbard-federal-trade-commission-033810205.html

William Rothbard – Federal Trade Commission (FTC) Puts an End To ‘Gag Clause’

William Rothbard - Federal Trade Commission Puts an End To Gag Clause
William Rothbard – Federal Trade Commission Puts an End To Gag Clause

SANTA MONICA, CA – The consumer review has never had more power over the success or failure of companies and their products than it does today. Initially, customers were able to use the Internet to praise or condone purchases in a few forums, which had a limited effect. Now, however, reviews on retailer websites such as Amazon and review-specific websites like Yelp result in enough negative feedback being able to bury a product or service. Assuming the reviews are legitimate and well-founded, this is good news for the consumer, but not for the retailer or marketer who learns an item isn’t a good one, resulting in a retail ‘natural selection’. Advertising and Marketing Law authority, William Rothbard recently highlighted a case in which an online marketer attempted to silence its customers from giving negative reviews – and the Federal Trade Commission quickly acted.

Rothbard addresses a particular case involving a Florida-based weight loss marketer. The online company was selling ingestibles that it claimed were safe, effective, and comparable in effect to gastric bypass surgery. It asserted users could lose over 100 lbs. in one year while eating whatever they liked. It boasted it was “scientifically proven to have a 90% success rate” even though, in truth, it had no clinical studies at all,” Rothbard revealed. Further, he said, “the marketer used extremely questionable methods to secure positive reviews through promises of discounts and the use of paid bloggers that were not revealed to be such.” Unfortunately, few things are ‘too good to be true’ to the most desperate individuals, and the company used inflated and outlandish statements to rake in approximately $20 million.

Rothbard concedes that these claims and underhanded promotion methods “may have been what caught the FTC’s eye initially,” but what made this company a prime target was its audacious tactic of preventing the sharing of negative feedback. “It sought to accomplish this,” Rothbard stated, “through the insertion of a “Gag Clause” in its hyperlinked terms that consumers were not warned about and unknowingly agreed to as a condition of sale.” Bad reviews or damaging blog posts that ‘negatively impacted’ the company or its products could see them threatened with legal action — as some actually were. A positive promotion discount that lowered the price of the product from $1580 to $480 was a doubled edged sword — any customer disparaging the company or item would immediately be charged the full amount. The FTC quickly responded and shut the company down. “The FTC is using its ‘unfairness authority’ to challenge the Gag Clause,” Rothbard explained. “[It is] alleging it is unfair because it caused substantial consumer injury that was not reasonably avoidable and not outweighed by countervailing benefits to consumers or competition.” While this argument is sparingly used by the Commission, William Rothbard believes judges will not be reluctant to use it in  cases like this, adding: “If someone else would try attempt this, they will surely deserve and meet the same fate.”

William Rothbard has an over 30 year career in advertising law and served as an attorney with the Federal Trade Commission from 1977 and 1984. During that time, he served as Attorney-Advisor to then FTC Chairman Michael Pertschuk, as well as in several other positions within the agency. He later served as Counsel to the United States Senate Judiciary Committee. Rothbard’s expertise and credentials make him extremely well-qualified to counsel and represent clients in federal and state law enforcement matters involving advertising issues and to comment on current developments and matters of public interest in the field of advertising law and FTC regulation. A complete copy of Rothbard’s article is available to view at FTCAdLaw.com

 

William Rothbard — Federal Trade Commission (FTC) Suffers Setback on Controlled Clinical Trials: http://www.reuters.com/article/idUSnMKWs093qa+1c0+MKW20160322

William Rothbard – Explains Supreme Court’s Debate on Freezing Defendants’ Funds: http://finance.yahoo.com/news/william-rothbard-explains-supreme-courts-043544360.html