Tag: Business Litigation

Summer 2023 Automatic Renewal Law Update: FTC Proposes Sweeping Amendments to Negative Option Rule

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Over the last few years, perhaps prompted by the proliferation of subscriptions for consumer goods and services during the pandemic, several states have passed new automatic renewal laws (ARLs) that regulate continuing or renewing contracts. Other states have likewise amended existing ARLs to add detailed restrictions and requirements. Our most recent coverage of those efforts can be found in our Fall 2021 and Summer 2022 alerts.

With such activity at the state level, it was only a matter of time before federal regulators joined the fray. The Federal Trade Commission (FTC) recently did so by issuing a statement regarding its nearly 50-year-old Negative Option Rule. As announced by the FTC, the existing federal regulatory regime has “major gaps”: the Negative Option Rule regulates only “prenotification plans” (where sellers send products and charge for them unless consumers decline); the Telemarketing Sales Rule (TSR) regulates only telemarketing; and the Restore Online Shoppers’ Confidence Act (ROSCA) regulates only online purchases.

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“Greenwashing” Claims Strike Consumer-Facing Companies: How to Avoid the Increasing Threat of Litigation

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Consumers are increasingly conscious of how the products they buy impact the environment.  Due to this heightened focus on environmental issues, consumer-facing companies frequently highlight the environmentally friendly attributes of their goods and services in advertising and on product labels.  Unfortunately, leading companies are facing a wave of “greenwashing” class action lawsuits challenging these environmental claims.  The Federal Trade Commission’s Green Guides provide some direction for companies seeking to avoid problematic environmental claims.  However, the Green Guides are currently nonbinding and they do not preempt state law.  The plaintiffs’ bar has seized upon this ambiguity and many preeminent companies have faced greenwashing class actions alleging claims under state consumer fraud statutes and related common law theories of liability.  The FTC has also filed lawsuits against several companies.  Consumer-facing companies should take immediate action to assess whether they are complying with the Green Guides and to review their exposure to greenwashing claims.

This article provides a high-level overview of the FTC’s Green Guides, analyzes the recent wave of greenwashing class actions and identifies practical strategies that companies can use to mitigate the risk of greenwashing litigation.

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The Class Action Playbook: Immediate First Steps for Companies Defending Against Consumer Class Actions

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Class action litigation is a significant risk for consumer-facing companies.  An adverse outcome in a class action case can result in astronomical liability.  Moreover, defending a class action may consume company resources and divert attention from core business objectives.  To mitigate these risks, executives and in-house lawyers must take deliberate and decisive action when presented with a newly filed class action case, a litigation threat letter or mounting consumer complaints that appear to be headed toward litigation.

The list below outlines the first steps a company should take to gather and preserve the information that may be necessary to defend against consumer class action claims.  For each of these steps, it is imperative that in-house attorneys or outside counsel take the lead to ensure preservation of the attorney-client privilege and attorney work product protections.

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