Plaintiff’s firms continue to file variations of state law wiretapping lawsuits over “session replay” software and “live chat” or “chatbot” applications in various jurisdictions. These filings typically allege that companies use such software tools to record users’ interactions with a website without first obtaining users’ consent, thereby violating the wiretapping, eavesdropping, or interception provisions of various state laws. Session replay software allows companies to record and play back users’ interactions on its websites. The “live chat” or “chatbot” feature allows a website user to engage in text conversations with an assistant, to which the company has access. These wiretapping claims threaten substantial penalties. Companies that use these web-tracking tools, however, can take steps to protect themselves from these lawsuits by a careful examination of the software being used and by evaluating what disclosures or consents may be warranted.
Continue Reading Class Action Lawsuits Continue Targeting Companies For Tracking Users’ Website ActivityAbsorbing and Reacting to the SEC’s New Clawback Rules
The Securities and Exchange Commission (the “SEC”) on October 26, 2022, adopted new executive compensation “clawback” rules, thus fulfilling its 2010 mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The purpose of this alert is to briefly summarize the rules and some related considerations and highlight next steps that issuers should be considering as they plan to comply with the new rules.
FTC Exploring Rule to Crack Down on Deceptive and Fake Consumer Reviews
The Federal Trade Commission published an Advanced Notice of Proposed Rulemaking (ANPR) on October 20 seeking public comment on a potential regulation aimed at curbing deceptive consumer reviews and endorsements. In its announcement, the FTC highlighted the prevalence of false and misleading reviews online and the harms they cause consumers and competitors.
Continue Reading FTC Exploring Rule to Crack Down on Deceptive and Fake Consumer ReviewsNYDFS Fines EyeMed $4.5 Million for Cybersecurity Violations
On October 18, 2022, the New York State Department of Financial Services (“NYDFS”) announced that EyeMed Vision Care LLC (“EyeMed”) agreed to a $4.5 million settlement for violations of the Cybersecurity Regulation (23 NYCRR Part 500) that contributed to the exposure of hundreds of thousands of consumers’ health data in connection with a cybersecurity event in 2020.
Continue Reading NYDFS Fines EyeMed $4.5 Million for Cybersecurity Violations
Inflation + Customer/Vendor Contracts = Bankruptcy?
Over the last two years, courtesy of a once-a-century pandemic, government-mandated business closures, nationwide stay-at-home orders, and—unprecedented—disruptions to the global supply chain have illuminated, previously unknown, vulnerabilities across a whole host of industries. Would anyone have seriously questioned the viability of office space two years ago? Now, inflation, in keeping with the recent chaos, may be upending the viability of another tried-and-tested institution: the supply contract.
Continue Reading Inflation + Customer/Vendor Contracts = Bankruptcy?
Kim Kardashian Ordered to Pay Over $1.26 Million for Securities Violation Arising Out of Crypto Endorsement
The SEC instituted settlement proceedings against Kim Kardashian on Monday, alleging that the reality television star and entrepreneur violated the SEC’s anti-touting statute when she failed to disclose compensation that she received in exchange for an Instagram post endorsing cryptocurrency tokens. The promotion, which Kardashian posted to her Instagram account on June 13, 2021, encouraged her 225 million followers to visit a website operated by EthereumMax, an online company that offers and sells digital “Emax tokens.” Kardashian’s Instagram post included an “#AD” hashtag, but failed to disclose that she received $250,000 from EthereumMax in exchange for the promotion.
Continue Reading Kim Kardashian Ordered to Pay Over $1.26 Million for Securities Violation Arising Out of Crypto Endorsement
FTC Complaints and Class Actions Send Warning to Consumer Product Manufacturers and Retailers: Double-Check Your Product Warranties
In the past year, the FTC has promoted consumers’ so-called “right to repair.” In particular, the FTC has focused on the “Anti-Tying Rule” of the Magnuson-Moss Warranty Act (the “MMWA”), which limits manufacturers’ ability to steer consumers to manufacturer-affiliated repair shops. Plaintiffs’ firms have taken notice, filing a spate of class actions based on purported violations of the Anti-Tying Rule. These same firms have also filed a spate of consumer class actions against retailers alleging violations of the MMWA’s “Pre-Sale Availability Rule.” Manufacturers and retailers should confirm they are complying with the MMWA and state law.
Continue Reading FTC Complaints and Class Actions Send Warning to Consumer Product Manufacturers and Retailers: Double-Check Your Product Warranties
FTC Brings Action Against Company Calling its Chinese-Produced Mattress Pads “Made-in-America”
The FTC unanimously agreed to an enforcement action against American textile manufacturer Electrowarmth Products, LLC and the company’s owner for deceptively marketing its heated “bunk warmer” mattress pads products as Made in the USA. According to the FTC’s complaint, Electrowarmth’s products, while marked as being domestically made, were wholly manufactured and packaged in China, thus violating the Textile Act and the FTC’s Textile Rule. While the proposed settlement agreement contains an $815,000 monetary judgment, payment of the redress amount is suspended upon the defendants’ inability to pay.
Continue Reading FTC Brings Action Against Company Calling its Chinese-Produced Mattress Pads “Made-in-America”
Retailers Have No Room to Manipulate Reviews: FTC and States Sue Rental Listing Platform Roomster for Bogus Listings
The Federal Trade Commission and six states have filed suit against Roomster Corp. and two corporate executives, accusing the residential rental listing platform of using fake reviews and unverified listings to generate tens of millions of dollars in business. According to the complaint, these practices often occur at the expense of vulnerable customers who rely on Roomster to find safe low-cost housing within expensive housing markets.
Continue Reading Retailers Have No Room to Manipulate Reviews: FTC and States Sue Rental Listing Platform Roomster for Bogus Listings
California Court of Appeal Narrows Reach of ADA and Unruh Civil Rights Act as They Apply to Ecommerce Businesses
In an August 2022 decision, the California Court of Appeal, Second Appellate District, held that retail websites without any connection to a physical space, such as a brick-and-mortar store, do not constitute “places of public accommodation” and, thus, are not within the purview of Title III of the American with Disabilities Act (“ADA”) or the Unruh Civil Rights Act (the “Unruh Act”).
Continue Reading California Court of Appeal Narrows Reach of ADA and Unruh Civil Rights Act as They Apply to Ecommerce Businesses