On February 17, the Federal Trade Commission (FTC) held an open meeting in which it shared a presentation on deceptive earnings claims for business ventures, gigs, or other work opportunities, or educational, coaching, or training offerings. The Commission voted 4-0 to move forward with a new rule, Advanced Notice of Proposed Rulemaking (ANPRM) on Earnings Claims, during the meeting.
Melissa Dickey from the Bureau of Consumer Protection, Division of Marketing Practices, gave the presentation for the Commission. She said a rule was needed because the FTC’s ability to claim monetary damages was limited by the 2021 United States Supreme Court ruling in AMG Capital Management v. Federal Trade Commission. She specifically mentioned the FTC’s action against AdvoCare, which included alleged deceptive earnings claims. However, her presentation only discussed why ANPRM was needed; it did not specify the Commission’s views on the contents of such a rule.
Chair Lina Khan, Commissioner Noah Phillips, and Commissioner Rebecca Kelly Slaughter mentioned multi-level marketing companies, for-profit colleges, and gig companies as industries that have used deceptive earnings claims and should be subject to a rule so the FTC can collect monetary damages for consumers.
The Government Relations Committee did approve the Direct Selling Association (DSA) filing written comments, but it did not provide live or recorded testimony during the hearing. DSA’s comments, which can be viewed here, urged if the Commission was to adopt a rule that it considers the economic impact it would have for millions of Americans and current self-regulatory efforts by the direct selling industry. DSA also urged that any rule be consistent with current guidance.
According to Brian Bennett, Senior Vice President of Government Affairs & Policy at DSA, the meeting is the first procedural step in a long regulatory process that will take years to finalize. The next step is the publication of the ANPRM in the Federal Register for comments.