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FTC Has Little to Say in Prepaid Card Advertising Case

11 Apr, 2017 By: Ellen T. Berge, Andrew E. Bigart


For regular readers of Federal Trade Commission (FTC) press releases, the recent announcement that the FTC settled its lawsuit against prepaid card company NetSpend Corp. was interesting because of the substance – or lack thereof – of the announcement itself. In four short sentences, the FTC simply stated that the advertiser agreed to settle, that the Commission vote approving the final order was 2-1, and that Acting Chair Maureen Ohlhausen issued a dissenting statement.

No details were provided about the claims at issue or the monetary relief imposed on the advertiser. And the FTC did not, as it often does, publish an ancillary blog on the FTC Business Center website to educate readers about all of the terrible things that must not be done.

The NetSpend press release begs the question: Is this how case announcements will be handled under the Ohlhausen administration? For companies that settle with the FTC to avoid the expense and distraction of litigating with the government, a departure from condemnatory FTC press releases would be welcome.

The 2-1 tally approving the final order reflected a vote of former FTC Chair Edith Ramirez, leaving us to wonder if she left any other yet-to-be-announced votes behind. Commissioner Terrell McSweeny also approved the NetSpend settlement.

Ohlhausen’s dissent stated that the order imposed monetary relief not sufficiently related to the allegedly deceptive conduct. Additionally, she objected to the way in which the majority analyzed NetSpend’s use of “immediate access” claims in its ads. The Acting Chair also indicated that limiting the dissemination of truthful claims harms consumers by inhibiting their ability to identify and differentiate products and services, which in turn stifles competition. These comments echo other recent statements by Ohlhausen that the FTC should refocus on ensuring that “our enforcement actions address concrete consumer injury.”

The NetSpend press release may be the first example of a shift. As Ohlhausen explained in a recent speech, “In every case we litigate, settlement we enter, report we write, guidance we issue, blog entry we post, and tweet we … twitter, we need to answer two questions. How were consumers harmed? And how does this action address that harm? This focus on consumer harm is part of our statutory mandate, but it is also good policy.”

Although it may be tempting to take the NetSpend announcement and the Ohlhausen’s comments as an indication the FTC will be less aggressive, and punitive, enforcer, marketers who take that approach are only looking at one aspect of the consumer protection ecosystem. There are a number of indications that state attorneys general and plaintiffs’ attorneys are likely to become more aggressive in the near term, regardless of attitudes at the FTC.

Marketers should work with experienced counsel to ensure that their advertising and marketing practices do not expose them to unnecessary legal risk. Even in a more forgiving enforcement environment, a modest investment in proactive counseling outweighs the cost and reputational risk of class action lawsuits, and government investigations or enforcement actions.

Ellen T. Berge is a partner in Venable LLP’s Advertising and Marketing practice group. Andrew E. Bigart is an attorney in the group. They may be reached at (202) 344-4000.


About the Author: Ellen T. Berge


About the Author: Andrew E. Bigart

Andrew E. Bigart

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