InfoBytes Blog
FTC publishes ANPR on bogus money-making opportunities
On February 17, the FTC announced an advanced notice of proposed rulemaking (ANPR), which “launched a proceeding to challenge bogus money-making claims used to lure consumers, workers, and prospective entrepreneurs into risky business ventures that often turn into dead-end debt traps.” According to the FTC, a rule in this area would permit “the Commission to recover redress for defrauded consumers, and seek steep penalties against the multilevel marketers, for-profit colleges, ‘gig economy’ platforms, and other bad actors who prey on people’s hopes for economic advancement.” The FTC summarized recent actions against “coaching or mentoring schemes, multi-level marketing companies, work-from-home, e-commerce, or other business opportunity scams, chain referral schemes, gig companies and employers, job scams, and businesses purporting to offer educational opportunities,” but noted that “the recent Supreme Court decision in the AMG Capital Management LLC v. FTC has hindered the FTC’s ability to seek monetary relief for consumers under the FTC Act.” (Covered by InfoBytes here). The ANPR gives notice of a new possibility of rulemaking for false, misleading, and unsubstantiated earnings claims, and, if adopted, the FTC will have the ability to return money to consumers injured by deceptive income claims, while holding bad actors accountable with civil penalties. The ANPR also solicits public comment on: (i) whether earnings claims are prevalent among all or only some industries; (ii) how a rule addressing earnings claims should be drafted; (iii) the benefits to consumers from such a rule and the costs to businesses; and (iv) whether the potential rule should address disclaimers, lifestyle claims, or liability for agents’ claims.