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Novel Advertising Gone Wrong

Posted by Clyde Hutchins | Jan 19, 2017 | 0 Comments

Novel Advertising Gone Wrong

One of the major challenges of retailers is how to increase business from consumers. Retailers advertise their services or products through various mediums, often using novel methods. Despite what method is used to drive business, retailers must still comply with the minimum disclosure and fair standards required by the Federal Trade Commission Act and the consumer protection laws of the individuals states.

A recent case illustrates how disconnected some businesses can get from these standards. In the matter of FTC v. Credit Bureau Center, LLC et al., the Federal Trade Commission (FTC) sued Credit Bureau Center, LLC and several connected individuals for using deceptive advertising to entice consumers to purchase its credit monitoring service. According to the complaint, the defendants placed ads on Craigslist for rental properties that they did not own or control. When contacted by consumers interested in the rental properties, the defendants would offer to setup tours of the rental properties if the consumers would first obtain their credit reports from defendants' websites. The websites would provide the credit reports and scores, and then enroll the consumers in a credit monitoring service with monthly charges. Many consumers were not aware that they had been enrolled in the credit monitoring service. When consumers followed up on the property tours, their emails went unanswered.

The FTC charged the defendants with violations of the FTC Act. Some defendants were also charged with violating the Restore Online Shoppers' Confidence Act (which I have highlighted before), the Fair Credit Reporting Act, and the Free Reports Rule.

The case is not over. The court entered a temporary restraining order against the defendants to halt their deceptive practices. I expect that it is not going to end well for the defendants because of the gross violations of the FTC Act and the Restore Online Shoppers' Confidence Act. 

The takeaway from this case is that retailers must always be cognizant of the consumer protection laws that regulate their activities with consumers. This case is an extreme example of novel advertising gone wrong, but the same situation can occur with more mundane attempts to engage in novel advertising methods. If you have any questions about your company's advertising methods or consumer protection law in general, please feel free to contact Harmony Law.

About the Author

Clyde Hutchins

Clyde Hutchins is the founder of Harmony Law. Prior to opening Harmony Law, Mr. Hutchins worked in the Wyoming Attorney General's Office for several years where he developed a strong consumer protection enforcement unit. In that position he led over 120 investigations and enforcement actions under the Consumer Protection Act. He worked on numerous joint cases with the Federal Trade Commission and other states, including Colorado, on consumer protection matters. Mr. Hutchins is also a contributing author to Consumer Protection Law Developments, Second Edition. Previous to his work in the Attorney General's Office, Mr. Hutchins was in private practice in Anchorage, Alaska where he was the chief litigator for a firm. Mr. Hutchins represented municipalities on various matters. Mr. Hutchins provided counsel to businesses and investment advisors regarding compliance with securities laws. He was also a bond lawyer and worked on municipal financing matters. Prior to that, Mr. Hutchins practiced civil litigation with a law firm in Cheyenne, Wyoming. Mr. Hutchins devotes his spare time to his family, traveling and enjoying the great outdoors.

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Harmony Law is one of the few law firms in Colorado and Wyoming that focuses on consumer law. Mr. Hutchins is a member of the National Association of Consumer Advocates and state chair for Wyoming. If you have a consumer law issue, please feel free to call 970-488-1857 and speak with Mr. Hutchins.

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