The National Advertising Division (“NAD”) of BBB National Programs has referred Quicken Loans, LLC (“Quicken Loans”) to the Federal Trade Commission (“FTC”) for investigation into its “No Registration, No Login” advertising practices. The NAD found that the statement “No Registration, No Login” misrepresented to consumers that Quicken Loans would not be collecting or sharing their personal data with third parties. In reality, the NAD believes that Quicken Loans requires consumers to enter a significant amount of personal information in order to learn more about its mortgage refinancing services. Additionally, the NAD found that Quicken Loans’ Privacy Policy explains that it shares and collects consumer personal data with third parties. Quicken Loans did not participate in the self-regulatory process offered by the NAD and now faces the specter of a potential FTC action.
How are advertising practices regulated?
Advertising Regulations
The BBB is an independent non-profit organization that, among other things, offers a self-regulation dispute resolution process, which is almost always a faster and cheaper alternative to court proceedings for participating parties. The NAD is the self-regulatory body of the BBB that monitors and evaluates national advertising issues and related disputes. The NAD examines and rules on a wide range of advertising claims brought by consumers, companies and other non-governmental agencies, including those involving puffery, consumer surveys, product testing and false advertising. Should an advertiser refuse to participate in their non-judicial process, the NAD will frequently refer the matter to the appropriate regulatory agency, which, in this case, is the FTC. United States advertising practices are regulated by and through various state and federal laws. The most prominent of the federal laws that address false advertising is the Federal Trade Commission Act (“FTC Act”). Nearly every state of the Union has regulations that prohibit false advertising, which are generally enforced by state attorneys general. Some jurisdictions, such as Ohio, allow private citizens to bring false advertising lawsuits on their own..
Avoiding an FTC Action
Unfair and deceptive advertising is prohibited by Sections 5(a) and 12 of the FTC Act. The FTC explains that “when consumers see or hear an advertisement, whether it’s on the Internet, radio or television, or anywhere else, federal law says that ad must be truthful, not misleading, and, when appropriate, backed by scientific evident.” If an FTC action is initiated, the FTC may seek a federal district court order to: 1) enjoin (stop) the advertising; 2) freeze assets; and/or 3) compensate victims.
The case at hand involves advertising which the NAD found misleads consumers into reasonably believing that their personal data will not be collected or shared with third parties. What companies do with consumer data has become a hot topic of late with state legislation, such as the California Consumer Privacy Act (“CCPA”), and the European Union’s General Data Protection Regulation (“GDPR”), both of which afford consumers significant personal data rights.
We will continue to monitor the Quicken Loans matter and provide an update if any FTC action is initiated. In the interim, it is important to remind our readership that consulting with competent advertising and marketing counsel will help prevent against becoming the subject of an FTC investigation. If you need assistance with reviewing your advertising and marketing practices, please email us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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