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In a notice published in the Federal Register on August 8, 2022, U.S. Consumer Product Safety Commission (CPSC) staff announced that the CPSC will hold a workshop on October 13, 2022, to discuss CPSC’s eFiling Program and the Commission’s plans for a joint Beta Pilot Test with U.S. Customs and Border Protection (CBP) (previously announced in the Federal Register on June 10, 2022).

During the test, which runs for six months, 30 to 50 participants will use the Partner Government Agency (PGA) Message Set to electronically file certificate data with CBP. The Beta Pilot is the second test carried out by the agencies to assess eFiling of data from a compliance certificate for regulated consumer products. Its purposes are “to develop and test the IT infrastructure necessary to support a full-scale eFiling requirement, inform CPSC’s pending rulemaking, develop internal procedures to support enforcement, and assist CPSC to target imports more accurately by enhancing targeting of non-compliant trade and facilitating the flow of legitimate trade.”

Workshop topics will include:

  • CPSC’s Enforcement at the Ports
    • CPSC and CBP Collaboration Overview
    • CPSC Targeting of Imported Products
  • CPSC’s Certificate Requirements
    • Statutory and Regulatory Requirements
    • Enforcement Efforts
    • Certificate Study
  • Overview of CPSC eFiling Program
    • Improved Enforcement/Facilitation of Legitimate Trade—Alpha Pilot
    • Beta Pilot Test Requirements
  • CPSC Procedures
    • CPSC’s Product Registry
  • CBP Procedures
    • CPSC’s draft Customs and Trade Automated Interface Requirements (CATAIR)
    • CPSC’s Risk Assessment Methodology (RAM) System and Use of Risk Scores for Enforcement
  • Third-Party Involvement in Certificate and eFiling Requirements
    • Role of brokers in meeting CPSC’s PGA Message Set requirement
    • Role of laboratories in meeting CPSC’s certificate requirement
  • Import Issues for eFiling
    • eCommerce
    • De minimis shipments
    • Direct-to-consumer shipments
    • International Mail Facilities
    • Foreign Trade Zones
    • Filing deadlines for different modes of transport

The October 13 workshop will be held from 9 a.m. to 4 p.m. ET both virtually and in person at the CPSC’s headquarters in Bethesda, MD. Interested parties must register by Thursday, October 6, 2022. Comments may be submitted following the workshop until November 11, 2022.

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Two recent Senate bills show that Congress is working to improve the nation’s patchwork of recycling laws. On July 28, 2022, the Senate voted unanimously to pass The Recycling Infrastructure and Accessibility Act of 2022 (RIAA) and The Recycling and Composting Accountability Act (RCAA). The first of these directs the U.S. Environmental Protection Agency (EPA) to establish a pilot grant project to fund recycling projects at the local and state level, while the latter aims to improve EPA reporting on recycling and composting.

The RIAA, introduced by Senator Shelley Moore Capito (R-WV), charges the EPA with establishing a pilot grant program to fund eligible state, local, Native, or public-private partnership projects “that will significantly improve accessibility to recycling systems through investments in infrastructure in underserved communities through the use of a hub-and-spoke model for recycling infrastructure development.” The RCAA, introduced by Senator Tom Carper (D-DE), directs the EPA to track and publish data on recycling and composting rates across the country. The information would be used to help improve performance and influence future projects, including a potential national composting strategy.

The two bills demonstrate that expanding the recycling and composting infrastructure remains a Congressional priority. The proposed legislation enjoys not only broad bipartisan support but has garnered widespread support from industry.

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On May 12, 2022, the European Data Protection Board published guidelines with a methodology for calculating fines for violations of the General Data Protection Regulation (GDPR). These guidelines were subject to a public consultation until June 27, 2022.

Because these guidelines are likely to have an influence on future decisions by data protection authorities in the European Union, Keller and Heckman LLP has developed DeFine, a GDPR fine calculator tool based on that methodology. It is accessible online and free of charge here.

While we hope that organizations will not need to use DeFine too often in dealing with regulators, it may serve as an internal company awareness-raising mechanism to enhance understanding of data privacy risks.

Feel free to reach out to the creator, Peter Craddock, or to any other Keller and Heckman LLP contact if you have any questions or suggestions, would like to share feedback on DeFine, or require assistance on data privacy or security.

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As we previously reported, the Federal Trade Commission (FTC) seeks comments on proposed updates to its Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides). The FTC’s notice was published in the Federal Register on July 26, 2022 (87 Fed. Reg. 44288), and comments must be received by September 26, 2022.

The Endorsement Guides are intended to help businesses ensure that their advertising testimonials and endorsements are not deceptive or misleading and that material connections between endorsers and companies are disclosed. As we discussed earlier, the FTC’s proposed updates to the Endorsement Guides focus on advertisers that post fake positive reviews or delete negative reviews and advertisers whose disclosures fall short. The changes would also add, among other things, more illustrative examples to help clarify the Guides’ provisions and new sections on endorsements and consumer reviews.

Additionally, the FTC proposes adding a new, very general provision regarding children, namely, that “[p]ractices which would not ordinarily be questioned in advertisements directed to adults might be questioned” if they are directed to children. However, the preamble supplements this by noting that the FTC suggested a similar provision in 1972 (after the kid-vid proceeding) but withdrew it in 1976. Now, the FTC suggests that “even as more evidence is gathered about the effects of children’s advertising, there is ample basis to recognize that children may react differently than adults to endorsements in advertising or to related disclosures.” Chair Lina Khan’s statement notes that the FTC currently lacks the full evidentiary basis to support specific guidance or propose best practices, and she pointed to the planned October 19, 2022 workshop, “Protecting Kids from Stealth Advertising in Digital Media,” as a vehicle to obtain more information. (The comment deadline was July 18).

It will be important for businesses to weigh in on all aspects of the FTC’s proposals.

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Following its report to Congress in 2021 on what it characterized as unlawful repair restrictions, Nixing the Fix, the Federal Trade Commission (FTC or Commission) announced that it would prioritize investigations into limits on consumer repair rights pursuant to its authority under the Magnuson-Moss Warranty Act (Warranty Act) and Section 5 of the FTC Act. In its subsequent Policy Statement on Repair Restrictions Imposed by Manufacturers and Sellers, the FTC explained that “restricting consumers and businesses from choosing how they repair products can substantially increase the total cost of repairs, generate harmful electronic waste, and unnecessarily increase wait times for repairs.” With three successive enforcement actions, the FTC has signaled that it means business. Companies that restrict consumers’ right to repair goods at the servicer or supplier of their choice may well find themselves the target of an FTC complaint, as Harley-Davidson, Westinghouse, and Weber Stephens recently discovered.

On June 23, 2022, the FTC announced that it had brought a complaint against motorcycle icon Harley-Davidson Motor Company (Harley-Davidson) and generator manufacturer Westinghouse Outdoor Power Equipment/MWE Investments, LLC (MWE). Shortly thereafter, on July 7, 2022, the Commission brought a third complaint on similar grounds against grill company Weber-Stephens (Weber). In each case, the FTC alleged that the company imposed illegal stipulations on consumer repair rights in violation of the Warranty Act § 2302(c), which prohibits a warrantor “from conditioning a warranty for a consumer product that costs more than $5 on the consumer’s use of an article or a service, other than an article or a service provided without charge, which is identified by brand, trade, or corporate name, unless the warrantor applies for and receives a waiver from the Commission.” The FTC also charged the companies with deceptive conduct for representing that their warranties were conditioned on the use of brand products or services in violation of Section 5 of the FTC Act.

Harley Davidson and Westinghouse/MWE Investments

The FTC’s complaint against Harley-Davidson alleges that the company conditions its warranty on the use of genuine Harley-Davidson parts and accessories, in violation of the Warranty Act. For instance, the company’s 2021 warranty tells customers to “insist that your authorized Harley-Davidson dealer uses only genuine Harley-Davidson replacement parts and accessories to keep your Harley-Davidson motorcycle and its limited warranty intact.” The FTC also charged Harley-Davidson with failing to fully explain what is covered or excluded from its warranty, which instead instructs customers to “see an authorized Harley-Davidson dealer for details.”

The FTC complaint against Westinghouse licensor and manufacturer MWE alleges that the company conditioned its warranty for electric and gas generators on using Westinghouse suppliers and service providers for repairs. MWE’s warranty for portable generators, for example, excludes “portable generators that utilize non-MWE Investments, LLC replacement parts” and “products that are altered or modified in a manner not authorized in writing by MWE Investments, LLC.”

The Harley-Davidson consent order and MWE consent order are nearly identical and require each company to cease conditioning warranties on a customer’s use of parts or services affiliated with the brand (unless the parts or services are provided free of charge or the company has been granted a waiver by the FTC under 15 U.S.C. § 2303(c)). The orders require both companies to disclose clearly and conspicuously in their warranties the following statement: “Except as described in ____, taking your products to be serviced by a repair shop that is not affiliated with [company name] will not void this warranty and using third-party parts will not void this warranty.” The companies must notify customers, dealers, and service providers of the revised warranty and publish it on their websites. Further, Harley-Davidson must provide a “clear description and identification of products, or parts, or characteristics, or components or properties covered by the warranty and where necessary for clarification, excluded from the warranty.”

The order does, however, make clear that certain types of product damage to Harley-Davidson vehicles caused by third-party parts or servicers can be excluded from the “warranty coverage for defects or damage caused by unauthorized parts, service, or use of the vehicle, including defects or damage caused by use of aftermarket parts or use of the vehicle for racing or competition, and denial of coverage may be based on installation of parts designed for unauthorized uses of the vehicle, such as a trailer hitch.” The company may also, pursuant to a 2017 Consent Decree between Harley-Davidson and the Environmental Protection Agency, “exclude warranty coverage and deny all warranty claims for functional defects of powertrain components for any Harley-Davidson motorcycle registered in the United States if the vehicle was tuned using a tuning product not covered by a California Air and Resources Board Executive Order.” Importantly, these exclusions allow the company to protect the safety and roadworthiness of their motorcycles and to meet environmental regulatory requirements.

Weber-Stephens

As with Harley-Davidson and MWE, the FTC complaint against Weber charges the company with improperly conditioning warranties on a customer’s use of the company’s servicers and parts. The Weber consent order, like the Harley-Davidson and MWE orders, prohibits the company from imposing warranties that require customers to use the company’s parts and services and requires it to inform purchasers of its gas or electric grills that “using third-party parts will not void this warranty.”

Commission Approval

The Commission vote to issue the administrative complaint and to accept the consent agreement was in each case unanimous. FTC Chair Lina Khan and Commissioner Rebecca Slaughter released a joint statement following the Harley-Davidson and MWE orders in which they noted that “the consent orders obtained in these matters bar both manufacturers from continuing the unlawful tying of their warranties to the use of authorized service or parts and prohibit them from misrepresenting any material facts about the warranty. Importantly, the firms are also required to note clearly and conspicuously in public statements that using third-party parts or repair services will not void the warranty. They must also provide customers with clear notice alerting them of the change.”

Imposition of warranty limits on a consumer’s right to repair is a priority issue for the Commission. For some types of products, unauthorized service or installation of unauthorized parts could create potential safety concerns that will have to be carefully evaluated. Businesses should examine their warranties thoroughly for compliance with the Warranty Act requirements and consider the need to seek a waiver or to consider other options.

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On July 8, 2022, the California Privacy Protection Agency (Agency) announced the start of the formal rulemaking process to adopt proposed regulations implementing the California Privacy Rights Act (CPRA), which amends and expands the California Consumer Privacy Act (CCPA).

The CCPA entered into force on January 1, 2020; most of the CPRA’s provisions become effective on January 1, 2023, with a look-back to January 2022.

The Agency was created and granted rulemaking authority via a provision in the CPRA. On May 5, 2022, the California Office of Administrative Law approved the transfer of existing CCPA regulations to the Agency’s jurisdiction; these proposed regulations will be the Agency’s first rulemaking.

The proposed CPRA regulations (1) update existing CCPA regulations to harmonize them with CPRA; (2) operationalize new rights and concepts introduced by the CPRA; and (3) reorganize and consolidate requirements to make the regulations easier to follow and understand.

Public hearings on the proposed regulations and received comments are slated for August 24 and August 25, 2022, at 9:00 am PDT, during which the Agency will hear comments from interested parties. Written comments must be submitted by August 23.

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In keeping with its 5-year schedule for comparability range updates to the Energy Labeling Rule (Rule), the Federal Trade Commission (FTC) published a Notice of Proposed Rulemaking on May 25, 2022, seeking to revise the Rule to require EnergyGuide labels to update comparability range information on EnergyGuide labels for televisions, refrigerators and freezers, dishwashers, water heaters, room air conditioners (ranges only), clothes washers, furnaces, and pool heaters.

The Rule requires manufacturers to affix EnergyGuide labels to many consumer products and prohibits retailers from removing the labels or making them illegible. EnergyGuide labels must contain three disclosures: a product’s estimated annual energy cost, its energy consumption or energy efficiency rating as determined by Department of Energy (DOE) test procedures, and a comparability range that shows the highest and lowest energy costs or efficiency ratings for all similar models. The FTC periodically updates comparability range and annual energy cost information based on current manufacturer data, pursuant to the Rule. The FTC is now proposing two amendments to the Rule: revising the average energy cost figures based on the national average cost figures published by the DOE and clarifying that manufacturers must use current DOE requirements to determine capacity for room air conditioners.

Manufacturers must display the updated information on product labels 90 days from publication of the final Notice announcing updated ranges for specific products. Manufacturers of room air conditioners will have until October 1, 2022, to give them time to change their packaging to include the updated labels and to coincide with the effective date of EnergyGuide labels for portable air conditioners.

The vote to approve publication of the Notice of Rulemaking in the Federal Register was 3-1. Commissioner Christine S. Wilson dissented, arguing that while the proposed revisions to the Rule are necessary, the Commission “fail(s) to take the opportunity to revisit the Rule’s highly prescriptive requirements,” including the detailed label requirements illustrated in the Notice.

Comments are due by July 11, 2022.

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The Federal Trade Commission (FTC or Commission) has issued several new proposals or policy statements affecting advertisers recently, including resurrection of its Penalty Offense Authority and an Enforcement Policy Statement Regarding Negative Option Marketing (which we previously reported on here). The FTC is now seeking public feedback on a proposal to enhance and strengthen the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the Endorsement Guides) and a review of its .com Disclosures: How to Make Effective Disclosures in Digital Advertising (.com Disclosures Guidance or Guidance).

Proposed Updates to the Endorsement Guides

At an open meeting on May 19, 2022, the FTC voted unanimously to publish a notice in the Federal Register proposing updates to the current Endorsement Guides. The FTC’s proposed updates to the Endorsement Guides, which were first published in 1980 and last revised in 2009, focus on advertisers that post fake positive reviews or delete negative reviews and advertisers whose disclosures fall short. One area of concern identified by the FTC is influencers who are paid, receive free products or services, or have a relationship with a brand but fail to disclose the material connection with the advertiser, in violation of the Endorsement Guides.

In addition to adding more examples to improve understanding of the Endorsement Guides, the FTC’s proposed updates include the following:

  • Expanding the definition of “product” to include brands;
  • Clarifying that marketing and promotional messages, including social media tags, can constitute endorsements;
  • Extending the definition of an “endorser” to cover “fabricated endorsers”;
  • Adding a new section that addresses consumer reviews and clarifies that advertisers should not distort or misrepresent what consumers think of their products;
  • Clarifying that the substantiation requirement covers both express and implied claims;
  • Tightening the definition of “clear and conspicuous” to mean a disclosure that is “difficult to miss … and easily understandable by ordinary consumers”;
  • Clarifying that a material connection can exist regardless of whether an advertiser offers payment or free products to an endorser;
  • Adding a new section that explains the potential liability of intermediaries such as advertising agencies and public relations firms;
  • Clarifying that an advertiser may be liable for an endorser’s deceptive statement even when the endorser is not liable and adding a new section that explains when endorsers can be liable for their statements;
  • Adding a new section regarding endorsements directed to children and emphasizing that “practices which would not ordinarily be questioned in advertisements addressed to adults might be questioned in such cases.” (The FTC will hold a public event on October 19, 2022, to discuss how children perceive online advertising and advertisers’ responsibilities for disclosures to children.)

Comments are due 60 days after the date of publication of the proposed updates in the Federal Register, which has not occurred as of the date of this posting.

Proposed Updates to the .com Disclosures Guidance

The FTC is also seeking comments on proposed changes to the .com Disclosures Guidance. First issued in 2000 and updated in 2013, the .com Disclosures Guidance focuses on how businesses can evaluate the effectiveness of online disclosures to assure they are clear and conspicuous. The Guidance also includes factors the FTC uses to evaluate whether such disclosures comply with the FTC Act.

In a Request for Comments published on June 3, 2022, FTC staff seek public input on updates to the Guidance. The FTC welcomes comments on any issue but is particularly interested in the following:

  • Issues raised by online technologies, activities, or features, such as sponsored and promoted advertising on social media platforms, advertising content embedded in games, and dark patterns;
  • Whether the current Guidance adequately addresses mobile advertising;
  • Whether further guidance concerning multi-party selling arrangements is needed;
  • Whether the Guidance adequately addresses how to make qualifying disclosures when consumers must navigate multiple webpages to complete purchases;
  • Whether the Guidance should address issues related to advertising that appears in virtual reality or the metaverse;
  • How the guidance on the use of hyperlinks can be made more effective; and
  • What existing guidance is outdated or unnecessary, and what guidance should be clarified, expanded, strengthened, or limited.

Comments on the proposed changes to the .com Disclosures Guidance must be received by August 2, 2022.

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Nearly a year after she was first nominated, Mary Boyle was confirmed Wednesday to be a Commissioner of the U.S. Consumer Product Safety Commission (CPSC). When she takes office for a term that will run through October 2025, Boyle will bring the Commission to its full five-member strength for the first time since 2019.

Boyle has been at CPSC for more than a decade, serving as an attorney in the Office of General Counsel (OGC), as General Counsel herself, and currently as the agency’s Executive Director. A graduate of Georgetown University and the University of Maryland, Boyle is the second CPSC Executive Director to join the Commission in recent years, following former Chair Elliot Kaye, who served from 2014 to 2021.

Boyle’s nomination had been held up in the Senate Committee on Commerce, Science, & Transportation amid Republicans’ concerns about her role in the agency’s unauthorized disclosures of company and consumer information in 2019 and in staffing of CPSC’s import surveillance operations amid COVID-19 disruptions. The first session of the 117th Congress ended in December 2021 with Boyle’s nomination still in committee. Her nomination was returned to the White House, and President Biden swiftly renominated her in early 2022.

The Commerce Committee failed to report Boyle’s nomination favorably on a 14-14 party-line vote in March. Her nomination was ultimately discharged from committee on May 12 by a straight party-line vote, with Vice President Kamala Harris breaking the 50-50 tie. Republican opposition followed Boyle to the floor with a filibuster that was broken by a 49-47 cloture vote on June 16, 2022. Wednesday’s confirmation vote was 50-48.

Boyle joins Chair Alexander Hoehn-Saric and Commissioner Richard Trumka, Jr., forming a Biden-administration majority on the Commission alongside Trump appointees Dana Baiocco and Peter Feldman. With Boyle’s confirmation, CPSC’s leadership appears set for the next two-plus years. The Commissioners’ terms are as follows:

Biden Consumer Product Safety Commission
Commissioner Term Through
Dana Baiocco (R) 2024
Mary Boyle (D) 2025
Peter Feldman (R) 2026
Alexander Hoehn-Saric (D, Chair) 2027
Richard Trumka, Jr. (D) 2028

 

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In the continuing absence of Congressional action on a comprehensive U.S. federal privacy law, five states have now enacted their own laws. We previously provided a summary of the California, Virginia, and Colorado laws (available here), and Connecticut and Utah have since enacted new privacy laws. The Connecticut Act Concerning Personal Data Privacy and Online Monitoring (CTDPA) was signed into law on May 10, 2022 and is scheduled to take effect on July 1, 2023. The Utah Consumer Privacy Act (UCPA) was signed into law on March 24, 2022 and is scheduled to take effect on December 31, 2023. The CTDPA and UCPA are similar to the recently enacted Colorado Privacy Act (CPA) and Virginia Consumer Data Protection Act (VCDPA) in many respects, but there are some key differences among these laws and the California Consumer Privacy Act (CCPA), which took effect in 2020 and was amended by the California Privacy Rights Act (CPRA). To help businesses plan for compliance, Keller and Heckman LLP has created a side-by-side comparison of some of the key provisions of each law, along with an overview of some recently introduced federal privacy bills. Click here to read the full article.