While most of the Consolidated Appropriations Act, 2021 signed into law on December 27, 2020, focused on government funding and COVID related relief, it also included the COVID-19 Consumer Protection Act (“CCPA”), to protect consumers from deceptive practices relating to COVID-19. Deceptive practices are acts or practice where “a representation, omission, or practice misleads or is likely to mislead the consumer; a consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances; and the misleading representation, omission, or practice is material.” These practices include promises made regarding the “treatment, cure, prevention, mitigation, or diagnosis of COVID-19; or a government benefit related to COVID-19” and apply to any person, partnership, or corporation subject to the Federal Trade Commission (“FTC”).
Prior to the CCPA’s enactment, the FTC began increasing enforcement of deceptive trade practices in relation to COVID-19. One example is the FTC’s handling of Zoom. Zoom, a video conferencing platform, reached high popularity as many companies transitioned to work-from-home employee models. However, security flaws brought serious issues with Zoom’s service to light. In November, the FTC announced a deceptive trade practice’s investigation into Zoom’s end-to-end encryption, false promises regarding the level of encryption provided and misleading security statements on the platform. The FTC settlement agreement limited Zoom’s ability to make a wide variety of privacy and security statements.
The Consumer Protection Act (“CCPA”) provides additional enforcement for the FTC regarding COVID-19 related claims. If your business has been in plans to make claims regarding COVID-19 and its goods or services, it is important to have adequate substantiation under your claims. Having to defend an FTC inquiry or FIDEs for unsubstantial claims could quickly exceed any benefit from such sales.