UNITED STATES OF AMERICA

Federal Trade Commission

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Keynote of Commissioner Noah Joshua Phillips1

The FTC and the Digital Marketplace: Highlights from the Last Year 

ANA/BAA Marketing Law Conference

San Diego, CA

November 5, 2019

Thank you very much for that kind introduction and the warm welcome.

Since four new Commissioners, myself included, arrived at the Federal Trade 

Commission in May 2018, consumer protection cases involving marketing, 

advertising, and privacy law have presented some of the most interesting and 

challenging issues we face. Technology is changing how we learn and communicate, 

and new platforms are allowing less traditional communicators as well as novel 

types of messaging. I am pleased to be here today to highlight how the FTC is 

navigating this evolving terrain.

The FTC has a long tradition of maintaining a competitive marketplace for 

both consumers and businesses. In 1914, President Woodrow Wilson signed the 

Federal Trade Commission Act into law, creating the FTC, which then absorbed its 

predecessor organization, the Bureau of Corporations – which had been housed 

within the Department of Commerce and Labor – in 1915. The FTC’s original 

 

1 The remarks I give today are my own and do not necessarily reflect the views of the Federal Trade 

Commission or any of my fellow Commissioners.
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purpose was to prevent unfair methods of competition in commerce as part of the 

battle to “bust the trusts”, that is, antitrust law. Recognizing that unfair and 

deceptive practices also can distort a competitive marketplace, in 1938 Congress 

amended the FTC Act and granted the FTC authority to stop “unfair or deceptive 

acts or practices in or affecting commerce”. In a nutshell, the FTC’s vision is a 

vibrant economy characterized by vigorous competition and consumer access to 

accurate information.2

I would like to spend my time today speaking about the importance of both of 

these components – vigorous competition in the U.S. technology markets and

consumer access to accurate information in the digital age.

With respect to competition in the tech market, this is a particularly thoughtprovoking time at the FTC. Shortly after the new commissioners arrived, Chairman 

Simons announced a series of public hearings that would consider, among other 

things, whether evolving new technologies might require adjustments to 

competition and consumer protection enforcement law, priorities, and policy.3 The 

FTC requested public input on topics such as: competition and consumer protection 

issues in communication, information, and media technology networks; and the 

intersection between privacy, big data, and competition. And as you may be aware, 

in February 2019, the Commission announced the creation of a task force – now 

called the Technology Enforcement Division – dedicated to monitoring competition 

 2 Federal Trade Commission, Strategic Plan for Fiscal Years 2018 to 2022, Feb. 12, 2018, 

https://www.ftc.gov/system/files/documents/reports/2018-2022-strategic-plan/ftc_fy18-22_strategic_plan.pdf. 3 FTC Press Release, FTC Announces Hearings on Competition and Consumer Protection in the 21st Century, June 

20, 2018, https://www.ftc.gov/news-events/press-releases/2018/06/ftc-announces-hearings-competition-consumerprotection-21st.
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in U.S. technology markets, investigating any potential anticompetitive conduct in 

those markets, and taking enforcement actions when warranted.4

The Commission recognizes the critical importance of competition in the 

technology sector. Evolving technologies, automation, and intellectual property 

issues, however, can increase the complexity of antitrust investigations and 

litigation. We strive to improve the agency’s understanding of various practices and 

developments in the marketplace by conducting public hearings, conferences, and 

workshops that bring together interested parties and conducting economic research 

on these issues. I would like to urge all of you to participate in this process and to 

come to us with information about the competitive landscape. If you see problems, 

bring them to us. Competition is a topic of great interest to me, and should be to all 

of you as well.

Consumer access to accurate information in the marketplace – both digital 

and otherwise -- is important for a number of reasons. First, free markets rely upon 

effective competition, which in turn is grounded upon the merits and value of 

competing products and services. An essential element of effective competition is 

the availability of information that consumers can use to evaluate competing 

products to make the best possible choices. Second, competition in the marketplace 

can be distorted when consumers do not receive accurate and material information, 

resulting in diminished comparison shopping, unwarranted competitive parity, or 

 4 FTC Press Release, FTC’s Bureau of Competition Launches Task Force to Monitor Technology Markets, Feb. 26, 

2019, https://www.ftc.gov/news-events/press-releases/2019/02/ftcs-bureau-competition-launches-task-forcemonitor-technology.
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even advantage for inferior products.5 Without accurate and material information, 

competition and consumers are harmed.

On the competition side, the FTC examines advertising markets to ensure 

that they are robust and well-functioning. For example, in a recent administrative 

action, the FTC alleged that 1-800 Contacts, the largest online retailer of contact 

lenses, unlawfully orchestrated a web of anticompetitive agreements with rival 

online contact lens sellers that suppressed competition in certain online search 

advertising auctions and restricted truthful and non-misleading internet 

advertising to consumers.6 Although I dissented because I did not agree with a 

number of aspects of the decision, including the analytical approach taken by the 

majority, I believe that scrutinizing online markets for anticompetitive 

manipulation of consumer information is very important.7

On the consumer protection side, the FTC actively polices the marketplace to 

promote the dissemination of accurate information. On one hand, we enforce 

statutes and rules that require the disclosure of information, such as the Franchise 

Rule, the R-Value Rule for Home Insulation Products and the Energy Labeling 

Rule. On the other, we monitor the marketplace and bring enforcement actions

against individuals and companies that are providing misleading or deceptive 

information to consumers.

 5 See Statement of Basis and Purpose, Labeling and Advertising of Home Insulation, 44 Fed. Reg. 50218, 50223 

(Aug. 27, 1979).

6 FTC Press Release, FTC Commissioners Find that 1-800 Contacts Unlawfully Harmed Competition in Online 

Search Advertising Auctions, Restricting the Availability of Truthful Advertising to Consumers, Nov. 14, 2018, 

https://www.ftc.gov/news-events/press-releases/2018/11/ftc-commissioners-find-1-800-contacts-unlawfully-harmed. 7 Commissioner Noah Joshua Phillips, Dissenting Statement in the Matter of 1-800 Contacts, Inc., [Redacted Public 

Version], Nov. 14, 2018, https://www.ftc.gov/public-statements/2018/11/dissenting-statement-commissioner-noahjoshua-phillips-redacted-public.
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At the Commission, we are applying this long-standing enforcement policy in 

a variety of new venues and to a new set of actors. One area is fake online reviews.

This past February, the FTC brought its first case challenging fake paid reviews on 

an independent retail website, alleging that Cure Encapsulations, a dietary 

supplement marketer, and its owner paid a third-party website to write and post 

fake reviews on Amazon.com. The complaint alleged that the defendants hired 

amazonverifiedreviews.com and instructed them to obtain reviews to attain an 

average rating of 4.3 out of 5 stars in order to have sales and to, “Please make my 

product ... stay a five star”.8

In another recent high-profile case, the FTC charged cosmetics firm Sunday 

Riley Modern Skincare, LLC and its CEO, Sunday Riley, with misleading 

consumers by posting fake reviews of the company’s products on Sephora.com. The 

FTC complaint alleged that, between November 2015 and August 2017, Sunday 

Riley Skincare managers, including Ms. Riley herself, posted reviews of their 

branded products on the Sephora site using fake accounts created to hide their 

identity, and requested that other Sunday Riley Skincare employees do the same.

The complaint further alleged that, after Sephora removed fake employee-written 

reviews, Sunday Riley Skincare employees suspected this was because Sephora 

recognized the reviews as coming from their IP addresses. Sunday Riley Skincare 

then obtained, according to one of the company’s managers, “an Express VPN 

account [to] . . . allow us to hide our IP address and location when we write 

 8 FTC Press Release, FTC Brings First Case Challenging Fake Paid Reviews on an Independent Retail Website, 

Feb. 26, 2019, https://www.ftc.gov/news-events/press-releases/2019/02/ftc-brings-first-case-challenging-fake-paidreviews-independent.
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reviews”. A VPN (virtual private network) lets users access the internet privately, 

by using separate servers to hide their online activity.9

Another set of defendants took their deception to another level. Using 

websites such as TwitterBoost.co, BuyView.co, and BuyPlays.co, Devumi LLC and 

its owner and CEO sold fake indicators of social media influence, including fake 

followers, subscribers, views, and likes to users of social media platforms. The FTC 

complaint alleged that defendants sold fake Twitter followers to actors, athletes, 

musicians, writers, and others who wanted to increase their appeal as online 

influencers. They also sold fake Twitter followers to motivational speakers, law firm 

partners, investment professionals, and others who wanted to boost their credibility 

to potential clients. Clients for faked LinkedIn followers included marketing, 

advertising, and public relations firms; companies offering computer software 

solutions; banking, investment, and other financial services firms; human resources 

firms; and others. Devumi also allegedly had more than 4,000 sales of fake YouTube 

subscribers and over 32,000 sales of fake YouTube views to its clients, including 

musicians who wanted to increase the apparent popularity of their songs.10

Posting deceptive or inaccurate information online, or engaging in other 

deceptive conduct like selling fake followers, distorts the online marketplace, 

 9 FTC Press Release, Devumi, Owner and CEO Settle FTC Charges They Sold Fake Indicators of Social Media 

Influence; Cosmetics Firm Sunday Riley, CEO Settle FTC Charges That Employees Posted Fake Online Reviews at 

CEO’s Direction, Oct. 21, 2019, https://www.ftc.gov/news-events/press-releases/2019/10/devumi-owner-ceo-settleftc-charges-they-sold-fake-indicators. 10 FTC Press Release, Devumi, Owner and CEO Settle FTC Charges They Sold Fake Indicators of Social Media 

Influence; Cosmetics Firm Sunday Riley, CEO Settle FTC Charges That Employees Posted Fake Online Reviews at 

CEO’s Direction, Oct. 21, 2019, https://www.ftc.gov/news-events/press-releases/2019/10/devumi-owner-ceo-settleftc-charges-they-sold-fake-indicators.
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preventing consumers from making informed purchasing decisions and creating an 

uneven playing field for those that follow the rules. 

And the converse is true as well. When companies prevent consumers from 

posting accurate reviews of products and services, this decreased flow of truthful 

information harms both consumers and competition. The FTC first waded into this 

territory in 2015 when we brought an action against weight-loss supplement 

marketer Roca Labs Nutraceutical and its principals. The defendants represented 

their products as safe and effective alternatives to gastric bypass surgery. They also 

claimed that users could lose as much as 21 pounds in one month, and that users 

have a 90 percent success rate in achieving substantial weight loss. Defendants 

apparently didn’t want real life experiences with the product to dispel this fantasy. 

Among other charges, the FTC’s complaint alleged that through contract provisions 

and other intimidating behavior, the defendants’ attempts to prohibit purchasers 

from speaking or publishing truthful or non-defamatory negative comments or 

reviews was unfair.

This practice caught the attention of Congress, and in 2016, the Consumer 

Review Fairness Act was enacted. The CRFA generally makes certain form contract 

provisions invalid. Form contracts between sellers and individual consumers cannot 

prohibit or restrict individuals from reviewing sellers’ goods, services, or conduct; 

impose penalties or fees on individuals for such reviews; or require individuals to 

transfer intellectual property rights in such reviews.11

 11 Consumer Review Fairness Act, 15 U.S.C. § 45b.
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The FTC’s first CRFA case took on a particularly egregious scheme run by 

Sellers Playbook, a get rich quick business opportunity based in Minnesota. The 

FTC, along with and the Minnesota Attorney General’s Office, alleged that Sellers 

Playbook lured consumers into buying its expensive “system” by claiming that 

purchasers were likely to earn thousands of dollars per month selling products on 

Amazon. The company used false and unsubstantiated claims, such as 

make“$20,000 a month” and “Potential Net Profit: $1,287,463.38”. Few, if any, 

consumers achieved these results, and most lost money. To make matters even 

worse, the defendants also allegedly violated the CRFA by using form contracts that 

improperly sought to restrict their victims’ right to review the products and services 

they purchased.12 I also want to give a shout out to the Utah Division of Consumer 

Protection, the U.S. Marshals Service for the District of Minnesota, Amazon.com, 

Inc., the Better Business Bureau of Minnesota and North Dakota, and the 

Electronic Retailing Self-Regulation Program for their indispensable assistance.

Sometimes it takes a village.

Consumers’ unfettered ability to provide truthful reviews and information is 

crucial to a well-functioning marketplace and the FTC is committed to halting 

violations of the CRFA. This past spring, we brought five administrative cases 

exclusively enforcing the CRFA, alleging that these defendants illegally used nondisparagement provisions in consumer form contracts in the course of selling their 

 12 FTC Press Release, FTC and State of Minnesota Halt Sellers Playbook’s Get Rich Scheme, Aug. 6, 2018, 

https://www.ftc.gov/news-events/press-releases/2018/08/ftc-state-minnesota-halt-sellers-playbooks-get-rich-scheme. 
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products and services.13 The defendants included a Pennsylvania-based HVAC and 

electrical provider, a Massachusetts-based flooring firm, a Nevada-based horseback

trail riding operation, a Florida-based vacation rental company, and Marylandbased residential property management company.

The law enforcement work I have described, and indeed the enactment of the 

CRFA itself, illustrates the important role of the digital marketplace as a conduit 

for information. The ubiquity of smartphones and other personal computing devices 

has only made communication and information flow easier and more efficient than 

ever. Whether you are a Fortune 500 company or a start-up with a brand new 

innovation, the Internet is a crucial component for sales and marketing. And, while 

consumers may still learn about or get a recommendation for a product or service 

from a neighbor or family member, it is probably much more likely that they 

discover and investigate that product or service while they are surfing the Internet.

I know that I am preaching to the choir. This conference is ample evidence of 

the impact and importance of the digital marketplace, digital advertising, and the 

power of communication. We all recognize that as technology continues to develop, 

now unimaginable products and services will emerge. So what does that mean for 

us going forward?

First, the digital marketplace facilitates an exchange of information that 

benefits both providers and consumers. I think it behooves everyone in this room to 

 13 FTC Press Release, FTC Announces First Actions Exclusively Enforcing the Consumer Review Fairness Act, May 

8, 2019, https://www.ftc.gov/news-events/press-releases/2019/05/ftc-announces-first-actions-exclusively-enforcingconsumer-review; FTC Press Release, FTC Announces Two Actions Enforcing the Consumer Review Fairness Act, 

June 3, 2019, https://www.ftc.gov/news-events/press-releases/2019/06/ftc-announces-two-actions-enforcingconsumer-review-fairness-act.
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work on protecting the integrity of that information flow. There are a number of 

ways do this. For advertisers and affiliated entities, adhering to the tenets of

responsible corporate citizenship can go a long way. Not only does it enhance your 

reputation and protect your consumer relationships, it will keep you out of the 

crosshairs of agencies like the FTC. I commend those of you that have taken this to 

heart and recommend to others the value in this approach.

Second, the development of, and adherence to, industry best practices can 

lessen the possibility that legislators or regulators will feel the need to draft 

legislation or rules to reach the same results. Well-defined industry best practices 

can help companies avoid pitfalls that might result in law enforcement actions.

Developing, implementing, and updating self-regulatory initiatives can protect and 

improve an industry’s reputation and goodwill with consumers. When done 

properly, self-regulation can be pro-competitive – providing an even playing field for 

all industry participants.

However, self-regulation cannot work without your ongoing participation and 

cooperation. Utilizing experienced industry members to help develop best practices 

ensures that industry expertise, knowledge, and judgment is incorporated into the 

process. This can be especially beneficial when the business practices or technology 

involved is complex and industry members have the most expertise. I encourage you 

to consider ways that self-regulation can foster innovation and new products.

Finally – and we hear this all the time in other contexts – but I really believe 

it applies here: if you see something, say something. The FTC and other enforcers
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rely on you in the trenches for information about deceptive and unfair acts or 

practices in the marketplace – or competition issues you see. Please reach out to us, 

whether it be a concern about competition, a troubling practice in which others are 

engaged, or information about trends and developments that would help inform the 

work of the FTC. As you may have noticed, we have several members of our FTC 

team presenting as panelists at the conference. That is a real indicator of our 

interest and commitment to these issues. We value your observations and feedback.

Thank you very much for your time today. I have enjoyed being here.