FEDERAL TRADE COMMISSION

Washington, DC 20580

DEPARTMENT OF JUSTICE

Washington, DC 20530

June 10, 2016

The Honorable Bill Cook

North Carolina Senate, 1st District

300 N. Salisbury Street, Room 525 

Raleigh, NC 27603-5925

Re: North Carolina HB 436

Dear Senator Cook:

The staff of the Federal Trade Commission (the “FTC” or the 

“Commission”)

1 and the Antitrust Division of the U.S. Department of Justice (the 

“Division”) (together, the “Agencies”) welcome the opportunity to share our 

views on the definition of the practice of law and North Carolina House Bill 436

(“HB 436” or “the Bill”).

2 The Bill would exclude from the statutory definition of 

the practice of law the operation of a website that offers consumers access to 

interactive software that generates legal documents in response to consumer 

input. Such websites would have to comply with several conditions, including 

disclosing that the forms do not substitute for attorney advice or service.

The Division and FTC staff believe that “the practice of law” should mean

activities for which specialized legal knowledge and training is demonstrably 

 

1 This letter expresses the views of the FTC’s Office of Policy Planning, Bureau of Competition, 

Bureau of Consumer Protection, and Bureau of Economics. The letter does not necessarily 

represent the views of the FTC or any individual Commissioner. The Commission, however, has 

voted to authorize staff to submit these comments.

2 See Letter from Bill Cook, North Carolina State Senator, District 1, to Michael J. Bloom, Assistant 

Director, Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission 

(July 28, 2015).
The Honorable Bill Cook

June 10, 2016

2

necessary to protect consumers and an attorney-client relationship is present. 

Overbroad scope-of-practice and unauthorized-practice-of-law policies can 

restrict competition between licensed attorneys and non-attorney providers of 

legal services, increasing the prices consumers must pay for legal services, and 

reducing consumers’ choices.

Accordingly, the Agencies recommend that the North Carolina General 

Assembly consider the benefits of interactive websites for consumers and 

competition in evaluating HB 436. Interactive software for generating legal 

forms may be more cost-effective for some consumers, may exert downward 

price pressure on licensed lawyer services, and may promote the more efficient 

and convenient provision of legal services. Such products may also help increase 

access to legal services by providing consumers additional options for 

addressing their legal situations. 

The Agencies also recognize that such interactive software products may 

raise legitimate consumer protection issues. The Agencies recommend that any 

consumer protections, such as requiring disclosures, be narrowly tailored to 

avoid unnecessarily inhibiting competition and new ways of delivering legal 

services that may benefit consumers.

I. Interest and Experience of the Agencies

Competition is the core organizing principle of America’s economy,3 and 

vigorous competition among sellers in an open marketplace gives consumers the 

benefits of lower prices, higher quality goods and services, greater access to 

goods and services, and innovation.4 The Agencies work to promote competition 

by enforcing the antitrust laws, which prohibit certain business practices and 

transactions that harm competition and consumers, and through competition 

advocacy, whereby the Agencies advocate for policies that promote competition 

 

3 See, e.g., N.C. State Bd. of Dental Exam’rs v. FTC, 135 S. Ct. 1101, 1109 (2015) (“Federal antitrust 

law is a central safeguard for the Nation’s free market structures.”); Standard Oil Co. v. FTC, 340 

U.S. 231, 248 (1951) (“The heart of our national economic policy long has been faith in the value of 

competition.”).

4 See, e.g., Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 695 (1978) (noting that the 

antitrust laws reflect “a legislative judgment that ultimately competition will produce not only 

lower prices, but also better goods and services. . . . The assumption that competition is the best 

method of allocating resources in a free market recognizes that all elements of a bargain—quality, 

service, safety, and durability—and not just the immediate cost, are favorably affected by the free 

opportunity to select among alternative offers.”).
The Honorable Bill Cook

June 10, 2016

3

and consumer welfare via comments on legislation, court filings, and discussions 

with regulators, among other means.

Because of the importance of legal services to consumers and the 

economy, the Agencies have long sought to foster competition in the legal 

services marketplace. The Agencies and their staff have provided comments to 

policymakers and stakeholders on the scope of the practice of law, the 

unauthorized practice of law, attorney advertising, and other aspects of the 

regulation of legal services.5 They have engaged in various activities relating

specifically to innovation in the area of legal services.6 In particular, the 

Agencies have previously provided comments on the definition of the practice of 

law as it relates to interactive software for generating legal forms.7 The Agencies 

have also submitted amicus briefs to courts regarding the application of 

competition principles to the provision of legal services.8

The Agencies have generally encouraged legislatures, courts, and state 

bars to avoid restrictions on the performance of legal-related services that are not 

necessary to address legitimate and substantiated harms to consumers, and 

recommended that any such restrictions be narrowly drawn to minimize their 

anticompetitive impact.9 The Agencies recognize the important role of state 

legislatures, courts, and bar associations in protecting consumers of legal services 

 

5 The Agencies’ joint letters regarding the practice of law are available at FTC, ADVOCACY FILINGS,

https://www.ftc.gov/policy/advocacy/advocacy-filings (Topic Filter: Attorneys); U.S.

DEPARTMENT OF JUSTICE, ANTITRUST DIVISION, COMMENTS TO STATES AND OTHER ORGANIZATIONS,

https://www.justice.gov/atr/comments-states-and-other-organizations.

6 See generally Submission of the United States to the Organisation for Economic Co-operation and 

Development Regarding Disruptive Innovations in Legal Services (May 30, 2016), 

http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/COMP/WP2

/WD(2016)4&docLanguage=En (summarizing DOJ and FTC activities).

7 DOJ-FTC Comments on the American Bar Association’s Proposed Model Definition of the 

Practice of Law 10-12 (Dec. 20, 2002), https://www.justice.gov/atr/comments-american-barassociations-proposed-model-definition-practice-law (hereinafter “DOJ-FTC 2002 ABA 

Comments”).

8 See, e.g., Brief Amici Curiae of the FTC and United States of America, McMahon v. Advanced 

Title Servs. Co. of W. Va., 216 W. Va. 413 (2004), https://www.ftc.gov/policy/policyactions/advocacy-filings/2004/05/ftc-amicus-curiae-brief-lorrie-mcmahon-et-al-v (real estate 

settlement services); Brief of FTC as Amicus Curiae Supporting Neither Party, Cleveland Bar 

Ass’n v. CompManagement, Inc., 104 Ohio St. 3d 168 (2004), 

https://www.ftc.gov/policy/policy-actions/advocacy-filings/2004/07/ftc-amicus-curaie-briefcleveland-bar-association (representation in workers’ compensation matters).

9 E.g., DOJ-FTC 2002 ABA Comments, supra note 7, at 13-15.
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June 10, 2016

4

from harm. The Agencies have previously noted, however, that unnecessarily 

broad definitions of the practice of law or the unauthorized practice of law can 

impose significant competitive costs on consumers of legal services, restrict 

access to legal services, and inhibit the development of innovative ways to 

deliver legal services to consumers.10

The Agencies believe the definition of the practice of law should be 

limited to activities where: (1) specialized legal skills are required, such that there 

is an implicit representation of authority or competence to practice law, and (2) a 

client relationship of trust or reliance exists.11 The Agencies have recognized

District of Columbia Court of Appeals Rule 49 Commentary as instructive.12

In addition to its shared authority to enforce the antitrust laws, the FTC

also combats fraud and promotes truthful and non-deceptive information in the 

marketplace.13 It has expertise in various other aspects of consumer protection 

that are relevant to interactive software for generating legal forms.

14 The 

Commission has extensive expertise in the advertising and marketing of 

products and services, including disclosure issues.15 For instance, the FTC has 

 

10 E.g., id. at 9-12.

11 E.g., DOJ-FTC Comments Before the Supreme Court of Hawaii on Revised Proposed Rule 

Concerning Unauthorized Practice of Law (Apr. 20, 2009), https://www.ftc.gov/policy/policyactions/advocacy-filings/2009/04/ftc-and-department-justice-comment-supreme-court.

12 E.g., id. at 2; see also D.C. Court of Appeals Commentary to Rule 49(b)(2) (Mar. 1, 2016), 

http://www.dccourts.gov/internet/documents/DCCA_Rules_02-04-2016.pdf (“[There are] two 

essential elements of the practice of law: The provision of legal advice or services, and a client 

relationship of trust or reliance. Where one provides such advice or services within such a 

relationship, there is an implicit representation that the provider is authorized or competent to 

provide them; just as one who provides any services requiring special skill gives an implied 

warranty that they are provided in a good and workmanlike manner. . . . The presumption that 

one’s engagement in [an activity] is the ‘practice of law’ may be rebutted by showing that there is 

no client relationship of trust or reliance, or that there is no explicit or implicit representation of 

authority or competence to practice law, or that both are absent.”) (internal citations omitted).

13 See generally FTC Policy Statement on Unfairness (Dec. 17, 1980), appended to Int’l Harvester Co., 

104 F.T.C. 949, 1070 (1984), https://www.ftc.gov/public-statements/1980/12/ftc-policystatement-unfairness (see 15 U.S.C. § 45(n)); FTC Policy Statement on Deception (Oct. 14, 1983), 

appended to Cliffdale Assocs., Inc., 103 F.T.C. 110, 174 (1984), https://www.ftc.gov/publicstatements/1983/10/ftc-policy-statement-deception.

14 The comments in this letter regarding deception and disclosure issues are based on the FTC’s 

consumer protection experience. In particular, see infra Section IV.B. (discussing consumer 

protection considerations for HB 436).

15 For example, FTC staff has conducted research regarding consumer understanding of 

disclosures relating to mortgages. See, e.g., JAMES M. LACKO & JANIS K. PAPPALARDO, IMPROVING 
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June 10, 2016

5

worked to combat scams by “notarios” claiming they can help with the 

immigration process,16 and to shut down an immigration services business that 

allegedly advertised and marketed its services online in a deceptive manner.17 

More generally, FTC staff has issued guidance on how to make effective

disclosures in the online context.18 The Commission also has significant

consumer protection expertise in identifying data security, privacy, and identity 

theft issues that websites and other software applications may raise.19

II. The Legal Services Marketplace

Licensed attorneys have traditionally performed many legal services on 

behalf of clients. Non-lawyers have also historically performed many legalrelated services that have not been deemed subject to regulation as “the practice 

of law.”20 Defining the practice of law has been a difficult question for the legal 

 

CONSUMER MORTGAGE DISCLOSURES: AN EMPIRICAL ASSESSMENT OF CURRENT AND PROTOTYPE 

DISCLOSURE FORMS (2007) (FTC Bureau of Economics Staff Report), 

http://www.ftc.gov/os/2007/06/P025505MortgageDisclosureReport.pdf; JAMES M. LACKO &

JANIS K. PAPPALARDO, THE EFFECT OF MORTGAGE BROKER COMPENSATION DISCLOSURES ON 

CONSUMERS AND COMPETITION: A CONTROLLED EXPERIMENT (2004) (FTC Bureau of Economics 

Staff Report), http://www.ftc.gov/os/2004/01/030123mortgagefullrpt.pdf.

16 See generally FTC, SCAMS AGAINST IMMIGRANTS, https://www.consumer.ftc.gov/articles/0141-

scams-against-immigrants.

17 See Press Release, FTC, FTC Action Bans Defendants from Providing Immigration Services (Jan. 

24, 2012), https://www.ftc.gov/news-events/press-releases/2012/01/ftc-action-bansdefendants-providing-immigration-services.

18 FTC STAFF, .COM DISCLOSURES: HOW TO MAKE EFFECTIVE DISCLOSURES IN DIGITAL ADVERTISING

(2013), http://ftc.gov/os/2013/03/130312dotcomdisclosures.pdf. 

19 See FTC STAFF, MOBILE PRIVACY DISCLOSURES: BUILDING TRUST THROUGH TRANSPARENCY (2013), 

http://www.ftc.gov/os/2013/02/130201mobileprivacyreport.pdf.

20 See generally HERBERT M. KRITZER, LEGAL ADVOCACY: LAWYERS AND NONLAWYERS AT WORK 11 

(1998) (“[B]y one count, as of 1994, nonlawyers can appear as advocates before thirty-eight 

federal agencies.”). Non-lawyers have practiced before the U.S. Patent and Trademark Office 

from its inception, with the express approval of the Office and with the knowledge of Congress. 

Sperry v. Florida ex rel. Fla. Bar, 373 U.S. 379, 384-88 (1963). Accountants and other tax specialists 

may practice in tax matters before the Treasury Department. Grace v. Allen, 407 S.W.2d 321 (Tex. 

Civ. App. 1966) (accountants admitted to practice before Treasury Department in preparation 

and presentation of client’s protest of federal income tax assessment may perform some legal 

research and provide assistance to tax lawyers). Accredited non-attorney representatives may 

represent persons in immigration proceedings before immigration judges and the Board of 

Immigration Appeals. Al Roumy v. Mukasey, 290 F. App’x 856, 861 n.2 (6th Cir. 2008).

Non-attorney practice has also been allowed before a number of state administrative agencies. 

E.g., Cleveland Bar Ass’n v. CompManagement, Inc., 104 Ohio St. 3d 168 (2004) (non-lawyers 

who appear and practice in a representative capacity before the Ohio Industrial Commission and 
The Honorable Bill Cook

June 10, 2016

6

profession for many years. The boundaries of the practice of law are frequently 

unclear and have varied significantly over time and from jurisdiction to 

jurisdiction.21

The legal services marketplace has experienced a number of changes in 

recent years. These trends include: client demands for more cost-effective and 

efficient services; unbundling of services and disaggregation of legal matters 

across multiple service providers; development of new billing models and law 

firm models; geographic expansion of law firms and other legal services 

providers; provision by non-law firms of certain services previously obtained 

exclusively from law firms; increased use of automation technologies; online 

matching, reviewing, and ranking of lawyers; and use of Internet, World Wide 

Web, and related computer technologies to deliver legal services. In particular, 

the increased use of computer, software, and online technologies has enabled 

non-lawyers to provide many services that historically were provided

exclusively by lawyers and traditional law firms.

Notwithstanding these changes, there remains a well-known crisis in 

access to legal services for millions of American consumers, especially for lowand middle-income people. Surveys have repeatedly shown that many low- and 

middle-income Americans cannot afford the services of a licensed attorney, 

despite a generally increasing number of lawyers.22 This seeming paradox of 

unmet legal needs and an abundance of lawyers continues to persist.23

In response to consumer demands for less expensive ways to address their 

legal needs, software companies, entrepreneurs, and law firms have developed 

inexpensive interactive software for generating legal documents. These 

programs allow users to create wills, trusts, articles of incorporation, and other 

 

the Bureau of Workers’ Compensation are not engaged in the unauthorized practice of law when

they act in conformance with Industrial Commission standards of conduct); Petition of Burson, 

909 S.W.2d 768, 777 (Tenn. 1995) (statute permitting non-attorney agents to represent taxpayers 

before boards of equalization did not sanction unauthorized practice of law).

21 See generally DOJ-FTC 2002 ABA Comments, supra note 7.

22 See generally LEGAL SERVICES CORP., DOCUMENTING THE JUSTICE GAP IN AMERICA: THE CURRENT 

UNMET CIVIL LEGAL NEEDS OF LOW-INCOME AMERICANS (2009), http://www.lsc.gov/lsc-updatesoctober-1-2009; ABA, LEGAL NEEDS AND CIVIL JUSTICE: A SURVEY OF AMERICANS (1994), 

http://www.americanbar.org/content/dam/aba/migrated/legalservices/downloads/sclaid/le

galneedstudy.authcheckdam.pdf.

23 See J.D. Smeallie, From BBA President: Connecting Supply With Demand to Fill the Justice Gap, 

BOSTON BAR ASS’N (July 17, 2013), http://www.bostonbar.org/public-policy/public-policyarchive/2013/07/22/from-bba-president-connecting-supply-with-demand-to-fill-the-justice-gap. 
The Honorable Bill Cook

June 10, 2016

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legal documents, based on answers to questions presented by the software. Such 

programs have included physical software products (e.g., CD-ROMs), as well as 

web-based internet applications and non-web-based internet applications (e.g., 

smartphone-type “native” applications). A number of courts24 and government 

agencies25 also now provide online legal forms for use in their jurisdiction. Prior 

to these developments, document generation assistance was available in a 

number of states through legal self-help books and standardized paper legal 

forms for completion by a consumer, as well as through attorneys.26

Interactive software programs for generating legal documents appear to 

be responsive to consumer demands for more cost-effective and efficient ways to 

address their legal issues. These software products may expand consumer access 

to legal services, facilitate the unbundling of legal services, promote a more 

efficient allocation of resources (e.g., among licensed attorneys, non-attorney 

providers, and self-help efforts), reduce transaction costs, increase convenience, 

and help some consumers more effectively to address their legal situations. For 

example, a consumer who may be unable to afford to retain a licensed attorney 

both to draft and review a legal document may be able to use interactive 

software to generate a draft document, and pay an attorney only to review the 

document, if desired. At the same time, such programs may raise consumer 

protection issues regarding consumers’ understanding both of the generated 

forms, and whether or when it may be desirable for a consumer to seek the 

services of an attorney.

 

24 E.g., CALIFORNIA COURTS, FORMS & RULES, http://www.courts.ca.gov/forms.htm; DELAWARE 

COURTS, FORMS, http://courts.delaware.gov/forms/; NORTH CAROLINA COURT SYSTEM, JUDICIAL 

FORMS, http://www.nccourts.org/Forms/FormSearch.asp; IDAHO JUDICIAL BRANCH COURT 

ASSISTANCE OFFICE, FORMS: INDIVIDUAL FORMS AND INSTRUCTIONS, 

http://www.courtselfhelp.idaho.gov/individual-forms-instructions; IOWA JUDICIAL BRANCH,

COURT RULES AND FORMS, http://www.iowacourts.gov/Court_Rules__Forms/Overview/; MASS.

COURT SYSTEM, COURT FORMS, http://www.mass.gov/courts/forms/; U.S. COURTS, FORMS, 

http://www.uscourts.gov/services-forms/forms.

25 E.g., NORTH CAROLINA DEP’T OF THE SECRETARY OF STATE, CORPORATE FORMS, 

https://www.secretary.state.nc.us/corporations/printforms.aspx; U.S. COPYRIGHT OFFICE,

FORMS, http://copyright.gov/forms/; U.S. PATENT AND TRADEMARK OFFICE, PATENTS FORMS, 

http://www.uspto.gov/patent/patents-forms and TRADEMARK ELECTRONIC APPLICATION 

SYSTEM, http://www.uspto.gov/trademarks-application-process/filing-online. 

26 See, e.g., N.Y. Cnty. Lawyers’ Ass’n v. Dacey, 28 A.D.2d 161, 171 (N.Y. App. Div. 1st Dept. 1967) 

(Stevens, J., dissenting), rev’d, 21 N.Y.2d 694 (1967) (adopting dissenting opinion of Appellate 

Division, holding that incorporating legal forms into self-help book entitled “How to Avoid 

Probate!” was not the unauthorized practice of law). See also generally DOJ-FTC 2002 ABA 

Comments, supra note 7.
The Honorable Bill Cook

June 10, 2016

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III. HB 436

HB 436, in its current version, would amend North Carolina General 

Statutes Section 84-2.1 to exclude from the statutory definition of the practice of 

law the operation of interactive websites that generate legal documents based on 

a consumer’s answers to questions presented by the software.27 A website would 

have to satisfy several conditions in order to be excluded from the definition of 

the practice of law, and thus for its provider not to be subject to prosecution for 

the unauthorized practice of law. These conditions include providing a 

disclosure that the forms are not a substitute for attorney advice or services, and 

disclosing the provider’s legal name and physical location and address.28

IV. Competition and Consumer Protection Considerations for HB 436

A. Competition Considerations

HB 436 appears meant to promote competition from interactive websites, 

and the Agencies recommend that the General Assembly consider the benefits of 

interactive software for consumers and competition.29 The Agencies believe that 

 

27 H.B. 436, N.C. Gen. Assemb., 2015-16 Sess. (4th ed. Sept. 23, 2015), 

http://www.ncleg.net/Sessions/2015/Bills/House/PDF/H436v4.pdf. This version of the Bill is 

apparently meant to cover certain web-based interactive forms, such as LegalZoom.com. See 

LegalZoom.com, Inc. v. N.C. State Bar, 2015 NCBC 96 (Sup. Ct. N.C. Oct. 22, 2015) (Consent 

Judgment) (“The parties have agreed to mutually support and use best efforts to obtain passage 

by the North Carolina General Assembly of HB 436 in the form currently pending before the 

House Judiciary Committee.”). This version of the Bill, in contrast to prior versions, does not 

appear to encompass other similar self-help products that may generate legal forms, however. 

The Agencies suggest that the North Carolina General Assembly consider expanding the Bill to 

encompass similar self-help products. As explained in Section IV.A. infra, a pro-competitive 

regulatory framework should not favor one type of competitor over another in addressing similar 

harms.

28 The Bill would also require that: a consumer be able to see a blank template or completed 

document before final purchase; each blank template be reviewed by a North Carolina attorney; a 

provider not disclaim any warranties or liability, or limit damages or other remedies; and a 

provider not require a consumer to agree to jurisdiction or venue outside North Carolina.

29 The Agencies also recommend that the General Assembly reconsider broadening the Bill to 

exclude similar self-help products from the definition of the practice of law. Doing so may 

further benefit consumers. The legislature may wish to consider the experience of Texas in this 

regard. The Texas Unauthorized Practice of Law Committee succeeded in having a federal 

district court enjoin the sale and distribution of Quicken Family Lawyer software as the 

unauthorized practice of law. See UPL Comm. v. Parsons Tech., Inc., 179 F.3d 956 (5th Cir. 1999). 

Texas subsequently enacted legislation amending the statutory definition of the practice of law to 

exclude from its definition such software and similar products, if they clearly and conspicuously 

state they are not a substitute for attorney advice. TEX. GOV’T CODE ANN. § 81.101(c) (1999). 
The Honorable Bill Cook

June 10, 2016

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consumers generally benefit from competition between lawyers and non-lawyers 

in the provision of legal-related services. Consumer demand should determine 

the range of choices in the marketplace, unless it is clear that specialized legal 

training is required to perform a legal-related service. Overbroad scope-ofpractice and unauthorized-practice-of-law policies can increase prices, impede 

innovation, and otherwise harm competition and consumers.

Interactive websites that generate legal documents in response to 

consumer input may be more cost-effective for some consumers, may exert 

downward price pressure on licensed lawyer services, and may promote the 

more efficient and convenient provision of legal services.

Such products may also help increase access to legal services by providing 

consumers additional options for addressing their legal situations. They may 

especially benefit low- and middle-income consumers, those who live in rural 

areas where a lawyer is unavailable, and others who may not have convenient 

access to a traditional law office during typical working hours.30

The Agencies recommend that the North Carolina General Assembly not 

adopt restrictions on such software products unless there is credible evidence 

that they harm consumers, any restriction is narrowly tailored to address that 

harm, and the benefits of the restriction will outweigh the harm that will likely 

result to competition. Should the General Assembly receive any claims of 

consumer harm from interactive websites or similar products, the Agencies urge 

the legislature to consider whether the evidence substantiates any such actual or 

predicted harm.

This analysis should also examine whether any harm from these products 

is materially greater than comparable harms posed by traditional attorney-client 

relationships or government provision of legal services or information, such as 

legal forms or other information available at the website of a government court 

or agency. As a matter of sound competition policy, a regulatory framework 

should not in purpose or effect favor one type of similarly situated competitor 

over others in addressing any identical or similar harms from these products.

 

Based on this legislation, the Fifth Circuit Court of Appeals vacated the injunction against the 

software.

30 See generally NORTH CAROLINA EQUAL ACCESS TO JUSTICE COMMISSION, A COMMISSION OF THE 

NORTH CAROLINA SUPREME COURT, http://ncequalaccesstojustice.org/about/ (collecting 

Commission reports finding that the number of low-income people in North Carolina needing 

legal assistance has continued to increase in recent years).
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June 10, 2016

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B. Consumer Protection Considerations

The Agencies recognize that licensing requirements and scope-of-practice

policies can have valid consumer protection justifications. Some circumstances 

and tasks require the knowledge and skill of a person trained in the law. Policies 

to protect consumers in such situations are legitimate. As noted above, however, 

overbroad scope-of-practice and unauthorized-practice-of law-policies can 

potentially inhibit new ways of delivering legal services that may benefit 

consumers.31

Providers of interactive software programs and other similar products 

should provide truthful, non-deceptive information about their characteristics.32 

For example, a commercial software product for generating legal forms should 

not falsely represent, either expressly or impliedly, that it is a substitute for the 

specialized legal skills of a licensed attorney, or that it is affiliated with or 

endorsed by a government entity.33 Providers also should not falsely represent, 

either expressly or impliedly, the scope or cost of the product or service, 

including whether they will initiate a legal submission to a government entity. 

For example, providers should not expressly or impliedly represent that a legal 

submission will be made to a government entity if, in fact, additional payment to 

the provider or to a government entity, or some other further action, is needed to 

execute a filing. Providers should provide truthful, non-deceptive information 

about the functions their products actually perform.

Regulation of interactive software for generating legal documents should 

therefore focus primarily on deterring unfair or deceptive advertising and 

marketing practices relating to the content of forms, their validity, liability, other 

terms of use, and any related filing fees, and addressing any other consumer 

protection issues. In the event the legislature receives evidence of significant 

 

31 The following analysis of consumer protection considerations regarding HB 436 represents the 

views of the staff of the Federal Trade Commission, which, as discussed in Section I. above, has 

expertise in consumer protection issues. The U.S. Department of Justice Antitrust Division does 

not express any views on consumer protection considerations regarding HB 436.

32 See FTC Policy Statement on Unfairness and FTC Policy Statement on Deception, supra note 13.

33 See generally FTC, Enforcement Policy Statement on Deceptively Formatted Advertisements 

n.17 (2015), https://www.ftc.gov/news-events/press-releases/2015/12/ftc-issues-enforcementpolicy-statement-addressing-native (discussing commercial communications that mislead 

consumers that they are from the government and other examples of deceptively formatted ads).
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June 10, 2016

11

consumer harm from interactive software, or similar products, any restrictions 

on their sale, distribution, or use should be tailored to address those harms.

34

HB 436 would require certain disclosures by providers of interactive 

websites. These appear designed to promote the dissemination of truthful and 

non-deceptive information to consumers. Requiring certain disclosures may be 

an efficient way to protect consumers from possible misunderstandings about 

the nature of these products.35 But the existence of a disclosure should not serve 

as a safe harbor for making false or deceptive express or implied claims. The 

General Assembly may wish to consider the principles and examples for mobile 

and other online advertising disclosures provided in FTC staff’s guidance 

document, .com Disclosures: How to Make Effective Disclosures in Digital 

Advertising.

36 Among other things, it emphasizes that advertisers should ensure 

that disclosures are clear and conspicuous on all devices and platforms 

consumers may use. Any disclosures should be made in the same language as 

the predominant language in which advertisements about the forms are 

communicated.37 As discussed above, any such disclosure requirements should 

be reasonably tailored to avoid unnecessarily inhibiting the entry, operation, and

expansion of new and innovative ways to serve consumers’ legal needs.

 

34 Requiring disclosures or other conditions on the sale, distribution, or use of interactive 

software, or similar products, may also raise First Amendment issues. See generally Central 

Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y., 447 U.S. 557, 566 (1980) (articulating a 

four-part test for evaluating whether government regulations on commercial speech are 

constitutional).

35 FTC staff recommends that the General Assembly consider evaluating available evidence 

regarding the effectiveness of any proposed disclosures. As noted above, the legislature may 

wish to consider the experience of Texas in this area. FTC staff research has demonstrated that 

disclosures developed even with the best intentions may confuse or mislead consumers, and that 

they can be improved substantially through the use of consumer research; in particular, wellcontrolled, quantitative testing can help to ensure that disclosures will work as intended. See 

supra note 15. FTC staff also recommends that the legislature and other relevant North Carolina 

authorities continue to monitor the effectiveness of any disclosures that are implemented, such as 

through conducting consumer surveys, to ensure that disclosures are, in fact, made in a clear and 

conspicuous manner to consumers, and they are otherwise achieving their underlying consumer 

protection objectives.

36 See supra note 18.

37 See FTC Enforcement Policy Statement on Deceptively Formatted Advertisements, supra note 

33, at n.58 and related text.
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June 10, 2016

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V. Conclusion

The Agencies recommend that the North Carolina General Assembly 

consider the benefits of interactive websites for consumers and competition in 

evaluating HB 436. The Agencies also recognize that such products may raise 

legitimate consumer protection issues, and recommend that any necessary 

consumer protections be narrowly tailored to avoid unnecessarily restricting new 

forms of competition that may benefit consumers.

We appreciate this opportunity to present our views.

Marina Lao, Director Robert Potter, Chief

Office of Policy Planning Legal Policy Section

Federal Trade Commission Antitrust Division

U.S. Department of Justice