Legal Library: Cases and Proceedings

The FTC filed a complaint in federal district court charging Qualcomm Inc. with using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products.

In June 2018, the final two defendants among a group of California-based marketers were permanently barred from the deceptive marketing and billing tactics used in connection with selling skincare products offered to consumers with supposedly “risk-free” trials. The court order settled the charges against them, which the FTC announced in mid-2015. In all, 32 defendants who sold AuraVie, Dellure, LéOR Skincare, and Miracle Face Kit branded skincare products agreed to court orders with the FTC or had default orders entered against them. In November 2019, the FTC announced it was returning over $1.8 million to consumers who bought the deceptively marketed products.

Food distributor US Foods, Inc. has agreed to divest assets to settle Federal Trade Commission charges that US Foods, Inc.’s proposed $1.8 billion acquisition of Services Group of America, Inc. would violate federal antitrust law. The complaint alleges that, in Eastern Idaho, Western North Dakota, Eastern North Dakota, and the Seattle area, the transaction would eliminate a key broadline distributor and limit customers’ ability to switch between distributors to obtain better pricing and service. Under the proposed consent agreement, within 30 days of the acquisition closing, US Foods must divest three FSA distribution centers: one in Boise, Idaho; another in Fargo, North Dakota (FSA competes in both Eastern and Western North Dakota out of this facility); and a third in the greater Seattle area. On Nov. 19, 2019, the FTC announced that it has approved a final order settling the charges.

LifeLock paid $100 million to settle Federal Trade Commission contempt charges that it violated the terms of a 2010 federal court order that requires the company to secure consumers' personal information and prohibits the company from deceptive advertising. 

Miami Beach-based retailer Truly Organic Inc. (Truly Organic) and its founder and CEO, Maxx Harley Appelman, will pay $1.76 million to settle a FTC complaint alleging that their nationally marketed bath and beauty products are neither “100% organic” nor “certified organic” by the U.S. Department of Agriculture (USDA).

Chemical companies Quaker Chemical Corp and Houghton International Inc. have agreed to divest assets to a subsidiary of French multinational corporation Total S.A., to settle Federal Trade Commission charges that Quaker’s proposed $1.4 billion acquisition of Houghton would violate federal antitrust law. According to the complaint, the proposed acquisition would harm competition in the North American market for aluminum hot rolling oil and associated technical support services; and in the North American market for steel cold rolling oils, and associated technical support services. Steel cold rolling oils include sheet cold rolling oil, pickle oil, and tin plate rolling oil. Under the proposed settlement agreement, Quaker must divest Houghton’s North American aluminum hot rolling oil and steel cold rolling oil product lines and related assets to Total. On Sept. 12, 2019, the FTC announced that it has approved a final order in this matter.

The Federal Trade Commission filed a complaint against medical testing laboratory LabMD, Inc. alleging that the company failed to reasonably protect the security of consumers’ personal data, including medical information.

In July 2017, the FTC obtained court orders against this Maryland-based office supply operation charged with tricking small businesses, non-profit organizations, and other consumers into paying for overpriced office and cleaning supplies they never ordered. The stipulated orders setting the FTC’s complaint barred the company and its principals from telemarketing office and cleaning supplies. It also imposed a financial judgment against them, resulting in the Commission sending  refund checks totaling more than $11.6 million to small businesses and other organizations in August 2019.

In December 2018, officers of a company that marketed and sold Nobetes, a pill they claimed treats diabetes, settled an FTC complaint alleging that the advertising claims for the product are false or unsubstantiated. The order settling the FTC’s complaint prohibits the company and its officers from undertaking future deceptive practices, including making unsubstantiated health claims, misleading consumers about the terms of “free trial” offers, billing consumers without their consent, and other practices related to the use of “expert” endorsements and consumer testimonials. In addition, it requires them to pay money to provide refunds to consumers who bought the product. In August 2019, the FTC returned $60,791 to these consumers.

The FTC alleged that while SecurTest initiated a Privacy Shield application in September 2017 with the U.S. Department of Commerce, the company did not complete the steps necessary to be certified as complying with the frameworks. Because it failed to complete certification, SecurTest was not a certified participant in the frameworks, despite representations to the contrary on its website. The settlement with the FTC prohibits SecurTest from misrepresenting its participation in any privacy or security program sponsored by a government, self-regulatory, or standard-setting organization, including the EU-U.S. Privacy Shield and Swiss-U.S. Privacy Shield frameworks. It also must comply with reporting and compliance requirements.

In October 2016, a federal judge granted the FTC’s request for a preliminary injunction against two people and their companies for allegedly tricking small commercial trucking businesses into paying them for federal and state motor carrier registrations by impersonating government transportation agencies, such as the U.S. Department of Transportation. The FTC alleged DOTAuthority.com Inc., DOTFilings.com Inc., Excelsior Enterprises International Inc. and JPL Enterprises International Inc. violated the FTC Act and the Restore Online Shoppers Confidence Act. Under a 2018 settlement order, the DOT Authority defendants are banned from misrepresenting affiliation with any government entity and from using consumers’ billing information to obtain payments without consumers’ express consent. They must also adequately disclose that they are a private third-party service provider and any fees associated with their services. The order imposes a $900,000 judgment to provide refunds to defrauded consumers. In October 2018, the FTC sent $90,000 back to defrauded consumers. In August 2019, the FTC sent an additional $757,946 back to defrauded consumers.

The Federal Trade Commission finalized five separate proposed administrative complaints and orders enforcing the Consumer Review Fairness Act (CRFA), which prohibits businesses from using form contract provisions that bar consumers from writing or posting negative reviews online, or threatening them with legal action if they do. These are the first five Commission actions exclusively focused on enforcing the CRFA, with the complaints filed against: 1) A Waldron HVAC, LLC and its owner, Thomas J. Waldron; 2) National Floors Direct, Inc. (NFD); 3) LVTR LLC (LTVR) and its owner, Tomi A. Truax; 4) Shore to Please Vacations LLC; and 5) Staffordshire Property Management, LLC. Each respondent agreed to separate final Commission orders barring them from using such non-disparagement clauses in form contracts for goods and services, and requiring them to notify consumers who signed such contracts that the prohibited text is not enforceable. The FTC sent two letters in response to public comments in the Staffordshire matter.