Legal Library: Cases and Proceedings

In March 2020, Michigan-based Federal-Mogul Motorparts LLC (Federal-Mogul) agreed to settle an FTC administrative complaint alleging that it made unsubstantiated claims that its aftermarket Wagner OEX brake pads could stop a vehicle in a shorter distance in an emergency and reduce the risk of collisions, as compared to competitors’ brake pads. The proposed order resolving the FTC’s complaint prohibits Federal-Mogul from making such claims in the future, unless they are true and supported by competent and reliable scientific evidence.

Rent-to-own operators Aaron’s Inc., Buddy’s Newco, LLC, and Rent-A-Center, Inc. agreed to settle FTC charges that they negotiated and executed reciprocal purchase agreements in violation of federal antitrust law. The complaints allege that from June 2015 to May 2018, Aaron’s, Buddy’s, and Rent-A-Center each entered into anticompetitive reciprocal agreements with each other and other competitors. The three proposed consent agreements prohibited the rent-to-own companies and their franchisees from entering into any reciprocal purchase agreement or inviting others to do so, and from enforcing the non-compete clauses still in effect from the past reciprocal purchase agreements. After a public comment period, the Commission announced the final consent agreements.

Rent-to-own operators Aaron’s Inc., Buddy’s Newco, LLC, and Rent-A-Center, Inc. agreed to settle FTC charges that they negotiated and executed reciprocal purchase agreements in violation of federal antitrust law. The complaints allege that from June 2015 to May 2018, Aaron’s, Buddy’s, and Rent-A-Center each entered into anticompetitive reciprocal agreements with each other and other competitors. The three proposed consent agreements prohibited the rent-to-own companies and their franchisees from entering into any reciprocal purchase agreement or inviting others to do so, and from enforcing the non-compete clauses still in effect from the past reciprocal purchase agreements. After a public comment period, the Commission announced the final consent agreements.

Rent-to-own operators Aaron’s Inc., Buddy’s Newco, LLC, and Rent-A-Center, Inc. agreed to settle FTC charges that they negotiated and executed reciprocal purchase agreements in violation of federal antitrust law. The complaints allege that from June 2015 to May 2018, Aaron’s, Buddy’s, and Rent-A-Center each entered into anticompetitive reciprocal agreements with each other and other competitors. The three proposed consent agreements prohibited the rent-to-own companies and their franchisees from entering into any reciprocal purchase agreement or inviting others to do so, and from enforcing the non-compete clauses still in effect from the past reciprocal purchase agreements. After a public comment period, the Commission announced the final consent agreements.

The Federal Trade Commission authorized an action to block Evonik Industries AG’s proposed $625 million acquisition of PeroxyChem Holding Company, alleging the merger of the chemical companies would substantially reduce competition in the Pacific Northwest and the Southern and Central United States for the production and sale of hydrogen peroxide, a commodity chemical used for oxidation, disinfection, and bleaching.

A Canadian company, RevenueWire, and its CEO, Roberta Leach, will pay $6.75 million to settle Federal Trade Commission charges they laundered credit card payments for, and assisted and facilitated, two tech support scams previously sued by the FTC. According to the FTC, RevenueWire entered into contracts with payment processors to obtain merchant accounts to process credit card charges for its own sales of eBooks and software. The contracts prohibited RevenueWire from submitting third-party sales through its merchant accounts. In reality, however, RevenueWire used its accounts to process credit card charges and collect payments from consumers on behalf of ICE and Vast, two companies that allegedly used tech support scams to bilk consumers out of millions of dollars.

Progressive Leasing, a company that markets rent-to-own payment plans in tens of thousands of retail stores nationwide, will pay $175 million to settle Federal Trade Commission charges it misled consumers about the true price of items purchased through its plans.

Polyurethane foam producers FXI Holdings, Inc. and Innocor, Inc. have agreed to divest polyurethane foam pouring plants in three regional markets to Future Foam, Inc., to settle Federal Trade Commission charges that FXI’s proposed $850 million acquisition of Innocor would violate federal antitrust law. The FTC alleges that the combination of FXI and Innocor would substantially lessen competition for low-density conventional polyurethane foam used in home furnishings in three regional markets: the Pacific Northwest (Oregon and Washington); the Midwest states of Indiana, Michigan, and Ohio; and Mississippi. To remedy the proposed transaction’s anticompetitive effects, the proposed order requires the companies to divest FXI’s foam-pouring plant in Kent, Washington and Innocor’s foam-pouring plants in Elkhart, Indiana and Tupelo, Mississippi to Future Foam no later than 10 days after the close of the acquisition. On April 20, 2020, the Commission voted 5-0 to approve the final order settling the charges.

In September 2017, a group of online marketers agreed to pay more than $2.5 million to settle FTC charges that it deceived consumers with “free” and “risk-free” trials for cooking and golfing products. According to a complaint filed in March 2017, the defendants offered “free” products, without clearly disclosing that by accepting the “free” product consumers were agreeing to be charged each month for a subscription if they did not cancel. They also allegedly misrepresented their return, refund and cancellation policies. The order setting the FTC’s complaint barred the defendants from misrepresenting the cost of any good or service, that consumers will not be charged, that consumers can get something for a processing or shipping fee with no further obligation, and that a product or service is free. In April 2020, the FTC announced it was sending refund checks totaling $488,629 to defrauded consumers.