International Monthly: April 2017

 
 U.S. Competition, Consumer Protection and Privacy News
 

APRIL 2017

Highlights

FTC Releases 2016 Annual Highlights

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The FTC released the agency’s 2016 Annual Highlights. The report addresses the FTC’s enforcement actions across many sectors, including health care, technology and other consumer products and services, as part of its ongoing efforts to protect consumers and promote competition. Notably, the FTC successfully blocked three mergers, preserving competition in the market for office supplies sold to large business customers and in two local markets for hospital services. The FTC also brought two cases against companies for using unlawful means to maintain a monopoly, increasing consumer prices, and limiting access and innovation.

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On the consumer protection side, the Commission obtained the largest false advertising settlement in its history, for over $10 billion in consumer redress, with Volkswagen Group of America. The agency also secured a historic settlement with Herbalife that required the company to fundamentally restructure its business and pay $200 million to compensate consumers who lost money. Privacy and data security continued to be a high priority for the agency, particularly in the mobile marketplace. For example, the agency alleged that digital advertising company Turn deceived consumers by tracking them online and through their mobile apps, even after consumers took steps to opt out of such tracking. The Highlights also include a section on the FTC’s policy work, which includes a discussion of the FTC’s international engagement, and sections on education (outreach) and statistics.

Consumer Protection and Privacy

FTC Signs Memorandum of Understanding with Royal Canadian Mounted Police

The FTC has entered into a memorandum of understanding with the Royal Canadian Mounted Police to strengthen enforcement cooperation on cross-border fraud matters. The MOU, signed by Acting FTC Chairman Maureen K. Ohlhausen, will enhance efforts by the FTC and RCMP to share information and engage in joint investigations. The FTC and the RCMP already cooperate on such issues as telemarketing fraud and providing redress for victims of cross-border frauds. The RCMP participates with the FTC in five Canada-U.S. regional partnerships focused on combatting cross-border marketing fraud, together with numerous other U.S. and Canadian enforcement agencies.

FTC Halts Invention Promotion Scheme

The FTC has charged the operators of an invention-promotion scam, World Patent Marketing, with deceiving consumers and suppressing complaints about the company by using threats of criminal prosecution against dissatisfied customers. At the FTC’s request, a federal court temporarily halted the Florida-based scheme and froze its assets pending litigation. The agency seeks to permanently stop the defendants’ practices and return money to consumers. According to the FTC’s complaint, consumers paid the defendants thousands of dollars to patent and market their inventions based on bogus “success stories” and testimonials promoted by the defendants. Instead, many customers ended up in debt or lost their life savings with nothing to show for it. The FTC also alleges that the defendants used various unfair tactics, including threats of legal action, to discourage consumers from publishing truthful or non-defamatory negative reviews about the defendants and their services.

FTC Charges Online Marketing Scheme with Deceiving Shoppers

The FTC has charged a group of online marketers with deceptively luring consumers with “free” and “risk-free” trials for cooking gadgets, golf equipment, and access to related online subscription services. According to the FTC complaint, the defendants asked people for their credit card information to cover shipping and handling, and then charged them for products and services without their consent. They also deceived consumers through websites, TV infomercials, and email by claiming prominently that their products and services were free, without clearly disclosing that they would start charging consumers if they did not cancel their “free trial” or return the “free” products.

NetSpend Settles FTC Charges for $53 Million in Fintech Case

NetSpend Corporation has agreed to settle FTC allegations that the prepaid card company deceived people about access to funds deposited on NetSpend debit cards. In November 2016, the FTC charged that in numerous instances, the company deceived consumers, many of whom do not have bank accounts, about access to funds deposited on defendants’ debit cards. According to the FTC’s complaint, NetSpend tells consumers that its reloadable prepaid debit cards offer an alternative way to store and immediately access their funds. But once people have loaded funds onto the cards, many of them find they cannot access their money, either because NetSpend denies or delays activation of the card, or because it blocks consumers from using it, the FTC alleges. The FTC seeks to return consumers’ funds and ensure that NetSpend provides them with promised access to their funds in the future. The Commission vote approving the stipulated final order was 2-1, with Acting Chairman Ohlhausen dissenting and issuing a statement. Former Chairwoman Ramirez had recorded a vote in favor before she left the FTC. Commissioner McSweeny also issued a statement.

Competition

FTC Requires ChemChina and Syngenta AG to Divest U.S. Pesticides Assets as Condition of Merger

China National Chemical Corporation (“ChemChina”) and Swiss global agricultural company Syngenta AG agreed to divest three types of pesticides - paraquat, abamectin, and chlorothalonil - to settle FTC charges that their proposed merger would harm competition in U.S. markets for these products. The complaint alleges that without the proposed divestitures, the merger would eliminate existing direct competition between ChemChina generics subsidiary ADAMA and Syngenta’s branded products and would increase the likelihood that U.S. customers would be forced to pay higher prices or accept reduced service for these products. FTC staff cooperated with antitrust agencies in Australia, Canada, the European Union, India, and Mexico, working closely with their staffs to analyze the proposed transaction and potential remedies.

FTC Requires Kidney Dialysis Chain DaVita, Inc. to Divest Assets as a Condition of Acquiring Competitor

The FTC will require the national outpatient kidney-dialysis chain DaVita, Inc. to divest its ownership interest in seven clinics – five in suburban and urban areas of New Jersey and two on the outskirts of Dallas, Texas – as part of a settlement resolving charges that its $358 million acquisition of competitor Renal Ventures Management, LLC would be anticompetitive. DaVita and Renal Ventures clinics compete directly with each other in these markets. The FTC alleged that the merger would constitute either a merger to monopoly or a reduction from three to two competitors. The complaint alleges that new entry of competing dialysis clinics in these seven markets is not likely because the markets do not have sufficient available kidney specialists to support new competition.

Organists Guild Agrees to Eliminate Rules That Restrict Competition

The American Guild of Organists agreed to eliminate rules that restrict its members from competing for opportunities to perform. Under the guild’s code of ethics, if a consumer wished to have someone other than an “incumbent musician” play at a venue for a wedding, funeral, or other service, the consumer was required to pay both the incumbent and the consumer’s chosen musician, which likely raised prices for consumers, the complaint alleges. The proposed consent order settling the FTC’s charges requires the Guild to stop restraining its members from soliciting work as musicians, and to stop issuing compensation schedules, guidance, or model contract provisions for members to use to determine their compensation. The guild must implement an antitrust compliance program, and is required to stop recognizing chapters that fail to certify their compliance with the order.

FTC Staff Comments on Occupational Licensing Reforms in Nebraska

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FTC staff submitted a comment to the Nebraska Senate on proposed legislation that would reduce or eliminate licensure requirements for certain occupations in Nebraska. The staff comment explains the competitive benefits of loosening unnecessary licensing requirements, and suggests a general framework for evaluating proposed changes to Nebraska’s licensing laws. This is the first staff comment issued since the formation of the FTC’s Economic Liberty Task Force, launched recently by Acting Chairman Maureen K. Ohlhausen to focus on the harms of excessive occupational licensing and reforms that would promote greater economic opportunity for all Americans, consistent with legitimate consumer protection goals.

FTC Staff Comments on Ohio State Legislative Effort to Enhance Access to Dental Care

FTC staff submitted a comment to the Ohio State Senate on proposed legislation that would broaden dental hygienists’ ability to work without a supervising dentist on-site, and provide for the licensure of dental therapists, a relatively new type of “mid-level” provider who offers some of the same basic services offered by dentists. The comment states that the bill’s general supervision provisions could benefit consumers by increasing choice, competition, and access to care, especially for those who are underserved. The comment also identifies that the bill would require mandatory written supervision agreements, and suggests that legislators consider whether less restrictive alternatives might achieve any legitimate and substantiated health and safety concerns goals without unduly burdening competition.

FTC and DOJ Support Reform of Alaska Laws That Limit Competition in the Health Care Sector

The FTC and the Department of Justice’s Antitrust Division recommended that Alaska repeal its certificate-of-need (CON) laws, which require healthcare providers to obtain state approval before expanding, establishing new facilities or services, or making certain large capital expenditures. In response to a request for views on Alaska Senate Bill 62, which would repeal the Alaska CON laws, the joint statement suggests that the state consider whether its CON program best serves the needs of its citizens.

In Other News

Cross-Border Enforcement Website to Offer International Consumer Authorities New Data Tools

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Since 2001, consumers around the globe have been able to report international scams to econsumer.gov, a project now sponsored by consumer authorities from 36 countries. Those complaints—which in 2016 numbered over 14,000—are available through a secure, online enforcement website to participating consumer authorities. In the coming months, the econsumer.gov enforcement website will offer its users new data tools. Key upgrades include new analysis and graphing tools, phrase cloud and phrase trending, and search results that personalize user experiences. Authorities interested in learning more are invited to email sentinel@ftc.gov.

FTC, NHTSA to Conduct Automated Vehicles Workshop

The FTC and the National Highway Traffic Safety Administration will hold a workshop on June 28 in Washington, D.C., to examine the consumer privacy and security issues posed by automated and connected motor vehicles. The workshop will bring together a variety of stakeholders, including industry representatives, consumer advocates, academics, and government regulators, to discuss various issues related to connected and automated vehicles that collect data. Those issues include the types of data that vehicles with wireless interfaces collect, store, transmit, and share; potential benefits and challenges posed by such data collection; the privacy and security practices of vehicle manufacturers; the role of the FTC, NHTSA, and other government agencies; and self-regulatory standards that might apply. The workshop, which is free and open to the public, will be webcast live. For further information on the workshop and the public comment process, including a list of suggested questions open for comment, please see the notice available on the FTC’s website.

FTC Announces Final Agenda for Hearing Health and Technology Workshop

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The FTC announced the final agenda for Now Hear This: Competition, Innovation, and Consumer Protection Issues in Hearing Health Care. The workshop will explore competition, innovation, and consumer protection issues raised by hearing health and technology. The workshop is free and open to the public. It will take place in Washington, D.C. on April 18. Discussion topics for researchers, health care providers, industry representatives, consumer representatives, policymakers, and others may be found here.

FTC Testifies Before Senate on Efforts to Combat Fraud

In testimony before Congress, the FTC described its efforts to fight fraud, noting that during the past year the agency obtained judgments totaling more than $11.9 billion for consumers harmed by deceptive and unfair business practices. The testimony stated that the FTC’s wide-ranging targets include imposter scams, where fraudsters call people and pretend to be government agents, well-known businesses, family members, or others, tricking consumers into sending money. The testimony described how the agency works with other federal and state law enforcement agencies as well as international partners to fight these frauds, including efforts against a massive fraud ring in India that took hundreds of millions of dollars from consumers in the U.S. and around the world.