International Monthly: April 2019

 
 U.S. Competition, Consumer Protection and Privacy News
 

APRIL 2019

Highlights

FTC Holds Hearings on the Agency’s International Programs

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In the 11th session of the FTC’s Hearings Initiative, the agency explored “The FTC’s Role in a Changing World.” During the two-day hearing, leading officials, academics, and practitioners addressed the implications of globalization, technological changes, and the increasing number of competition, consumer protection, and privacy laws and enforcement agencies on the FTC’s work on behalf of American consumers. Participants discussed the effectiveness of the FTC’s enforcement cooperation tools and its approaches to international policy coordination and best practice development in light of the challenges and opportunities posed by today’s dynamic global marketplace. The agency seeks public comment by May 31 on the questions posted in the press release. Event materials, including the agenda, speaker bios, presentation slides, video, transcript, and a link to post public comments, are available here.

annual highlights

FTC Chairman Releases 2018 Annual Highlights

FTC Chairman Simons released the agency’s 2018 Annual Highlights, describing some of the agency’s most notable enforcement actions, policy and advocacy initiatives, and education and outreach programs in the past year. Among the highlights were the FTC’s use of its U.S. SAFE WEB Act powers in enforcement actions against several large-scale international frauds that affected consumers in the United States and around the world. These included: Mobe, an online international business coaching scheme; Next-Gen, Inc., a deceptive sweepstakes mailer scheme that targeted consumers in the United States, Canada, the United Kingdom, France, and Germany; Apex Capital Group and Triangle Media Corporation, an international enterprise that marketed deceptive free trial offers; and Sanctuary Belize, a massive overseas real estate investment scam.

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The report also identifies the FTC’s extensive competition case cooperation. It highlights the agency’s cooperation on 43 merger and anticompetitive conduct cases with international counterpart agencies, noting that many of these matters, including Praxair/Linde, involved cooperation with multiple foreign agencies to ensure consistent analyses, outcomes and remedies. Also highlighted were policy initiatives aimed at promoting sound antitrust, consumer protection, and privacy approaches, including the agency’s work leading to the International Competition Network’s 2018 adoption of guiding principles for procedural fairness in antitrust investigations. The Stats & Data infographic captures some of the highlights.

Consumer Protection and Privacy

FTC Signs Consumer Protection Memorandum of Understanding with United Kingdom’s Competition and Markets Authority

The FTC signed a memorandum of understanding with the United Kingdom’s Competition and Markets Authority (CMA) to strengthen enforcement cooperation on consumer protection matters. The MOU supersedes a previous agreement between the FTC and U.K. authorities, furthering the agencies’ history of collaborating on consumer protection investigations and cases, and promoting multilateral cooperation at the International Consumer Protection Enforcement Network. The new MOU streamlines sharing investigative information and complaint data, simplifies requests for investigative assistance, and aids joint law enforcement investigations. It also provides strong and clear confidentiality and data safeguards.

data security

FTC Releases 2018 Privacy and Data Security Update

The FTC released its annual report highlighting its privacy and data security work for 2018. The FTC’s privacy and security enforcement actions in 2018 included shutting down revenge porn website MyEx.com, approving a settlement with peer-to-peer payment service Venmo over deceptive privacy settings, approving an expanded settlement with Uber Technologies, Inc. to resolve data security and privacy allegations, and approving a privacy and data security settlement with mobile phone maker BLU Products, Inc. The FTC announced separate settlements with electronic toy maker VTech Electronics Limited and online talent site Explore Talent over allegations that they violated the Children’s Online Privacy Protection Act. In 2018, five U.S. companies settled FTC charges that they misled consumers about their participation in the EU-U.S. Privacy Shield Framework. For details on the matters highlighted in the report, click the headline above.

UrthBox Settles FTC Charges Related to Compensated Online Reviews and “Free” Trial Offer

Food delivery service UrthBox, Inc. and its principal have agreed to settle an FTC complaint alleging that the company misrepresented that customer reviews were independent when, in fact, it had provided those customers with free products and other incentives to post positive reviews online. The administrative order settling the FTC’s complaint, which also alleges that UrthBox failed to adequately disclose key terms of its “free trial” automatic renewal programs, bars the respondents from engaging in similar conduct and requires them to pay $100,000 to the Commission to compensate consumers deceived by the trial offers.

sham charities

FTC, States Shut Down Operations That Falsely Claimed to Help Disabled Police Officers and Veterans

The operators of two purported sham charities have agreed to settle charges by the FTC and the Attorneys General of Missouri and Florida that they deceived donors with false claims that their organizations helped disabled police officers and military veterans. The operators of both schemes are permanently banned from charitable solicitations or otherwise working for charities. The settlements with Disabled Police and Sheriffs Foundation, Inc. (DPSF), and American Veterans Foundation, Inc. (AVF) highlight the FTC’s ongoing efforts to stop sham charities from defrauding donors. Advice for donating wisely and avoiding charity scams is available at ftc.gov/charity.

Office Depot and Tech Support Firm Will Pay $35 Million to Settle FTC Allegations That They Tricked Consumers into Buying Costly Computer Repair Services

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Office Depot, Inc. and a California-based tech support software provider have agreed to pay $25 million and $10 million, respectively, to settle FTC allegations that the companies tricked customers into buying millions of dollars’ worth of computer repair and technical services by deceptively claiming their software had found malware symptoms on the customers’ computers. The FTC intends to use these funds to provide refunds to consumers. The FTC alleged that Office Depot and Support.com used PC Health Check, a software program, as a sales tool to convince consumers to purchase tech repair services from Office Depot and OfficeMax, Inc., which merged in 2013. The FTC alleges that while Office Depot claimed the program detected malware symptoms on consumers’ computers, the actual results presented to consumers were based entirely on whether consumers answered “yes” to four questions, including whether the computer ran slow, received virus warnings, crashed often, or displayed pop-up ads or other problems that prevented the user from browsing the Internet.

robocalls

FTC Crackdown Stops Operations Responsible for Billions of Illegal Robocalls

Four separate operations responsible for bombarding consumers nationwide with billions of unwanted and illegal robocalls pitching auto warranties, debt-relief services, home security systems, fake charities, and Google search results services have agreed to settle FTC charges that they violated the FTC Act and the agency’s Telemarketing Sales Rule, including its Do Not Call provisions. The court orders ban the defendants from robocalling and most telemarketing activities, including those using an automatic dialer, and require them to pay significant financial penalties. Advice on call-blocking services and how to reduce unwanted calls is available at www.consumer.FTC.gov.

FTC Sends Warning Letters to Companies Regarding Diamond Ad Disclosures

FTC staff sent letters to eight jewelry marketers warning them that some of their online advertisements of jewelry made with simulated or laboratory-created diamonds may deceive consumers, in violation of the FTC Act. The letters note that in July 2018 the FTC issued updated Guides for the Jewelry, Precious Metals, and Pewter Industries that provide marketers with information on how to make non-deceptive representations about jewelry and related products, including mined, lab-created, and simulated diamonds.

Competition

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FTC Concludes that Impax Entered into Illegal Pay-for-Delay Agreement

Reversing a decision by an Administrative Law Judge, the FTC unanimously ruled that generic pharmaceutical company Impax Laboratories engaged in an illegal pay-for-delay, or “reverse payment,” settlement to block consumers’ access to a lower-cost generic version of Endo Pharmaceuticals Inc.’s branded extended-release opioid pain reliever, Opana ER. The Commission found ample evidence that Impax could have launched a generic product before the agreed-upon date had it not entered into the reverse payment settlement with Endo.

FTC’s Bureau of Competition Issues Statement Regarding Announcement that Republic National Distributing Company and Breakthru Beverage Group have Terminated Their Acquisition Agreement

Following an announcement by Republic National Distributing Company and Breakthru Beverage Group regarding the abandonment of their proposed merger, the Bureau of Competition issued a statement confirming that agency staff had been investigating the proposed transaction and had informed RNDC and Breakthru Beverage of significant concerns about likely anticompetitive harm resulting from the proposed transaction. According to the statement, staff gathered extensive evidence supporting the view that the transaction likely would have resulted in higher prices and diminished service in the distribution of wine and spirits in several states.

In Other News

FTC Seeks to Examine the Privacy Practices of Broadband Providers

The FTC issued orders to seven U.S. Internet broadband providers and related entities seeking information the agency will use to examine how broadband companies collect, retain, use, and disclose information about consumers and their devices. The orders seek information about the companies’ privacy policies, procedures, and practices. The orders were sent to: AT&T Inc., AT&T Mobility LLC, Comcast Cable Communications doing business as Xfinity, Google Fiber Inc., T-Mobile US Inc., Verizon Communications Inc., and Cellco Partnership doing business as Verizon Wireless. The FTC is initiating this study to better understand Internet service providers’ privacy practices in light of the evolution of telecommunications companies into vertically integrated platforms that also provide advertising-supported content.

capitol

FTC Describes Its Oversight of Consumer Reporting Agencies’ Data Security Practices in Congressional Testimony

Testifying before the House Oversight and Reform Subcommittee on Economic and Consumer Policy, the FTC described its role in overseeing the data security practices of consumer reporting agencies. Bureau of Consumer Protection Director Andrew Smith testified that since 2001 the Commission has promoted data security in the private sector by enforcing Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices, as well as other laws and rules, such as the Fair Credit Reporting Act, Gramm-Leach-Bliley Act, and the FTC’s Safeguards Rule. Under the Gramm-Leach-Bliley Act, the Safeguards Rule requires some non-bank financial institutions, including credit reporting agencies, to safeguard nonpublic personal information. The testimony also noted the Commission’s longstanding call for comprehensive data security legislation that would give the agency additional tools such as civil penalty authority, jurisdiction over common carriers and non-profit entities, and targeted rulemaking authority under the Administrative Procedure Act, the testimony explains.

FTC Staff Testifies in Favor of Repealing Alaska Laws that Limit Competition in the Health Care Sector

In testimony before the Alaska Senate Committee on Health & Social Services, FTC staff recommended that Alaska repeal its certificate-of-need law, requiring healthcare providers to obtain state approval before expanding or establishing new facilities or services, or making certain large capital expenditures. According to the testimony, CON laws create barriers to entry and expansion, limit consumer choice, and stifle innovation.

FTC to Hold Workshop on Product Repair Restrictions, Calls for Research in Advance

nixing the fix

Staff of the FTC will host a workshop on July 16 to examine ways in which manufacturers attempt to limit third-party repairs through warranty conditions. The agency is calling for empirical research and data focused on such limitations. Nixing the Fix: A Workshop on Repair Restrictions will focus on how manufacturers seek to limit repairs by consumers and repair shops and whether those limitations affect consumer protection, including consumers’ rights under the Magnuson-Moss Warranty Act. The statute, which the FTC enforces, aims to help consumers make informed purchasing decisions and ensure access to remedies if a product does not perform as specified. The Act, among other things, prohibits manufacturers from conditioning warranty coverage on the use of particular products or services.

FTC and CFPB Report on 2018 Activities to Combat Illegal Debt Collection Practices

The FTC and the Consumer Financial Protection Bureau reported to Congress on their 2018 activities to combat illegal debt collection practices. The report details administration of the Fair Debt Collection Practices Act, highlighting both agencies’ efforts to stop unlawful debt collection practices, including through robust law enforcement, education and public outreach, and policy initiatives.