President Joe Biden designated Rebecca Kelly Slaughter as Acting Chair of the FTC. Slaughter has served as a Commissioner since May 2018. She replaces Joseph Simons, who had served as Chairman since May 2018. Simons announced his resignation from the Commission effective January 29, 2021.
Consumer Protection and Privacy
Amazon will pay more than $61.7 million to settle FTC charges that it failed to pay Amazon Flex drivers the full amount of tips they received from Amazon customers over a two and a half year period. In late 2016, the FTC alleges, Amazon shifted from paying drivers the promised rate of $18–25 per hour plus the full amount of customer tips to paying drivers a lower hourly rate, a shift that it did not disclose to drivers. Amazon used the customer tips to make up the difference between the new lower hourly rate and the promised rate. This resulted in drivers’ being shorted more than $61.7 million in tips.
The FTC’s complaint alleges that the company stopped its behavior only after becoming aware of the FTC’s investigation in 2019. The $61.7 million will be used by the FTC to compensate drivers. The FTC’s agreement with Amazon also prohibits the company from misrepresenting any driver’s likely income, rate of pay, or tips. Amazon also will be prohibited from making any changes to how a driver’s tips are used as compensation without first obtaining the driver’s express informed consent.
The FTC brought legal action against three New York ticket brokers who allegedly used automated software to illegally buy up tens of thousands of tickets for popular concerts and sporting events and then subsequently made millions of dollars reselling the tickets to fans at higher prices. Under a proposed settlement, the three ticket brokers will be subject to a judgment of more than $31 million in civil penalties for violating the Better Online Ticket Sales (BOTS) Act. Due to their inability to pay that much, the judgment will be partially suspended, requiring them to pay $3.7 million. If the defendants are found to have misrepresented their financial condition, the full amounts of the penalties will be immediately due. The BOTS Act, enacted in 2016, gives the FTC authority to take law enforcement action against individuals and companies that use bots or other means to circumvent limits on online ticket purchases. For blog posts offering guidance to consumers and businesses, click the headline above.
The FTC received 4.7 million reports, including approximately 2.6 identity theft related reports and more than 2.1 million complaints about fraud and other illegal business practices from consumers in 2020, according to recently released data. As in 2019, imposter scams were the most common type of fraud reported to the agency. Online shopping was the second-most common fraud category reported by consumers. With the pandemic came an increase in online shopping, and then a wave of reports about sellers failing to deliver on promises — or just failing to deliver. The FTC received more than 350,000 reports in this category, claiming losses more than $245 million, with a median loss of about $100. In total, consumers reported losing more than $3.3 billion in 2020, up from $1.8 billion in 2019. Data on international reports submitted to the FTC’s Consumer Sentinel Network show that in 2020, consumers lost more than $489 million to foreign scams (up from more than $266 million in 2019), based on the more than 116,700 reports (up from more than 91,000 in 2019) against companies located outside the United States. Online shopping was the top complaint category about non-U.S. companies, followed by tech support scams; romance scams; prizes, sweepstakes, and lotteries; and advance-fee credit reports. For non-U.S. companies, Canada was the subject of the largest number of consumer complaints, followed by China, the United Kingdom, India, and Nigeria.
Because of these types of economic losses to consumers, a core part of the FTC’s mission is to return money to consumers who have been harmed by fraud or other illegal business practices. Data recently released by the Commission shows that FTC actions led to more than $482 million in refunds to consumers across the country in 2020. More than 1.6 million consumers in the United States and abroad received distributions as a result of 50 different FTC cases. Click here to explore data on domestic and international refunds.
The FTC filed an action against Endo Pharmaceuticals Inc., Impax Laboratories, LLC, and two other firms, alleging that a 2017 agreement between Endo and Impax eliminated competition in the market for oxymorphone ER. The FTC had previously sued Endo and Impax over a 2010 agreement concerning an earlier formulation of the same drug. The Commission later found that agreement to be an illegal reverse-payment settlement in which Endo paid Impax not to compete. That decision is currently on appeal. Separately, in mid-2017, Endo voluntarily withdrew a 2012 reformulation of the drug from the market, leaving Impax’s generic version as the only extended-release oxymorphone drug on the market. Rather than using other strategies to reenter the market, the FTC alleges that Endo, instead, entered into an agreement with Impax, which paid Endo to stay out of the market, and that the agreement eliminated potential competition from Endo through the sharing of Impax’s monopoly profits. The Commission vote to file the complaint was 3-2, with Commissioners Noah Phillips and Christine Wilson voting no.
Following Tronox Holdings plc.’s announcement that it has abandoned its acquisition of TiZir Titanium and Iron (TTI), the FTC closed its investigation into the proposed acquisition. Tronox is one of the largest producers of titanium dioxide pigment and TTI is one of the few producers of chloride slag, a key input used to make titanium dioxide pigment, which provides color and opacity for products such as paint, plastics, and paper. Following an investigation of the proposed acquisition, focused in large part on the potential for harm from foreclosure of supply, FTC staff recommended that the Commission challenge the transaction. FTC staff cooperated closely with staff of the U.K. Competition and Markets Authority throughout the investigation.
The FTC issued orders to six health insurance companies to provide information that will allow the agency to study the effects of physician group and healthcare facility consolidation that occurred from 2015 through 2020. This study is part of a broader initiative recently announced by the FTC’s Bureau of Economics to revamp its merger retrospective program.
In Other News
The FTC published its Fiscal Year 2020 Performance Report, which documents the Commission’s progress in achieving the mission and performance goals established in the Fiscal Year 2020-2021 Performance Plan.
For 2021, the size-of-transaction threshold for reporting proposed mergers and acquisitions under Section 7A of the Clayton Act will decrease from $94 million to $92 million. Also, the 2021 thresholds under Section 8 of the Act that trigger prohibitions on certain interlocking memberships on corporate boards of directors changed to $37,382,000 for Section 8(a)(l) and $3,738,200 for Section 8(a)(2)(A). These changes are statutorily required based on annual changes in the U.S. GDP. A complete listing of current thresholds can be found on the FTC’s website.
During the transition to the new Administration and given the unprecedented volume of HSR filings for the start of a fiscal year, the FTC, with support from the Department of Justice Antitrust Division, will be reviewing the processes and procedures used to grant early termination to merger filings made under the Hart-Scott-Rodino Act. During this period, the agencies will not grant early terminations.
The FTC has published a blog post warning of the identity theft risk of posting COVID-19 vaccination cards, which contain sensitive personal information, on social media. The blog says, “Some of you are celebrating your second COVID-19 vaccination with the giddy enthusiasm that’s usually reserved for weddings, new babies, and other life events. You’re posting a photo of your vaccination card on social media. Please — don’t do that! You could be inviting identity theft.” The blog explains, “Your vaccination card has information on it including your full name, date of birth, where you got your vaccine, and the dates you got it. When you post it to Facebook, Instagram, or to some other social media platform, you may be handing valuable information over to someone who could use it for identity theft.”