International Monthly: January 2015


 U.S. Competition, Consumer Protection and Privacy News
 

JANUARY 2015

Highlights

President Obama Visits FTC

President Obama at FTC  

During a visit to the FTC on Monday, President Barack Obama announced his proposed actions to better protect consumers’ privacy and identity. Chairwoman Edith Ramirez introduced the President before he provided his remarks in front of 250 FTC staff. The agency was proud to host the President in its Centennial year.

Consumer Protection and Privacy

T-Mobile to Pay At Least $90 Million, Including Full Consumer Refunds, To Settle FTC Mobile Cramming Case

T-Mobile bill graphic

T-Mobile has agreed to provide consumers full refunds totalling at least $90 million to settle the FTC’s charges of mobile cramming. Under the terms of the settlement, T-Mobile also will pay $18 million to the state attorneys general and $4.5 million to the Federal Communications Commission. The FTC filed a lawsuit against T-Mobile in July, alleging that the company placed millions of dollars in unwanted third-party charges on its customers’ mobile phone bills and received 35 to 40 percent of every charge. The charges were for services like horoscopes, love tips, and celebrity gossip, for which T-Mobile typically billed consumers $9.99 per month.

FTC Charges Data Broker with Facilitating the Theft of Millions of Dollars from Consumers' Accounts by Selling Personal Financial Information to Scammers

The FTC has charged a data broker operation, LeapLab, with selling the sensitive personal information – including Social Security and bank account numbers, along with bank routing numbers – of hundreds of thousands of consumers to scammers who allegedly debited millions of dollars from their accounts. According to the complaint the FTC filed in federal district court, LeapLab bought payday loan applications from financially strapped consumers, and then sold that information to marketers who were not online lenders and had no legitimate need for this financial information. At least one of those marketers, Ideal Financial Solutions – a defendant in another FTC case – allegedly used the information to withdraw millions of dollars from consumers’ accounts without their authorization. The FTC’s lawsuit seeks equitable relief, including a permanent injunction and restitution.

FTC Warns Chinese Children’s App Maker About Possible Children’s Privacy Law Violations

FTC staff sent a letter to a China-based developer of mobile applications directed to children, warning that the company may be violating the Children’s Online Privacy Protection Act (COPPA) Rule. The letter notes that the child-directed applications marketed by the company, BabyBus, appear to collect precise geolocation information about users, and that the company does not obtain parents’ consent before collecting children’s personal information, which would violate the COPPA Rule. The letter states that the applications, available on the Apple App Store, Amazon App Store, and Google Play, have been downloaded millions of times. The apps are explicitly directed to children from ages one to six, including apps that teach letters, numbers, and shapes. The agency also sent the letter to the three application marketplaces. The COPPA Rule requires companies that collect personal information from children under 13 to post clear privacy policies and to notify parents and obtain their consent before collecting or sharing any information from a child. The FTC revised the rule in 2013 to adapt to the growth of mobile technology aimed at children. The letter asks the company to evaluate its apps and determine whether they may be in violation, and informs the company that the Commission will review the apps again in the next month to ensure they comply with the rule.

Competition

To Settle FTC Charges, Two Trade Associations Agree to Eliminate Rules that Restrict Competition

Two trade associations have agreed to eliminate provisions in their bylaws that the FTC charged limit competition among each association’s members. The FTC’s complaint against Professional Lighting and Sign Management Companies of America Inc. (PLASMA), a trade association representing electricians, alleges that PLASMA’s bylaws restrain competition by: (1) prohibiting members from providing service to customers in the designated territory of another member unless that member declined the work; (2) implementing a price schedule for work done by a member in another member's designated territory, and (3) prohibiting terminated members from soliciting current members’ customers for one year after termination. The proposed consent order requires PLASMA to revise its bylaws and publicize the settlement with the FTC to its members.

In a separate complaint, the FTC charged that the code of ethics of the Professional Skaters Association (PSA) broadly bans members from soliciting other members’ students, depriving consumers of the benefits of competition among PSA’s 6,400 ice skating teachers and coaches. The complaint further charges that the PSA actively enforced the ban through a variety of penalties, including suspension, even over the objections of skating students and their parents who wanted to switch coaches. The proposed consent order requires the PSA to stop restraining its members from soliciting work and competing on the basis of price. It also requires the group to change its code of ethics and publicize its settlement with the FTC to its members. Both PLASMA and the Skaters Association also are required to implement antitrust compliance programs.

FTC Conditions Eli Lilly’s Proposed Acquisition of Novartis Animal Health

To settle FTC charges that its proposed $5.4 billion acquisition of Novartis Animal Health would likely be anticompetitive, Eli Lilly and Company has agreed to divest Novartis’s Sentinel line of heartworm medications for dogs. The complaint alleges that the transaction would have eliminated the close competition between Eli Lilly and Novartis Animal Health and substantially decreased competition in the market for canine heartworm parasiticides. The Eli Lilly and Novartis products are particularly close substitutes because they are the only two products that are given orally once per month, contain the same active ingredient, and also treat fleas and other internal parasites in dogs. According to the complaint, other companies seeking to enter the canine heartworm parasiticide market would face high barriers because developing new animal health pharmaceutical products is difficult and time-consuming. More information can be found in the analysis to aid public comment.

FTC Staff Issues Report on Branded Drug Firms’ Patent Settlements with Generic Competitors

The FTC has issued a staff report on branded drug firms’ patent settlements with generic competitors during fiscal year 2013. According to the report, in FY 2013, companies filed 145 final patent dispute settlements, of which 29 constituted potential “pay-for-delay” agreements because the brand manufacturer compensated the generic manufacturer, and the generic manufacturer was restricted from marketing its product in competition with the branded product for some period of time. Although the number of potential pay-for-delay settlements was down from FY 2012, it was similar to FY 2010 and 2011. The report is based on patent dispute settlements filed by pharmaceutical companies with the FTC and the Department of Justice during FY 2013, pursuant to the Medicare Modernization Act of 2003.

Verisk Analytics Abandons Proposed Acquisition of Rooftop Aerial Measurement Products Challenged by the FTC

Verisk Analytics, Inc. has abandoned its proposed $650 million acquisition of EagleView Technology Corporation, which the FTC had challenged. The FTC complaint alleged that the transaction likely would result in a virtual monopoly in the U.S. market for rooftop aerial measurement products used by the insurance industry to assess property claims. EagleView dominates the market, serving most of the top 25 insurance carriers. Verisk offers two roof measurement products, which together pose the only meaningful competition to EagleView. According to the complaint, absent the acquisition, Verisk is in the best position to continue competing with EagleView based on several factors, including: product quality; ownership of the dominant software platform through which insurance carriers process roof damage claims and other property claims; ability to defend against patent infringement claims by EagleView; and existing relationships with insurance carriers.

In Other News

FTC Appoints Marina Lao as Director of its Office of Policy Planning

FTC Chairwoman Edith Ramirez has appointed Professor Marina Lao as Director of the agency’s Office of Policy Planning, succeeding Andrew Gavil, who has returned to teaching at Howard University School of Law. Professor Lao, who will join the FTC in February, teaches at Seton Hall University School of Law, where her focus is antitrust law. A member of the advisory board of the American Antitrust Institute who has written and spoken extensively on various aspects of antitrust law and policy, Professor Lao also served as Chair of the Antitrust and Economic Regulation section of the Association of American Law Schools. The Office of Policy Planning helps the Commission develop and implement long-range competition and consumer protection policy initiatives and advises staff on cases raising new or complex policy and legal issues.

FTC Releases Annual Technical Assistance Report

Cropped TA report cover

The FTC staff released a report describing the agency’s international technical assistance activities for Fiscal Year 2013. The FTC conducted or participated in 45 competition and consumer protection technical assistance programs involving 60 jurisdictions, mainly in developing countries in Asia, Africa, and Latin America. The FTC’s programs helped agencies address both basic and emerging consumer protection and competition issues brought about by rapidly spreading technologies, changing economic and demographic trends, and significant advances in legal frameworks and institutions for consumer protection and competition.

FTC Approves Changes to Cooling-Off Rule

The FTC has approved a final amendment to its Cooling-Off Rule, increasing the exclusionary limit for certain “door-to-door” sales. The Cooling-Off Rule previously provided that it is unfair and deceptive for sellers engaged in “door-to-door” sales valued at more than $25 to fail to provide consumers with disclosures regarding their right to cancel the sales contract within three business days of the transaction. Under the amended rule, the definition of “door-to-door sales” distinguishes between sales at a buyer’s residence and those at other locations. The revised definition retains coverage for sales made at a buyer’s residence at a purchase price of $25 or more, and it increases the purchase price to $130 or more for all other covered sales at temporary locations. The revised definition recognizes that concern regarding high-pressure sales tactics and deception during in-home solicitations is greater than when sales are made away from consumers’ homes. Therefore, the Commission concluded that raising the value to $130 for non-home sales would reduce compliance burdens for sellers while still protecting consumers.

Back It Up: Don’t Lose Your Digital Life

Just in time for New Year’s resolutions, the FTC released a new video to help consumers keep their digital lives safe. The video advises computer users to back up digital files at least once a week and explains how, recommending removing the external hard drive, USB drive, or other backup device from the computer until the next backup to protect the backup from being corrupted by viruses or malware. Feel free to use or adapt this video and the FTC’s other tips for online safety for consumers in your jurisdiction.