International Monthly: September 2017

 
 U.S. Competition, Consumer Protection and Privacy News
 

SEPTEMBER 2017

Consumer Protection and Privacy

CSGO Lotto Owners Settle FTC’s First-Ever Complaint Against Individual Social Media Influencers; Staff Sends Warning Letters to Influencers and Updates Staff Guidance

CSGO

Trevor “TmarTn” Martin and Thomas “Syndicate” Cassell, two social media influencers who are widely followed in the online gaming community, have settled FTC charges that they deceptively endorsed the online gambling service CSGO Lotto, while failing to disclose they jointly owned the company. The Commission order settling the charges requires Martin and Cassell to clearly and conspicuously disclose any material connections with an endorser or between an endorser and any promoted product or service. According to the FTC’s complaint, Martin, Cassell, and their company also had an “influencer program” and paid other gaming influencers between $2,500 and $55,000 to promote the CSGO Lotto website to their social media circles, while prohibiting them from saying anything negative about the site. The Commission’s complaint alleges that Martin, Cassell, and their company misrepresented that videos of themselves and other influencers gambling on the CSGO Lotto website and their social media posts about the website reflected the independent opinions of impartial users of the service. For more details, click here.

The FTC also announced that staff has both sent warning letters to 21 social media influencers it contacted earlier this year regarding their Instagram posts, and updated staff guidance for social media influencers and endorsers. The 21 recipients of warning letters earlier were among recipients of the more than 90 educational letters FTC staff sent to social media influencers and brands in April.

Three Companies Agree to Settle FTC Charges They Falsely Claimed Participation in EU-U.S. Privacy Shield Framework

Three U.S. companies have agreed to settle FTC charges that they misled consumers about their participation in the European Union-United States Privacy Shield framework, which allows companies to transfer consumer data from EU member states to the United States in compliance with EU law. In separate complaints, the FTC alleges that human resources software company Decusoft, LLC, printing services company Tru Communication, Inc. (doing business as TCPrinting.net), and Md7, LLC, which manages real estate leases for wireless companies, violated the FTC Act by falsely claiming that they were certified to participate in the EU-U.S. Privacy Shield. The FTC also alleged that Decusoft falsely claimed participation in the Swiss-U.S. Privacy Shield framework - https://www.privacyshield.gov/Swiss-US-Privacy-Shield-FAQs. Despite these claims, all three companies failed to complete the certification process for the Privacy Shield, according to the FTC complaints. Companies that want to join the Privacy Shield must be subject to the jurisdiction of the FTC or the U.S. Department of Transportation, and certify to the U.S. Department of Commerce that they comply with the Privacy Shield Principles - https://www.privacyshield.gov/EU-US-Framework. These cases join the four enforcement actions the FTC has brought related to the Asia-Pacific Economic Cooperation (APEC) Cross-Border Privacy Rules (CBPR) system.

Uber Settles FTC Allegations that It Made Deceptive Privacy and Data Security Claims

Uber Technologies, Inc. has agreed to implement a comprehensive privacy program and obtain regular, independent audits to settle FTC charges that the ride-sharing company deceived consumers by failing to monitor employee access to consumer personal information and by failing to reasonably secure sensitive consumer data stored in the cloud. In its complaint, the FTC alleged that Uber failed to live up to its claims that it closely monitored employee access to consumer and driver data and that it deployed reasonable measures to secure personal information it stored on a third-party cloud provider’s servers. Among other things, the complaint also alleges that despite Uber’s claim that data was “securely stored within our databases,” Uber’s security practices failed to provide reasonable security to prevent unauthorized access to consumers’ personal information in databases Uber stored with a third-party cloud provider. As a result, an intruder accessed personal information about Uber drivers in May 2014, including more than 100,000 names and driver’s license numbers that Uber stored in a datastore operated by Amazon Web Services.

Lenovo Settles FTC Charges It Harmed Consumers with Preinstalled Software on Its Laptops that Compromised Online Security

Lenovo Inc., one of the world’s largest computer manufacturers, has agreed to settle charges by the FTC and 32 State Attorneys General that the company harmed consumers by pre-loading software on some laptops that compromised security protections in order to deliver ads to consumers. In its complaint, the FTC charged that Lenovo sold consumer laptops in the United States that came with a preinstalled “man-in-the-middle” software program called VisualDiscovery that interfered with how a user’s browser interacted with websites and created serious security vulnerabilities. The software was installed on hundreds of thousands of Lenovo laptops. It delivered pop-up ads from the company’s retail partners whenever a user’s cursor hovered over a similar looking product on a website. To deliver its ads, VisualDiscovery acted as a “man-in-the-middle” between consumers’ browsers and the websites they visited, even those websites that were encrypted. Without the consumer’s knowledge or consent, this technique allowed VisualDiscovery to access all of a consumer’s sensitive personal information transmitted over the Internet, including login credentials, Social Security numbers, medical information, and financial and payment information.

FTC Permanently Halts Tech Support Scammer Who Was Government Impostor

The FTC has obtained a default judgment and permanent injunction halting the activities of a defendant doing business as PC Guru Tech Support and Elite Tech Support. The defendant allegedly peddled unnecessary tech support services under the deceptive guise of an affiliation with the FTC. The defendant emailed consumers and used fake FTC press releases and the names of real FTC staff to trick consumers into contacting him so he could pitch them unnecessary tech support services, according to the FTC’s complaint. The complaint also alleges that the defendant falsely claimed that the consumers’ computers were sending out information to hackers or were seriously infected with malware. A federal judge issued a preliminary injunction against the defendant in April, which temporarily halted his deceptive tactics. Under the court’s final order, the defendant is prohibited from making material misrepresentations, including any misrepresentations about an affiliation with the FTC. Defendant also has been ordered to pay more than $52,000

Competition

Acting Director of FTC Bureau of Competition Issues Statement on Agency's Review of Amazon.com, Inc.'s Acquisition of Whole Foods Market Inc.

Bruce Hoffman, the Acting Director of the FTC’s Bureau of Competition, issued this statement on the Commission’s decision not to further pursue an investigation of Amazon.com, Inc.’s acquisition of Whole Foods Market Inc.:

“The FTC conducted an investigation of this proposed acquisition to determine whether it substantially lessened competition under Section 7 of the Clayton Act, or constituted an unfair method of competition under Section 5 of the FTC Act. Based on our investigation we have decided not to pursue this matter further. Of course, the FTC always has the ability to investigate anticompetitive conduct should such action be warranted.”

FTC Conditions Pet Care Acquisition

To settle FTC charges that Mars Inc.’s $9.1 billion acquisition of pet care company VCA Inc. would likely lead to higher prices for pet owners and lower quality in the specialty and emergency veterinary services in ten local markets, Mars agreed to divest 12 specialized veterinary clinics around the United States. The Commission alleged that the merger would eliminate head-to-head competition between the parties, and that new entrants would be unlikely to replace lost competition through timely new entry, as opening a specialty or emergency services veterinary clinic presents unique challenges, including the need to recruit specialist veterinarians. Under the proposed consent order, Mars is required to divest each of the clinics to one of three divestiture buyers, and the Commission approved an Interim Monitor responsible for overseeing the divestiture process. Further details are set forth in the analysis to aid public comment.

Association of Breeders Barred from Restraining Competition

The National Association of Animal Breeders, Inc. (NAAB) – a non-profit trade association whose members compete to sell dairy cattle semen to U.S. dairy farms for artificial insemination of dairy cows – agreed to refrain from adopting rules that the FTC claimed would unreasonably stifle competition among its members. According to the FTC’s complaint, the NAAB rules dampened competition in the sale of dairy bulls for semen production by requiring NAAB members to have an ownership interest in a dairy bull to obtain its genomic predicted transmitting ability (GPTA) data and impeded NAAB members from selling GPTA data to non-members. GPTA data consists of information about the commercially relevant traits, such as milk yield, that the bull is expected to transmit to its daughters. Under the proposed consent order, NAAB is required to stop restraining its members from obtaining, disclosing, providing, using, or selling any technology or information resulting from research projects to which the association is a party or conducts. Details about the case are set forth in the analysis to aid public comment.

In Other News

FTC Offers Advice for Hurricane Victims and People Who Want to Help

hurricane charity

The FTC has information for people affected by Hurricanes Irma and Harvey, and for those who want to contribute to relief efforts. In addition to the important tips and advice here, they can find more at www.FTC.gov/weatheremergencies. The FTC blog post, Make your hurricane donations count, describes for consumers how to make sure their dollars go to the causes they support. The blog post, Avoid hurricane clean-up scams, has tips to protect consumers, their property, and their money from dishonest contractors. See the infographic, The Scam: What to Do, for a summary of this information. The FTC also is warning consumers about a flood insurance scam targeting those that have been affected by Hurricane Harvey. According to the Federal Emergency Management Agency (FEMA), homeowners and renters are getting fraudulent robocalls telling them their flood premiums are past due. See Hurricane Harvey scams: Callers lie about flood insurance.

FTC Announces Second Economic Liberty Public Roundtable

economic liberty

The FTC announced that its Economic Liberty Task Force will hold its second roundtable in Washington, DC on Nov. 7 to examine empirical evidence on the effects of occupational licensure. The roundtable will bring together experts who have studied the economic and legal aspects of occupational licensing regulations. Further information on the roundtable is available here. The FTC invites comments from the public on the topics covered by this roundtable. Details on the public comment process, including a list of suggested questions open for comment, are available at the roundtable website, which will also feature an agenda to be published later. The roundtable is free and open to the public.

FTC Acting Chairman Maureen K. Ohlhausen Speaks on 2017 Joint FTC-DOJ Antitrust Guidelines for International Enforcement and Cooperation Before International Bar Association Conference

Speaking before the 21st Annual Competition Conference of the International Bar Association, FTC Acting Chairman Maureen K. Ohlhausen discussed Guidelines for Global Antitrust: The Three Cs – Cooperation, Comity, and Constraints. According to the Acting Chairman, the updated Guidelines provide a high-level guide to U.S. antitrust and related laws likely of greatest significance for businesses engaged in international activities; discuss the Agencies’ application of U.S. antitrust law to conduct involving foreign commerce, focusing on the connections to the United States sufficient for the Agencies to investigate or bring enforcement actions against foreign conduct; and detail the Agencies’ consideration of comity and other laws and doctrines pertaining to foreign government involvement, such as foreign sovereign compulsion and the act of state doctrine. The Guidelines conclude with a new chapter on the Agencies’ international cooperation that addresses their investigative tools and enforcement cooperation with foreign agencies. The Acting Chairman stressed that in developing the 2017 Guidelines, the Agencies demonstrated their commitment to the principles of predictability, transparency, and fairness – not just in issuing the updated guidelines but also in seeking and incorporating public comment.

Acting Chairman Maureen K. Ohlhausen Speaks on Antitrust Enforcement in the Digital Age

At the Global Antitrust Enforcement Symposium at Georgetown University in Washington, DC, Acting Chairman Maureen K. Ohlhausen spoke about Antitrust Enforcement in the Digital Age. The speech is available on the FTC website.

FTC Closes Investigation of Honeywell International, Inc. and E.I. DuPont de Nemours & Co.

The FTC has announced that it has closed its investigation of several agreements between Honeywell International, Inc. and E.I. DuPont de Nemours & Co related to the sale of 1234yf, the next generation refrigerant in automotive air conditioning systems. The Commission voted to close the investigation in accordance with a recently announced initiative to close older, pending investigations where appropriate.

FTC Acting Chairman Maureen K. Ohlhausen Announces Selection of Ian R. Conner as an Acting Deputy Director of the Bureau of Competition

Acting FTC Chairman Maureen K. Ohlhausen announced that she has selected Ian R. Conner, a partner in the Antitrust & Competition group at the law firm of Kirkland & Ellis LLP, to be an Acting Deputy Director of the FTC’s Bureau of Competition, effective Sept. 18. In private practice, Conner represented clients before the FTC, the U.S. Department of Justice and various state attorneys general. Prior to entering private practice, Conner was a trial attorney in the Transportation, Energy and Agriculture Section of the U.S. Department of Justice, Antitrust Division, which he joined through the Attorney General’s Honors Program.