International Monthly: September 2020

FTC Chairman Joseph Simons signed the Multilateral Mutual Assistance and Cooperation Framework for Competition Authorities among the FTC, the Department of Justice, and the competition agencies of Australia, Canada, New Zealand, and the United Kingdom.  The Framework aims to strengthen cooperation among the signatories and provides the basis for a contemplated series of agreements that would permit sharing confidential information and using compulsory process to aid each other’s antitrust investigations.  The U.S. antitrust agencies are authorized to enter into such agreements under the International Antitrust Enforcement Assistance Act of 1994.

An online children’s education company, Age of Learning, Inc., which operates an early education website and mobile app, ABCmouse, will pay $10 million and change its negative option marketing and billing practices to settle FTC charges that it failed to disclose key membership terms.  Specifically, the FTC alleged that the company failed to disclose material information about ABCmouse memberships, including that they automatically renew, that it would charge members each year unless they cancel, and what consumers needed to do to cancel.  The company also unfairly billed ABCmouse users without their authorization and made it difficult for consumers to cancel their memberships, preventing consumers from avoiding additional charges.  The proposed settlement order bars the company from making any misrepresentations that a good or service is offered on a “free,” “trial,” “sample,” “no obligation,” or similar plan, when a consumer must take action to avoid future charges.  Commissioner Rohit Chopra filed a concurring statement, explaining how ABCmouse used internet-based design techniques often-termed “dark patterns” to deceive ABCmouse users.

A U.S. District Court ordered the defendants in the Sanctuary Belize land fraud scheme to pay a $120 million judgment to be used to pay redress to defrauded consumers.  “With this $120 million judgment, the Federal Trade Commission has successfully put an end to the largest land fraud in the agency’s history,” said FTC Bureau of Consumer Protection Director Andrew Smith.  “The FTC pursued these fraudsters doggedly and ultimately brought them to justice—despite the use of foreign banks to hide their wrongdoing, the hiring of dozens of well-heeled lawyers, and a sprawling and complex fraudulent scheme spread over multiple states and countries that took a four-week-long trial to resolve.”  The FTC filed the lawsuit in November 2018 against several related individuals and entities alleging that they duped consumers into buying lots in a luxury development in Belize by falsely promising that the development would include luxury amenities and be completed soon, and that the value of the lots would rapidly appreciate.

The FTC announced it has sent letters warning 20 more marketers nationwide to stop making unsubstantiated claims that their products and therapies can prevent or treat COVID-19.  The Commission has sent similar letters to almost 300 companies and individuals.  Several letters in the latest set target “treatments” the Commission has warned companies about previously, including intravenous (IV) Vitamin C infusions, ozone therapy, and supplements.  Others challenge claims that nasal spray, skincare products, or acupuncture can prevent or treat COVID-19.  Currently there is no scientific evidence that these, or any, products or services can prevent or treat the disease.

FTC staff issued a paper detailing key takeaways from the agency’s “Inside the Game” workshop, which examined consumer protection issues related to video game “loot boxes.”  Loot boxes are random rewards that players may buy within a video game for a small fee or earn through game play.  Players may use them, for example, to change a character’s appearance or to “pay-to-progress” in the game.  These types of in-game microtransactions have become a multi-billion-dollar market, accounting for a significant percentage of revenue derived from video games, particularly for free video games downloaded via mobile apps.  The paper summarizes concerns about loot box marketing techniques including that they may encourage players to overspend or mask the real costs through confusing terms or inadequate disclosures.  It also discusses public concerns about the impact of loot box monetization models on children and those vulnerable to compulsive spending.  Participants called for meaningful disclosures to help players make informed decisions, additional research and consumer education, and improved industry self-regulation.

The FTC announced that its September 22 workshop, which will examine the potential benefits and challenges to consumers and competition raised by data portability, will be held online.  The workshop will bring together consumer advocates, industry representatives, economists, regulators, and other stakeholders for a wide-ranging public discussion on data portability, which is the ability for consumers to move data—such as emails, contacts, calendars, financial information, health information, favorites, friends, or content posted on social media—from one service to another or to themselves.  For the agenda, along with information about how to view the event online, click here.  For a blog post, click here.