For decades, the Commission has seen itself primarily as a law enforcement agency, promoting competition and protecting consumers through court and administrative actions. Critical to success as an enforcement agency is the ability to keep up with changing behaviors in the market — and research, study, and rulemaking are fundamental to the Commission’s enforcement efforts.
The Commission promotes competition among providers of health care services and products to encourage cost containment, higher quality care, increased access, and the development of innovative new treatments. Using enforcement as its primary tool, the Commission has worked to stop anticompetitive mergers and conduct that might diminish competition in health care markets.
One key enforcement strategy is to block mergers that would allow providers to raise rates or decrease quality for vital services. For instance, the Commission challenged three hospital mergers this year. Methodist Le Bonheur Healthcare abandoned its acquisition of two Memphis-area hospitals, after the Commission charged that the transaction was likely to result in higher health care costs and lower quality service in the Memphis area. The Commission also filed suit to block Hackensack Meridian Health’s proposed acquisition of Englewood Healthcare Foundation, alleging that the proposed transaction would eliminate close competition between the two hospital systems and leave insurers with few alternatives for inpatient general acute care services in Bergen County, New Jersey. The case is pending. In September, Commission staff, working with the Pennsylvania Attorney General, presented evidence before a federal district court on charges that the proposed merger of Jefferson Health and Albert Einstein Healthcare Network would violate the antitrust laws. After the district court denied the agency’s motion for a preliminary injunction, the case was dismissed.
The Commission is also attentive to labor market effects arising from mergers. For example, two providers of in-home nursing services, Aveanna Healthcare and Maxim Healthcare, abandoned their plans to merge after the Commission’s investigation raised concerns about the merger’s potential effects on the hiring and wages of private duty nurses in numerous locations throughout the country. Health care workers and their patients benefit from robust competition for nursing services and health care industry mergers can threaten such competition.
The Commission also continues to review carefully mergers between medical device manufacturers. At the end of 2020, the Commission required Stryker Corp. to divest its total ankle replacement and finger joint businesses to settle charges that Stryker’s proposed acquisition of Wright Medical Group N.V. would harm competition in those markets. The Commission also required Össur Hf and College Park Industries, Inc. to divest College Park’s myoelectric elbow business. The Commission required the divestiture after concluding that Össur would likely be the next entrant into the U.S. myoelectric elbow market and would compete directly with College Park. In April, the Commission closed its investigation of Johnson & Johnson’s proposed acquisition of fibrin sealant surgical patch TachoSil from Takeda Pharmaceuticals after the parties abandoned the deal. The Commission’s investigation focused on the potential loss of competition between TachoSil and Johnson & Johnson’s Evarrest — the only two fibrin sealant patches approved in the U.S. to stop bleeding during surgery.
The Commission reviews pharmaceutical mergers to preserve competition in these vital markets. For instance, recently, the Commission announced settlements in mergers involving generic drugs used to treat hypertension, epileptic seizures, bacterial conjunctivitis, and certain types of dysfunctional uterine bleeding, as well as drugs used to treat exocrine pancreatic insufficiency, moderate-to-severe Crohn’s disease, and moderate-to-severe ulcerative colitis.
Also on the merger front, the Commission preserved competition for three animal health products to resolve charges that Elanco Animal Health, Inc.’s proposed $7.6 billion acquisition of Bayer Animal Health would be anticompetitive. In another matter, the Commission required divestitures to preserve competition for various specialty and emergency veterinary services.
The Commission also continues to combat anticompetitive conduct by pharmaceutical firms. In January 2020, the Commission filed a complaint against Vyera Pharmaceuticals, LLC that alleges Martin Shkreli and Kevin Mulleady orchestrated the company’s scheme to purchase the life-saving drug, Daraprim, and raise its price by more than 4,000 percent. The defendants then kept the price high through anticompetitive acts that deterred and prevented other competitors from making a rival generic version. The FTC is joined by the attorneys general from seven states. The case is pending.
In 2020, the Commission continued its longstanding commitment to preventing consumer harm, tackling a breadth of false treatment claims regarding COVID-19. Protecting consumers from these claims as quickly as possible was the first priority, so the FTC pursued a rigorous warning letter program. The FTC, on its own, and with FDA, issued over 350 warning letters to marketers making prevention, cure, and treatment claims, and the vast majority of recipients took quick steps to correct problematic claims.
When warning letter recipients do not correct their problematic claims, however, the FTC can — and does — follow up with law enforcement suits. In fact, the agency charged Golden Sunrise Nutraceutical, Inc. — a warning letter recipient that did not correct its claims — with deceptively advertising a $23,000 treatment plan as a scientifically proven way to treat COVID-19. Going forward, under a new federal law, the COVID-19 Consumer Protection Act, the FTC has the authority to obtain first-time civil penalties for scams related to COVID-19. This new law provides another tool in the FTC’s fight against operators engaged in such deception.
In other health-related matters, the Commission approved a Part 3 administrative complaint against Health Research Laboratories, LLC for unsubstantiated claims that their dietary supplements can treat cardiovascular and other diseases. The complaint is scheduled to be heard before an administrative law judge in July 2021.
In its first law enforcement crackdown on deceptive claims in the growing market for cannabidiol (CBD) products, the FTC sued six sellers of CBD-containing products for allegedly making a wide range of scientifically unsupported claims about their ability to treat serious health conditions like, cancer, heart disease, hypertension, and Alzheimer’s disease. Under an administrative settlement, the marketer behind Whole Leaf Organics is barred from making baseless claims that his CBD-based product can treat or prevent the risk of COVID-19.
Teami, LLC, a marketer of teas and skincare products, paid $1 million to settle FTC charges that it promoted its products using deceptive health claims and endorsements by well-known social media influencers who did not adequately disclose they were being paid to do so.
Last year the FTC brought a number of cases against the marketers of health-related products, including actions against supposed cures for joint pain and inflammation, for cancer and diabetes, for ailments and physical damage related to aging, and for growing new bone to alleviate pain, as well as an action against an app that didn’t keep users’ health information private.
Competition in technology sectors is an important driver of innovation and growth in the economy, leading to new or better-quality products and lower prices that benefit consumers. This year more than ever, technology products and services have become central to our lives, allowing us to work and learn remotely, and to stay connected with friends and family. Accordingly, ensuring that technology markets are competitively robust and consumers are adequately protected is more important than ever. In December, the Commission filed a federal court action against Facebook, alleging that the company is illegally maintaining its personal social networking monopoly through various anticompetitive acts, including its strategic acquisitions of up-and-coming rivals Instagram and WhatsApp and imposition of anticompetitive conditions on software developers. The case is pending.
The FTC also has a pending suit against the consummated merger of two makers of body-worn cameras used by law enforcement. The FTC filed charges in January 2020, alleging Axon’s acquisition of Safariland’s VieVu body-worn camera division and associated non-compete and non-solicitation agreements harmed competition. Safariland, LLC agreed to settle the charges, and rescinded the non-compete and non-solicitation provisions. After the Ninth Circuit rejected Axon’s federal suit challenging the FTC’s administrative proceedings, the case to unwind the acquisition itself remains pending.
In December, CoStar Group, Inc. and its chief competitor for apartment internet listing services, RentPath Holdings, Inc., abandoned their deal after the Commission challenged it as anticompetitive. CoStar operates a network of websites, including Apartments.com, ApartmentFinder.com, and ForRent.com, which are two-sided platforms that match prospective renters with available apartments. RentPath operates similar websites, including Rent.com and ApartmentGuide.com. The complaint alleged that the acquisition would significantly increase concentration in the already highly concentrated markets for internet listing services advertising for large apartment complexes in 49 individual metropolitan areas across the U.S.
On the consumer protection front, as the pandemic took hold, millions of users flocked to video communications platforms. Zoom Video Communications, Inc. agreed to settle FTC charges that the company misrepresented the level of encryption it offered and the time it took to store meetings in Zoom’s secure cloud storage in an encrypted format, and installed software on certain users’ computers that circumvented a privacy and security safeguards for certain users offered by their browser. The settlement prohibits Zoom from making a wide variety of privacy- and security-related misrepresentations, requires Zoom to implement an information security program (including a security review for all new software before release and restrictions on circumventing third-party security safeguards), and independent program assessments by a qualified third party.
The FTC also took action to halt the use of technology to promote deception and fraud related to COVID-19. The Commission sent warning letters to Voice over Internet Protocol (VoIP) service providers and other companies for their activities “assisting and facilitating” illegal Coronavirus-related telemarketing calls. And, last year, the Commission also brought its first consumer protection case against a VoIP provider, Globex Telecom, Inc., which agreed to pay $1.9 million to settle charges from the FTC and the State of Ohio that they facilitated an illegal bogus credit card interest rate relief scheme. In addition, Alcazar Networks Inc. settled the FTC’s charges that they facilitated tens of millions of illegal telemarketing phone calls.
In other deceptive and unfair marketing, the FTC brought its first cases enforcing the Better Online Ticket Sales (BOTS) Act. Three ticket brokers will pay $3.7 million to settle allegations they used automated software to illegally buy tens of thousands of event tickets, then resold the tickets at higher prices.
Consumer Products and Services
The Commission works to preserve competition for purchases consumers make every day. For example, this year the Commission challenged two mergers involving wet-shave razors. Procter & Gamble, maker of Gillette razors, proposed to acquire Billie, Inc., a direct-to-consumer company that began selling women’s razors and body care products in November 2017. After the Commission moved to block the merger, the parties abandoned the deal. The Commission also blocked Edgewell Personal Care Company’s acquisition of Harry’s. The Commission’s complaint alleged that the transaction threatened to eliminate the disruptive competitive force that Harry’s brought to the wet shave razor industry in the past years, and to make the market more vulnerable to coordination. The parties abandoned the deal one week after the Commission issued its complaint.
In April, the Commission challenged Altria Group’s acquisition of a 35% stake in e-cigarette supplier JUUL Labs, Inc. coupled with the parties’ non-compete agreement. The complaint alleges that once JUUL became the market leader in 2018, Altria abandoned its own e-cigarette business, acquired the minority stake to become JUUL’s largest shareholder, and committed not to develop a competing e-cigarette in violation of federal antitrust law. The case is pending.
In another matter, Eldorado Resorts, Inc. agreed to divest casino-related assets in the Bossier City-Shreveport area of Louisiana and the South Lake Tahoe area of Nevada to resolve Commission charges that Eldorado’s acquisition of Caesars Entertainment Corporation would harm competition for casino services in those areas. The Commission also preserved competition for six types of wine and spirits products, requiring E. & J. Gallo Winery to divest several products and remove others from its asset purchase agreement with Constellation Brands, Inc. to settle charges that their proposed deal would harm competition in the U.S. for entry-level on-premise sparkling wine, low-priced sparkling wine, low-priced brandy, low-priced port, low-priced sherry, and high color concentrates.
Earlier in the year, three rent-to-own companies agreed to abandon anticompetitive reciprocal purchase agreements to settle Commission charges that they negotiated and executed the agreements in violation of federal antitrust law. According to the complaint, these agreements swapped customer contracts from rent-to-own stores in various local markets, leading one firm to close down stores and exit a local market where the other party continued to maintain a presence. These reciprocal agreements likely led to store closures that may not have occurred otherwise, resulting in reduced competition for quality and service among the remaining stores. The settlement prohibits the three companies from enforcing non-compete clauses in effect from past reciprocal agreements.
Stopping Activities Related to Deceptive and Unfair Marketing
The FTC moved quickly to stop unscrupulous marketers seeking to take advantage of the COVID-19 pandemic. The Commission brought several cases against companies that failed to deliver on their promises to get consumers goods in high-demand as a result of the pandemic. A federal court in Ohio issued a temporary restraining order against 25 counterfeit websites that allegedly tricked consumers into paying for Clorox and Lysol products that the defendants never delivered. The Commission also brought actions against three online merchandisers and SuperGoodDeals.com, Inc., based, in part, on violations of the Mail, Internet, or Telephone Order Merchandise Rule (Mail Order Rule) and promises they would quickly ship facemasks, sanitizer, and other personal protective equipment (PPE).
The FTC took action against Traffic Jam Events, LLC to stop a scheme that allegedly deceived consumers with mailers that promised to get them federal COVID-19 stimulus benefits but was actually luring them to a used car sale.
The FTC also took action to protect workers. The FTC alleged that Amazon failed to pay Amazon Flex drivers the full amount of tips they received from Amazon customers over a two and a half year period. As part of a settlement, Amazon will pay more than $61.7 million, representing the full amount the company allegedly withheld from drivers, which will be used by the FTC to compensate drivers.
The impact of income opportunity scams has intensified as scammers take advantage of the COVID-19 pandemic and financial crisis. The Commission, along with 19 federal, state, and local partners, led Operation Income Illusion, a nationwide crackdown of more than 50 law enforcement actions against scams that target consumers with fake promises of income and financial independence that have no basis in reality.
The FTC also continued its efforts on behalf of small businesses. The FTC and the Small Business Administration (SBA) sent warning letters to eight companies that targeted small businesses seeking SBA loans as a result of the Coronavirus pandemic.
The Commission also continued its work in other areas. The FTC won a $120.2 million judgment against the primary Sanctuary Belize defendants, successfully putting an end to the largest land fraud in FTC history. Other cases included actions against the operator of a deceptive crowdfunding scheme and a rent-to-own company that paid $175 million for allegedly misleading buyers. The Commission also brought cases stopping deceptive negative option practices, including Age of Learning, Inc. (paid $10 million); Nutraclick (paid $1.04 million); and AH Media Group, LLC (paid $4.3 million). In other cases, the FTC took action against two companies (Williams-Sonoma, Inc. and Gennex Media, LLC) for making unsubstantiated Made in USA claims; a mobile banking app for false promises about interest rates and access; a company selling phone plans that ripped off the families of incarcerated love ones; an alleged pyramid scheme that lured consumers with false promises of financial independence; operators of a deceptive business coaching scheme; companies selling misleading ad listings to small businesses, and an operation that tricked consumers by lying about being affiliated with the SBA. The FTC continues its vigorous enforcement against operations that assist companies defrauding consumers. In 2020, the FTC brought six cases involving payment processors — RevenueWire, Inc., Apex Capital Group, LLC, Qualpay, Inc., Complete Merchant Solutions, LLC (CMS), Madera Merchant Services, LLC, and First Data Merchant Services LLC — for enabling deceptive practices or scams. In four of the cases, the defendants were banned from payment processing, either completely or for certain types of businesses.
The FTC, with more than 50 federal and state law enforcement partners, brought Operation Corrupt Collector, a nationwide law enforcement and outreach initiative to protect consumers from deceptive and abusive debt collection practices. In one case, the FTC alleged Critical Resolution Mediation LLC threatened consumers with arrest and imprisonment and tried to collect debts that consumers did not actually owe. A federal court shut down the operation. Other debt collection cases were against a sprawling fundraising operation that solicited for sham charities (the FTC alleged defendants kept for themselves 90% of the money raised) and against a seller of get rich quick “training programs” (that allegedly promised buyers they’d make significant income but, in reality, had data showing most buyers of the training made little to no money.)
The FTC also brought actions against companies that hurt people looking for housing, looking to borrow money, reduce their credit card rates, pay down their debt, or fix their credit. The FTC charged pay day lender Lead Express, Inc. (Harvest Moon Financial) with deceptively overcharging consumers millions of dollars and withdrawing money repeatedly from consumers’ bank accounts without their permission. A federal court has entered a temporary restraining order halting the operation and freezing the defendants’ assets. Credit repair company BoostMyScore LLC agreed to settle FTC charges they misled consumers with promises to improve credit scores and increase access to lower mortgage rates. Grand Teton Professionals LLC are banned from the credit repair business to settle the FTC’s charges that they falsely promised to remove all negative items and “hard” credit inquiries from consumers’ credit reports. And AppFolio, Inc., a provider of background reports to property management companies, paid $4.25 million to settle the FTC’s charges the firm didn’t follow reasonable procedures to ensure the accuracy of its reports about potential tenants.
This year, the FTC also brought actions against several companies that falsely promised struggling student loan borrowers that — in return for paying an illegal upfront fee — the defendants could lower or eliminate their debt. SLAC, Inc., CD Capital Investments, LLC, Elegant Solutions, Inc. (Mission Hills Federal), and American Financial Benefits Center were banned from the debt relief business, and courts entered combined judgments of nearly $40 million against CD Capital Investments and Elegant Solutions.
This year the FTC launched a new streamlined and user-friendly website, ReportFraud.ftc.gov, where consumers can easily report scams, frauds, and bad business practices. The FTC has long encouraged consumers to report these issues to the agency when they encounter them — whether or not they lost money to the fraud. Recently, the FTC also launched a new initiative, the Community Advocate Center, aimed at partnering with community legal aid organizations to expand our outreach to lower-income communities to encourage them to report fraud and provide them with advice to help recover.
Money for Consumers
A critical aspect of the FTC’s mission is returning money to consumers harmed by illegal business practices. In 2020, 1.66 million consumers received $106.8 million in redress directly from the FTC. An additional $376.9 million went to consumers in redress administered by others.
In the Western Union case, approximately $147 million was sent to 33,000 consumers in the second distribution of refunds. Western Union was aware that fraudsters around the world used the company’s money transfer system to bilk consumers, and that some Western Union agents were complicit in the frauds.
The FTC sent more than 541,000 refund checks — totaling more than $34 million — to consumers who allegedly were tricked by Office Depot, Inc. and a software provider into buying computer repair products and services. In the Jeremy Lee Marcus, et al. case, the FTC sent more than $16 million to more than 27,000 people who lost money to a debt relief scam.
In the I Works, Inc., et al. matter, the FTC sent full refunds — totaling more than $12 million — to more than 147,000 people who lost money to I Works’ deceptive “trial” memberships and bogus government-grant and money-making schemes.
In 2020, the Commission continued its initiatives to protect the privacy of consumers. Recently, the FTC began to seek more comprehensive remedies against technology companies that failed to live up to consumer privacy promises. The FTC settled allegations that the developer of the photo app Everalbum deceived consumers about its use of facial recognition technology and its retention of user photos and videos by requiring the deletion of models and algorithms developed from user data. The Commission also turned its attention to the growing area of health apps, settling allegations that the developer of a period and fertility-tracking app, Flo, shared user health information with outside data analytics providers after promising that such information would be kept private. As part of the settlement, Flo must notify affected users about the disclosure of their personal information and instruct any third party that received users’ health information to destroy that data.
The FTC continued its actions protecting children’s online privacy through enforcement of the Children’s Online Privacy Protection Act Rule (COPPA Rule). App developer HyperBeard, Inc. agreed to pay $150,000 and to delete personal information it illegally collected from children under 13. Miniclip, S.A., a digital game maker, settled the FTC’s allegations that it misled consumers into thinking it was a current member of the Children’s Advertising Review Unit’s (CARU) COPPA safe harbor program.
The Department of Justice (DOJ), on behalf of the FTC, sued MyLife.com, Inc., alleging that the company deceived consumers with “teaser background reports” that often falsely claimed to include information about arrest, criminal, and sex offender records.
Two recent cases required the defendants to put in place comprehensive data security programs to settle the FTC’s allegations: Ascension Data & Analytics, LLC (which failed to ensure that its vendor was adequately securing personal data, leaving the sensitive information of more than 60,000 consumers exposed on the internet for a year); and SkyMed International, Inc. (which left unsecured a cloud database of approximately 130,000 membership records so they were in plain text and easily accessible.)
The agency entered a modified administrative order against Facebook, formally adding approved amendments to its 2012 privacy order to include provisions that were incorporated into the FTC’s 2019 settlement with the company.
The FTC also brought charges against eight companies that allegedly misrepresented their participation in the EU-U.S. Privacy Shield framework (Privacy Shield), which enables companies to transfer consumer data legally from EU countries to the U.S. The orders settling the FTC’s charges were released in January, March, July, and October.
Industrial and Manufactured Goods
The Commission works to maintain competitive markets for industrial and manufactured goods. For instance, the FTC successfully blocked the formation of a joint venture to combine the coal mining operations of Peabody Energy Corp. and Arch Coal in Wyoming’s Southern Powder River Basin. After a nine-day evidentiary hearing, the district court found that the proposed joint venture was likely to increase Peabody and Arch Coal’s incentive and ability to increase prices and reduce output. The parties abandoned the transaction shortly after the court’s ruling. In another matter, the Commission required the divestiture of three polyurethane foam-pouring plants to resolve charges that FXI Holdings, Inc.’s acquisition of Innocor was likely to harm competition for low-density conventional polyurethane foam used in home furnishings in three regional markets: the Pacific Northwest (Oregon and Washington); the Midwest states of Indiana, Michigan, and Ohio; and Mississippi.
Promoting competitive energy markets is another Commission priority. To resolve concerns that Arko Holdings Ltd.’s acquisition of Empire Petroleum Partners would reduce competition for both retail gasoline and retail diesel fuel, the Commission required divestitures of retail fuel assets in local markets across four states: Indiana, Maryland, Michigan, and Texas. The Commission also required divestitures to settle charges that Tri Star Energy, LLC’s proposed acquisition of assets from Hollingsworth Oil Company, Inc. likely would harm competition in two local Tennessee markets for retail gasoline and retail diesel fuel. In another matter, retail fuel station and convenience store operator Alimentation Couche-Tard Inc. and its former affiliate, CrossAmerica Partners LP, agreed to pay a $3.5 million civil penalty to settle allegations that they failed to divest 10 retail fuel stations in Minnesota and Wisconsin as required by a Commission order.