FTC International Monthly - January


FTC International Monthly: U.S. Competition, Consumer Protection and Privacy News

JANUARY 2014

Highlights

FTC Issues Performance and Accountability Report for Fiscal Year 2013

The FTC has issued its annual Performance and Accountability Report.  The Report shows American taxpayers how the FTC has managed its resources, and highlights its major accomplishments in fulfilling the FTC’s two core goals of protecting consumers and promoting competition.  Report highlights included showing that the FTC saved consumers over 20 times the amount of resources it put into non-merger competition cases and obtained a successful result in over 98 percent of its consumer protection cases.  Regarding the agency’s international work, the Report noted that the FTC:

  • provided policy advice to foreign competition agencies in over 100 instances; 
  • obtained evidence and other assistance for the FTC’s consumer protection and privacy investigations and litigation through cooperation with counterparts in numerous jurisdictions, including Australia, Canada, Colombia, Chile, Dominican Republic, El Salvador, Israel, Italy, Jamaica, Netherlands, New Zealand, Nigeria, Philippines, Slovakia, Spain, the United Kingdom and the European Union;
  • conducted a total of 37 competition and consumer protection technical assistance events; and
  • hosted 10 international fellows from counterpart agencies abroad. 

FTC Launches Redesigned FTC.gov Website

On December 9, the FTC launched a redesigned FTC.gov website.   The redesign features more powerful search options and greater ease of use.  The new site lets users navigate easily with a phone or tablet and sort FTC cases, early termination notices, advocacy filings, and other documents by date, type, and more.  Users may most easily reach international content through the “Policy” menu on the home page.   To offer feedback on the site, email ftcgovweb@ftc.gov.


Competition

Professional Associations Agree To Eliminate Ethics Provisions Limiting Competition

Professional associations of music teachers and of legal support services providers have agreed to eliminate provisions in their codes of ethics that limited competition among their members.  These settlements are the latest in a long line of antitrust cases addressing restraints on competition incorporated into the ethics codes of professional associations.  One proposed order requires the Music Teachers National Association, Inc., which represents over 20,000 music teachers nationwide, to stop restricting or declaring it unethical for its members to solicit teaching work from other music teachers.  The Association agreed to stop affiliating with any association that it knows is restricting solicitation, advertising, or price-related competition by its members.  The other proposed order settles charges that the California Association of Legal Support Professionals violated the FTC Act through code of ethics provisions that restrained its members from competing against each other on price, disparaging each other through advertising, and soliciting legal support professionals for employment.  The proposed order requires the Association to cease and desist from these practices.

Commissioner Ohlhausen Addresses London Standards and Patents Conference

At the 2013 Standards and Patents Conference in London, Commissioner Maureen Ohlhausen addressed three controversial areas.  First, she discussed whether seeking an injunction on a FRAND-encumbered standard essential patent (SEP) is a competition law violation.  Second, she considered whether “patent assertion entities” (PAEs) are harming competition, innovation, and the economy.  Third, she addressed how “reverse-payment” settlements should be treated after the U.S. Supreme Court’s ruling in favor of the FTC in Actavis earlier this year. 

Commissioner Ohlhausen lauded the FTC’s successful decade-long campaign of research, advocacy, and litigation to combat anticompetitive reverse payment settlements in the pharmaceutical industry.  She set out a framework that guides her analysis of matters involving SEPs, PAEs, and reverse payment drug settlements.  She also noted that the Commission is developing a nuanced approach to analyzing and enforcing patent hold-up issues related to SEPs and PAEs, including consideration of mitigating factors, as well as challenging anticompetitive agreements involving patents.

FTC Launches Competition Matters Blog

In connection with the launch of the redesigned ftc.gov website last month, the agency unveiled Competition Matters, the FTC’s newest blog for all things competition.  The blog will offer the latest insights and events from the FTC’s Bureau of Competition, Bureau of Economics, and Office of Policy Planning.  The Office of International Affairs will contribute on cooperative relationships with foreign enforcement agencies to address common problems.   The blog will feature the latest word on upcoming workshops and policy projects, practical points from FTC competition enforcement for business owners and their counsel, and tips from our premerger notification specialists.  It will also answer readers’ questions, link to various litigation filings, such as opening or closing statements, and more.  Go to the ftc.gov Stay Connected page to sign up for email delivery.  Send your comments or suggestions to ftcgovweb@ftc.gov.


Consumer Protection and Privacy

Android Flashlight App Developer Settles FTC Charges It Deceived Consumers About Use of Information

A mobile App developer has agreed to settle FTC charges that its flashlight app surreptitiously collected and sent third parties information collected from consumer cell phones without consumers’ knowledge.  The free app, known as “Brightest Flashlight Free,” is one of the most popular apps for Android mobile devices and has been downloaded tens of millions of times.  According to the FTC complaint, the company’s privacy policy deceptively failed to disclose that the app transmitted users’ precise location and unique device identifier to third parties, including advertising networks.  Furthermore, the company deceived consumers by presenting them with a false option to decline sharing their information.  In fact, the information was not only shared automatically regardless of whether the consumer opted out, but the sharing began before the consumer even clicked  to accept or reject the license agreement.

App creator Goldenshores Technologies, LLC, and its manager Erik M. Geidl have agreed to a settlement that prohibits them from misrepresenting how they collect and share consumer information.  The settlement also prohibits them from misrepresenting how much control consumers have over the way their information is used.  The settlement requires timely notification and fully-informed express consent before collecting, using, and sharing consumers’ geolocation information.  The defendants are also required to delete any personal information collected from consumers through the Brightest Flashlight app.

FTC Seeks Comment on Issues Raised at Internet of Things Workshop

FTC staff is seeking public comments on issues discussed at a November 19 workshop exploring consumer privacy and security issues posed by the Internet of Things.  The workshop brought together academics, consumer advocates, and business and industry representatives to discuss privacy and security issues related to increased connectivity for consumers across a range of devices in and outside the home.  A transcript of the proceedings will also be available at the Internet of Things website, linked above.  Staff seeks comments on issues addressed at the workshop, including how consumers can benefit from the Internet of Things; the unique privacy and security concerns and solutions associated with the Internet of Things; existing security technologies and practices businesses and consumers could use to enhance privacy and security in the Internet of Things; the role of the Fair Information Practice Principles in the Internet of Things; steps companies can take (before putting a product or service on the market) to prevent connected devices from becoming targets of, or vectors for, malware or adware; and how companies can provide effective notice and choice, and what solutions are available to protect consumers in circumstances where effective notice and choice are not possible.  Additional topics for comment are posted on the website.  The deadline for filing comments is January 10, 2014.  Comments can be filed electronically or by mail.

FTC Moves Against Massive Mobile Cramming Operation That Heaped Millions in Unwanted Charges on Consumers’ Bills

The Federal Trade Commission is has obtained a temporary restraining order as it takes action to stop a mobile phone cramming operation that has billed consumers tens of millions of dollars on their mobile phone bills without their permission. Operating through a number of companies, the defendants placed monthly subscription fees for so-called services like “love tips” and “fun facts” on consumers’ cell phone bills without authorization.  Defendants tricked consumers into providing their cell numbers through spurious website offers, including one claiming the consumer had won Justin Bieber tickets.  Many consumers thought the random messages they received were spam, not realizing that defendants were cramming recurring fees onto their cell phone bills, typically $9.99 per month.   The FTC is seeking preliminary and permanent injunctions and a variety of equitable relief to recover money paid by consumers. 

Information about what consumers should do if they notice mystery phone charges is available at the FTC website.  These materials, as well as tips gathered in a blog post on how to beat a mobile cramming scam, may be adapted to help protect consumers in your jurisdiction.

FTC Testifies on Data Brokers Before Senate Committee

Jessica Rich, Director of the FTC Bureau of Consumer Protection, testified on behalf of the FTC on December 18 before the Senate Committee on Commerce, Science and Transportation on the status of FTC work regarding data brokers.  These entities collect and aggregate consumers’ information and then resell it.   Rich recounted the FTC’s past and present efforts related to the privacy practices of the data broker industry.

The Commission currently pursues a three-pronged strategy regarding data brokers: enforcement actions, research and reports, and education for consumers and businesses.  Enforcement  has included nearly 100 cases and more than $30 million in civil penalties for violations of the FCRA. Cases highlighted in the testimony include the 2012 consent decree with data broker Spokeo, a  settlement announced in January 2013 with app developer Filiquarian, and the Commission’s recent consent decree with Certegy Check Services, which resulted in a $3.5 million FCRA fine.  Research and reports include the Commission’s ongoing study of the data broker industry and the FTC’s upcoming series of workshops on emerging privacy issues.  The workshops will explore a variety of issues, including alternative scoring products sold by data brokers.  Educational initiatives include warning letters sent by Commission staff to data brokers that provided tenant-screening services as well as to marketers of mobile apps that provide employment screening services.  A recent undercover effort by Commission staff sought to determine if data brokers who said they were not covered under FCRA were willing to sell information for FCRA-covered purposes. As a result, staff issued ten warning letters to companies.

The testimony sketched the history of FTC work regarding data companies, stretching back to 1990s efforts to explore the privacy practices of data companies not covered under the Fair Credit Reporting Act (FCRA).  It noted that in 2012, the FTC issued a report on privacy, containing recommendations about improving the transparency of data brokers’ practices and giving consumers greater control over how their information is used. The recommendations made in the report included giving consumers reasonable access to the data maintained about them by data brokers. The report also noted that the Commission has long supported legislation both to improve consumers’ access rights to data and to improve the transparency of industry practices.


In Other News

FTC Recruits International Fellows from Counterpart Agencies Around the World

The FTC is inviting counterpart agencies around the world to nominate applicants for the FTC International Fellows Program for 2014.  Fellows will spend 3-6 months at the FTC.  Fellows participate in investigations, enforcement actions, and other projects with FTC attorneys, investigators, and economists.  They will gain a first-hand appreciation of the practices and approaches that the FTC uses in its enforcement mission, while also sharing insights into their home agencies’ approaches.  Since 2007, the FTC has hosted 46 International Fellows from 27 countries.  For more details and to apply, see our brochure and application information.

FTC Postpones Follow-On Biologics Workshop Due to Inclement Weather

Due to inclement weather and the closure of the federal government on the day it was scheduled, the FTC has postponed until February 4, 2014 its one-day public workshop on Follow-On Biologics: Impact of Recent Legislative and Regulatory Naming Proposals on Competition.

FTC Ends Rulemaking On Caller ID Falsification Issues

After reviewing the public comments received on a December 2010 Notice of Proposed Rulemaking regarding the caller identification (Caller ID) requirements of the Telemarketing Sales Rule, the FTC has determined that no additions or modifications to the Rule would effectively prevent Caller ID spoofing.  As a result, the rulemaking proceeding has been closed.

FTC Seeks Public Comment on IVeriFly, Inc., Proposal for Parental Verification Method Under COPPA Rule

The Federal Trade Commission is seeking public comment on a proposed verifiable parental consent method that IVeriFly, Inc., has submitted for Commission approval under the Children’s Online Privacy Protection Rule.