News from the Federal Trade Commission - April 2014

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April 2014

Privacy and WhatsApp

Privacy and WhatsApp

In light of Facebook’s proposed acquisition of WhatsApp, FTC staff has notified the companies about their obligations to protect the privacy of their users. The letter notes that they must get permission from WhatsApp subscribers before making any material changes to how they use data already collected from them. They also must not misrepresent the extent to which they maintain the privacy of subscribers’ information. In 2011, Facebook settled FTC charges that it deceived its users by failing to keep its privacy promises.

App-rehensive

App security

Two companies have agreed to settle FTC charges that they misrepresented the security of their mobile apps and put the sensitive personal information of millions of people at risk. The FTC alleged that, despite their security promises, Fandango and Credit Karma failed to take reasonable steps to secure their mobile apps, leaving people’s sensitive personal information vulnerable to attackers who could intercept any of the information the apps sent or received. This type of attack is especially dangerous on public Wi-Fi networks like those at coffee shops, airports and shopping centers.

Getting jerked around

FTC files complaint against Jerk.com

The FTC charged the operators of the website "Jerk.com" with harvesting personal information from Facebook to create profiles for more than 73 million people, including children, that labeled people a “Jerk” or “not a Jerk.” According to the FTC’s complaint, Jerk, LLC and its operator, John Fanning, violated federal law by misrepresenting that users created all the content on the site and by falsely claiming that people could change their online profiles for a $30 fee. Jerk.com profiles allegedly often appeared in search engine results.

Alarming calls

Home security company used illegal telemarketing practices

The FTC has settled a complaint against a home security company that illegally called millions of people on the National Do Not Call Registry to pitch home security systems. According to the FTC, Versatile Marketing Solutions bought phone numbers from lead generators who claimed those consumers had given Versatile permission to contact them. They hadn’t. The lead generators used illegal ways – robocalls, fake surveys and calls to phone numbers on the Registry – to compile their lists.

Up in your grill

Propane suppliers charged with collusion

The FTC charged two leading suppliers of propane exchange tanks used in BBQ grills and patio heaters with illegally working together to reduce the amount of propane in each container. The FTC’s administrative complaint alleges Blue Rhino and AmeriGas colluded to reduce the propane level in each tank from 17 to 15 pounds, without lowering the wholesale price paid by Walmart. According to the FTC, Blue Rhino and AmeriGas secretly agreed that neither would deviate from their proposal to Walmart to reduce the fill level. Walmart eventually accepted the tanks with less propane. The case is headed to administrative litigation.

A good year

FTC 2013 Annual Highlights

The FTC has released its 2013 Annual Highlights, describing the agency’s work to protect consumers and promote competition during the past calendar year. In celebration of its 100th anniversary, the FTC will host a public symposium on Nov. 7 in Washington that will feature keynote addresses and panel discussions examining both the Commission’s history and its future.

Business flop-portunity

False Business Opportunties

The operators of a business opportunity scheme have agreed to settle FTC charges that they defrauded people who bought their work-at-home program. Under the settlement, Ben and Dave’s Consulting Associates, Inc., and David Clabeaux, the defendants behind The Online Entrepreneur, are banned from selling business and work-at-home opportunities. Their scheme purportedly would help buyers set up their own websites. The scammers promised buyers that they could earn a significant income in commissions by marketing their sites as affiliates of well-known companies like Prada, Sony, Louis Vuitton and Verizon.

                                

"Consumers are increasingly using mobile apps for sensitive transactions. Our cases against Fandango and Credit Karma should remind app developers of the need to make data security central to how they design their apps."

— Edith Ramirez, FTC Chairwoman

Alcohol marketing

For the first time, the FTC has obtained substantial information about internet and digital marketing in the alcohol industry. According to the FTC’s fourth major study on the industry, online and digital promotional expenditures showed a four-fold increase since the 2008 report. The current report compiles data about the industry’s compliance with self-regulatory guidelines, including ad placement, digital marketing, and the role of self-regulation.

Auto know better

Courtesy Auto Group of Massachusetts has agreed to settle the FTC’s charges that the dealership deceptively advertised that drivers could lease a vehicle for $0 down and specific monthly payments when the advertised amounts actually excluded substantial fees. In another case, the FTC filed a complaint against Arkansas car dealer Abernathy Motor Company and its two principals charging that they violated federal law by failing to display a “Buyers Guide” on used vehicles offered for sale.

Banned from debt collection

Under a settlement with the FTC, Jason R. Begley and Wayne W. Lunsford, the two principal owners of Rincon Debt Management, will give up more than $3.3 million in assets for victim refunds. The order permanently bans the two defendants from the debt collection business. Litigation continues against several companies that Begley and Lunsford used as part of their scheme.

Telemarketing fraud

At the FTC’s request, a federal court has temporarily stopped a multi-million dollar telemarketing fraud that targeted older people. According to the FTC, Ari Tietolman, the leader of the telemarketing scheme, and his associates called tens of thousands of older people claiming to sell fraud protection, legal protection and pharmaceutical benefit services.

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