FTC International Monthly - September

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



Google to Refund Consumers at Least $19 Million to Settle FTC Complaint It Unlawfully Billed Parents for Children’s Unauthorized In-App Charges

Google infographic

On September 4, the FTC announced that Google Inc. has agreed to refund millions of dollars in unauthorized purchases by children using mobile apps from its Google Play app store.  According to the FTC’s complaint, thousands of consumers complained, many reporting hundreds of dollars of unauthorized charges.  The settlement requires Google to provide full refunds of at least $19 million.  Google also will modify its billing practices. 

According to the FTC’s complaint, Google Play in-app charges range from 99 cents to $200.  In many apps used by children, users accumulate virtual items.  The complaint notes that the lines between virtual money purchases and real money purchases can be blurred.  After initially offering in-app purchases with no account holder authorization, the complaint states that in mid- to late 2012, Google began presenting a pop-up box asking for the account holder’s password.  But the pop-up did not inform consumers of the nature of the charge, or that entering the password opened up a 30-minute window in which children could incur unlimited charges.

This is the Commission’s third case concerning unauthorized in-app charges by children.  In January, Apple Inc. agreed to a settlement requiring it to provide full refunds of at least $32.5 million and change its billing practices.  In July, the Commission filed a complaint in federal court against Amazon.com, Inc., similarly seeking full refunds for consumers and an order requiring informed consent for in-app charges.


Dramamine Maker Agrees To Divest Competing Motion Sickness Drug Following Acquisition To Settle FTC Charges

Prestige Brands Holdings, Inc. has agreed to divest assets and marketing rights for the motion sickness drug Bonine.  The divestment will settle FTC charges that Prestige’s proposed $750 million acquisition of Insight Pharmaceuticals Corporation would likely lead to higher prices for consumers.  According to the FTC’s complaint, Prestige’s Dramamine, which is the best-selling branded product in the market for over-the-counter (OTC) motion-sickness drugs, and Insight’s Bonine, are the only two branded products with significant sales.  The proposed settlement requires Prestige to divest Bonine to Wellspring Pharmaceuticals, which produes a range of OTC medications.  More information about the OTC motion sickness medications market and the consent agreement can be found in the analysis to aid public comment on the FTC’s website.

Second Violation Results in $896,000  Civil Penalty for Investment Holding Company’s  Failure to Report 2013 Acquisition

Investment holding company Berkshire Hathaway Inc. has agreed to pay $896,000 to settle charges that it violated premerger reporting laws in connection with the acquisition of voting securities in USG Corporation.   According to the complaint, Berkshire Hathaway changed convertible USG notes it owned into $21.4 million voting securities.  This raised the value of its USG holdings above the applicable premerger reporting threshold under the Hart-Scott-Rodino (HSR) Act.   The HSR Act requires parties to notify the U.S. agencies of large transactions that affect commerce in the United States and otherwise meet the statutory filing requirements.  The HSR Act requires parties to notify the antitrust agencies if their total holdings in another party exceed a “size-of-transaction” threshold, regardless of the value of an individual transaction.   Berkshire Hathaway made a corrective filing, acknowledging that the transaction should have been reported.  This was the second such corrective filing by Berkshire Hathaway in six months.  The FTC took no action against the firm following its first HSR Act violation, relying on its assurances that it would implement appropriate HSR monitoring procedures going forward.   The proposed final judgment settling the complaint requires Berkshire Hathaway to pay the maximum civil penalty that can be imposed as a result of this violation.

To help firms in your jurisdiction avoid the most common HSR filing mistakes, feel free to direct them to this blog posting on filing mistakes on affidavits and notice letters.  Another resource is the FTC Premerger Notification Office’s checklist.  Use of these resources will help a firm avoid having a filing “bounced” for deficiencies, and having the initial HSR waiting period tolled until the filing is fixed.  Future blog posts will address other common mistakes.

Professional Associations Eliminate Rules that Restrict Competition among Their Members

Two professional associations have agreed to eliminate provisions in their respective codes of ethics that limit competition among their members. The FTC’s complaint against the National Association of Residential Property Managers, Inc. (NARPM), which represents more than 4,000 real estate managers, brokers, and agents, alleges that NARPM and its members restrained competition through provisions in its code of ethics that restrict comparative advertising and solicitation of competitor’s clients.  The proposed consent order requires NARPM to stop restraining its members from soliciting property management work, and from making statements that are not false or deceptive about a competitor’s products, services, or business or commercial practices. 

In a separate complaint, the FTC charged that National Association of Teachers of Singing, Inc. (NATS) restrained competition through a code of ethics provision that prohibits members from soliciting students from other members.  NATS represents more than 7,300 vocal arts teachers in the United States.  The proposed order settling the FTC’s complaint requires that NATS stop restraining members from seeking teaching work, and stop telling its members that soliciting students is unethical.  Among other things, the order also requires NATS to obtain a certification from each of its chapters that the chapter is not restricting solicitation, advertising, or price-related competition by its members, and to sever its ties with any chapter that NATS learns is restraining solicitation, advertising, or price-related competition by its members.  

The actions follow on other recent FTC cases involving other professional associations, including last April’s consent orders settling actions against the National Association of Music Teachers and the California Association of Legal Support Professionals.

Consumer Protection and Privacy

FTC Announces Winners of “Zapping Rachel” Robocall Contest

Robocall graphic

On August 28, the FTC announced the winners of its “Zapping Rachel” robocall contest held at the DEF CON 22 hacking conference in Las Vegas on Aug. 7-10. Robocalls are illegal, pre-recorded telemarketing calls. The contest challenged participants to design a robocall “honeypot,” an information system designed to attract robocallers, and help law enforcement authorities, researchers, and others gain enhanced insights into robocallers’ tactics. The winners are listed here, along with a description of their entries. Sixty teams and individuals registered for one or more of the contest’s three phases. A panel of expert judges selected the winning entries for each of the three phases, along with two honorable mentions for the final phase. Phase 1 challenged contestants to build a honeypot that identifies inaccurate information in incoming calls, such as spoofed caller IDs, or determines which calls are likely robocalls. Phase 2 challenged contestants to circumvent an existing honeypot and prevent it from collecting information on incoming calls. Phase 3 challenged participants to analyze call data from an existing honeypot and develop algorithms that predict which calls are likely robocalls. The FTC will continue its efforts to engage information security experts in its ongoing battle against robocalls. Updates will be posted at FTC.gov/ZapRachel.

Email Spammer Settles FTC Charges: Tricked Consumers With False Information About the Affordable Care Act 

On August 7, a Federal District Court entered an order requiring an email spammer and his company to pay $350,000 to resolve FTC charges that they sent deceptive emails in advance of the Affordable Care Act (ACA) roll-out.  According to the FTC’s district court complaint, the emails falsely claimed that consumers would be violating the law if they did not immediately click a link to enroll in health insurance.  The FTC also alleged that the defendants’ spam emails illegally failed to provide consumers the opportunity to decline to receive future emails, and failed to provide a valid physical postal address.  The settlement order imposes a $350,000 judgment and permanently prohibits the defendants from misrepresenting material facts about any product or service. 

In Other News

FTC Announces Agenda, Panelists for September 15 Big Data Workshop

big data

The FTC has announced the agenda for its upcoming workshop, “Big Data: A Tool for Inclusion or Exclusion?” “Big data” refers to technologies that are dramatically expanding the commercial collection, analysis, use, and storage of data. The workshop will examine the use of big data and its impact on consumers, including low-income and underserved consumers. The day-long program will feature presentations and panel discussions with academic researchers, consumer groups, industry representatives, and other experts. It will include remarks by FTC Chairwoman Edith Ramirez and Commissioner Julie Brill. The workshop will be held at 9 a.m. on Sept. 15 in the auditorium of the Constitution Center, located at 400 7th Street, SW, in Washington, D.C. Registration will open at 8 a.m.

FTC Is Cosponsoring September 8-10 African Consumer Protection Dialogue Conference   

From September 8-10, the FTC is co-sponsoring the sixth annual African Consumer Protection Dialogue conference, along with the Common Market for Eastern and Southern Africa (COMESA) Competition Commission, and the Malawi Competition and Fair Trading Commission.  The conference is being held in Lilongwe, Malawi.  The focus this year is “Strengthening the Framework for Dealing with Cross Border Consumer Violations.”  A list of participants, detailed agenda, and several dozen presentation decks are available here.

FTC Updates Telemarketer Fees for the Do Not Call Registry

copped 2 do not call graphic

On September 2, the FTC announced updated fees for telemarketers accessing phone numbers on the National Do Not Call Registry.  The new fees are effective on October 1, 2014.  All telemarketers calling consumers in the United States are required to download the numbers on the Do Not Call Registry to ensure they do not call those who have registered their phone numbers.  Telemarketers must subscribe each year for access to the Registry numbers.  More details regarding the new access fees are available here. 

FTC Warns Against Government Imposter Scams

The FTC is warning consumers about scammers who pretend they’re with the government to scare consumers into sending money.  The FTC tips may help consumers in your jurisdiction realize that scammers know how to show fake information on caller ID.  So, just because a government agency’s name appears does not mean the call is legitimate.  The FTC alerts consumers that scammers may say they owe taxes or some other debt, or must pay a fee to collect a prize.  Then the scammers tell them to put money on a prepaid debit card and tell them the number — something no government agency would ask.  More information on how these scams work and how to avoid them is available at the FTC’s consumer blog post Can you spot a government imposter? and Government Imposter Scams. The FTC has also made materials on this subject available in Spanish, including a fotonovela, as part of the FTC’s ongoing efforts to raise awareness about scams targeting the United States Latino community.