News from the Federal Trade Commission - August 2017

Federal Trade Commission sent this bulletin at 08/31/2017 12:46 PM EDT

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Penn Corner - Your update from the Federal Trade Commission - August 2017

Uber Settles FTC’s Privacy, Data Security Charges

Uber agreed to settle FTC charges that it failed to keep its promises to protect consumers’ personal information and ensure Uber employees can only access customer information for appropriate business purposes. The FTC’s complaint alleges that Uber’s failure to provide reasonable data security in 2014 enabled a hacker to get personal information about Uber drivers, including more than 100,000 drivers’ names and license numbers. The complaint says Uber also failed to keep its word to monitor rider and driver accounts for unauthorized access after 2014 news reports claimed its employees were checking people’s trip records and driver information without having official business reasons to do so.

Fake Discount Clubs Stole Millions, FTC Says

The FTC sued several companies and individuals for allegedly taking millions of dollars out of people’s accounts using remotely created checks – without the account owners’ authorization. According to the FTC, the defendants had websites and made telemarketing calls that offered short-term loans and cash advances to people with bad credit. To get access to that money, people gave their bank account information. But the FTC says the defendants actually signed people up for online discount membership clubs – and charged for them. The FTC says when people complained to the company, the defendants lied to confuse people into thinking they had, in fact, approved those charges.

Online Marketing Scheme Cheated People, FTC Says

A group of online marketers lured people into expensive monthly subscriptions for teeth whiteners using initial low-cost “trials,” according to the FTC. The defendants sold tooth-whitening products under various names, and hired other companies to help them market the products. These affiliate marketers created online surveys, as well as ads promoting free or low-cost trials – all to drive people to the product’s website. Once people put in credit card and other information, the site prompted them to click “Complete Checkout” - twice. The first time, people not only got the free trial, they were signed up for monthly shipments of the product at $94.31 per month. The second time they were tricked into signing up for another monthly subscription and paying an additional $94.31 for a second product they didn’t even request. So, what people thought was an inexpensive trial offer of the tooth whitener turned out to cost nearly $200 per month. The FTC charged the marketers with violating the FTC Act and the Restore Online Shoppers’ Confidence Act.

FTC: Scam Laundered $6 Million in Card Charges

Two years after the FTC shut down Money Now Funding, which baited people into buying phony small business opportunities, the FTC is suing the people and payment processing businesses it says laundered more than $6 million in credit card charges that Money Now Funding collected from its victims. The FTC says the payment processing defendants kept submitting fraudulent merchant applications to the bank for fake companies, despite obvious signs that Money Now Funding was defrauding people. According to the FTC, the defendants created accounts for more than 40 shell companies that processed people’s credit card payments and hid the scam. The FTC is asking the court to return money to people who lost it.

Baxter to Divest Drug Products per FTC Charges

Baxter International Inc. and Claris Lifesciences agreed to divest two pharmaceutical products to settle FTC charges that Baxter’s $625 million acquisition of Claris’ injectable drugs business is anticompetitive. According to the FTC’s complaint, the acquisition would reduce U.S. competition for the antifungal agent fluconazole in saline intravenous bags, which is used to treat fungal and yeast infections. The acquisition also would reduce future competition in the U.S. market for intravenous milrinone, which dilates the blood vessels and is a short-term treatment for life-threatening heart failure. In order to maintain competition in these markets, the parties will divest Claris’ rights to both products to Renaissance Lakewood LLC.

"Uber failed consumers in two key ways: First, by misrepresenting the extent to which it monitored its employees’ access to personal information about users and drivers and, second, by misrepresenting that it took reasonable steps to secure that data. This case shows that, even if you’re a fast growing company, you can’t leave consumers behind: you must honor your privacy and security promises."

— FTC Acting Chairman Maureen K. Ohlhausen on Uber case

FTC Gets Court to Halt Work-at-Home Scheme

A federal court temporarily shut down a scheme that the FTC says tricked people into buying a work-at-home system based on false claims that it would let them earn thousands of dollars. The FTC brought the case against several operations working under various brand names, including Work At Home EDU, Work At Home Program, Work At Home Ecademy, Work At Home University, Work At Home Revenue and Work at Home Institute.

FTC Picks Winner of its Internet Home Contest

New Hampshire software developer, Steve Castle, won the FTC’s top prize, $25,000, in its Internet of Things (IoT) competition. The IoT competition sought new tools to help people protect their IoT devices. Castle created an app, IoT Watchdog, which would help users with limited technical experience manage the IoT devices and networks in their home to ensure they are up-to-date and do not face any other security vulnerabilities.

FTC Intensifies Fight against Illegal Robocalls

On a daily basis, the FTC now releases to the telecommunications industry the phone numbers of robocallers the agency gets from consumers. This initiative will help the industry’s efforts to implement call-blocking solutions. Unwanted and illegal robocalls are the FTC’s number-one complaint category, with more than 1.9 million complaints filed in the first five months of 2017 alone.

The FTC’s Accomplishments in Six Months

Acting Chairman Maureen Ohlhausen announced that, since January 2017, the FTC has filed or settled 44 consumer protection matters, reached 14 administrative consent agreements related to consumer protection, and distributed $86,519,000 in redress to over a million consumers. In addition, the Bureau of Consumer Protection has taken several measures to simplify information requests to businesses, implemented initiatives to start a national dialogue on cybersecurity with small businesses, and reached many other milestones to fortify consumer protection, privacy and data security.

Your Money Back

American Business Builders Refunds

The FTC is mailing 2,711 checks totaling more than $372,000 to people who paid American Business Builders and related entities for a home-based business opportunity. According to the FTC, the defendants claimed that people would earn substantial income offering payment-processing services, credit card terminals, and merchant cash advances to small businesses.

VGC Corp of America Refund

The FTC is mailing 53,240 checks totaling more than $532,000 to people who paid VGC Corp of America for expensive vacation packages they never received. The FTC says the company advertised vacation packages as prizes to people who called and answered a trivia question. VGC allegedly told callers they had won, but had to pay up to $400 in "taxes" or "fees.”

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