DECEMBER 2019
The University of Phoenix and its parent company will pay a record $191 million to resolve FTC charges that they used deceptive advertisements that falsely touted relationships and job opportunities with companies such as AT&T, Yahoo!, Microsoft, Twitter, and The American Red Cross. Under the settlement, University of Phoenix will pay $50 million in cash as well as cancel $141 million in debts owed to the school by students harmed by the deceptive ads. "This is the largest settlement the Commission has obtained in a case against a for-profit school,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Students making important decisions about their education need the facts, not fantasy job opportunities that do not exist."
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The FTC issued a unanimous Final Order and Opinion finding that the U.K. data analytics and consulting company, Cambridge Analytica, LLC, engaged in deceptive practices to harvest personal information from tens of millions of Facebook users for voter profiling and targeting. The FTC also found that the company engaged in deceptive practices relating to its participation in the EU-U.S. Privacy Shield framework. This Opinion follows from the administrative complaint the FTC issued in July against Cambridge Analytica and its then-CEO Alexander Nix and app developer Aleksandr Kogan. Nix and Kogan previously agreed to settle the FTC’s allegations. Cambridge Analytica, which filed for bankruptcy in 2018, did not respond to the complaint.
Five Companies Settle FTC Allegations That They Falsely Claimed Participation in the EU-U.S. Privacy Shield
The FTC reached settlements with five companies that allegedly misrepresented their participation in the EU-U.S. Privacy Shield framework, which enables companies to transfer consumer data legally from European Union countries to the United States. They are: Click Labs, Inc., a website and mobile app services provider; Incentive Services, Inc., a developer of service award and incentive programs for employers; Global Data Vault, LLC, a provider of data storage and recovery services; TDARX, Inc., an IT services provider; and Medable, Inc., a technology solutions company.
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The FTC has brought 21 enforcement actions related to the EU-U.S. Privacy Shield framework since the framework was established in 2016.
A federal court halted the operations of Voice over Internet Protocol (VoIP) service provider Globex Telecom Inc., which allegedly played a key role in robocalling consumers to promote a credit card interest reduction scheme that bilked consumers out of millions of dollars. In an amended complaint filed in ongoing litigation against Educare Centre Services, the FTC alleged that Globex (and a related Canadian corporation) provided Educare Centre Service with the means to make calls to U.S. consumers, including illegal robocalls, to market Educare’s phony credit card interest rate reduction services. The court issued a temporary restraining order appointing a temporary receiver and freezing the defendants’ assets. This is the FTC’s first case against a VoIP service provider under the FTC’s Telemarketing Sales Rule.
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The marketers of Synovia, a dietary supplement, agreed to settle FTC charges by halting the deceptive tactics they allegedly used to mislead consumers into thinking Synovia could treat arthritis and alleviate joint pain. The FTC’s proposed settlement with the defendants bars them from continuing to make the alleged misleading and unsupported claims about Synovia, including that the supplement would pave the “pot holes” in damaged joints, replace expensive injected medications, and reduce arthritis pain by 95 percent. It also requires the defendants to pay $821,000, which the Commission may use to provide refunds to defrauded consumers.
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Pharmaceutical and biologic manufacturers Bristol-Myers Squibb Company (BMS), and Celgene Corporation agreed to divest Celgene’s Otezla, the most popular oral treatment for moderate-to-severe psoriasis in the United States. The divestiture settles FTC charges that BMS’s proposed $74 billion acquisition of Celgene would substantially lessen competition and tend to create a monopoly by eliminating future competition between BMS and Celgene in developing, manufacturing, and selling such oral products in the United States. According to the complaint, a BMS product under development will likely be the next market entrant and would compete directly with Otezla, with other potential competitors facing lengthy delays for both drug development and FDA approval. The Commission approved the settlement by a 3-2 vote. Commissioners Phillips and Wilson issued accompanying statements and Commissioners Slaughter and Chopra issued dissenting statements.
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FTC staff submitted a comment to the North Carolina State Board of Dental Examiners expressing support for proposed changes to the North Carolina Administrative Code that appear to increase competition by increasing the supply of and access to preventive dental services in underserved areas to the benefit of North Carolina’s health care consumers.
FTC staff also submitted a comment in support of a bill before the Massachusetts legislature that would allow podiatrists to treat not just the foot, but also the lower leg. The comment urges lawmakers to avoid restrictions on podiatrists that are not narrowly tailored to address well-founded patient safety concerns.
FTC staff also submitted a comment to the Texas Medical Board raising concerns that a proposed rule could harm competition by impeding access to surgical and other health care services that require anesthesia or related services.
Testifying before the House Subcommittee on Antitrust, Commercial, and Administrative Law, FTC Chairman Joseph Simons described the FTC’s enforcement and policy work to promote competition in U.S. markets. With respect to high-priority efforts to address technology markets, the testimony states that the FTC has prioritized efforts to monitor, study and, where necessary, bring enforcement actions to maintain competition.
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On January 9, the FTC will hold a public workshop to examine whether there is a sufficient legal basis and empirical economic support to promulgate a Commission Rule that would restrict the use of non-compete clauses in employer-employee employment contracts. This follows a labor market workshop hosted by the Department of Justice Antitrust Division in September. For details, click on the headline above.
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The FTC published a blog post raising issues parents might consider before giving kids Internet-connected toys to keep them safe online. They include: toy features, including understanding camera or microphone recording; email or social media connectivity; and parental controls. The blog sets out a list of questions parents can use to protect their kids’ data. For specific questions to consider, click the headline above. There are more resources for parents on the FTC’s Protecting Kids Online webpage.
According to a Bureau of Competition blog post, “More and more, merging parties argue that their merger does not raise competition concerns because they are not each other’s closest competitors. Parties have advanced this argument even in markets where there will be only two or three remaining firms, post-transaction, including the merged firm. This argument is not new, and it often misunderstands merger analysis.” According to the post, “For any merger involving direct competitors – firms that are actively bidding against one another or vying for the same customers – the key question is whether the elimination of competition between the merging parties increases opportunities for anticompetitive unilateral or coordinated conduct in the post-merger market.” For more details, click on the headline above.
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