MAY 2020
FTC Chairman Joe Simons has released a summary of the agency’s 2019 Annual Highlights, calling attention to the Commission’s ongoing efforts to protect consumers and promote a competitive marketplace through vigorous enforcement, effective advocacy, thoughtful policy work, and international cooperation. The report highlights the agency’s record-breaking settlements with Facebook and Google/YouTube, and its successful challenges to anticompetitive business conduct in the health care and pharmaceuticals sector.
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The Highlights note that FTC actions have led to more than $232 million in refunds to consumers with $136 million sent directly from the FTC. The Highlights also spotlight significant new developments such as the Bureau of Competition’s establishment of a new Technology Enforcement Division to investigate potential anticompetitive conduct in digital platform markets, and new consumer and business outreach initiatives focusing on online issues such as Social Media Influencers 101. The Highlights also detail the FTC’s enforcement-related cooperation with foreign agencies and multilateral networks as well as international policy initiatives with competition, consumer protection, and privacy agencies and international organizations. Click for more data or the full report.
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A federal district court judge has approved the $5 billion settlement that resolved allegations that Facebook violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information. In the wake of the Court’s decision, FTC Chairman Joe Simons stated that the FTC is “pleased with the Court’s decision,” explaining that:
 Now that the federal court has approved the settlement, the FTC has formally approved amendments to its 2012 privacy order with Facebook to include the provisions that were incorporated in the settlement the Commission announced with the social network platform in July 2019.
The FTC continues to prioritize enforcement against deceptive COVID-19 related health claims. Adding to the dozens of warning letters the FTC has sent since March, the agency announced last week that it sent 45 more letters warning marketers to stop making unsubstantiated claims that their products and therapies can treat or prevent COVID-19, the disease caused by coronavirus. The letters note that if the false claims do not cease, the Commission may seek a federal court injunction and an order requiring that money be refunded to consumers. In all, the Commission has sent similar letters to almost 100 companies and individuals around the world that tout coronavirus “cures.” The letters announced last week target dubious “treatments” such as herbal medications, music therapy, homeopathic treatments, and even electromagnetic field shields. As the FTC letters make clear, there is currently no scientific evidence that these, or any, products or services can treat or cure coronavirus.
Separately, in one of the FTC’s first court actions aimed at deceptive coronavirus claims, a California-based marketer of a supplement consisting mainly of Vitamin C and herbal extracts has agreed to a preliminary order barring him from claiming that it is effective at treating, preventing, or reducing the risk of COVID-19. Pending the resolution of a parallel administrative case, the proposed preliminary order also bars the defendant from claiming that three cannabidiol-based products he sells are effective cancer treatments.
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 Online fashion retailer Fashion Nova will pay $9.3 million to settle FTC charges that it violated the agency’s Mail, Internet, or Telephone Order Merchandise Rule by not properly notifying consumers and giving them the chance to cancel their orders when it failed to ship merchandise in a timely manner, and by illegally using gift cards to compensate consumers for unshipped merchandise instead of providing refunds. The money will be used to refund consumers who were harmed by the company’s violations. The FTC received thousands of complaints about Fashion Nova’s shipping and refund practices from American consumers, as well as hundreds from consumers located in Canada and more than fifty other countries.
The FTC announced the launch of two new interactive dashboards detailing consumer reports about international fraud. One of the new dashboards provides data on cross-border complaints submitted by consumers to econsumer.gov, a site created in 2001 by members of the International Consumer Protection and Enforcement Network (ICPEN) to gather and share consumer complaints about international scams. Consumers reported losing more than $150 million to international scams in 2019, with online shopping and misrepresented products as the top categories of complaints. The second set of dashboards shows data on international reports submitted to the FTC’s Consumer Sentinel Network. The international dashboards reflect cross-border complaints and data by region. These dashboard reports alert consumers to emerging threats, including those that have emerged in the wake of COVID-19, and enable consumer protection agencies to identify trends and opportunities for cross border coordination. Contact Hui Ling Goh for more information on how to participate in econsumer.gov.
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The FTC and DOJ’s Antitrust Division jointly announced that they will seek to protect workers on the front lines of the COVID-19 pandemic–including doctors, nurses, first responders, and those who work in grocery stores, pharmacies, and warehouses, among other essential service providers–by using various antitrust laws against those who seek to exploit the current circumstances to engage in anticompetitive conduct in the labor market. In a joint statement, the agencies acknowledge that the COVID-19 pandemic may require unprecedented cooperation between federal, state, local, and tribal governments, private businesses, and individuals to protect health and safety. At the same time, the agencies said they are on alert for employers, staffing companies, and recruiters, among others, who might engage in collusion or other anticompetitive conduct in labor markets, such as agreements to lower wages or salaries, or reduce hours worked.
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Pharmaceutical companies AbbVie Inc. and Allergan plc agreed to divest three drugs to settle FTC charges that AbbVie’s proposed $63 billion acquisition of Allergan would violate federal antitrust law. Following an extensive investigation, the FTC alleges that the proposed acquisition would likely result in substantial competitive harm to consumers in the market for treatment of exocrine pancreatic insufficiency, a condition that results in the inability to digest food properly. The FTC also alleges that the acquisition would eliminate future direct competition between AbbVie and Allergan in the development and sales in the United States of IL-23 inhibitor drugs for treatment of moderate-to-severe Crohn’s disease and moderate-to-severe ulcerative colitis. The Commission vote to issue the complaint and accept the proposed consent order for public comment was 3-2. Chairman Simons, along with Commissioners Phillips and Wilson, issued a majority statement, and Commissioners Chopra and Slaughter issued dissenting statements.
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The FTC closed its investigation into Johnson & Johnson’s proposed acquisition of TachoSil from Takeda Pharmaceutical Company following the parties’ abandonment of the deal. The investigation focused on the potential loss of competition between TachoSil and Johnson & Johnson’s Evarrest, the only two fibrin sealant patches approved in the United States to stop bleeding during surgery. Based on the investigation, staff had significant concerns about the likely anticompetitive effects and had recommended that the Commission block the transaction. Throughout the investigation, FTC staff cooperated closely with staff of the European Commission’s DG Competition.
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Össur Hf and College Park Industries, Inc., both makers of prosthetic limbs, agreed to divest College Park’s myoelectric elbow business to settle FTC charges that Össur’s proposed acquisition of College Park would violate federal antitrust law. The FTC alleges that the transaction, which was not reportable under the Hart-Scott-Rodino Act, is likely to harm U.S. customers of myoelectric elbows. The complaint alleges that the U.S. market for myoelectric elbows is highly concentrated and that College Park is a leading supplier in that market. Iceland-based Össur is developing its own myoelectric elbow and, absent the proposed acquisition, it would likely compete with College Park for U.S. sales of myoelectric elbows, according to the complaint.
A new paper from Bureau of Consumer Protection staff provides a look at the issues and solutions discussed at the FTC’s June 2019 “That’s the Ticket” workshop. While this is a challenging time for the live event industry and the online ticket marketplace, the issues highlighted in the perspective paper are likely to affect consumers in the future. Workshop attendees heard divergent views and proposals relating to a many ticketing practices, including the intentional underpricing of event tickets in the primary market, how ticket availability is affected by factors such as holdbacks, staggered sales, the use of bots to purchase large blocks of tickets for later resale, and the practice of disclosing mandatory fees only after consumers select their tickets, making it more difficult to comparison shop. Many workshop participants advocated for federal legislation and enforcement to protect consumers and encourage a fair and transparent online event ticket market.
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The FTC’s Bureau of Economics and the INFORMS Society for Marketing Science’s journal Marketing Science will co-organize the second FTC-Marketing Science Conference on Marketing and Consumer Protection on October 2 in Washington, D.C. The conference will bring together scholars interested in issues related to marketing and consumer protection policy and regulation. The call for papers for the event is now open, and the deadline to submit papers for consideration is July 31. The goal of the conference is to promote dialogue between marketing scholars and the FTC, with an eye toward promoting academic research with potentially high impact on the practice of consumer protection and regulation, and providing agency staff with existing cutting-edge research.
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The FTC announced that it has postponed its workshop seeking input on proposed changes to the Safeguards Rule under the Gramm-Leach-Bliley Act until July 13 and that the event will be held online. The virtual workshop, originally scheduled to take place on May 13, will continue to focus on some of the issues raised in response to amendments the FTC has proposed to the Safeguards Rule, which requires financial institutions to develop, implement, and maintain a comprehensive information security program. The FTC has extended the deadline to submit a comment on the topics that will be examined at the workshop until August 12. Instructions for filing comments can be found in the Federal Register notice announcing the workshop’s postponement.
The FTC is seeking comment on whether proposed changes should be made to the Health Breach Notification Rule, which went into effect in 2009. The Rule requires vendors of personal health records and related entities that are not covered by the Health Insurance Portability and Accountability Act (HIPAA) to notify individuals, the FTC, and, in some cases, the media of a breach of unsecured personally identifiable health data. The FTC will accept comments on the proposed changes for 90 days after the Rule review notice is published in the Federal Register.
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