NOVEMBER 2021
The FTC issued a new enforcement policy statement warning companies against deploying illegal dark patterns that trick or trap consumers into subscription services. The agency is ramping up its enforcement in response to a rising number of complaints about the financial harms caused by deceptive sign up tactics, including unauthorized charges or ongoing billing that is impossible cancel. The enforcement policy statement is based on prior FTC cases challenging a variety of illegal subscription practices. These include: hiding important payment information, or even the fact that consumers would be charged at all, behind hyperlinks, hover-overs or in inconspicuous places or buried on pages beyond the initial offer page; making consumers wait on hold or listen to lengthy ads before they could cancel; converting free trials to paid subscriptions before the free trial ended; or failing to disclose that widely advertised, material benefits of the subscription were no longer available. The new enforcement policy statement reminds businesses that they must disclose all material terms clearly and conspicuously, obtain consumers’ express informed consent to charges, and provide an easy and simple cancellation method. The statement warns businesses that they can be subject to law enforcement action, including potential civil penalties, if they fail to do so. The Commission vote approving the issuance of the enforcement policy statement was 3-1.
The FTC, through a complaint filed by the Department of Justice, sued Xlear, Inc. and its owner for violating the COVID-19 Consumer Protection Act, alleging that it falsely pitched its saline nasal sprays as an effective way to prevent and treat COVID-19. According to the FTC, the company did not conduct any clinical trials to support its claim that its nasal sprays provide protection against the coronavirus and grossly misrepresented the purported findings and relevance of several scientific studies. The FTC is asking a federal court to impose monetary penalties on the defendants and bar them from continuing to make such false and unsupported claims.
|
The FTC announced a newly updated rule that strengthens the data security safeguards that financial institutions are required to put in place to protect their customers’ financial information. In recent years, widespread data breaches and cyberattacks have resulted in significant harms to consumers, including monetary loss, identity theft, and other forms of financial distress. The FTC’s updated Safeguards Rule requires non-banking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders, to develop, implement, and maintain a comprehensive security system to keep their customers’ information safe. It specifies criteria for safeguards financial institutions must implement as part of their information security program. These include limiting who can access consumer data and using encryption to secure the data. Under the updated Safeguards Rule, institutions must also explain their information sharing practices, specifically the administrative, technical, and physical safeguards the financial institutions use to access, collect, distribute, process, protect, store, use, transmit, dispose of, or otherwise handle customers’ secure information. In addition, financial institutions will be required to designate a single qualified individual to oversee their information security program and report periodically to an organization’s board of directors, or a senior officer in charge of information security. The Commission voted 3-2 to publish the revisions to the Safeguards Rule in the Federal Register.
Using its Notice of Penalty Offense Authority, the FTC has put more than 1,100 businesses that pitch money-making ventures on notice that if they deceive or mislead consumers about potential earnings, the FTC won’t hesitate to use its authority to target them with large civil penalties. As the pandemic has left many people in dire financial straits, money-making pitches have proliferated. From multi-level marketing companies offering the dream of owning a business, to investment “coaches” with promises of secrets on how to beat the odds, to ubiquitous “gigs” that pitch a steady second income, consumers are bombarded by offers that often prove to be less than advertised. Using a Notice of Penalty Offenses, the agency has put the companies on notice they could incur significant civil penalties—up to $43,792 per violation—if they or their representatives make claims about money-making opportunities that run counter to prior FTC administrative cases.
The FTC announced that it is restoring its practice of routinely restricting future acquisitions for merging parties that pursue anticompetitive mergers. The FTC issued the Prior Approval Policy Statement, which establishes that merger enforcement orders will once again require acquisitive firms to obtain prior approval from the agency before closing any future transaction affecting each relevant market for which a violation was alleged. Parties settling an allegedly anticompetitive proposed deal with a consent order will need the Commission’s permission to close any further acquisition in an affected market, and sometimes in broader markets depending on the circumstances, for at least ten years. The Commission may seek prior approvals even when parties abandon a transaction. The Commission approved the issuance of the policy statement by a vote of 3-2.
The FTC issued a proposed order imposing strict limits on future mergers by DaVita, Inc., a dialysis service provider with a history of fueling consolidation in life-saving health industries. Under the proposed order, DaVita is required to divest three Provo-area dialysis clinics to Sanderling Renal Services, Inc. and is prohibited from entering into or enforcing non-compete agreements and other employee restrictions. According to the FTC's complaint, the acquisition would eliminate actual, direct, and substantial competition, and would tend to create a monopoly. Under the order, DaVita is also required to receive prior approval from the FTC before acquiring any new ownership interest in a dialysis clinic anywhere in Utah for a period of ten years. The proposed order limiting future transactions marks the FTC’s return to the standard use of prior approval, which accompanied the announcement of the Agency's new Prior Approval Policy Statement. See above, “FTC To Restrict Future Acquisitions for Firms That Pursue Anticompetitive Mergers.”
|
The FTC and the Justice Department's Antitrust Division released the agencies' 43rd Annual Hart-Scott-Rodino Report. The report provides HSR Premerger Notification data for fiscal year 2020, and its release coincides with an unprecedented surge in pre-merger filings during the current fiscal year.
|
Many internet service providers (ISPs) collect and share far more data about their customers than many consumers may expect—including access to all of their Internet traffic and real-time location data—while failing to offer consumers meaningful choices about how this data can be used, according to an FTC staff report on ISPs’ data collection and use practices. The report, which details the expanding scope and some troubling aspects of some ISP data collection practices, stems from orders the FTC issued in 2019 using its authority to compel information from businesses under section 6(b) of the FTC Act. The agency issued orders to six internet service providers, which make up about 98 percent of the U.S. mobile Internet market. Click here for a list of the companies and additional statements about the report.
|
The FTC has issued a report to Congress on protecting older adults. The report includes information on the FTC’s efforts to protect older consumers through law enforcement and outreach and education programs. It calls particular attention to the Commission’s work to combat scams related to the COVID-19 pandemic. Reports of online shopping fraud increased sharply among adults aged 60 and higher in the second quarter of 2020 as online marketers failed to deliver masks and other scarce items needed during the COVID-19 pandemic. The most frequent type of fraud reported by older adults was online shopping scams. Overall, reports of losses to online shopping fraud by older adults more than doubled in 2020, and the numbers continued to be far higher than pre-pandemic levels in the first half of 2021. As in prior years, the analysis of fraud reports received by the FTC in 2020 showed that adults aged 60 and higher are substantially less likely to report losing money to fraud than adults aged 20-59. When they do report losing money, though, they tend to report losing substantially more than younger adults. Consumers 80 and older reported losing a median of $1,300 to fraud, while those in their seventies reported a median loss of $650, and those in their sixties reported a median loss of $449.
|
New research in a staff report from the FTC shows a number of key differences in the way that fraud and other consumer problems affect communities of color, from the types of problems reported to the methods used to pay scammers. The new report, “Serving Communities of Color,” highlights the FTC’s law enforcement and outreach work addressing consumer protection issues facing these communities. It provides a summary of more than 25 cases brought by the FTC in the last five years where the unlawful conduct either targeted or disproportionately affected communities of color and shares information about the agency’s ongoing outreach program to communities of color, including events, local and national partnerships, and an array of videos and publications. The report also summarizes several studies analyzing information from complaints to the FTC as well as FTC cases, which show differences in the ways problems that people living in Black and Latino communities differ from those in majority White communities, as well as disparities in fraud protections.
|
The FTC and the Department of Justice Antitrust Division will host a virtual workshop on December 6 and 7 to discuss efforts to promote competitive labor markets and worker mobility. “Making Competition Work: Promoting Competition in Labor Markets,” will bring together lawyers, economists, academics, policy experts, labor groups, and workers, and will explore recent developments at the intersection of antitrust and labor, as well as implications for efforts to protect and empower workers through competition enforcement and rulemaking. Interested parties may submit public comments online now through December 20 at Regulations.gov. The workshop will be held virtually and webcast on the FTC’s website. Visit the event page here.
|
The number of cigarettes that the largest cigarette companies in the United States sold to wholesalers and retailers nationwide was up from 202.9 billion in 2019 to 203.7 billion in 2020, according to the most recent FTC Cigarette Report. This is the first time annual cigarette sales have increased in 20 years. According to the 2020 Smokeless Tobacco Report, smokeless tobacco sales increased from 126.0 million pounds in 2019 to 126.9 million pounds in 2020.
|
|
