MARCH 2022
The FTC announced that its years-long investigation into DeVry University continues to benefit consumers, as the U.S. Department of Education will forgive $71.7 million in federal student loans for students deceived by the for-profit university. According to the 2016 FTC complaint, DeVry deceptively advertised that 90 percent of its graduates seeking employment landed jobs in their field within six months of graduation. Consumers interested in submitting a claim for loan forgiveness should visit the Department of Education’s Borrower Defense Loan Discharge informational page.
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The operators of a massive real estate investment coaching scheme face permanent bans and will pay approximately $12 million for consumer redress as part of a settlement in a lawsuit filed by the FTC and the Utah Department of Commerce Division of Consumer Protection (UDCP). The FTC and UDCP alleged that Zurixx, LLC, its owners, and a number of associated companies operated a real estate investment coaching scheme that sold live seminars and telephone coaching using false earnings claims that convinced tens of thousands of consumers to pay them thousands or tens of thousands of dollars. Zurixx and its celebrity endorsers invited consumers to free “seminars” that, the FTC and UDCP allege, were in fact high-pressure sales events for paid seminars that cost nearly $2000. Thereafter, the defendants pushed more expensive seminars and coaching. The FTC and UDCP also alleged that Zurixx required consumers who received refunds to sign agreements barring them from speaking with the FTC, state attorneys general, and other regulators; submitting complaints to the Better Business Bureau; or posting negative reviews about Zurixx.
The FTC launched a rulemaking to challenge bogus money-making claims used to lure consumers, workers, and prospective entrepreneurs into risky business ventures that often turn into dead-end debt traps. If finalized, a rule in this area would allow the Commission to recover redress for defrauded consumers, and seek steep penalties against the multilevel marketers, for-profit colleges, “gig economy” platforms, and other bad actors who prey on people’s hopes for economic advancement. The Commission has taken aggressive law enforcement action in this area including against coaching or mentoring schemes, multi-level marketing companies, and work-from-home or other business opportunity scams. In the recently announced Advanced Notice of Proposed Rulemaking (ANPR), the Commission gives notice of a new potential rulemaking concerning false, misleading, and unsubstantiated earnings claims. If the Commission adopts such a rule, the FTC will have an important new tool to return money to consumers injured by deceptive income claims, and to hold bad actors accountable with civil penalties.
At the request of the FTC, federal courts in California ordered two Voice-over-Internet Protocol (VoIP) service providers to turn over information that the agency is seeking as part of ongoing investigations into potentially illegal robocalls. Companies that fail to comply with such federal court orders can be held in contempt of court. VoIP service providers are companies that facilitate the transmission of telephone calls over the Internet. As billions of illegal telemarketing calls and robocalls pass through VoIP service providers each year, the FTC has worked to ensure they do not transmit illegal calls – especially those coming from overseas.
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More than two months into its litigation with the FTC, Nvidia Corp. announced that it would abandon its acquisition of Arm Ltd. from SoftBank Group Corp. According to FTC Bureau of Competition Director Holly Vedova, the termination of what would have been the largest semiconductor chip merger will preserve competition for key technologies and safeguard future innovation. It represents the first abandonment of a litigated vertical merger in many years. FTC staff cooperated with competition agencies in the European Union, United Kingdom, Japan, and South Korea.
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Rhode Island’s two largest healthcare providers, Lifespan Corp. (“Lifespan”) and Care New England Health System (“Care New England”), terminated their proposed merger after the FTC filed an administrative complaint and authorized a suit in federal court to block the transaction. The FTC alleged the deal would lead to higher prices and lower quality care in the state of Rhode Island and 19 nearby Massachusetts communities for inpatient general acute care hospital services and inpatient behavioral health services. In a statement, FTC Bureau of Competition Director Holly Vedova said, "Had the FTC and the Rhode Island Attorney General not challenged the proposed transaction, it would have combined the two largest healthcare providers in Rhode Island and created a dominant entity that would have led to higher prices and lower quality care for Rhode Islanders."
Chief Administrative Law Judge Chappell dismissed the antitrust charges in the FTC’s April 2020 complaint alleging that Altria Group, Inc. and electronic cigarette maker JUUL Labs, Inc. entered a series of agreements, including Altria’s acquisition of a 35% stake in JUUL, that eliminated competition in violation of federal antitrust laws. Complaint Counsel has filed a notice of appeal. According to the complaint, this series of agreements involved Altria’s ceasing to compete in the U.S. market for closed-system electronic cigarettes in return for a substantial ownership interest in JUUL, by far the dominant player in that market. Judge Chappell concluded that Complaint Counsel failed to demonstrate both the anticompetitive effects of the non-compete provision and a reasonable probability that Altria would have competed in the e-cigarette market in the near future, through marketing a competing product independently, or through collaboration or acquisition.
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The FTC is soliciting public input on the ways that practices by large, vertically integrated Pharmacy Benefit Managers (PBMs) are affecting drug affordability and access. The Request for Information covers a wide range of issues in the PBM market, including contract terms, rebates, fees, pricing policies, steering methods, conflicts of interest, and consolidation. The agency seeks information, by April 25, on these practices and their impact on patients, physicians, employers, independent and chain pharmacies, and other businesses across the distribution system. The information will enable agency staff to study a wide array of PBM business practices and issues and will help inform the agency’s policy and enforcement work.
Newly released FTC data shows that consumers reported losing more than $5.8 billion to fraud in 2021, an increase of more than 70 percent over the previous year. The FTC received fraud reports from more than 2.8 million consumers last year, with the most commonly reported category once again being imposter scams, followed by online shopping scams. Prizes, sweepstakes, and lotteries; internet services; and business and job opportunities rounded out the top five fraud categories. Of the losses reported by consumers, more than $2.3 billion of losses reported last year were due to imposter scams—up from $1.2 billion in 2020, while online shopping accounted for about $392 million in reported losses from consumers—up from $246 million in 2020. Click here for a related blog.
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The FTC released data for 2021 showing consumers lost more than $227.4 million to international scams (compared to $211.6 million in 2020), based on the more than 36,700 econsumer.gov reports (compared to 60,835 reports in 2020). Online shopping was the top complaint category, followed by miscellaneous investments; business imposters; romance scams; and vacation & travel. The United States was the subject of the largest number of consumer complaints, followed by China, the United Kingdom, France, and India. Econsumer.gov is 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. Contact Olivia Barney for more information on how to participate in econsumer.gov.
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The FTC’s Associate Director for Consumer and Business Education Jennifer Leach published a blog post on charitable giving to Ukraine. The blog points out that “when scammers spot a crisis in the world, they are there to take advantage. It’s true after natural disasters, when scammers set up fake charities that look and sound like real ones to try to get your money. And it’s true now that millions of people want to support the Ukrainian people. If you’re one of them, take a moment to make sure your generosity really benefits the people and groups you intend.” The blog suggests ways to research organizations online, see how donated money will be spent, and explore other important questions and issues. Learn more by clicking on the headline above or at ftc.gov/charity.
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