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August 2022
Competition
The FTC is seeking to block virtual reality giant Meta and its controlling shareholder and CEO Mark Zuckerberg from acquiring Within Unlimited and its popular virtual reality dedicated fitness app, Supernatural. Meta, formerly known as Facebook, is already a key player at each level of the virtual reality sector. The company’s virtual reality empire includes the top-selling device, a leading app store, seven of the most successful developers, and one of the best-selling apps of all time. The complaint alleges that Meta and Zuckerberg are planning to expand Meta’s virtual reality empire with this attempt to illegally acquire a dedicated fitness app. It identifies that Meta is a potential entrant in the virtual reality dedicated fitness app market, and notes that instead of entering it chose to acquire Supernatural, thereby eliminating the prospect of such entry, and dampening future innovation and competitive rivalry. The complaint further alleges that the mere possibility of Meta’s entry has likely influenced competition in the virtual reality dedicated fitness app market.
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The FTC is joining with the NLRB in a new agreement that will bolster the FTC’s efforts to protect workers by promoting competitive U.S. labor markets and putting an end to unfair practices that harm workers. The new memorandum of understanding between the two agencies outlines ways in which the Commission and the Board will work together on key issues such as labor market concentration, one-sided contract terms, and labor developments in the “gig economy.”
Consumer Protection and Privacy
The FTC is sending payments to 244,745 consumers in the United States and abroad who were defrauded by the Next-Gen sweepstakes scheme that affected consumers in dozens of countries, including the United States and Canada. In total, the FTC is returning almost $25 million to affected consumers including many seniors. The FTC is sending: 221,687 checks totaling over $19 million to U.S. and Canadian consumers; 3,516 prepaid, hand-delivered Mastercard debit cards totaling over $600,000 to consumers in the United Kingdom; and 19,542 letters to consumers in more than 50 different countries explaining how they can claim their payments via PayPal, which total nearly $4.7 million. The deadline for consumers to cash their checks or claim their PayPal payments is October 17. Debit cards have a two-year expiration date and can be reissued without charge.
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The FTC took action against online home buying firm Opendoor Labs Inc. for cheating potential home sellers by tricking them into thinking that they could make more money selling their home to Opendoor than on the open market using the traditional sales process. The FTC alleged that Opendoor pitched potential sellers using misleading and deceptive information and, in reality, most people who sold to Opendoor made thousands of dollars less than they would have made selling their homes using the traditional process. Under a proposed administrative order, Opendoor will have to pay $62 million and stop its deceptive tactics.
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The FTC and a group of 18 states sued national jewelry retailer Harris Jewelry to stop the company from cheating military families with illegal financing and sales practices. According to the complaint, the jewelry company deceptively claimed that financing jewelry purchases through Harris would raise servicemembers’ credit scores, misrepresented that its protection plans were not optional or were required, and added the plans to purchases without consumers’ consent. Under a proposed order, the company must stop collection of millions of dollars in debt, provide approximately $10.9 million in refunds for purchased protection plans, provide refunds for overpayments, and assist with the deletion of any negative credit entries pertaining to debt in consumers’ credit reporting files. The company also is required to complete its shutdown of operations and to dissolve pursuant to applicable state laws, once it meets the obligations of the order.
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The FTC took action against payment processing company First American Payment Systems and two of its sales affiliates for trapping small businesses with hidden terms, surprise exit fees, and zombie charges. The FTC alleges that the defendants made false claims about fees and cost savings to lure merchants, many of whom had limited English proficiency. Once merchants were enrolled, the defendants withdrew funds from their accounts without their consent, and made it difficult and expensive for them to cancel the service. Under a proposed federal court order, the defendants will be required to return $4.9 million to harmed businesses, stop their deception, and make it easier for merchants to cancel their services.
The FTC won victories in two lawsuits against companies that failed to deliver on orders of personal protective equipment (PPE) in the early stages of the COVID-19 pandemic. In separate actions against QYK Brands (doing business as Glowyy and through related companies) and American Screening, LLC, the Commission alleged that both companies deceived consumers about the availability of PPE gear at the onset of the COVID-19 pandemic. Commission staff won both actions on summary judgment, holding these companies accountable for their misconduct and putting more than $17.6 million back into consumers’ pockets.
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In Other News
The FTC testified before the House Committee on Oversight and Reform Subcommittee on National Security about the aggressive action the agency is taking to crack down on fraud and related threats against servicemembers and the broader military community. Testifying on behalf of the Commission, the Associate Director of the FTC’s Division of Financial Practices, Malini Mithal, said fraud against members of the military harms individual members and their families, and undermines military readiness and troop morale. In 2021, the FTC’s Consumer Sentinel consumer complaint database received over 200,000 complaints from military consumers, with reported monetary harm of over $267 million. According to the testimony, the FTC has responded with enforcement actions combating illegal practices that target military members, including: illegal auto sales and financing practices; phony promises of earnings or investment opportunities; deceptive claims and recruiting tactics regarding for-profit schools; and sham charities that exploit the public’s desire to help veterans.
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