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MONTH 2022
Consumer Protection and Privacy
 The FTC has stopped internet phone service provider Vonage from imposing junk fees and creating obstacles to those who try to cancel their service. The FTC alleges that the company used dark patterns to make it difficult for consumers to cancel and often continued to illegally charge them even after they spoke to an agent directly and requested cancellation. Under the proposed court order, Vonage will be required to pay $100 million in refunds to consumers harmed by the company’s actions, make its cancellation process simple and transparent, and stop charging consumers without their consent.
The FTC has taken action against auto dealer Passport Automotive Group for deceiving consumers by tacking hundreds to thousands of dollars in illegal junk fees onto car prices and for discriminating against Black and Latino consumers with higher financing costs and fees. Passport and two individual defendants will pay more than $3.3 million to settle the FTC’s lawsuit, which will be used to refund consumers harmed by Passport’s conduct.
The FTC is exploring a rule to crack down on junk fees proliferating throughout the economy. Junk fees are unnecessary, unavoidable, or surprise charges that inflate costs while adding little to no value. Consumers can get hit with junk fees at any stage of the purchase or payment process. Companies often harvest junk fees by imposing them on captive consumers or by deploying digital dark patterns and other tricks to hide or mask them. The agency is seeking public comment on the harms caused by junk fees and the unfair or deceptive tactics companies use to impose them.
The FTC has taken action against the online alcohol marketplace Drizly and its CEO over allegations that the company’s security failures led to a data breach exposing the personal information of about 2.5 million consumers. Drizly and its CEO were alerted to security problems two years prior to the breach yet failed to take steps to protect consumers’ data from hackers. The FTC’s proposed order requires the company to destroy unnecessary data, restricts the data that the company can collect and retain, and binds the CEO to specific data security requirements for his role in presiding over unlawful business practices.
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The FTC has taken action against education technology provider Chegg Inc. for its lax data security practices that exposed sensitive information about millions of its customers and employees, including Social Security numbers, email addresses and passwords. Chegg allegedly failed to fix problems with its data security despite experiencing four security breaches since 2017. The FTC’s proposed order requires the company to bolster its data security, limit the data the company can collect and retain, offer users multifactor authentication to secure their accounts, and allow users to access and delete their data.
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The FTC and State of California have taken action against home improvement financing provider Ygrene Energy Fund Inc. for deceiving consumers about the potential financial impact of its financing, and for unfairly recording liens on consumers’ homes without their consent. The FTC and California allege that Ygrene and its contractors falsely told consumers that the financing, a form of secured home-improvement financing, would not interfere with the sale or refinancing of their homes, in many instances relying on high-pressure sales tactics or outright forgery to sign consumers up. A proposed court order requires Ygrene to stop its deceptive practices and meaningfully oversee the contractors who have served as its salesforce. As part of the settlement, Ygrene will be required to dedicate $3 million to provide relief to certain consumers whose homes are subject to the company’s liens.
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Competition
The FTC issued a statement that restores the agency’s policy of rigorously enforcing the federal ban on unfair methods of competition. Congress gave the FTC the unique authority to identify and police against these practices, beyond what the other antitrust statutes cover. But in recent years the agency has not always carried out that responsibility consistently. The FTC’s previous policy restricted its oversight to a narrower set of circumstances, making it harder for the agency to challenge the full array of anticompetitive behavior in the market. The new policy statement removes this restriction and declares the agency’s intent to exercise its full statutory authority against companies that use unfair tactics to gain an advantage instead of competing on the merits.
FTC staff submitted a comment to the New York State Department of Health opposing a request by SUNY Upstate Medical University and Crouse Health System to grant a certificate of public advantage, also known as a COPA, which could shield the merger from antitrust laws, and would likely lead to higher health care costs, lower quality and less access to care, and depressed wages for area hospital workers. According to the comment, an analysis by the FTC staff indicates that SUNY Upstate currently competes closely with Crouse, which benefits patients and also results in optimal wages and benefits for hospital employees, and that there is insufficient evidence to conclude that any benefits of the merger would outweigh the potential harms.
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In Other News
The FTC issued its latest report to Congress on protecting older adults, which highlights key trends based on fraud reports by older adults, and the FTC’s efforts to combat the problems through law enforcement actions, rulemaking, and outreach and education programs. The report, Protecting Older Consumers, 2021-2022, A Report of the Federal Trade Commission, finds that in 2021 older adults reported significantly higher losses to investment scams, business impersonation scams, and government impersonation scams than they did in 2020:
- Investment scams - $147 million reported lost, up 213%
- Business impersonation scams - $151 million reported lost, up 134%, and
- Government impersonation scams - $122 million reported lost, up 109%.
As in prior years, the analysis of fraud reports received by the FTC in 2021 showed that adults aged 60 and over were substantially less likely to report losing money to fraud than adults aged 20-59. When they did report losing money, though, they tended to report losing substantially more than younger adults. Consumers 80 and older reported losing a median of $1,500 to fraud, while those in their seventies reported a median loss of $800.
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The FTC is seeking public comments on whether it should propose updates to its Energy Labeling Rule. The FTC’s Energy Labeling Rule requires manufacturers to attach labels to major home appliances and other consumer products to help consumers compare the energy usage and costs of competing models. The FTC also has authority to require manufacturers to provide consumers with instructions for the maintenance, use, or repair of covered products. In an Advance Notice of Proposed Rulemaking, the FTC is seeking public comment on whether it should propose amendments to the Rule, requiring repair instructions, developing EnergyGuide labels for several new product categories, and matching label format and location to consumer shopping patterns. The FTC also seeks comment on whether it should consider changes to the content and format of EnergyGuide labels currently in use.
The FTC is exploring a potential rule to combat deceptive or unfair review and endorsement practices, such as using fake reviews, suppressing negative reviews, and paying for positive reviews. Deceptive and manipulated reviews and endorsements cheat consumers looking for real feedback on a product or service and undercut honest businesses. The FTC’s Advance Notice of Proposed Rulemaking seeks public comment on potential harms stemming from deceptive or unfair review and endorsement practices and whether a rule would help consumers and level the playing field for honest marketers.
The FTC is exploring possible steps to strengthen and modernize the Funeral Rule, which requires funeral providers to give in-person visitors price information to make informed decisions. Because the rule was first issued in the 1980s, it does not require them to provide price information online and via other electronic means like email or text messages. The FTC released a staff report that reported findings of a review of funeral providers’ websites, which was conducted during the height of the COVID-19 pandemic when many people could not or did not feel comfortable visiting a funeral home in person to make arrangements for their loved ones. According to the report, more than 60 percent of the websites reviewed provided little to no information about prices.
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