FTC International Monthly - February

The FTC hosted a public forum examining the agency’s proposed rule to prohibit employers from imposing noncompetes on their workers, and providing an opportunity for people to directly share their experiences with noncompetes. The forum supplemented the FTC’s request for members of the public to submit written comments on the proposed rule, which is based on a preliminary finding that noncompetes constitute an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act. Click here for the agenda, a speakers list, transcript, and video.

FTC Asks Federal Court To Hold ‘Pharma Bro’ Martin Shkreli in Contempt

The FTC asked a federal judge to hold “Pharma Bro” Martin Shkreli in contempt for failing to provide the FTC with information needed to determine whether he is violating a previous order by the judge that banned him from working in the pharmaceutical industry for life. The FTC first invoked the order’s compliance reporting and access-to-information provisions in October 2022, but Shkreli has disregarded the agency’s repeated requests for him to provide a compliance report and access to relevant records, and to sit for an interview. In their filing, the FTC and state enforcers asked the court for an order to show cause why Shkreli should not be held in civil contempt for violating these provisions and to order Shkreli to comply with these information requests within 21 days of the court’s decision.

More than $115 million in refunds are being sent to consumers nationwide as a result of a 2018 action the FTC and the U.S. Department of Justice brought against MoneyGram for failing to crack down on scammers using their payment system. The 2018 action charged that MoneyGram violated prior settlements in which the company agreed to take proactive steps to reduce scammers’ ability to use their payment system to receive money from consumers. In a 2009 settlement with the FTC, MoneyGram agreed to put in place a fraud prevention program which, among other things, required the company to promptly investigate, restrict, suspend, and terminate high-fraud agents. The FTC charged that MoneyGram was aware of continued fraud on their payment network after the settlement, turning a blind eye for years to numerous instances of suspicious payment activity by the company’s agents.

The FTC issued a proposed order requiring HomeAdvisor, Inc. – a company affiliated with Angi, formerly known as “Angie’s List” – to pay up to $7.2 million for using a wide range of deceptive and misleading tactics in selling home improvement project leads to service providers, including small businesses operating in the “gig” economy. The administrative order also bars HomeAdvisor from the deceptive conduct detailed in the Commission’s complaint against the company, which the complaint alleged occurred over many years, and sets up two redress funds to provide money to defrauded service providers.

FTC Order Requires LasikPlus To Pay for Its Bait-and-Switch Eye Surgery Ads

The FTC issued an order requiring LCA-Vision, doing business as LasikPlus and Joffe MediCenter, to pay $1.25 million for using deceptive bait-and-switch advertising to trick consumers into believing they could have their vision corrected for less than $300. In reality only 6.5 percent of consumers lured in for consultations were eligible for the advertised promotional price for both eyes. According to the FTC, despite the advertising claims, for consumers with less than near-normal vision (good enough to drive without glasses), the company typically quoted a price between $1,800 and $2,295 per eye. In some ads LCA, the largest nationwide LASIK surgery chain, also neglected to tell consumers up-front that the promotional price was per-eye only.

The FTC took action against a marketer of vitamins and other supplements called The Bountiful Company (Bountiful) for allegedly abusing a feature of Amazon.com to deceive consumers into thinking that its newly introduced supplements had more product ratings and reviews, higher average ratings, and “#1 Best Seller” and “Amazon’s Choice” badges. The case against Bountiful marks the FTC’s first law enforcement challenging “review hijacking,” in which a marketer steals or repurposes reviews of another product. Bountiful allegedly carried out this deceptive tactic by merging its new products on Amazon with different well-established products that had more ratings, reviews, and badges, the FTC said.

The FTC announced an order settling a 2020 federal lawsuit against defendants ZyCal Bioceuticals Healthcare Company, Inc. (ZyCal) and its president, which charged them with deceptively claiming that their products grow bone and cartilage and relieve joint pain. The order bars the ZyCal defendants from making these claims unless supported by randomized controlled clinical trials. It also bars them from providing anyone else with the means to make false or misleading claims.

The FTC has taken enforcement action for the first time under its Health Breach Notification Rule against the telehealth and prescription drug discount provider GoodRx Holdings Inc. for failing to notify consumers and others of its unauthorized disclosures of consumers’ personal health information to Facebook, Google, and other companies. In a proposed order, filed by the Department of Justice on behalf of the FTC, GoodRx will be prohibited from sharing user health data with applicable third parties for advertising purposes, and has agreed to pay a $1.5 million civil penalty for violating the rule.

New FTC Data Reveals Top Lies Told by Romance Scammers

Data released by the FTC sheds new light on the lies that romance scammers use to take advantage of people—lies that reports to the FTC show cost nearly 70,000 consumers $1.3 billion in 2022. Using data from the FTC’s Consumer Sentinel Network, the new data spotlight breaks down the most common lies that consumers reported being told when they were contacted by romance scammers last year. Topping the list was scammers telling consumers that they needed money because a friend or relative was sick, hurt or in jail – a lie consumers reported hearing in nearly a quarter of reports. The next most commonly reported lie was that the scammer had great investment advice to share with their newfound romantic interest, followed closely by the lie that the scammer was in the military, or that they needed help making some sort of important delivery.

The FTC opened a claims process for former AT&T customers who have yet to claim a refund stemming from the FTC’s lawsuit against the company for misleading consumers about its unlimited data plans. Former AT&T customers may be eligible to claim a refund from the $7 million remaining in a fund created to settle allegations that the wireless provider charged for “unlimited” data plans while reducing their data speeds, a practice known as throttling. The FTC in 2019 required AT&T to provide $60 million for refunds for failing to disclose to millions of smartphone customers with unlimited data plans that once they reached a certain amount of data use in a given billing cycle, AT&T would reduce or throttle their data speeds. Some customers experienced data speeds so slow that many common phone applications, such as web browsing and video streaming, became difficult or nearly impossible to use.

The FTC marked its annual Identity Theft Awareness Week with a series of free events January 30-February 3 focused on how identity theft affects people of every community and ways to reduce your risk. Identity theft happens when someone uses your personal or financial information—such as your Social Security number or financial account information—without your permission. This year’s events included webinars, podcasts, and other activities. Participants heard from experts from the FTC and its Identity Theft Awareness Week partners, including AARP, Consumer Action, the Identity Theft Resource Center (ITRC), the IRS, the Maryland Library for the Blind and Print Disabled, the Small Business Administration, and the Department of Veterans Affairs. For more information, click on the headline above.

The Criminal Liaison Unit of the FTC’s Bureau of Consumer Protection (BCP CLU) has issued its 2022 Criminal Liaison Unit Report, describing the history of the BCP CLU, its program operations, and major accomplishments over the past five years. In an effort to ensure criminal prosecution of appropriate consumer fraud cases, the BCP CLU refers cases to partner agencies with criminal jurisdiction, including U.S. Attorney’s Offices across the county, Divisions of the Department of Justice (DOJ), and others. The FTC, which is not authorized to bring criminal law enforcement actions, established the BCP CLU in 2002 to bring the “worst of the worst” offenders to the attention of prosecutors. As it grew, the BCP CLU worked to establish relationships with prosecutors and educate them about the Commission’s consumer fraud and deception cases. Success in initial cases proved that criminal consumer protection cases were viable and could result in substantial prison sentences.

FTC, DOJ Issue Fiscal Year 2021 Hart Scott Rodino Premerger Notification Report

The FTC, together with the Justice Department’s Antitrust Division, released the agencies’ 44^th Annual Hart-Scott-Rodino Report. The report presents fiscal year 2021 data on the HSR Premerger Notification Program that alerts the agencies to transactions that may substantially lessen competition in violation of federal law. The report notes that a record-breaking 3,520 transactions were reported to both antitrust agencies during fiscal year 2021, more than twice the number that were reported the year before. The report also identifies that the agencies issued 65 second requests in fiscal year 2021, up from 48 the year before, reflecting a significant increase in the merger workload. The report goes on to highlight the 32 merger challenges undertaken by both agencies to protect competition. The Commission brought 18 of the 32 merger enforcement actions, including seven in which the transaction was abandoned or restructured as a result of antitrust concerns raised during the investigation, and six in which the agency initiated administrative or federal district court litigation to block or undo the merger. Another five mergers were modified when the Commission issued final orders requiring significant divestitures to protect competition. Separately, the FTC has approved revised jurisdictional and filing fee thresholds for the Hart‑Scott‑Rodino (HSR) Antitrust Improvements Act of 1976. For 2023, the size-of-transaction threshold for reporting proposed mergers and acquisitions under Section 7A of the Clayton Act will adjust from $101 million to $111.4 million. Also, the 2023 thresholds under Section 8 of the act that trigger prohibitions on certain interlocking memberships on corporate boards of directors are $45,257,000 for Section 8(a)(l) and $4,525,700 for Section 8(a)(2)(A).