FTC International Monthly - May

FTC Chair Lina M. Khan and officials from three other federal agencies–the Civil Rights Division of the Department of Justice, the Consumer Financial Protection Bureau, and the Equal Employment Opportunity Commission–issued a joint statement outlining a commitment to enforce their respective laws and regulations to promote responsible innovation in automated systems. The agencies jointly pledged to uphold core principles of fairness, equality, and justice as emerging automated systems, including those sometimes marketed as “artificial intelligence” or “AI,” become increasingly common–impacting civil rights, fair competition, consumer protection, and equal opportunity.

The FTC held a virtual panel discussion with a diverse set of experts to discuss the business practices of cloud computing providers, including issues related to security, competition, and emerging technology. FTC staff has issued a “Request for Information” seeking comment on the impact of cloud computing on specific industries, including healthcare, finance, transportation, e-commerce, and defense. The deadline for comments has been extended until June 21. For the panel discussion agenda, speaker list, and video, click here.

FTC Testifies Before House Appropriations Subcommittee on Budget Request and Ongoing Work

The FTC appeared before the House Appropriations Subcommittee on Financial Services and General Government to discuss its FY 2024 budget request and the agency’s ongoing work to ensure open, competitive, and fair markets on behalf of consumers, workers, and honest businesses. In Commission testimony delivered by Chair Lina M. Khan, the FTC described how the agency is using its current funding to address pressing issues across the country, from data practices that can expose Americans’ most sensitive and personal information, to corporate mergers affecting critical sectors of the economy, the integrity of supply chains, and the prices consumers pay for drugs. For FY 2024, the Commission is requesting an increase in its operating budget, which would enable the FTC to better address the increased demand on agency staff and resources as the agency reviews corporate mergers, conducts more complex and expensive litigation, receives millions of consumer complaints, works to stay abreast of transformative technological and market changes, and responds to burgeoning requests for research and investigation of various economic sectors. The requested raise would build on the substantial budget increase the agency received in FY 2023 based on the recognition that demands on Commission resources continue to grow.

The FTC proposed changes to the agency’s 2020 privacy order with Facebook after alleging that the company has failed to fully comply with the order, misled parents about their ability to control with whom their children communicated through its Messenger Kids app, and misrepresented the access it provided some app developers to private user data. As part of the proposed changes, Meta, which changed its name from Facebook in October 2021, would be prohibited from profiting from data it collects from users under the age of 18. It would also be subject to other expanded limitations, including in its use of facial recognition technology. The proposed changes to the 2020 order would apply to Facebook and Meta’s other services, such as Instagram, WhatsApp, and Oculus. The proposed order modifications are based on the agency’s authority under Section 5(b) of the FTC Act and Commission Rule 3.72, which allow the Commission to reopen an administrative case and modify a final order when the Commission finds “changed conditions of fact or law or [when the] public interest” may require such action.

The International Consumer Protection and Enforcement Network (ICPEN) selected the FTC as president of the network for 2024-25 during a meeting in Sydney, Australia. The Commission last served as president of the network in 2000-2001. ICPEN is an international network of consumer protection authorities from more than 70 countries that aims to protect consumers’ economic interests around the world by sharing information and encouraging global cooperation among law enforcement agencies.

The FTC has sued XCast Labs, Inc., a Voice over Internet Protocol (VoIP) provider that has funneled hundreds of millions of illegal robocalls through its network. The FTC alleges that XCast has persisted in this conduct even after receiving multiple warnings. According to the FTC, many of these suspect robocalls were part of organized campaigns designed to generate telemarketing leads by, for example, impersonating federal officials from the Social Security Administration. Lead generators sell the information they gather to telemarketers, who then use consumers’ information to pester them with even more unwanted, illegal calls.

As a result of an FTC lawsuit, the operators of an alleged credit card debt relief scheme have agreed to court orders that permanently ban them from telemarketing and selling debt relief products or services. The FTC alleges that three individual defendants operated a network of companies that supported the defendants’ deceptive debt relief scheme. The FTC charged the defendants with taking tens of millions of dollars from people by falsely promising to eliminate or substantially reduce their credit card debt. A federal court earlier agreed to the FTC’s request to temporarily freeze the defendants’ assets and appoint a receiver over the businesses while the case took place.

The FTC staff sent 37 new cease and desist letters to eyeglass prescribers, including optometrists and ophthalmologists, warning them of potential violations of the agency’s Ophthalmic Practice Rules, known as the Eyeglass Rule. The Rule gives consumers the right to comparison shop for prescription eyeglasses. The letters, sent as a result of reported violations, remind the prescribers that they are required to provide patients with a copy of their eyeglass prescription immediately after an eye exam, even if the patient does not request it. The letters also warn the prescribers that violations of the Eyeglass Rule may result in legal action, including civil penalties of up to $50,120 per violation. Finally, the letters require the recipients to contact the staff within five days of receipt describing the specific action they plan to take to address the reported violations.

Following an in-depth investigation by the FTC staff and the California Attorney General’s Office, CalPortland Co. has abandoned its proposed $350 million acquisition of assets from a rival cement producer Martin Marietta Materials. According to a statement by Bureau of Competition Director Holly Vedova, the transaction would have reduced the number of cement suppliers in Southern California from five to four, further concentrating an already concentrated market, and was presumptively illegal.

FTC staff asked a federal court to issue a temporary restraining order (TRO) and preliminary injunction (PI) to prevent Intercontinental Exchange, Inc. (ICE) from consummating its proposed acquisition of rival mortgage loan technology provider Black Knight, Inc., pending the outcome of the FTC’s administrative challenge to the deal. According to the administrative complaint, by combining the nation’s two largest providers of home mortgage loan origination systems and other key lender software tools, the deal would drive up borrower costs, reduce innovation, and reduce lenders’ choices for tools necessary to generate and service mortgages.

The FTC is seeking to block biopharmaceutical giant Amgen Inc. from acquiring Horizon Therapeutics plc, saying the deal would allow Amgen to leverage its portfolio of blockbuster drugs to entrench the monopoly positions of Horizon medications used to treat two serious conditions, thyroid eye disease and chronic refractory gout. The FTC filed a lawsuit in federal court to block the transaction, saying it would enable Amgen to use rebates on its existing blockbuster drugs to pressure insurance companies and pharmacy benefit managers (PBMs) into favoring Horizon’s two monopoly products – Tepezza, used to treat thyroid eye disease, and Krystexxa, used to treat chronic refractory gout. Neither of these treatments have any competition in the pharmaceutical marketplace.

The FTC sued to stop Louisiana Children’s Medical Center (LCMC) from integrating three competing hospitals in the New Orleans area that it recently acquired, saying LCMC and HCA Healthcare, Inc. (“HCA”) defied federal law by consummating the $150 million acquisition without reporting it to U.S. antitrust authorities and without observing the mandatory waiting period. The FTC is seeking a temporary restraining order and a preliminary injunction requiring that LCMC and HCA comply with the Hart-Scott-Rodino (HSR) Act, that LCMC hold the three acquired hospitals and related assets separate from its existing hospital system pending an FTC investigation into the transaction, and that LCMC give the FTC prior notice of certain transactions while the court resolves the agency’s dispute.

The FTC released the tentative agenda for its May 23 workshop in Washington, DC, which will examine the Commission’s guidance on “recyclable” advertising claims as part of its ongoing review of the Guides for Use of Environmental Marketing Claims (Green Guides). The workshop, Talking Trash: Recyclable Claims and the Green Guides, is free and open to the public, and pre-registration is not required. The event will be webcast on the FTC’s website, www.ftc.gov. Registration is not required to watch the webcast. In conjunction with this event, the Commission is seeking additional public comment through June 13. For additional details and the agenda, click here.