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SEPTEMBER 2023
Consumer Protection and Privacy
In an initial decision, the FTC’s Chief Administrative Law Judge (ALJ) sided with FTC staff, ruling that Intuit Inc., the maker of the popular TurboTax tax filing software, deceived consumers when it ran ads for “free” tax products and services for which many consumers were ineligible. The ALJ issued an order requiring the company to cease-and-desist from engaging in the deceptive practices alleged in the complaint. The ALJ also barred Intuit from representing that any good or service is free, unless: 1) it is free for all consumers; 2) it clearly and conspicuously discloses any terms that would limit the offer and might be misunderstood by consumers; and 3) if the good or service is not free “to a majority of U.S. taxpayers,” this also must be disclosed in a clear and conspicuous manner.
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As a result of an FTC lawsuit, a federal court has temporarily shut down a business opportunity scheme that lured consumers into investing $22 million in online stores, using unfounded claims about income and profits. The operators of Automators claimed to use artificial intelligence to ensure success and profitability for consumers who agreed to invest with them. In addition to offering consumers high return as “passive investors” in profitable e-stores, Automators, also offered to teach consumers how to successfully set up and manage e-stores themselves using a “proven system” and the powers of artificial intelligence. The FTC’s complaint claims that the vast majority of defendants’ clients did not make the promised earnings or even recoup their investment.
Kyle Dennis, a supposed stock trading “guru” for RagingBull.com, charged by the FTC with pitching bogus stock tips that cost consumers more than $40 million, will face a permanent injunction preventing him from making further false earnings claims or other false or misleading marketing claims. The FTC complaint against Dennis, along with RagingBull.com and its owners, charged that Dennis made numerous false claims in online videos and seminars, including the claim that consumers who receive his stock tips or use his trading strategy could make 100 percent trading profits in “just one to three days.” RagingBull.com and its owners agreed to settle the FTC’s charges against them in March 2022, agreeing to a court order that required them to pay $2.4 million, end the earnings deception, get affirmative approval from consumers for subscription sign ups, and provide them with a simple method to cancel recurring charges.
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The FTC has stopped student debt relief scammers who pretended to be affiliated with the U.S. Department of Education, made deceptive loan forgiveness promises, and falsely claimed they were offering relief under the “Biden Loan Forgiveness” plan. According to the complaint, companies Express Enrollment LLC and Intercontinental Solutions LLC and three individual defendants targeted students seeking debt relief and collected approximately $8.8 million in illegal advance fees for student loan debt relief services that were available for free through the U.S. Department of Education. The complaint also notes that the defendants used these misrepresentations to illegally obtain consumers’ bank account, debit card, or credit card information, and typically collect hundreds of dollars in unlawful advance fees – sometimes through remotely created checks in violation of the Telemarketing Sales Rule.
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The FTC will require Experian Consumer Services, which offers consumers access to their Experian credit information, to pay $650,000 to settle charges it sent consumers unsolicited email without offering them a way to opt out of such messages, as required under the CAN-SPAM Act. In a complaint filed by the Department of Justice on behalf of the FTC, the agency says that Experian Consumer Services, also known as ConsumerInfo.com, Inc., spammed consumers with marketing offers after they signed up for an account with the company to manage their Experian credit report information. In the emails, the company failed to provide clear and conspicuous notice of consumers’ ability to opt out of receiving additional marketing messages and a mechanism for doing so, in violation of the CAN-SPAM Act, according to the complaint.
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Competition
The FTC, along with attorneys general from six states, reached a settlement with Amgen Inc. to address the potential competitive harm that would result from Amgen’s $27.8 billion acquisition of Horizon Therapeutics plc. Under the proposed order, Amgen will be prohibited from leveraging its drug portfolio to disadvantage rivals. Specifically, Amgen is prohibited from bundling an Amgen product with either Tepezza or Krystexxa, Horizon’s medications used to treat thyroid eye disease (TED) and chronic refractory gout (CRG), respectively. In addition, Amgen may not condition any product rebate or contract terms related to an Amgen product on the sale or positioning of either one of these drugs. Amgen also is barred from using any product rebate or contract term to exclude or disadvantage any product that would compete with Tepezza or Krystexxa. As part of the agreement, Amgen is required to seek prior approval from the FTC if it seeks to acquire related products. This case was the FTC’s first litigated challenge to a pharmaceutical merger in more than a decade.
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The FTC approved a proposed consent order to resolve antitrust concerns surrounding Intercontinental Exchange, Inc.’s (ICE) proposed $13.1 billion acquisition of Black Knight, Inc. The proposed settlement ensures Black Knight’s divestiture of Empower and Optimal Blue, two businesses that provide critical services in the mortgage origination process, as well as other concessions. The proposed consent order settles FTC charges that ICE’s deal with Black Knight, which combines the two top mortgage technology providers, would drive up costs, reduce innovation, and limit lenders’ choices for mortgage origination tools. The proposed consent order also requires ICE and Black Knight, for the next 10 years, to seek prior approval from the FTC before either reacquiring any divested asset or acquiring an interest in a loan origination system business. It further requires the companies to provide prior notice to the FTC before acquiring an interest in a product, pricing, and eligibility engine business for that same period.
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The FTC took action to resolve antitrust concerns surrounding a $5.2 billion cash-and-stock deal between private equity firm Quantum Energy Partners and natural gas producer EQT Corporation by approving a consent order that prevents entanglements between the two companies and the exchange of confidential, competitively sensitive information. Quantum and EQT are direct competitors in the production and sale of natural gas in the Appalachian Basin, the largest natural gas-producing region in the United States. The proposed acquisition would make Quantum one of EQT’s largest shareholders and give Quantum – an active investor in natural gas production in the region – a seat on EQT’s board of directors, violating the antitrust laws and harming competition in this industry. The consent order delivers ground-breaking structural relief that prohibits Quantum from occupying an EQT board seat, requires Quantum to divest its EQT shares, prevents anticompetitive information exchange, unwinds a separate anticompetitive joint venture between the two entities, and imposes additional restraints to protect competition. This marks the FTC’s first case in 40 years that enforces Section 8 of the Clayton Act, which prohibits interlocking directorates, an arrangement that occurs when an officer or director of one firm simultaneously serves as an officer or director of a competing firm.
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In Other News
FTC Chair Lina M. Khan has appointed Henry Liu to serve as Director of the FTC’s Bureau of Competition. Liu joins the FTC from Covington & Burling, where he was a partner in the firm’s litigation and antitrust practices. He brings more than 14 years of experience litigating complex antitrust cases and has served as lead counsel in a variety of antitrust matters at the trial and appellate levels. Previously, Liu served as a law clerk to the Honorable R. Guy Cole, Jr. of the U.S. Court of Appeals for the Sixth Circuit. Liu earned a J.D. from Yale Law School, where he served on the Yale Law Journal.
The FTC and Justice Department are co-hosting three workshops to facilitate public dialogue on the 2023 Draft Merger Guidelines the agencies announced in July. The workshops are aimed at promoting a dynamic discussion about the draft guidelines to complement the comments currently being submitted to the agencies by the public. The goal of the merger guidelines update is to better reflect how the agencies determine a merger’s effect on competition in the modern economy and evaluate proposed mergers under the law. The first workshop was held September 5 and is available on video here. Information about forthcoming workshops will be announced at a later date. The FTC and DOJ continue to encourage comments from the public on the draft guidelines, which may be submitted online through September 18.
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