|
November 2023
Consumer Protection and Privacy
The FTC issued two reports to Congress – a report on efforts to combat cross-border fraud through the U.S. SAFE WEB Act, and a report on the FTC’s role in the fight against ransomware and other cyber-related attacks. The agency delivered the reports to the House Committee on Energy and Commerce and the Senate Committee on Commerce, Science, and Transportation and released them to the public. The report on the U.S. SAFE WEB Act highlights recent trends on cross-border fraud, including that 11 percent of fraud reported to the FTC in 2022 was cross-border fraud. The report outlines how the FTC has used the SAFE WEB Act, including by engaging in over 300 instances of cross-border cooperation since it was enacted in December 2006. With the authority provided by SAFE WEB, the FTC has pursued and stopped harmful conduct in the United States and successfully defended against challenges to its jurisdictional authority over foreign companies targeting American consumers. The FTC has also worked with numerous foreign enforcers to stop cross-border injury and frauds. Pursuant to the Act, the FTC has hosted more than 130 foreign colleagues from more than 40 jurisdictions to work with our attorneys, economists, and investigators through our International Fellows Program and SAFE WEB Interns Program.
|
The Ransomware report details the FTC’s work to fight ransomware and other cyber attacks. The FTC has brought more than 80 enforcement actions involving data security. Improved data security programs can help defend against cyber attacks. The agency also has pursued bad actors involved in ransomware-related tech support scams and worked to educate the public and businesses on how to secure and protect data from cyber attacks.
Both reports urge Congress to permanently reauthorize the SAFE WEB Act, currently scheduled to sunset on September 30, 2027, and reiterate the FTC’s call for Congress to restore the agency’s ability to get money back to consumers harmed by unlawful conduct and to prevent bad actors from profiting from their misconduct. The FTC’s authority to do so was severely hampered by the Supreme Court’s 2021 AMG decision.
|
 The FTC is sending nearly $100 million in refunds to consumers who lost money as a result of internet phone service provider Vonage imposing junk fees and creating obstacles to those who try to cancel their service. According to the FTC’s November 2022 complaint, Vonage used dark patterns to make it difficult for consumers to cancel their service and often continued to illegally charge them even after they spoke to an agent directly and requested cancellation. The company agreed to a settlement with the FTC that required it to pay 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 sued to stop four related defendants from deceptively marketing their 1 Virus Buster Invisible Mask that purportedly creates a three-foot barrier of protection against 99.9 percent of all viruses and bacteria, including COVID-19 – without any scientific proof that the product actually works. Despite receiving a warning letter that the FTC sent in July 2020, the defendants continued falsely advertising the Invisible Mask – a badge worn around the neck – as a scientifically proven defense against COVID-19 and other diseases and that it was a government-approved device, according to the FTC’s complaint. Three of the four defendants have agreed to a proposed order settling the FTC’s complaint, and will be banned from making unsupported health claims for products designed to prevent or treat COVID-19.
|
The FTC is taking action against personal finance app provider Brigit, alleging that its promises of “instant” cash advances of up to $250 for people living paycheck-to-paycheck were deceptive and that the company locked consumers into a $9.99 monthly membership they couldn’t cancel. Brigit, also known as Bridge It, Inc., has agreed to settle the FTC’s charges, resulting in a proposed court order that would require the company to pay $18 million in consumer refunds, stop its deceptive marketing promises, and end tactics that prevented customers from canceling. The FTC’s complaint charges that consumers were rarely able to get an advance for the promised $250, and in many cases consumers were not able to receive a cash advance at all.
|
Competition
The FTC and Justice Department’s Antitrust Division participated in the G7 Competition Authorities and Policymakers’ Summit to discuss how members are addressing competition concerns in digital markets, including in emerging technologies such as artificial intelligence. G7 competition authorities and policymakers issued a statement on digital competition at the conclusion of the summit. The statement describes a shared commitment to enforce competition laws and develop policies necessary to ensure that principles of fair competition are applied to digital markets. The statement highlights competition concerns arising from emerging technologies and describes the ways in which G7 members are enhancing their ability to better understand and anticipate the challenges to competition when dealing with new technologies such as generative AI. The summit was convened by the G7 Digital and Tech Ministers and hosted in Tokyo by Japan’s Secretariat of Headquarters for Digital Market Competition and the Japan Fair Trade Commission. Delegates from G7 authorities of Canada, France, Germany, Italy, Japan, the UK, the United States, and the European Commission participated in the event. The FTC works with counterpart agencies to promote sound antitrust, consumer protection, and data privacy enforcement and policy.
|
The FTC challenged more than 100 patents held by manufacturers of brand-name asthma inhalers, epinephrine autoinjectors, and other drug products as improperly or inaccurately listed in the Food and Drug Administration’s publication of “Approved Drug Products with Therapeutic Equivalence Evaluations,” commonly known as the “Orange Book.” The Commission has also notified the FDA that it disputes the accuracy or relevance of the listed information for these patents, which may require that the manufacturers remove the listings or certify under penalty of perjury that the listings comply with applicable statutory and regulatory requirements. The FTC sent notice letters to 10 companies identifying specific patents that FTC contends are improperly listed for specific asthma and other inhaler devices, Restasis multidose bottles, and epinephrine autoinjectors, also commonly known as EpiPens. Last month, the FTC issued a policy statement that warned that the agency would be scrutinizing the improper submission of patents for listing in the Orange Book. The Commission said improper listings in the Orange Book may harm competition from cheaper generic alternatives and keep brand prices artificially high. According to the FTC’s policy statement, costs associated with challenging improperly listed patents can disincentivize investments in developing generic drugs, which risks delaying or thwarting competitive generic alternatives. Delays in generic competition, even if brief, can reduce patient access to more affordable alternatives and increase costs across the entire health care system.
|
The FTC filed a petition seeking a federal court order to force Total Wine to comply with an FTC civil investigative demand (CID), which is a type of administrative subpoena that seeks documents and other information related to an ongoing antitrust investigation. The FTC’s petition notes that it has tried to work cooperatively with Total Wine, but the company has failed to comply with the Commission’s CID for more than four months. Total Wine has categorically refused to search any employee-maintained files for documents and information needed to address the FTC’s CID and has failed to assert any valid reason for its refusal to comply. The suit shows that the FTC does not hesitate to take action against parties who fail to comply with its compulsory process requests.
In Other News
As part of its ongoing efforts to combat scammers and protect consumers in every community, the FTC is now providing the ability to report fraud, scams and deceptive practices in multiple languages in addition to English and Spanish. These new language access enhancements will allow people to file reports with the FTC in their preferred language when calling the FTC. Among the new languages available are Mandarin, Tagalog, Vietnamese, French, Arabic, Russian, Korean, Portuguese and Polish. Consumers speaking English and Spanish can also continue to file reports directly online. The FTC is also offering guidance online and in print to consumers and businesses in additional languages. This includes advice on how to spot, stop, and avoid scams and what to if you paid a scammer online, as well as offering free print resources in multiple languages. More information about the enhanced language access for both reporting and consumer and business guidance is available in a new FTC blog post.
The FTC has approved an amendment to the Safeguards Rule that would require non-banking institutions to report certain data breaches and other security events to the agency. The FTC’s Safeguards Rule requires non-banking financial institutions, such as mortgage brokers, motor vehicle dealers, and payday lenders, to develop, implement, and maintain a comprehensive security program to keep their customers’ information safe. The amendment requires financial institutions to notify the FTC as soon as possible, and no later than 30 days after discovery, of a security breach involving the information of at least 500 consumers. Such an event requires notification if unencrypted customer information has been acquired without the authorization of the individual to which the information pertains. The notice to the FTC must include the number of consumers affected or potentially affected.
In a comment submitted to the U.S. Copyright Office, the FTC identifies several issues raised by the development and deployment of Artificial Intelligence (AI) that implicate competition and consumer protection policy, noting the Commission’s role in monitoring the impact of generative AI and vigorously enforcing the law as appropriate to protect competition and consumers. The comment explains that the FTC has an interest in copyright-related issues beyond questions about the scope of rights and the extent of liability under the copyright laws. For instance, not only may creators’ ability to compete be unfairly harmed, but consumers may be deceived when authorship does not align with consumer expectations. A consumer may think a work has been created by a particular musician or other artist when it is an AI-created product. “Conduct that may violate the copyright laws . . . may also constitute an unfair method of competition or an unfair or deceptive practice, especially when the copyright violation deceives consumers, exploits a creator’s reputation or diminishes the value of her existing or future works, reveals private information, or otherwise causes substantial injury to consumers,” the comment continues. In addition, certain large technology firms have vast financial resources that enable them to protect the users of their generative AI tools or exclusive licenses to copyrighted proprietary data, potentially further entrenching the market power of these dominant firms. Accordingly, the FTC has been using its existing legal authorities to take action against illegal practices involving AI, citing consumer protection examples including allegations that Amazon and Ring used highly private data they collected to train their algorithms while violating consumer privacy.
The FTC released the National Do Not Call Registry Data Book for Fiscal Year 2023, which shows that consumer complaints about robocalls and unwanted live telemarketing calls have decreased to a five-year low. Now in its fifteenth year of publication, the data book also provides the most recent fiscal year information available on robocall complaints, the types of calls consumers reported to the FTC, and a complete state-by-state analysis. According to the data book, complaints about imposter calls again topped the list, with more than 175,000 received during the fiscal year ending on September 30, 117,000 of which were robocalls. In such calls, imposters falsely pose as representatives of government, such as the Social Security Administration or the IRS, legitimate business entities, or as people affiliated with them.
|
The FTC has 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 multi-pronged efforts to combat the problem through law enforcement actions, rulemaking, and outreach and education programs. The report finds that older adults reported losing more than $1.6 billion to fraud in 2022. Because the vast majority of frauds are not reported, this figure represents only a fraction of the overall cost of fraud to older consumers, which the FTC estimates to be as high as $48 billion. The report also finds that in 2022, older adults reported significantly higher losses to certain types of scams than they did in 2021: investment scams up 175%; business impersonation scams up 78%; government impersonation scams up 52%; tech support scams up 117%; and fake check scams up 116%.
|
|
