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November 2024
Competition
Tapestry ‒ Parent of Coach and Kate Spade ‒ and Capri Holdings ‒ Parent of Versace and Michael Kors ‒ Abandon Merger Following Court Ruling in Favor of FTC Merger Challenge
 Following a federal court ruling in favor of the FTC and blocking the $8.5 billion merger of Tapestry, parent of Coach and Kate Spade, and Capri holdings, parent of Versace and Michael Kors, the parties have abandoned their proposed merger. The district court agreed with the FTC’s allegation that the merger would eliminate direct competition between Tapestry’s and Capri’s brands, many of which compete head-to-head in the “accessible luxury” handbag market. Affirming the FTC’s market definition, the court found “accessible luxury” handbags distinguishable from “mass-market” and “true luxury” bags. While the parties criticized this relevant market, the court pointed to ordinary course documents where the defendants themselves used the “affordable luxury” term. The court also cited the parties’ ordinary course documents discussing the close competition between the parties in that market.
A federal judge dismissed the bulk of Meta’s motion for summary judgment in the FTC’s antitrust suit against the social networking company and ordered the case to go to trial, now set to begin in April 2025. According to the opinion, “[a]rmed now with experts and evidence, [the FTC] continues to argue that a relevant antitrust market exists for personal social-networking services and that, since at least 2012, Meta has enjoyed monopoly power in that market. The Commission further contends that Defendant unlawfully maintained that monopoly by acquiring two actual or nascent competitors, Instagram and WhatsApp, that posed a threat to its dominance at the time.” In denying summary judgment, the court ruled that the FTC put forward sufficient evidence to warrant a trial. An FTC spokesperson noted that the case “represents a bipartisan effort to curtail Meta’s monopoly power and restore competition to ensure freedom and innovation in the social media ecosystem.” The trial will begin on April 14.
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Consumer Protection and Privacy
 An FTC lawsuit is leading to changes for consumers who use H&R Block’s do-it-yourself online tax filing products. A proposed FTC settlement would stop H&R Block from unfairly requiring consumers seeking to downgrade to a cheaper H&R Block product to contact customer service, from unfairly deleting users' previously entered data, and from making deceptive claims about “free” tax filing. The tax-filing company has agreed to a proposed settlement that will require the company to make a number of changes for the 2025 tax filing season in addition to longer-term changes. The settlement would also require the company to pay $7 million to the FTC to be used to redress consumers harmed by the company’s unlawful practices.
 The FTC is acting against online cash advance app Dave for allegedly using misleading marketing to deceive consumers about the amount of its cash advances, charging consumers undisclosed fees, and charging so-called “tips” to consumers without their consent. Dave describes the consumers it targets as being “financially vulnerable” or “financially coping,” including those whose spending exceeds their income, who have minimal savings, and who overdraft their bank accounts frequently. Dave’s advertising is dominated by claims that consumers can receive “up to $500” by using Dave, and that they can do so “instantly.” The complaint charges that despite making these claims in a variety of advertisements, Dave offered advances of $500 only a tiny percentage of the time. Consumers who take advances from Dave are often charged a surprise fee of 15% of their advance that is described by Dave as a “tip.” Many consumers are either unaware that Dave is charging them or unaware that there is any way to avoid being charged. In public filings with the Securities and Exchange Commission, Dave reported receiving more than $149 million in revenue from these so-called “tips” alone from 2022 through the first six months of 2024.
 The FTC is bringing an action against Seek Capital and its founder and CEO for operating a bogus business finance scheme that cost small business owners more than $37 million. According to a complaint filed by the FTC, the company has targeted new and aspiring small business owners looking for loans or lines of credit to open or grow their businesses. While the company’s advertising implies that business owners would have access to cash, instead Seek charges clients thousands of dollars simply to open credit cards in the owners’ names.
According to the complaint, Seek’s telemarketers use high-pressure sales tactics, including follow-up calls that some business owners have described as “incessant” and “harassing.” Once business owners sign a contract, instead of procuring business loans or lines of credit, Seek begins applying for numerous credit cards, typically personal credit cards in the name of the business owner. The complaint charges that the first time many learn that Seek has applied for credit cards in their name is when they receive an alert about a drop in their credit score, an invoice from Seek listing the credit cards Seek obtained in their name, or a letter from a bank approving or denying them for a credit card.
The FTC is taking action against a debt collector that tricked consumers into paying more than $7.6 million in bogus debt by threatening them with jail time, harassing their family members, and other unlawful actions. In response to a federal court complaint filed against Global Circulation, Inc. (GCI) and its owner, the court agreed to temporarily halt the company’s operation and ordered it to turn its assets over to a court-appointed receiver. In its complaint, the FTC alleges that GCI and the individual defendant contacted consumers under a number of fictitious company names. The company’s collectors call consumers out of the blue and threaten them with arrest, wage garnishment, and lawsuits if they don’t pay a supposed debt.
The FTC charged that Sitejabber, a company offering an AI-enabled consumer review platform, deceived consumers by misrepresenting ratings and reviews it published came from customers who experienced the reviewed product or service, artificially inflating average ratings and review counts. Under a proposed order settling the agency’s complaint, Sitejabber will be prohibited from making such misrepresentations in the future and from making other misrepresentations about consumer ratings or reviews. According to the FTC’s complaint, GGL Projects, Inc., which does business as Sitejabber, collected ratings and reviews for its online business clients from consumers at the time of purchase, before they received or had the chance to experience the products or services they bought. Sitejabber allegedly used these point-of-sale ratings and reviews to deceptively inflate the average ratings and review counts of its clients on the company’s review platform, claiming that the ratings “indicat[e] that most customers are generally satisfied with their purchases.”
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In Other News
The FTC released the National Do Not Call Registry Data Book for Fiscal Year 2024, which shows that consumer reports about unwanted calls continue to drop for the third straight year, with complaint volume down by more than half since 2021. The FTC has pursued a multifaceted strategy to crack down on unwanted calls. In 2023, the agency announced Operation Stop Scam Calls, the largest crackdown on illegal telemarketing in the agency’s history. This year, the agency issued a rule banning impersonation of government or business and expanded the Telemarketing Sales Rule (TSR) to protect businesses facing illegal telemarketing.
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The FTC will host a virtual public workshop on December 18 that will examine predatory pricing and its potential effects on consumers, competition, and innovation. The workshop, Competition Snuffed Out: How Predatory Pricing Harms Competition, Consumers, and Innovation, will feature speakers with experience on how predatory pricing has impacted competition and consumers. Economists, academics, and antitrust litigators will discuss predatory pricing caselaw and economic scholarship. FTC Chair Lina M. Khan will provide opening remarks at the workshop. Questions to be addressed include:
- How does predatory pricing harm competition, consumers, and innovation?
- What would a successful predatory pricing case look like under current doctrine?
- How does the Supreme Court’s decision in Brooke Group align with current market dynamics?
- Under what circumstances does current economic literature and legal scholarship suggest that predatory pricing can be an effective, profit-maximizing strategy to gain or entrench market power?
- Does legal doctrine need to change to match modern-day economic realities? How so?
The workshop is scheduled from 9:30am to 12:30pm EST. Additional information, including a list of speakers and the agenda, will be posted on the event page in advance of the workshop. A link to view the workshop will be posted to the FTC’s website at FTC.gov the morning of the event.
FTC staff have issued a report detailing key findings from the agency’s first-ever undercover Funeral Rule phone sweep, which found several funeral providers failed to provide pricing information required by law. The FTC’s Funeral Rule requires providers to give information about their offerings and pricing over the phone, when asked. The report notes that staff were unable to obtain price information after business hours from 73 funeral providers (26% of all funeral providers called). Staff also were unable to obtain price information from 21 providers (7% of all funeral providers called) during business hours, according to the report.
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The FTC issued its Fiscal Year 2024 Agency Financial Report, which highlights the FTC’s accomplishments in protecting consumers and promoting competition and reaffirms the agency’s commitment to responsible stewardship of resources and sound financial operations. This report includes annual audited financial statements, as well as the Office of the Inspector General’s assessment of the FTC’s key management accomplishments and opportunities for performance improvements. The FTC’s FY 2024 independent financial statement audit marks the agency’s 28th consecutive unmodified opinion, the highest audit opinion available.
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