Friday, February 18, 2022
Bureau of Competition: Endorsements, Influencers, and Reviews
The FTC is refunding more than $580,000 to consumers across the country who bought indoor TV antennas and signal amplifiers marketed online with allegedly deceptive claims that the products would allow the consumers to cancel their cable service and still receive their preferred channels for free. The March 2021 complaint alleged that Wellco, Inc. and its owner and CEO, George M. Moscone violated the FTC Act by making deceptive performance claims for their antennas and signal amplifiers and using deceptive consumer endorsements and web pages that looked like objective news reports. The products were sold online under the brand names TV Scout, SkyWire, SkyLink, and Tilt TV.
Thursday, February 17, 2022
Bureau of Consumer Protection: Proposed Rulemaking on Earnings Claims
Citing prior enforcement activity against multilevel marketing companies, work-from-home and other business opportunity companies, the FTC launched a rulemaking proceeding to regulate false money-making claims used to lure consumers, workers, and prospective entrepreneurs into what the FTC called “risky business ventures that often turn into dead-end debt traps.” If finalized, a rule in this area would allow the Commission to recover redress for defrauded consumers, and seek steep penalties against the multilevel marketers, for-profit colleges, “gig economy” platforms, and other bad actors. The FTC stated that this rulemaking is in response to its hindered ability to seek monetary relief for consumers in light of the U.S. Supreme Court’s decision in AMG Capital Management LL v. FTC. According to the FTC, this is a “first step toward ensuring that consumers targeted by these schemes can be compensated.” Chair Lina M. Khan’s remarks regarding the advance notice of proposed rulemaking on earnings claims, explained that the commission has well-established legal authority to challenge deceptive earnings claims under Section 5 of the FTC Act. She also noted that deceptive earnings claims can hit especially hard in today’s “gig” economy. Commissioner Christine S. Wilson released a concurring statement expressing her hesitation to unleash “a tsunami of rulemakings” but agrees with the aforementioned proposed rulemaking in the wake of AMG. This action signals that the FTC is looking for multiple ways to target companies pitching business opportunities, as it came on the heels of more than 1,000 notice letters sent in October 2021 to companies pitching money-making ventures to place them on notice that the FTC could seek monetary penalties under §5(m)(1)(B) of the FTC Act if they make false or misleading earnings claims.
Wednesday, February 16, 2022
Bureau of Consumer Protection: Advertising and Marketing
The FTC announced that the U.S. Department of Education will forgive $71.7 million in federal student loans for students deceived by DeVry University. According to the 2016 FTC complaint, DeVry deceptively advertised that 90 percent of its graduates seeking employment landed jobs in their field within six months of graduation. The FTC also alleged that DeVry misrepresented that its graduates had 15 percent higher incomes one year after graduation on average than the graduates of all other colleges or universities. The court order can be found here.
Bureau of Consumer Protection: Advertising and Marketing Real Estate and Mortgages
The FTC announced a settlement with Zurixx, LLC its owners and number of associated companies which will require the operators of the large real estate investment coaching scheme to pay approximately $12 million to consumers and over $111 million in monetary judgments. The FTC and Utah Department of Commerce Division of Consumer Protection (“UDCP”) alleged that defendants operated a real estate investment coaching scheme that sold live seminars and telephone coaching using false earnings claims that convinced tens of thousands of consumers to pay them thousands or tens of thousands of dollars. The FTC and UDCP also alleged that the defendants used deceptive telemarketing tactics to convince the consumers that they could make tens or hundreds of thousands of dollars in a relatively short amount of time by “flipping” or wholesaling real estate using Zurixx’s system. the defendants are permanently banned from marketing or selling any real estate or business coaching programs.