The FTC kicked off the week with a fresh batch of warning letters and followed this up with a pair of complaints related to deceptive marketing. Just in time for the busiest part of tax season, the FTC has filed administrative and federal complaints against Intuit, manufacturers of the popular TurboTax software. The Commission also entered into a record-breaking settlement with a multistate car dealer over alleged deceptive sales tactics, some of which were racially discriminatory. Finally, action in the Senate this week indicates that the long-vacant fifth Commissioner position may finally fill. These stories and more after the jump.
Monday, March 28, 2022
Warning Letters: Unapproved New Drugs and Misbranded Products Related to COVID-19
- In collaboration with the FDA, the Commission issued seven warning letters to companies allegedly offering up various CBD and herbal products as potential COVID-19 treatments, adding on to three letters issued the previous week. The cease-and-desist letters explain how the marketed products potentially violate the FTC Act and the Federal Food, Drug, and Cosmetic Act, and they advise each company that it risks facing legal consequences if the marketing continues, including a Federal District Court injunction and an order requiring the companies to pay back consumers. In addition, the companies also potentially face fines of up to $46,517 per violation pursuant to the COVID-19 Consumer Protection Act, Section 1401, Division FF, of the Consolidated Appropriations Act, 2021, P.L. 116-260
Tuesday, March 29, 2022
Bureau of Consumer Protection: Deceptive Advertising and Marketing
- The FTC filed an administrative complaint against Intuit, Inc. over allegations that the company’s ubiquitous advertising that consumers could use its tax filing products, such as TurboTax, for free, when in fact most tax filers are ineligible for the free services. The “freemium” software allegedly waits until after the consumer begins the filing process and inputs their personal and financial information to inform them that they must upgrade to a paid version of TurboTax to continue. The complaint also alleges that Intuit actively concealed its truly free tax filing product, previously offered as part of the IRS Free File Program, by changing the name of the free product, using naming that consumers confused with the “freemium” version, and hiding the existence of the free product from search engines and on its own website. For example, Intuit allegedly paid for search terms that directed consumers searching for the free version to the “freemium” version. The agency concurrently filed a complaint in federal court requesting a temporary restraining order and a preliminary injunction to enjoin Intuit from advertising that consumers can file their taxes for free using TurboTax.
Wednesday, March 30, 2022
Bureau of Consumer Protection: International Dialogue on Consumer Protection
- Chair Lina Khan and Commissioner for Justice of the European Commission Didier Reynders issued a joint statement to address the two agencies’ informal dialogue on consumer protection. The two reaffirmed their mutual interest in maintaining and increasing their dialogue on consumer issues, particularly dark commercial patterns, artificial intelligence, certain vulnerable consumer groups, environmental and sustainability claims made to consumers, “right to repair” issues, online marketplaces, and consumers’ financial payment transactions. Chair Khan and Commissioner Reynders also highlighted the need to explore new ways for the agencies to collect and exchange information, such as studies about consumer behavior and experience with consumer protection remedies.
FTC Internal Operations: Senate Vote on New Commissioner
- The Senate voted on Wednesday to advance the nomination of Alvaro Bedoya, putting him one step closer to filling the vacant fifth Commissioner position. This procedural vote discharged Mr. Bedoya’s nomination from the Commerce Committee, which deadlocked on Mr. Bedoya’s nomination last month. The full Senate vote also resulted in a tie, causing Vice President Harris to travel to Capitol Hill and cast the tiebreaking vote in favor of the nomination. Now that the nomination is discharged, the next step will be a full Senate vote to confirm Mr. Bedoya.
Friday, April 1, 2022
Bureau of Consumer Protection: Racial Discrimination and Deceptive Sales
- The FTC and the State of Illinois have settled a lawsuit against multistate auto dealer Napleton Auto Group in relation to a concurrently filed complaint in the Northern District of Illinois. In the complaint, the agency alleged that the various dealerships comprising the automotive group engaged in deceptive tactics related to add-on charges such as paint protection, either by falsely telling consumers that the charges were mandatory or by inserting the charges into consumers’ contracts without their informed consent. In addition, the complaint alleges that the Group had a discretionary policy allowing sales personnel to add a finance charge, called a “markup,” to the “buy rate.” The buy rate is calculated based upon a risk assessment of a consumer’s credit application, credit report, and income, while the discretionary markup is not based on underwriting risks or credit. The defendants have allegedly charged Black borrowers more for markups and addons than other consumers, resulting in Black consumers paying, on average, $190 more in interest and $99 more in add-on packages. Chair Lina Khan and Commissioner Rebecca Slaughter issued a joint statement touting that the $10 million settlement is the highest monetary judgment obtained in an FTC auto lending case to date, and $9.95 million of the funds will be returned to injured consumers.