The FTC had a busy week, taking multiple actions against alleged scammers and pyramid schemes in the finance and credit industries. In merger news, the agency announced a workshop on pharmaceutical mergers, and it took enforcement actions related to several mergers in a variety of industries. The FTC also issued a report showing that consumers have lost a whopping $1 billion in cryptocurrency scams since 2021. These stories and more after the jump. 

Tuesday, May 31, 2022

Bureau of Competition: Health Care & Pharmacy

  • The FTC and the DOJ will be hosting a two-day workshop entitled “The Future of Pharmaceuticals: Examining the Analysis of Pharmaceutical Mergers” on June 14 and 15. The event will “explore new approaches to enforcing the antitrust laws in the pharmaceutical industry” with topics such as market concentration, merger analysis remedies, and innovation. The workshop is virtual, open to the public, and registration is not required.

Bureau of Consumer Protection: Deception in the Credit & Finance Industry

  • The Commission reported victories against two alleged scammers in the credit industry.  First, the agency obtained a temporary restraining order against Financial Education Services and its owners. According to the complaint filed on May 23, 2022, the company used false promises of easy credit repair services to recruit consumers into a pyramid scheme selling the same services. The company made over $213 million from these allegedly deceptive acts by charging an upfront fee and recurrent monthly fees for the services, which were ineffective and, in some cases, harmed consumers’ credit scores. Second, the FTC is issuing 5,726 checks for more than $255,000 to consumers harmed by Vantage Point Services’ illegal debt collection practices. These refunds relate to a complaint filed by the FTC and the New York Attorney General in 2015 and a related settlement in 2018. This case predates the FTC’s loss of its ability to obtain equitable monetary relief in federal court for consumers following an April 22, 2021 Supreme Court decision. Chair Lina Khan and Commissioner Rebecca Slaughter issued a statement emphasizing that the loss of this ability has caused consumers to lose out on over $1.5 billion in relief that the agency otherwise would have been able to recover for them.

Wednesday, June 1, 2022

Bureau of Consumer Protection: Advertising and Marketing

  • Following a complaint filed in 2020, the FTC is refunding $542,000 to over 1,000 consumers harmed by Digital Income System’s Florida-based investment scam. According to the complaint, the company allegedly promised consumers that, in exchange for steep membership fees of $1,000 to $25,000, the company would sell memberships to other individuals on the consumer’s behalf and would send the consumer $500 to $12,500 per sale.  The vast majority of consumers did not receive any income from this arrangement, let alone the claimed amounts. The lawsuit arose from Operation Income Illusion, a nationwide crackdown on scams announced in response to an uptick in financial scams during the COVID-19 pandemic. This case predates the FTC’s loss of its ability to obtain equitable monetary relief in federal court for consumers following an April 22, 2021 Supreme Court decision.

Thursday, June 2, 2022

Bureau of Competition: Mergers and Acquisitions

  • In what may be a nod to the FTC’s promise to strengthen merger enforcement, the agency moved to block two mergers and required divestiture in a third. First, the agency sued to block a proposed merger in Utah between companies HCA Healthcare and Steward Health Care System, alleging that the deal would reduce the number of healthcare systems offering inpatient acute care in the Wasatch Front region—home to 80% of Utah’s residents—and would increase market concentration in the region to unacceptable levels. Next, the agency filed a complaint to block New Jersey-based healthcare system RWJ Barnabas Health from acquiring Saint Peter’s Healthcare system. Per the complaint, the merger would allegedly enhance RWJ’s already-dominant position in Middlesex County and would give it control over the only two hospitals in New Brunswick. The complaint further outlines a number of ways in which the two healthcare systems compete head-to-head, and argued that the acquisition would therefore have anticompetitive effects. Finally, in relation to pipeline and storage company Buckeye Partners, L.P.’s proposed $435 acquisition of Magellan Midstream Partners, L.P., the Commission filed a complaint asserting that the deal would have anticompetitive effects in the gasoline terminaling services market in three distinct regions in Alabama and South Carolina. The agency proposed a consent order requiring the two companies to divest petroleum terminals in the two states as a condition of the acquisition. Commissioners Noah Phillips and Christine Wilson issued a statement about the order to point out that prior approval provisions have become standard in FTC consent agreements, but cautioned that such provisions may not always be beneficial.

Friday, June 3, 2022

Bureau of Consumer Protection: Credit and Finance

  • The FTC provided its annual report to the Consumer Financial Protection Bureau regarding its enforcement and other activities in 2021 under the Truth in Lending Act, the Consumer Leasing Act, and the Electronic Fund Transfer Act. The agency highlighted successes shutting down deceptive schemes in the automobile financing, payday lending, credit repair/debt relief, and mortgage industries. The agency also outlined efforts by its Military Task Force to assist military consumers, as well as research and policy work on “negative options” which trick consumers into signing up for subscription services.

Bureau of Consumer Protection: Cryptocurrency

  • The Commission released a new Consumer Protection Data Spotlight on cryptocurrency scams. Since the start of 2021, consumers reported losing a staggering $1 billion in cryptocurrency to scams, with a median individual loss of $2,600—far more than any other payment method. The report explains that cryptocurrency has several unique features that make it prone to scams, such as the lack of a bank or centralized authority to identify suspicious or fraudulent transactions, and the fact that crypto transactions cannot be reversed. The most common type of scam, the investment scam, resulted in $575 million in crypto fraud losses. These investment scams take advantage of the fact that consumers often have a limited understanding of crypto; scammers claim that consumers can get huge returns, but the investment simply sends money straight to a scammer’s crypto wallet. Other common forms of fraud include romance scams and business/government impersonation scams. The FTC has set up a consumer guide to explain cryptocurrency and how to avoid and report scams.

Bureau of Consumer Protection: Digital Deception

  • The agency is requesting the public’s assistance to update it 2013 guide for businesses on digital advertising and marketing, as companies have been citing the outdated guidelines to justify deceptive behavior. Specifically, the FTC is requesting comments on (1) the use of sponsored and promoted advertising on social media; (2) advertising embedded in games and virtual reality and microtargeted advertisements; (3) the use of “dark patterns” (manipulative user interfaces that alter consumer behavior, such as tricking them into sharing more information than intended); (4) whether the guide adequately addresses advertising on mobile devices, (5) whether additional guidance is needed on multi-party selling arrangements in online commerce; (6) how guidance on the use of hyperlinks can be strengthened; and (7) the adequacy of online disclosures when consumers must navigate multiple webpages. Comments may be submitted from now through August 2, 2022.