The FTC kicked off the holiday season analyzing data on fraudulent online shopping, cryptocurrency, and employment advertisements that are popular on social media. The Commission also announced updates to the Eyeglass Rule while also announcing the public comment period for potential updates to the Green Guides. These stories and more after the jump.

Wednesday, December 7, 2022

Bureau of Consumer Protection: Made in USA Labeling Rule

  • The FTC made public CSW Industrials, Inc. d/b/a Smoke Guard, Inc.’s (“Smoke Guard”) remedial action plan to avoid violating the Made in USA Labeling Rule, 16 C.F.R. § 323.  Specifically, Smoke Guard is required to (1) remove unqualified claims from all marketing materials, including social media platforms; (2) provide updated materials and marketing instructions to customers and distributors; (3) train staff; (4) create and distribute a written policy regarding U.S.-origin claims in product marketing, including processes and procedures to be followed before such claims may be made; and (5) collect substantiation in support of future, qualified claims.  The Commission emphasized that “[a]lthough U.S.-origin claims are optional for most products, products covered by the Textile Fiber Products Identification Act, 15 U.S.C. §§ 70-70k (the “Textile Act”) and implementing Rules, are subject to mandatory country-of-origin labeling requirements, including requirements to disclose use of imported fabric,” and that these “Textile Rules set forth specific factors for marketers to apply in deciding whether to mark a product as of U.S. origin.” 

Bureau of Consumer Scams Against Older Adults Advisory Group 

  • The Commission announced the members that will be represented on the FTC’s Scams Against Older Adults Advisory Group’s four committees following the Group’s first meeting of in September.  As part of the Stop Senior Scams Act, the FTC formed the Advisory Group to focus on expanding consumer education efforts; improving industry training on scam prevention; identifying innovative or high-tech methods to detect and stop scams; and developing research on consumer or employee engagement to reduce fraud.

Thursday, December 8, 2022

Bureau of Consumer Protection: Fraud Data Spotlight

  • The FTC released data that shows consumers under the age of 60 are more likely to report losing money to online shopping scams than older Americans.  The Commission’s analysis reveals a general difference in the origination of scams.  The majority of 2021 fraud loss reports by Americans under the age of 60 originated on social media, while fraud loss reports by Americans over the age of 60 originated through phone calls.  The agency’s data spotlight on social media fraud indicates this may be an area of increased regulatory scrutiny.

Bureau of Consumer Protection: COVID-19 Business Grants

  • The FTC and the State of Florida filed stipulated orders for permanent injunctions against the operators of an alleged grant scam called Grant Bae that the Commission claimed targeted minority-owned businesses.  In their complaint against Grant Bae, the FTC and Florida alleged that Grant Bae and its owner, Treashonna Graham falsely promised “guaranteed” grant funding and COVID-19 economic benefits that did not materialize.  The order against defendants Treashonna Graham and C Lee Enterprises LLC requires defendants to turn over a home, car, and watch to the court-appointed receiver to raise money for Grant Bae scheme victims, prohibits defendants from making misleading statements in the future, and permanently bans defendants from providing any products or services related to either grants or business consulting.  Treashonna Graham and C Lee Enterprises are ordered to pay a partially suspended monetary judgment of $2,107,727.69.  The order against defendant Joey Williams also includes a monetary settlement of $115,000 that is fully suspended due to an inability to pay.  Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, commented on the case that “[t]hese fraudsters preyed on minority-owned businesses that were trying to survive the pandemic,” and “[o]ur proposed orders will ensure these scammers get out and stay out of the grant writing and business consulting field.”

Friday, December 9

Bureau of Consumer Protection: Eyeglass Rulemaking

  • The Commission proposed updating its Ophthalmic Practice Rules, known as the Eyeglass Rule, to ensure ophthalmologists and optometrists provide patients with a copy of their prescription immediately after the completion of a refractive eye exam, and get a signed statement from the patient confirming that they have received their prescription.  The proposed rule would require optometrists to keep a record of that confirmation for at least three years and allow prescribers, with a patient’s verifiable affirmative consent, to provide the patient with a digital copy of a prescription in lieu of a paper copy.  The FTC also clarified that a patient’s proof of insurance coverage will be deemed to be a payment for the purpose of determining when a prescription must be provided and changed the term “eye examination” to “refractive eye examination” throughout.  Under the current Eyeglass Rule, prescribers cannot require that patients buy eyeglasses as a condition of providing them with a copy of their prescription, place a liability waiver on the prescription, require patients to sign a waiver, or require patients to pay an additional fee in exchange for a copy of their prescription; and cannot refuse to perform an eye exam unless the patient buys eyeglasses, contact lenses, or other ophthalmic goods from them.  Importantly, this action follows up on warning letters the FTC sent eyeglass prescribers in 2020 reminding them that they must provide patients with prescriptions at the end of an exam; cannot charge a fee or require eyeglass purchase for prescription release.

Bureau of Competition: Farming Products and Services 

  • Following a public comment period, the FTC finalized a consent order regarding Tennessee-based farm store chain Tractor Supply Company’s (“Tractor Supply”) acquisition of Midwest and South farm chain store rivals Orscheln Farm (“Orscheln”) and Home LLC.  The FTC had challenged the merger, arguing that online retailers are not reasonable substitutes for brick-and-mortar farm stores and that the acquisition would increase prices and decrease the quality and selection of products. The consent order requires Tractor Supply to divest some Orscheln stores, corporate offices and a Missouri distribution center, to farm store chains Bomgaars (based in Iowa) and to Buchheit (based in Missouri and Illinois).  Tractor Supply must assist Bomgaars and Buchheit as they convert the stores and Orscheln’s distribution center and move the stores it is retaining out of the distribution center on a specific timeline.  The FTC insisted on physical and technical separation between the teams supporting Tractor Supply’s stores, the stores being divested to Bomgaars, and the stores being divested to Buchheit.  For three years, Bomgaars and Buchheit must obtain prior approval from the Commission before selling any of the Orscheln stores they acquired.

Monday, December 12, 2022

FTC Operations: Office of the General Counsel

  • Following a recent decision by the U.S. Court of Appeals for the Fifth Circuit, finding the Horseracing Integrity and Safety Act unconstitutional, the FTC issued an Order disapproving the Anti-Doping and Medication Control rule proposed by the Horseracing Integrity and Safety Authority. Since next steps in litigation could render the proposed rule unenforceable in several states, the Commission reasoned approval of the proposed rule would be inconsistent with the Act’s foundational principle that horseracing rules be uniform across the nation. All hope is not lost for the Authority as the Commission did not assess the merits of the proposed rule, allowing the opportunity for the Authority to re-submit the rule for FTC approval if the uncertainty surrounding the constitutionality of the Act is resolved.

Thursday, December 14, 2022

Bureau of Consumer Protection: Advertising and Marketing 

Thursday, December 15, 2022

FTC Operations: Bureau of Economics

  • FTC Commission Chair Lina M. Khan appointed Aviv Nevo to serve as Director of the FTC’s Bureau of Economics, beginning January of 2023. Nevo will join the FTC from the University of Pennsylvania, where he previously served as the George A. Weiss and Lydia Bravo Weiss Penn Integrates Knowledge Professor with appointments in the Wharton School of Business and the Department of Economics, as well as director of the Competition and Policy Initiative.

Bureau of Consumer Protection: Credit & Loan Offers

  • The FTC filed stipulated orders against the operators of a credit repair scheme, “The Credit Game,” imposing a $18,875,613 monetary judgment and a lifetime ban from operating or assisting any credit repair service of any kind. Defendants Michael and Valerie Rando and their companies were sued by the FTC in May 2022, where the FTC alleged that the scheme’s operators provided false information to credit reporting agencies regarding consumers’ credit reports and encouraged consumers to pay for their credit repair services using COVID-19 tax relief funds, in violation of the COVID-19 Consumer Protection Act. Additionally, the FTC alleged the defendants perpetuated consumers’ harm by pitching opportunities to create their own “bogus” credit repair schemes. The total monetary judgment will be partially suspended due to the defendants’ inability to pay; however, the orders will require defendants to turn over numerous assets for liquidation. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection commented on the case that “[t]hese defendants falsely promised consumers improved credit based on tactics that were both illegal and ineffective,” and “[the] proposed orders will permanently ban these fraudsters from peddling deceptive credit repair tactics to struggling consumers.”