The FTC has continued its strong start to the new year with enforcement actions related to false advertising in the healthcare industry and misleading conduct in the “gig” economy as well as revising the merger reporting thresholds and filing fees. These stories and more after the jump.
Thursday, January 19, 2023
Bureau of Consumer Protection: Healthcare, Advertising & Marketing
- The FTC issued an order requiring Ohio-based LCA-Vision, d/b/a LasikPlus, and Joffe MediCenter to pay $1.25 million for using deceptive bait-and-switch advertising. The bait-and-switch advertising offered corrective vision services for approximately $300, but less than 10% of consumers were eligible for the promotional pricing. Most often, the consumer cost was between $1,800 and $2,295 per eye. The administrative complaint alleged consumers did not learn of the actual price until after spending considerable time and effort in eye exams and consultations. Further, both the website and call centers failed to disclose the lengthy eligibility restrictions to receive the advertised promotional pricing. In addition to the customer redress, LCA is barred from similar deceptive conduct as alleged in the complaint and will be required to include proper disclosures in advertising such as eligibility requirements, price per eye, and the price that most consumers will pay. The Commission voted to issue the administrative complaint and accept the consent agreement 3-1, with Commissioner Wilson voting no and issuing a dissenting statement. Commissioner Wilson was not convinced the claims constitute deceptive advertisements in violation of the FTC Act because LCA did disclose that eligibility requirements existed and offered a free consultation to determine a consumer’s eligibility based on a variety of medical factors that could likely only be assessed through a medical exam.
Friday, January 20, 2023
Bureau of Competition: Unfair Methods of Competition, Healthcare
- The FTC filed a motion asking a federal judge to hold Martin Shkreli (“Pharma Bro”) in contempt for failing to provide the FTC with information to determine whether Shkreli is in violation of a prior order by that judge banning him from working in the pharmaceutical industry for life. The motion, filed in the U.S. District Court for the Southern District of New York, alleged Shkreli has failed to comply with requests to produce documents and participate in an interview as part of the FTC’s ongoing investigation into whether Shkreli has violated his lifetime ban of forming and operating a company in the pharmaceutical industry. Shkreli formed and now operates a company called Druglike, Inc., which purports to revolutionize early-stage drug discovery. In January 2022, U.S. District Court Judge Cote held that Shkreli orchestrated an illegal anticompetitive scheme to perpetuate a monopoly for the drug Daraprim, one of the best treatments for a rare, potentially fatal parasitic infection, toxoplasmosis. Beyond the lifetime ban against Shkreli, he was also liable for $64.6 million in disgorgement. The FTC invoked the order’s compliance reporting and access-to-information provisions in October 2022, but Shkreli has disregarded all compliance requests from the FTC.
Monday, January 23, 2023
Bureau of Consumer Protection: Deceptive/Misleading Conduct in the “gig” economy
- The FTC issued a proposed order requiring Denver-based HomeAdvisor, Inc. (affiliated with Angi, formerly known as “Angie’s List”) to pay up to $7.2 million for a range of deceptive and misleading tactics in its selling of home improvement project leads to service providers, such as small businesses operating in the “gig” economy. In particular, the order would establish funds to make payments of up to $30 to service providers affected by HomeAdvisor’s misrepresentations about its lead quality and to make payments of up to $59.99 to service providers who were told that the first month of their “mHelpDesk” subscription was free. The order would also bar HomeAdvisor from committing similar deceptive conduct in the future. We first reported on this action in a March 2022 post when the FTC first charged HomeAdvisor with deceptive and misleading practices. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, commented that the proposed order “requires HomeAdvisor to refund home service providers millions of dollars and stop misleading them about the quality of its leads” and noted how even in a changing economy “the FTC will continue to combat dishonest commercial practices aimed at consumers, workers, and small business.” The Commission’s action follows its Policy Statement on Enforcement Related to Gig Work, and the Commission voted 4-0 to accept the proposed consent agreement.
Bureau of Consumer Protection: Online Advertising and Marketing
- The Commission finalized its consent order regarding allegations that Credit Karma, a credit services company, deployed dark patterns to misrepresent that various consumers were “pre-approved” for certain credit card offers. The order would require Credit Karma to pay $3 million, which would be sent to consumers, who spent time applying for such credit cards, and would prevent the company from making such deceptive claims in the future. We first reported on this action in a September 2022 post when the FTC issued the administrative complaint and proposed order. The FTC voted 4-0 to approve the final order.
Bureau of Competition: Merger and Hart-Scott-Rodino Act (HSR)
- The FTC announced new reporting thresholds and merger filing fees for the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. HSR Section 7A(a)(2) requires annual revision of the jurisdiction thresholds, and for 2023, the threshold for reporting under Section 7A of the Clayton Act will adjust from $101 to $111.4 million. The 2023 thresholds for Section 8 of the Clayton Act will also adjust, to $45,257,000 for Section 8(a)(1) and $4,525,700 for Section 8(a)(2)(A). The Commission also approved publication of a Federal Register notice regarding new merger filing fees based on the size of the proposed transaction. The Commission voted 4-0 approving the Federal Register notices announcing the HSR threshold revisions and updated merger filing fees.
Tuesday, January 24, 2023
Bureau of Consumer Protection: Identity Theft and Privacy
- The Commission will host a series of free events from January 30 through February 3 as part of its annual Identity Theft Awareness Week. The Identity Theft Awareness Week will formally kick off on January 30 with a webinar from the ITRC and FTC on the financial, emotional, and physical impacts of identity theft and will include webinars, podcasts and other activities featuring experts from the FTC, AARP, Consumer Action, the Identity Theft Resource Center (ITRC), the IRS, the Maryland Library for the Blind and Print Disabled, the Small Business Administration, and the Department of Veterans Affairs. A full list of the events can be found on the FTC’s website.
Wednesday, January 25, 2023
Bureau of Consumer Protection: Online Advertising and Marketing
- The FTC announced that it will be sending more than $973,000 in payments to over 17,000 people who lost money after NutraClick LLC automatically enrolled them in unwanted membership programs for supplements and beauty products. The payments follow two separate FTC actions against NutraClick. In 2016, the FTC and NutraClick settled the Commission’s federal court complaint alleging the company lured customers with “free” samples and then charged them a recurring monthly fee without consent. NutraClick was required to clearly disclose the terms of its recurring membership programs as part of the settlement. However, in September 2020, the FTC filed another federal court complaint alleging that it violated the terms of the 2016 settlement by misleading consumer about when they needed to cancel their free trials to avoid monthly charges. NutraClick settled with the Commission and agreed to pay $1.04 million for consumer refunds and agreed to not employ such negative option marketing in the future. The FTC will provide a state-by-state breakdown of the refunds on its online interactive dashboard for refund data.