The FTC has continued its steady progress on enforcement actions following the ABA Antitrust Spring Meeting. The agency is seeking to halt a hospital system merger based on alleged Hart-Scott-Rodino Act violations and is progressing on matters related to deceptive and misleading advertising. These stories and more after the jump.
Monday, April 17, 2023
Bureau of Consumer Protection: Credit and Finance
- The FTC filed a federal court complaint against Nexway, a multinational payment processing company, alleging that at least from 2016 through 2020 Nexway knowingly facilitated an offshore tech support scam, which had processed tens of millions of dollars in charges and gave scammers access to the U.S. credit card network. In particular, the complaint alleges that Nexway acted as a payment processor for tech support scams by acquiring credit card merchant accounts and subsequently using such accounts to collect money from consumers on behalf of the scammers. The complaint also alleges that Nexway knew these tech support clients were scammers, received numerous complaints about the companies, and generated a quarter of all of its business between 2016-2020 through these clients. The district court granted the parties’ proposed court order and the stipulated federal court order prohibits Nexway from any further payment laundering as well as mandates close monitoring of high-risk clients for potential illegal activity. The court entered a judgment of $16,500,000 against all of the defendants. Samuel Levine, Director of the FTC’s Bureau of Consumer Protection commented that the Commission would “not hesitate to use its law enforcement powers to stop” companies that “knowingly launder charges for scammers” and that otherwise help scammers “cheat money from consumers.” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, similarly stated that the “Department of Justice will not hesitate to pursue and hold accountable payment processors who facilitate tech support scams that defraud consumers.” The Commission voted 4-0 to refer the civil penalty complaint and proposed federal order to the Department of Justice, which then filed the complaint and stipulated order in the U.S. District Court for the District of Columbia.
Tuesday, April 18, 2023
Bureau of Consumer Protection: Made in USA
- The Commission filed an administrative complaint against motocross and ATV part maker Cycra for falsely claiming its products were manufactured in the United States. According to the complaint, Cycra from 2019 through 2022 made product labels featuring the American flag and made claims on its website, social media, and product packaging saying “Proudly designed, developed and manufactured in Lexington, North Carolina.” The accompanying proposed order would prevent Cycra from making “unqualified” U.S.-origin claims for any product, unless it can show that the product’s final assembly or processing—and all significant processing—takes place in the U.S., and that all or virtually all ingredients or components of the product are made and sourced in the U.S. The Commission vote to issue the administrative complaint and to accept the consent agreement was 3-0.
Thursday, April 20, 2023
Bureau of Competition: Hospitals and Clinics
- The FTC has filed a federal court petition seeking to prevent Louisiana Children’s Medical Center (“LCMC”) from integrating three recently acquired competing hospitals in the New Orleans area based on alleged violations of the Hart-Scott-Rodino Act. As alleged, LCMC and HCA Healthcare, Inc. violated the Act by consummating the $150 million acquisition without reporting it to antitrust authorities or observing the mandatory waiting period. The petition seeks injunctive relief requiring that the three acquired hospitals separate from the existing hospital system pending the FTC’s investigation, requiring compliance with the Hart-Scott-Rodino Act, and requiring LCMC to give the FTC prior notice of certain transactions pending court resolution of the dispute. Commission Chair Lina M. Khan noted that “[b]usinesses that believe they can flout the law should be on notice: we will use the full scope of our authority to combat obstruction and to vindicate the FTC’s authority to investigate potentially illegal deals.”
Friday, April 21, 2023
Bureau of Consumer Protection: Real Estate and Mortgages
- The Commission has finalized a consent order against Denver-based HomeAdvisor, Inc. – a company affiliated with Angi, formerly known as “Angie’s List” after a public comment period– settling allegations that it used a wide range of deceptive and misleading tactics in selling home improvement project leads to service providers, including small businesses operating in the “gig” economy. We last covered this action in a January post when the FTC issued the proposed order. The final order requires HomeAdvisor to pay up to $7.2 million and prohibits the company from making any false or misleading claims regarding its leads, including that they concern individuals who are ready to hire a service provider or who submitted a request for home services directly to HomeAdvisor. The Commission voted 3-0 to approve the final consent order and response to public commenters.