The FTC’s past two weeks focused on privacy and cybersecurity as well as the Bureau of Consumer Protection successfully wrapping up multiple cases regarding various forms of unfair or deceptive acts or practices. The FTC launched its third action against Meta regarding user privacy issues. In addition, the FTC is seeking comments on a number of topics ranging from cloud computing to recycling. More on this, after the jump.
Monday, May 1, 2023
Bureau of Consumer Protection: Debt Relief, Credit & Finance
- The FTC settled a case based on the defendants’ agreement to court orders after being charged by the FTC in November 2022 for taking tens of millions of dollars by falsely promising to eliminate or reduce consumers’ credit card debt. The court orders and agreed settlement permanently ban the scammers from telemarketing and selling debt relief products and services. The FTC’s complaint alleged that three individuals operating a network of companies incorporated in Tennessee, Nevada, New Mexico, and Wyoming worked together as a common enterprise to perpetrate the deceptive debt relief scheme. The host of companies included ACRO Services, American Consumer Rights Organization, Consumer Protection Resources, Reliance Solutions, Thacker & Associates, and Tri Star Consumer Group. Beyond the ban on offering any form of debt relief product or service and telemarketing, the companies were required to surrender property interests and assets for a total monetary judgement of almost $17.5 million dollars. The Commission vote approving the stipulated final order was 3-0 and the U.S. District Court for the Middle District of Tennessee entered the final orders on April 28, 2023.
Wednesday, May 3, 2023
Bureau of Consumer Protection: COPPA, Privacy & Cybersecurity, Children’s Privacy, Social Media
- The FTC proposed a blanket prohibition to prevent Meta from monetizing children’s data as an update to the agency’s 2020 privacy order with Facebook (Meta’s prior name) after alleging that the company has failed to comply with the order. The FTC further alleges Meta misled parents about control functionality of children’s communications in the Messenger Kids app and misrepresented the access provided to app developers to access private user data, which constitute violations of the prior order and the Children’s Online Privacy Protection Act (COPPA Rule). The proposal would prohibit all profiting from data collected from users under the age of 18 and would apply to Meta’s products beyond Facebook, such as Instagram, WhatsApp, and Oculus. Other than the prohibition against monetizing data from children, the proposed order would 1) pause launch on all new products or services until confirmation from a third-party assessor was obtained confirming compliance with the order’s privacy requirements, 2) extend all compliance requirements to any acquisitions or mergers, and 3) limit future use of facial recognition and require affirmative consent for the use of such technology. This marks the third occasion the FTC has taken action against Meta for allegedly failing to protect users’ privacy. The prior two actions were resolved by a 2012 order and 2020 order. The 2020 order required an independent third-party assessor to conduct a privacy review of every new product, service, or practice to document risks and mitigation efforts. The independent assessor tasked with reviewing whether Meta satisfied the 2020 order’s requirements identified several gaps in the company’s privacy program. Levine, the Director of the FTC’s Bureau of Consumer Protection, stated “The company’s recklessness has put young users at risk, and Facebook needs to answer for its failures.” Additionally, Commissioner Bedoya released a statement questioning whether a nexus exists between the original order and the proposed modified order regarding specific provisions as required by the agency’s modification authority.
Thursday, May 4, 2023
Bureau of Consumer Protection: Advertising & Marketing, Healthcare
- The FTC released a tentative agenda for its workshop, ‘A Clear Look at the Eyeglass Rule.’ The workshop was hosted in Washington, DC on May 18 and reviewed proposed changes to the Ophthalmic Practice Rules, commonly known as the Eyeglass Rule. The half-day event featured three panel discussions with the following themes 1) Prescription Release, 2) the Confirmation Requirement and Contact Lens Rule, and 3) Other Changes (digital prescriptions, clarification of insurance considered as payment, and the term ‘refractive’). The public has until June 20 to submit public comments on the Eyeglass Rule.
Bureau of Consumer Protection: Advertising & Marketing, Consumer Goods, ‘Made in USA’
- The FTC is returning $176,000 to consumers who purchased clothing from Lions Not Sheep after charging the company with using deceptive ‘Made in USA’ labels and advertising on clothing and accessories imported from other countries. The FTC filed a complaint against Lions Not Sheep last May and alleged that Lions Not Sheep deceptively advertised clothing and accessories as ‘Made in USA,’ when most of their products were wholly imported shirts and hats with some limited finishing work performed in the United States. On Oct. 8, 2020, the owner of the company published a video on social media admitting he concealed the shirts were made in China by ripping out origin tags. The order settling the Commission’s complaint barred the company from advertising and labeling its clothing as ‘Made in USA’ when the clothing is not made in the United States and required defendants to pay money to provide refunds to defrauded consumers.
Monday, May 8, 2023
Bureau of Consumer Protection: Student Loan Debt Relief
- The FTC has filed two complaints against companies who allegedly tricked consumers into signing up for a student loan repayment program that charged hundreds to thousands of dollars in illegal fees. The complaints, filed against SL Finance, LLC, BCO Consulting Service, Inc., and SLA Consulting Services, Inc., bring claims for violations of the FTC Act, the Telemarketing Sales Rule, the COVID-19 Consumer Protection Act, and the Gramm-Leach Bliley Act. The FTC further alleges that the companies falsely claimed to be affiliated with the Department of Education and falsely promised to take over services for students’ loans. A federal court in the Central District of California issued temporary restraining orders with asset freezes in order to stop the conduct while the litigation is pending.
Wednesday, May 10, 2023
Bureau of Consumer Protection: Recyclable Advertising Claims
- The Commission released its tentative agenda for its May 23 public workshop in Washington, D.C., entitled “Talking Trash at the FTC: Recyclable Claims and the Green Guides.” The event will feature three panel discussions on the current state of the recycling market and recycling advertising, consumer perception of recycling claims, and the future of the FTC’s Green Guides, which provide guidance to marketers on how to avoid making deceptive recycling claims. The FTC is seeking public comments in connection with this event; the deadline to submit a comment is June 13, 2023.
Bureau of Consumer Protection: Commission Open Meeting Agenda
- The FTC held an open Commission meeting on May 18, 2023, and released in advance a tentative agenda. Agenda items included a vote (1) to issue a Policy Statement on biometric information and Section 5 of the FTC Act and (2) to issue a Notice of Proposed Rulemaking to amend the Health Breach Notification Rule.
Office of Technology: FTC Panel on Cloud Computing
- The agency held an online Panel Event on Cloud Computing, where Deputy Chief Technology Officer Alex Gaynor gave prepared remarks. Mr. Gaynor, an employee of the FTC’s new Office of Technology, discussed his long history as a software engineer and how the definition of the cloud and cloud services have changed over time. He noted how cloud services have become ubiquitous and intertwined with other technology trends such as AI, and how ubiquity comes with security and data breach issues. The FTC is currently seeking public comment on cloud computing and other cloud-related issues, as outlined in its Request for Information. Cloud computing is used by a host of industries for on-demand access to data storage, servers, and networks, which gives rise to concerns related to security, competition, and emerging technologies. The FTC announced the deadline to submit comments has been extended until June 21, 2023.
Friday, May 12, 2023
Bureau of Consumer Protection: Telemarketing
- sued Voice over Internet Protocol (“VoIP”) provider XCast Labs, alleging violations of Sections 5 and 19 of the FTC Act, Section 6 of the Telemarketing and Consumer Fraud and Abuse Prevention Act, and the Telemarketing Sales Rule. The complaint alleges that the company, despite repeated warnings from the FTC and other entities dating back to 2018, continues transmitting billions of illegal robocalls to American consumers. The complaint cites Traceback Requests expressly showing that many of the calls were perpetrating fraud by impersonating federal officials, threatening to cut off recipients’ utilities, and using corporate names without permission. The Department of Justice filed the complaint in the Central District of California on the FTC’s behalf.