As we enter 2024, the FTC is pushing forward on all fronts. The Bureau of Consumer Protection announced both settlements and actions, especially related to telemarketing and robocalls, as well as automotive industry junk fees and illegal uses of consumer location data. And, the FTC has scheduled a summit on Artificial Intelligence on January 25. This, and more, after the jump.

Tuesday, January 2, 2024

Bureau of Consumer Protection: Advertising and Marketing; Telemarketing; Robocalls 

  • The FTC announced a proposed settlement with XCast Labs, Inc., a Voice over Internet Protocol (VoIP) provider. The agreement would settle the FTC’s allegations that XCast Labs allowed hundreds of millions of illegal robocalls through its network, even after receiving warnings about such conduct. Under the settlement, XCast Labs will be required to implement a screening process of current and potential clients to ensure compliance with the FTC’s telemarketing rules. The settlement order will permanently bar XCast Labs from providing services to any company that does not have an automated procedure to block calls displaying invalid Caller ID phone numbers or that fail to be authenticated in the FCC’s STIR/SHAKEN Authentication Framework. Finally, the settlement imposes a $10 million civil penalty, but the penalty will be suspended based on an inability to pay. The complaint, filed in May 2023, stated the FTC sent warning letters to VoIP providers, including XCast Labs, in early 2020 warning the providers that assisting or facilitating illegal telemarketing or robocalling is against the law. The Department of Justice litigated the case and filed the proposed order on the FTC’s behalf.

Bureau of Consumer Protection: Advertising and Marketing; Telemarketing; Robocalls

  • The FTC announced a proposed settlement with Response Tree LLC and its president, Derek Thomas Doherty. Response Tree allegedly sold personal information of hundreds of thousands of consumers to telemarketers who used the information to make millions of illegal telemarketing calls nationwide. The settlement will ban Response Tree from making or assisting others in making robocalls or calls to numbers on the FTC’s Do-Not-Call Registry. The settlement order charges Response Tree with operating over fifty websites designed to trick consumers into providing their personal information for mortgage refinancing loans and other services. These websites are described as ‘consent farms’ that use manipulative dark patterns to induce consumers to provide their personal information and obscure inadequate disclosures regarding how the personal information will be used. Third parties then purchase the consumers’ personal information to use in illegal telemarketing campaigns. The settlement order imposes a $7 million judgment against the defendants, which will be suspended based on inability to pay. The FTC voted 3-0 to file the complaint and stipulated final order.

Thursday, January 4, 2024

Bureau of Consumer Protection: Deceptive Business Conduct; Credit and Finance; Automobiles

  • The FTC and the State of Connecticut announced an action against auto-dealer Manchester City Nissan, as well as a number of key employees, for allegedly deceiving consumers about the price of used cars, add-ons, and government fees. The complaint alleges that Manchester City Nissan charged various junk fees without consumers’ notice or consent. These junk fees include double charges for ‘certified pre-owned’ vehicles, bogus add-ons, and bogus government fees. The complaint cites violations of the FTC Act and the Connecticut Unfair Trade Practices Act. The FTC voted 3-0 to authorize the complaint filed in the U.S. District Court for the District of Connecticut.  

Friday, January 5, 2024

Office of Technology: Artificial Intelligence; Consumer Protection; Competition  

  • The FTC’s Office of Technology will host a virtual technology summit on January 25, 2024 at noon that will bring together various stakeholders to discuss key developments in the evolving field of Artificial Intelligence. The event will include three panels and the stakeholders will include representatives from academia, industry, civil society organizations, and the government to discuss the technology, market trends, and real-world impacts of artificial intelligence. Chair Lina Khan and Commissioners Rebecca Slaughter and Alvaro Bedoya all plan to provide remarks at the Summit. The summit will take place online and further details can be found at the event website.

Bureau of Consumer Protection: Do Not Call Registry; Telemarketing

  • The FTC issued its Biennial Report to Congress Under the Do-Not-Call Registry Fee Extension Act of 2007 (the “Act”) for Fiscal years 2022 and 2023. In 2008, Congress passed the Act requiring a biennial report on the National Do Not Call Registry. The Registry has over 249 million active registrations, which increased by 2.6 million phone numbers in 2023. Over 10,000 sellers, telemarketers, and exempt organizations subscribe to the Registry and pay fees totaling nearly $15 million. The Registry allows consumers to register numbers and submit complaints regarding suspected violations, as well as helps businesses and law enforcement investigate potential violations of Do Not Call rules.

Office of the Executive Director: Operations

  • The FTC issued an order approving the Horseracing Integrity and Safety Authority’s 2024 budget as submitted to the Commission. On March 27, 2023, the FTC adopted procedures for the FTC’s review and approval of the Horseracing Integrity and Safety Authority’s annual budget. The FTC published the Horseracing Integrity and Safety Authority’s proposed 2024 budget in the Federal Register, allowed for public comment, and now has voted 3-0 to approve the proposed budget.  

Tuesday, January 9, 2024

Bureau of Consumer Protection; Debt Relief; Consumer Refunds

  • The FTC is sending payments of $201.34 each to 6,261 consumers who lost money due to Consumer Defense, an alleged deceptive mortgage modification scheme. According to the FTC’s 2018 complaint, Consumer Defense operated under a number of names, including Preferred Law and American Home Loan Counselors (“defendants”), and promised homeowners foreclose prevention and more affordable mortgage payments. Under the Consumer Defense scheme, homeowners were unlawfully charged upfront fees in monthly installments of $650 and were falsely promised legal assistance. Once consumers paid these fees, they learned that the defendants had not obtained the promised loan modifications and sometimes had never even contacted the lenders. In 2019, a federal court ruled in favor of the FTC in the case, ordering defendants’ assets to be turned over to the FTC and liquidated. The defendants appealed the case, and an appellate court in 2022 upheld the ruling but returned the case back to the district court to re-enter the monetary judgment pursuant to Section 19 of the FTC. In 2023, the district court entered a monetary judgmentfor the defendants’ violations of the Mortgage Assistance Relief Services Rule.

Bureau of Consumer Protection: Consumer Privacy; Online Advertising and Marketing

  • The FTC issued a proposed order in relation to the complaint against X-Mode Social and its successor, Outlogic, which alleged that the company sold precise location data that could be used to track people’s visits to sensitive locations such as medical and reproductive health clinics, places of religious worship and domestic abuse shelters, failed to put in place reasonable and appropriate safeguards on the use of such information by third parties, and failed to ensure that users of their own apps were informed that their location data would be used. X-Mode and Outlogic collect precise location data from third-party apps that incorporate its software development kit into their apps. The company then sells and licenses consumer location data to hundreds of clients in various industries. The proposed order requires X-Mode/Outlogic to create a program to ensure it develops and maintains a list of sensitive locations, and ensure it is not sharing, selling or transferring location data about those sensitive locations and limits the company from collecting or using location data when consumers have opted out. The Commission voted 3-0 to accept the consent agreement.

Bureau of Consumer Protection; Advertising and Marketing

  • The FTC will hold an informal hearing on its proposed rule banning fake reviews and testimonials at 10 a.m. ET on February 13, 2024. On July 31, 2023, the FTC published a Federal Register notice proposing a new rule to stop marketers from using illicit review and endorsement practices such as using fake reviews, suppressing honest negative reviews, and paying for positive reviews. During the hearing, three interested parties will provide statements addressing issues raised during the rulemaking process. The hearing will be open to the public and available via webcast.

Wednesday, January 10, 2024

Bureau of Consumer Protection: Privacy and Security

  • The FTC is launching a claims process for consumers who had their Social Security numbers exposed in a data breach involving online platform CafePress. The claims process comes after a March 2022 settlement with CafePress over allegations the company failed to implement reasonable security measures to protect sensitive information stored on its network, including plain text Social Security numbers, inadequately encrypted passwords, and answers to password reset questions, leading to a data breach of sensitive data. Under the settlement with the FTC, Residual Pumpkin Entity, LLC, the former owner of CafePress, and PlanetArt, LLC, which bought CafePress in 2020, were required to implement information security programs to address the security problems identified in the complaints in addition to paying $500,000 to compensate victims impacted by the data breach.

Thursday, January 11, 2024

Bureau of Competition; Bureau of Consumer Protection; FTC Operations

  • The FTC has adjusted the maximum civil penalty dollar amounts for violations of 16 provisions of law the FTC enforces, as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, effective on January 10, 2024, from 1) $50,120 to $51,744 for violations of Sections 5(l), 5(m)(1)(A), and 5(m)(1)(B) of the FTC Act, Section 7A(g)(l) of the Clayton Act, and Section 525(b) of the Energy Policy and Conservation Act; 2) $659 to $680 for violations of Section 10 of the FTC Act, and; 3) $1,426,319 to $1,472,546 for violations of Section 814(a) of the Energy Independence and Security Act of 2007. These adjustments are listed in the Federal Register notice.

Friday, January 12, 2024

Bureau of Competition; Merger

  • The FTC has approved revised jurisdictional thresholds for Section 8 of the Clayton Act, which prohibits interlocking directorates. For 2024, thresholds under Section 8 of the Act that trigger prohibitions on certain interlocking memberships on corporate boards of directors are $48,559,000 for Section 8(a)(l) and $4,855,900 for Section 8(a)(2)(A).

Thursday, January 18, 2024

Data Security; Consumer Privacy; Business Guidance

  • The FTC announced a proposed order and complaint which would inhibit the digital marketing platform, InMarket Media, from using its consumers’ locations without obtaining their consent. The complaint alleges that InMarket embedded location-collecting software development kits (SDK) into two of its own shopping awards apps, and subsequently made such data available to more than “300 third-party apps downloaded to more than 390 million different devices.” InMarket has agreed to the terms of the proposed order, which prohibit it from selling or licensing precise location data. Further, InMarket is required to implement a prevention program to halt future uses of consumer location data. This case conveys the extent to which the FTC will act to protect consumers against the illegal collection of their sensitive location data.