The FTC celebrates the Valentine’s Day holiday this week by providing warnings to consumers about online romance scams.  Additionally, this week’s updates include the FTC’s warnings to artificial intelligence companies regarding clauses in terms of services, a new tool to combat impersonation scams, and a judgment providing monetary relief for small businesses harmed by cash advance companies. All this, and more, after the jump.

Tuesday, February 13, 2024

Data Security; Consumer Privacy

  • The FTC reports that it received 64,003 reports of romance scams in 2023.  The reported losses stemming from the scams totals around $1.14 billion, with median losses per person of $2,000.  In order to mitigate potential injuries inflicted by romance scammers, the FTC suggests never sending money, crypto, gift cards, bank or live transfers to online suitors.  Further, the FTC recommends reporting suspicions about romance scams directly to the agency via its online portal.

Big Data; Data Security; Privacy

  • The FTC warned AI companies that it will continue to bring actions to combat unfair or deceptive data mining practices. As consumer data continues to rise in value, AI companies may feel inclined to adapt their privacy policies to increase the flow of user data to fuel their AI products.  The FTC reminds AI companies that “it may be unfair or deceptive” to adopt more permissive data practices through surreptitious means, and pointed to its order against Gateway Learning Corporation, known for Hooked on Phonics, in which it charged the company with violating the FTC Act for sharing consumer data with third parties without notifying consumers or getting their consent.

Thursday, February 15, 2024

Data Security; Health Privacy; Technology

  • The FTC announced the publication of a Final Rule aimed at combatting scammers who impersonate governmental agencies and companies.  In creating the rule, the FTC incorporated the perspectives of consumers who have been substantially injured by impersonators, and also heard from the governmental agencies and businesses whose names have been misused.  The Rule outlaws the deceptive use of government seals or business logos; spoofing government or business email or web addresses; and the bogus use of “.gov” email addresses.  The FTC is continuing to seek consumer feedback on refining its Rule.

Consumer Privacy; Data Security

  • The FTC announced that a federal court entered a final judgment, requiring merchant cash advance company owner Jonathan Braun to pay $20.3 million in monetary relief and civil penalties for misleading small businesses and unlawfully seizing their assets. The judgment follows a lawsuit filed in 2020 by the FTC against Braun and his company RCG Advances (formerly known as Richmond Capital Group), along with four other defendants, for deceiving small business owners about how much money they would get, and how much they would have to pay back.  In order to secure repayment, Braun used unfair collection practices, and also threatened physical violence.  The court determined that Braun exercised an egregious disregard for how his actions would impact his small business clients, and entered a judgment of $3,421,067 to redress the harm that Braun’s misconduct caused to small businesses. In addition, the court imposed $16,956,000 in civil penalties for Braun’s violations of law.