NOVEMBER 2018
Highlights
The FTC continued its hearings on Competition and Consumer Protection in the 21st Century with new sessions focusing on emerging issues stemming from technology and innovation. Panelists at recent sessions discussed topics that increasingly affect the FTC’s work, such as innovation and intellectual property policy; privacy, Big Data, and competition; vertical merger analysis; and competition and consumer protection issues associated with the use of algorithms, artificial intelligence, and predictive analytics in business decisions and conduct. Upcoming hearings, to be held at the FTC’s Constitution Center facilities in Washington, DC, include data security (December 11 and 12) and consumer privacy (February 12 and 13). Click the link above for videos, transcripts, and other materials.
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Consumer Protection and Privacy
MoneyGram International, Inc. has agreed to pay $125 million to settle allegations that the company failed to take steps required under a 2009 FTC consent order to crack down on fraud-induced money transfers. The 2009 order resolved FTC charges that MoneyGram ignored warnings that fraudulent telemarketers and con artists based in Canada and the U.S. used MoneyGram (often in complicity with MoneyGram agents based in Canada) to trick consumers into wiring millions of dollars within the United States and to Canada. The $125 million payment is part of a settlement resolving allegations that MoneyGram also violated a separate agreement with the Department of Justice. In addition to the monetary payment, MoneyGram has agreed to an expanded and modified order that will supersede the 2009 order and apply to money transfers worldwide. It requires, among other things, that the company block the money transfers of known fraudsters and provide refunds to fraud victims in circumstances in which its agents fail to comply with applicable policies and procedures. In addition, the modified order includes enhanced due diligence, investigative, and disciplinary requirements.
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At the FTC’s request, a federal district court in Maryland issued an order temporarily shutting down the largest overseas real estate investment scam the FTC has ever targeted. According to the FTC, the scam was established by Andris Pukke, who was previously sued by the FTC for his role in a scheme selling financially strapped consumers debt management plans while pretending to be a non-profit credit counseling organization. Pukke served a prison sentence for obstruction of justice in connection with the earlier matter, and conducted the Sanctuary Belize scheme while in prison. The alleged scheme took in more than $100 million, marketing lots in what supposedly would become a luxury development in Central America known by several names, including Sanctuary Belize, Sanctuary Bay, and The Reserve. According to the FTC, the defendants duped consumers into buying Sanctuary Belize lots by falsely promising that the development would include luxury amenities and be completed soon, and that the value of the lots would rapidly appreciate.
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The FTC settled charges against defendants operating a government imposter scam that falsely implied that their websites were affiliated with U.S. Citizenship and Immigration Services. The defendants allegedly used this deception to sell immigration form preparation services to consumers, many of whom were attempting to reach the government site to renew their green cards or apply for naturalization. The settlement requires defendants to pay $2.2 million to compensate consumers.
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Defendants have settled charges of deceptively advertising that “amniotic stem cell therapy” can treat serious diseases, including Parkinson’s disease, autism, macular degeneration, cerebral palsy, multiple sclerosis, and heart attacks. The settlement imposes a partially suspended $3.31 million judgment and requires the defendants to notify current and former patients about the order within 30 days.
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Competition
The FTC has held that 1-800 Contacts, the nation’s largest online retailer of contact lenses, unlawfully entered into a web of anticompetitive agreements with fourteen rival sellers of contact lenses. The Commission ruled that the agreements constitute unfair methods of competition, in violation of Section 5 of the FTC Act. The agreements prevent online contact lens retailers from bidding for search engine result ads that would inform consumers that identical products are available at lower prices. The Commission’s Order requires 1-800 Contacts to cease and desist from enforcing the unlawful provisions in its existing agreements and from entering into similar agreements in the future. It prohibits 1-800 Contacts from agreeing with other contact lens retailers to restrict search advertising or to limit participation in search advertising auctions. The Commission’s Opinion upholds Chief Administrative Law Judge D. Michael Chappell’s October 2017 Initial Decision. The Commission vote approving the Opinion and Final Order was 3-1-1, with Commissioner Noah Joshua Phillips dissenting and Commissioner Christine S. Wilson not participating. Commissioner Rebecca Kelly Slaughter issued a concurring statement.
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Industrial gas suppliers Praxair, Inc. and Linde AG agreed to divest assets in nine industrial gases product markets in numerous geographic markets in the United States, as part of a settlement that resolves charges that their proposed $80 billion merger likely would be anticompetitive. The Commission voted 4-1 to issue the complaint and accept the proposed consent order for public comment; Commissioner Rohit Chopra issued a dissenting statement. FTC staff and the staff of antitrust agencies in Argentina, Brazil, Canada, Chile, China, Colombia, the European Union, India, Korea, and Mexico worked cooperatively to analyze the proposed transaction and potential remedies.
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Antitrust agency heads from the United States, Canada, and Mexico met in Mexico City to discuss their ongoing work to ensure consistent and effective antitrust enforcement and increased cooperation among the three nations. The meeting included FTC Chairman Joseph J. Simons, Assistant Attorney General Makan Delrahim of the U.S. Department of Justice Antitrust Division, Canadian Acting Commissioner of Competition Matthew Boswell, and President Alejandra Palacios of the Mexican Federal Economic Competition Commission.
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Marathon Petroleum Corp. agreed to divest retail fuel assets in five local markets in New York State to settle charges that its proposed acquisition of Express Mart would harm competition for both retail gasoline and retail diesel in those markets. Further details about the consent agreement, which includes an asset maintenance order and allows the FTC to appoint a monitor trustee, are set forth in the analysis to aid public comment.
Casino operators Penn National Gaming, Inc. and Pinnacle Entertainment, Inc. agreed to divest casino-related assets to resolve charges that Penn’s proposed $2.8 billion acquisition of Pinnacle likely would harm competition for casino services in metropolitan St. Louis, Missouri; Kansas City, Missouri; and Cincinnati, Ohio.
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In Other News
FTC staff called for a balanced approach to consumer privacy in a comment submitted to the Department of Commerce’s National Telecommunications and Information Administration (NTIA), based on the agency’s extensive experience in protecting privacy and fostering innovation. This experience includes bringing hundreds of cases protecting the privacy and security of consumer information and engaging in consumer and business education and policy development. The staff comment reiterates the agency’s longstanding call for data security and breach notification legislation, and notes that both Congress and the Administration are considering federal privacy legislation, and that the Commission strongly supports those efforts. It states further that the Commission should continue to be the primary enforcer of laws related to information flows in the marketplace, whether under the existing or a new privacy and security framework.
The FTC, the National Association of State Charities Officials, and state charities regulators across the country participated in the first annual International Charity Fraud Awareness Week (ICFAW) last month. ICFAW is a coordinated international campaign to help charities and consumers avoid charity fraud and promote wise giving. International participants include the Charities Commission for England & Wales, as well as the Australian Charities and Not-for-profits Commission, the Charity Commission for Northern Ireland, the New Zealand Charities Service, and the Office of the Scottish Regulator. As part of this initiative, the FTC released a new video, “Make Your Donations Count,” that provides tips about charitable donations and directs people to visit FTC.gov/Charity for more information
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The FTC is making the millions of consumer complaints it receives more accessible by releasing its aggregated consumer complaint data quarterly in a new interactive online format. Until now, the FTC has released aggregated consumer complaint data collected through our Consumer Sentinel Network on an annual basis.
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A new report by the FTC details the agency’s comprehensive efforts to protect older consumers from fraud, identity theft, and other problems in the marketplace. The report, Protecting Older Consumers 2017-2018: A Report of the Federal Trade Commission, outlines the FTC’s research, law enforcement, and education efforts aimed at protecting older Americans. It spotlights enforcement actions against cross-border frauds, such as tech support and sweepstakes scams that affect older consumers. It notes the FTC’s collaboration (along with the Department of Justice) with the International Mass Marketing Fraud Working Group, which has been pivotal in enforcement actions against entities that have allegedly defrauded millions of elderly consumers out of hundreds of millions of dollars.
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As part of its efforts to address evolving privacy and data security challenges, the FTC announced a call for presentations for its fourth annual PrivacyCon, to be held on June 27, 2019. PrivacyCon 2019 aims to bring together a diverse group of stakeholders, including researchers, academics, industry representatives, consumer advocates, and government regulators, to discuss the latest research and trends related to consumer privacy and data security.
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The econsumer.gov consumer education video on reporting online international scams to econsumer.gov is now available in Japanese. The video is also available in English,French, Korean, Polish (subtitled), Spanish, and Turkish (subtitled). Help share the video on your agency website and social media channels to ensure it reaches as many consumers as possible. You can also incorporate the video into your consumer outreach, and make the video your own by incorporating your agency’s logo. To learn how your organization can participate in and promote this project, please contact Hui Ling Goh of the FTC at hgoh@ftc.gov.
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