The FTC is taking no breaks this summer with an active first half of June. The FTC released two annual reports regarding refunds and consumer finance and credit protection activity as well as initiating a request for public information on collaboration efforts with State Attorneys General. These stories and more regarding specific matter updates, ranging from false advertising to data privacy, after the jump.

Monday, June 5, 2023

Bureau of Competition: Office of Policy, Hospitals and Clinics

  • FTC sent a comment letter to North Carolina Representative Larry Potts and the Members of the House Health Committee raising concerns about North Carolina Senate Bill 743 ("Bill"). The Bill includes a provision that provides UNC Health a defense from antitrust enforcement for potentially unlawful mergers or other coordinated activities such as information sharing and joint contract negotiations. The Bill was unanimously passed by the North Carolina Senate on May 1, 2023 and is pending before the North Carolina House. The FTC has previously raised concerns about similar legislation in other states that would have provided antitrust defenses to public health entities. The FTC argues that UNC Health does not need state protection to engage in beneficial or collaborative activities because antitrust laws permit competitively neutral collaborations among healthcare providers for the benefit of patients. The FTC remains concerned about state legislative protections exempting hospital consolidation that may harm patients and workers.

Bureau of Consumer Protection: Advertising and Marketing, Health Claims, Coronavirus, Online Advertising

  • The FTC announced a recent permanent injunction order against Frank Romero, d/b/a Trend Deploy and/or Uvenux, for making false promises to consumers regarding personal protective products related to the COVID-19 pandemic. The FTC filed the complaint in June of 2021 against Romero for his deceptive and unfair business conduct regarding the availability, speed of delivery, and quality of products, namely N95 facemasks. Based on these allegations by the FTC, the United States District Court for the Middle District of Florida issued the order permanently banning Romero from offering for sale or selling any protective goods or services, and granting the FTC's motion for summary judgment. The court found Romero violated the Mail Order rule, and the FTC Act, including with regard to the COVID-19 Consumer Protection Act, because Romero lacked a reasonable basis for various business claims made in advertisements and to consumers. Further, the order included two monetary judgments against Romero totaling almost one million dollars.

Bureau of Consumer Protection: Advertising and Marketing, Made in USA Claims

  • The FTC sent ClaroLux, Inc. a closing letter informing the company that the FTC would not pursue further investigation regarding ClaroLux's "Made in the USA" advertising claims due to the company's remedial actions. The FTC was concerned that ClaroLux's advertisements for its outdoor lighting products were overstated because component parts incorporated imported materials, such as the LED components. The FTC perceives unqualified U.S.-origin claims to suggest to consumers that the products advertised are all, or virtually all, made in the United States. 16 C.F.R. § 323. The Commission has explained that, unless marketers either specify which products are covered or directly link claims to particular products, consumers generally interpret U.S.-origin claims in marketing materials to cover the entire product advertised. ClaroLux implemented a remedial action plan by 1) removing unqualified claims, 2) introducing qualified claims, 3) informing dealers of the marketing changes, 4) training employees, and 5) implementing an approval process for packaging. The FTC cautioned that its decision to close the matter should not be construed as a determination that no FTC violation occurred in ClaroLux's advertisements.

Tuesday, June 6, 2023

Bureau of Consumer Protection: Annual Reports, Refunds

  • FTC issued its Annual Report on Refunds to consumers in 2022, finding that its law enforcement actions resulted in more than $392 million in refunds to consumers. Further, 1.9 million consumers benefitted from FTC refund payments. The report provides a breakdown of the total amount refunded by state and matter. The FTC highlighted that ninety percent of the $392 million of the refunded amounts occurred from cases resolved prior to the Supreme Court's 2021 ruling in AMG Capital Management, LLC v. FTC and stated that in the four years preceding the case the FTC returned more than $11 billion to consumers.

Wednesday, June 7, 2023

Bureau of Consumer Protection: Annual Reports, Credit and Finance

  • The FTC provided its annual report to the Consumer Financial Protection Bureau ("CFPB") on enforcement and related activities regarding the Truth in Lending Act, Consumer Leasing Act, and Electronic Fund Transfer Act. The report focused on specific areas, including 1) automobile purchase and financing, 2) payday lending, 3) credit repair and debt relief, and 4) electronic fund transfers. Further, the report highlighted ongoing rulemakings, including 1) a rule to ban junk fees and bait-and-switch advertising and 2) a rule to limit junk fees.

Bureau of Consumer Protection: Request for Public Information, State Attorneys General

  • The FTC announced it is seeking public comment on collaboration efforts with State Attorneys General. The agency seeks suggestions, input, and ideas on how to work more effectively alongside State Attorneys General to educate consumers about and protect them from fraud. The request for public information ("RPI") was issued at the direction of the FTC Collaboration Act of 2021 ("Act"), which was signed into law by President Biden in October of 2022. The Act required the FTC to consult directly with interested stakeholders and provide opportunity for public comment. The RPI has three broad topic areas that include fourteen specific questions. The three topic areas are 1) the roles and responsibilities of the FTC and State Attorneys General that advance collaboration, 2) how resources should be dedicated to advance collaboration, and 3) accountability mechanisms that should be implemented to advance collaboration. The vote approving the RPI and publication in the Federal Register was 3-0 and Chair Khan issued a statement. The public will have 60 days to comment, and the period will close on August 14, 2023. The RPI has been published to the Federal Register and public comments can be submitted (88 FR 38510).

Tuesday, June 13, 2023

Bureau of Competition: Hospitals and Clinics

  • The FTC recently applauded the state of Maine for enacting LD 97, "An Act to Repeal the Hospital and Health Care Provider Cooperation Act." Elizabeth Wilkins, Director of the FTC Office of Policy and Planning, commented in a statement that "[w]e are heartened to learn that Maine has repealed its Certificate of Public Advantage law, and that the FTC's COPA policy paper was influential in this outcome." She also noted that the Commission welcomes "the opportunity to work collaboratively with any state legislatures, health departments, or stakeholders who may be considering enacting or repealing COPA laws."

Bureau of Consumer Protection: Online Advertising and Marketing

  • A Florida-based federal court has granted the FTC's request for a temporary restraining order against the operators of an opportunity and real estate investment training scheme known as Ganadores Online and Ganadores Inversiones Bienes Raíces. According to the allegations in the Commission's complaint, the Ganadores scheme targeted Spanish-speaking consumers and enticed these consumers to spend thousands of dollars on money-making training, mentoring, and business opportunities by using unsubstantiated earnings claims and other misrepresentations. The temporary restraining order, among other requirements, prevents the defendants from making baseless marketing claims and from interfering with the consumer's ability to review Ganadores and its products. Samuel Levine, Director of the FTC's Bureau of Consumer Protection, commented that the Ganadores scheme "took millions of dollars from Spanish-speaking consumers seeking to better their lives and provide for their families" and that it is time to hold the operators of the scheme accountable for the "significant injury" they have caused.

Wednesday, June 14, 2023

Bureau of Consumer Protection: Debt Relief and Marketing

  • The Commission has announced that more than 37,000 consumers harmed in a student loan debt relief scam will be receiving checks totaling over $3.3 million. According to the allegations in the Commission's November 2019 complaint, Arete Financial Group and other companies, under the guise of being affiliated with U.S. Department of Education, took consumers' money under false promises of eliminating or reducing consumers' student loan balances. The FTC recommended that recipients should contact the refund administrator or the FTC's Frequently Asked Question page with any questions.

Thursday, June 15, 2023

Bureau of Consumer Protection: Health Privacy and Data Security

  • The FTC announced a proposed order in its privacy and security of genetic information action against 1Health.io Inc., also known as Vitagene Inc. In its complaint, the Commission alleged that 1Health, a seller of DNA health and test kits, deceived consumers about its privacy and security practices. For example, the Commission alleged that 1Health made misrepresentations regarding how it stored consumer information along with DNA results and how it would destroy DNA saliva samples after being analyzed. Under the proposed order, 1Health would pay $75,00 for consumer refunds and would be required to implement a number of security measures, including a prohibition from sharing health data with third parties—including information provided by consumers before and after its 2020 privacy policy change—without obtaining consumers' affirmative express consent. The Commission voted 3-0 to issue the proposed administrative complaint and to accept the consent agreement with the company.

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