Author: bacree

Following Public Service Recognition Week, the Federal Trade Commission released its Fiscal Year 2023 Annual Report outlining the agency’s work to protect consumers and promote competition.

“The FTC is focused on ensuring that American consumers, workers, and entrepreneurs can enjoy honest markets and the economic liberty that fair and free competition provides,” said FTC Chair Lina M. Khan. “As detailed in this report, the work of our talented and dedicated staff in FY 2023 made Americans’ lives better in meaningful and material ways—from safeguarding people’s access to affordable healthcare to protecting people’s sensitive data from unchecked surveillance.”

The report lays out the Commission’s work to vigorously enforce the nation’s antitrust and consumer protection laws in a constantly evolving modern economy. As artificial intelligence and algorithmic decision-making tools proliferated, the FTC’s enforcement and policy efforts have been forward-looking—enabling the agency to stay on the cutting edge as these technologies develop.

In FY 2023, the FTC made programmatic strides to protect Americans’—and especially children’s—privacy; hold companies that defraud the public accountable; stop companies from hiking prices with needless junk fees; shut down subscription tricks and traps; make clear there is no AI exemption for the laws on the books; and ensure that domestic manufacturers, independent repairers, and other small businesses can compete on a level playing field. As part of its work to protect consumers, the FTC in FY 2023:

• Sued Amazon for engaging in a years-long effort to enroll consumers into its Prime program without their consent while knowingly making it difficult for consumers to cancel their Prime subscriptions;
• Announced the largest telemarketing sweep in U.S. history, in partnership with more than 100 federal and state law enforcers, targeting operations responsible for billions of illegal robocalls to Americans;
• Filed a lawsuit against owners of a money-making scheme that claimed to use artificial intelligence to boost earnings for consumers’ e-commerce storefronts; and  
• Took action to protect Americans’ privacy by bringing several cases. They included actions against Amazon and Microsoft for violating the Children’s Online Privacy Protection Act, against BetterHelp for deceiving users about their health data sharing practices, against the maker of the Premom app for violating the Health Breach Notification Rule, and against Ring for failing to stop employees from viewing customer videos and hackers from taking control of consumers’ accounts, cameras, and videos.

The FTC also continued to deploy its full toolkit to block anticompetitive mergers, halt anticompetitive practices to monopolize markets, and prevent businesses from using unfair tactics to gain an advantage. In critical sectors across the economy, the agency brought important and justified, yet challenging, theories and cases and pursued bold remedies to fully restore and prevent competitive harms. In addition to the FTC’s enforcement work, the agency worked to update U.S. federal enforcers’ merger policy to reflect market realities and help courts develop and clarify the law through amicus briefs. This work included:

• Taking action, in partnership with 17 state attorneys general, against Amazon by alleging the company illegally maintained its monopoly power and raised prices for sellers and shoppers;
• Filing a lawsuit against U.S. Anesthesia Partners and private equity firm Welsh Carson for engaging in a multi-year scheme to monopolize anesthesiology practices in Texas, driving up the prices of anesthesia services for Texas patients to increase profits; and
• Blocking anticompetitive mergers in sectors across the economy, including the world’s largest health care data provider, IQVIA’s, proposed acquisition of Propel Media, Inc.

Across the agency’s work, the FTC continued to prioritize opening its doors to hear from Americans across the country—including through Open Commission Meetings, comment dockets, public workshops, and listening forums. 

The Federal Trade Commission 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. The Act directs agencies to implement annual inflation adjustments based on a prescribed formula. The new maximum civil penalty amounts became effective once they were published in the Federal Register on January 10.

The maximum civil penalty amount has increased from $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. It has increased from $659 to $680 for violations of Section 10 of the FTC Act.

The maximum civil penalty amount has increased from $1,426,319 to $1,472,546 for violations of Section 814(a) of the Energy Independence and Security Act of 2007. The maximum civil penalty amounts for other law violations within the agency’s jurisdiction are listed in the Federal Register notice. The Commission vote to publish the Federal Register notice amending Commission Rule 1.98 was 3-0

At the request of the Federal Trade Commission, a federal court has temporarily halted the operation of a sprawling business opportunity scheme that has taken in millions of dollars from consumers with bogus promises of huge returns.

The scheme has operated since at least 2018 under a number of names, including “Blueprint to Wealth,” according to the FTC’s complaint. Three individuals — Samuel James Smith, Robert William Shafer and Charles Joseph Garis, Jr. — and a company owned by one of them — Business Revolution Group — are charged in the complaint with operating the scheme.

Blueprint to Wealth targets consumers looking to build their own businesses with a program that offers essentially no value, other than commissions that come from encouraging others to join the scheme, according to the complaint.

“Schemes like this use bogus claims to lure in consumers who are trying to provide for their families, only to leave people’s finances in tatters,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue to track down and stop those who deceive consumers out of their hard-earned money.”

The complaint alleges that consumers were charged at least $3,000 and as much as $21,000, plus additional hundreds in “administrative fees,” for membership in the scheme, which nominally promises its members turnkey online businesses that would be operated on the members’ behalf.

Advertising and marketing for the businesses is controlled by the scheme’s operators and the businesses exist entirely to sell Blueprint to Wealth memberships, the complaint charges.

The complaint charges that the scheme’s marketing is rife with false claims. One robocall used by the scheme claims to be from a member saying, “I actually make $50,000 each month,” and a scheme website says, among other claims, that consumers could “start earning $3,500 weekly within 3-10 days From Now!” Another website includes videos that claim to be from scheme members who made tens of thousands of dollars in little time.

The complaint charges that Shafer and Garis used robocalls, telemarketing, and social media ads to contact consumers and convince them to join the Blueprint to Wealth scheme. The complaint notes that in one call with a consumer in her seventies, Garis told the consumer that she could “get out of debt quicker” and begin making a profit if she joined Blueprint to Wealth, a recommendation he made while knowing that the consumer was a retiree in need of extra money.

Smith, according to the complaint, acted as the scheme’s administrator, controlling its online headquarters and goods and services that consumers receive with membership in Blueprint to Wealth.

The court’s order temporarily bars the defendants from misrepresenting or assisting others in misrepresenting material facts about any business or money-making opportunity. It also freezes the defendants’ assets until further action by the court. The FTC’s complaint asks the court to shut down the defendants’ scheme permanently and allow the FTC to provide refunds to the consumers harmed by the scheme.

The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the Eastern District of Pennsylvania.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The staff attorneys on this matter are Connell McNulty and Lauren Rivard of the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission is launching a claims process for consumers harmed by Credit Karma’s practice of misrepresenting that consumers were “pre-approved” for credit card offers. According to the FTC, many consumers were denied, costing them time and subjecting them to unnecessary credit checks.

The agency is sending notices to 497,425 consumers who may be eligible for a payment. Consumers can apply if they were offered a pre-approved credit card from Credit Karma but were denied when they applied. Most of the consumers will get an email, but about 4,000 people who don’t have an email address on file will get a notice in the mail. Eligible consumers can file a claim online at www.ftc.gov/CreditKarma.

Consumers who have questions or need help filing a claim can email [email protected] or call 866-848-0871. The deadline to file a claim is March 4, 2024.

In September 2022, the FTC announced an enforcement action against Credit Karma, alleging that the company used claims that consumers were “pre-approved” for a credit card or had “90% odds” of approval to entice them to apply for offers that, in many instances, they did not qualify for. Consumers who applied incurred a hard inquiry on their credit reports, and, if they were denied, may have damaged their credit scores unnecessarily.

Credit Karma paid $3 million to settle the charges, which the FTC will use to pay claims to consumers harmed by the company’s actions. The FTC received roughly thirty complaints involving Credit Karma’s “pre-approved” offers in the five years prior to announcing its action against the company. But within five months of that announcement, the agency received nearly 900 more such complaints. This is consistent with the FTC’s experience that consumer complaints represent the tip of the iceberg compared to the number of consumers harmed.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of refunds in FTC cases. In 2022, Commission actions led to more than $392 million in refunds to consumers across the country.