This week, the FTC announced activity focused on junk fees, companies deceiving and misleading consumers in negative options, and consumer background reporting. These stories and more after the jump.
Wednesday, October 10, 2023
Bureau of Competition: Merger; Energy; Natural Gas
- The Federal Trade Commission ("FTC") finalized a consent order preventing Quantum Energy Partners and EQT Corporation, competitors in the production and sale of natural gas in the largest natural gas-producing region in the United States, from exchanging confidential and competitively sensitive information in a $5.2 billion cash-and-stock acquisition. The proposed acquisition would have resulted in Quantum becoming one of EQT's largest shareholders and receiving a seat on EQT's board of directors, which would have harmed competition in the natural gas and energy industries. The order prohibited Quantum from occupying an EQT board seat, required Quantum to divest its EQT shares, prevented the exchange of anticompetitive information, unwound a separate anticompetitive joint venture between the two entities, and imposed additional restraints to prevent an interlocking directorate arrangement.
Wednesday, October 11, 2023
Bureau of Consumer Protection: Advertising and Marketing; Merchandise & Clothing; Deceptive/Misleading Conduct
- The FTC issued a proposed rule to ban junk fees. The FTC has estimated that junk fees could potentially cost consumers billions of dollars each year in unexpected costs. The proposed rule would (1) prohibit unfair or deceptive practices relating to fees for goods or services; (2) ban businesses from misrepresenting the total costs of goods and services by omitting mandatory fees from advertised prices; (3) and misrepresenting the nature and purpose of fees. The proposed rule would require businesses to include all mandatory fees when telling consumers a price and would allow the FTC to secure refunds for harmed consumers and seek monetary penalties against companies that do not comply with its provisions. The FTC will open the rule for the submission of comments once it is made available on the federal registrar.
- On October 11, 2023, the FTC issued a lifetime ban on negative option marketing against Gopalkrishna Pai, a marketer of online skin cream products, and eight of his companies, , settling a complaint alleging that defendants charged consumers millions of dollars in undisclosed and recurring subscription fees for skin creams. In February 2019, the FTC filed a suit against Pai and his companies, charging them with violating the Restore Online Shoppers' Confidence Act ("ROSCA") through negative option marketing for deceptive online "free-trial" skin cream offers that tricked consumers into enrolling in negative option plans. The settlement included permanently banning defendants in negative option marketing; prohibited Pai and his companies from deceiving consumers about other goods or services they sell or market; required defendants to turn over numerous bank accounts and a retirement account; and required Pai to assign his interest in a promissory note secured by real property to an FTC-appointed liquidator. The total monetary judgment was for $34,081,6073, which was partially suspended due to the defendants' inability to pay the full amount. The defendants in the case were F9 Advertising LLC; Ace Initiative Group LLC; Connected Ad Station LLC; Fastlane Sales LLC; Hyper Marketing Solutions LLC; Media Redefined LLC; Primed Marketing LLC; Responsive Media LLC; and Gopalkrishna Pai
Thursday, October 12, 2023
Bureau of Consumer Protection: Deceptive/Misleading Conduct
- On October 12, 2023, the FTC issued a complaint against Voyager Digital and former executive Stephen Ehrlich, alleging that the company falsely claimed that consumers' deposits were insured by the FDIC, even while the company was facing bankruptcy, resulting in $1.4 billion in consumer loses. The proposed settlement, with Voyager and its affiliates, will permanently ban the companies from offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets. The companies also agreed to a judgment of $1.65 billion, which will be suspended to permit Voyager to return its remaining assets to consumers in the bankruptcy proceedings. Stephen Ehrlich did not agree to a settlement and the FTC's case against him will proceed forward.
Bureau of Consumer Protection: Housing; Fair Credit Reporting Act (FCRA); Privacy and Security Credit Reporting
- The FTC settled a case requiring a credit reporting agency to pay a total of $15 million to settle charges for failing to ensure the accuracy of tenant screening reports by including inaccurate and incomplete eviction records, negatively impacting consumers' ability to obtain housing. The FTC's complaint alleged Trans Union LLC and its subsidiary TURSS failed to follow reasonable procedures to prevent the inclusion of multiple entries for the same eviction case; accurately report the disposition of eviction cases it included in its reports; accurately label the monetary amounts associated with those cases; and prevent the inclusion of sealed eviction records in its background reports. Defendants additionally failed to provide consumers with the source of the third-party vendors who provided Trans Union and TURSS with criminal and eviction records included in its tenant screening reports, making it harder for consumers to correct errors in their background reports. Under the proposed order, Trans Union LLC and TURSS will be required to pay $11 million to compensate consumers and a $4 million civil penalty, which will go to the CFPB's civil penalty fund. In addition to the $15 million judgment, the companies were required to implement six procedures to prevent erroneous housing information in the future and to assist consumers in disputing inaccurate information.
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