ARTICLE
19 March 2024

FTC Updates (February 26 – March 11, 2024)

CM
Crowell & Moring LLP

Contributor

Our founders aspired to create a different kind of law firm when they launched Crowell & Moring in 1979. From those bold beginnings, our mission has been to provide our clients with the best services of any law firm in the world through a spirit of trust, respect, cooperation, collaboration, and a commitment to giving back to the communities around us.
As we move forward our clocks to adjust for daylight saving time and enter the season of spring, the FTC is keeping quite busy.
United States Consumer Protection
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As we move forward our clocks to adjust for daylight saving time and enter the season of spring, the FTC is keeping quite busy. The FTC held multiple events, proposed various settlement orders, and issued new rules covering a host of industries and topical areas, including healthcare, privacy, and telemarketing. Most importantly, the FTC welcomed Commissioners Ferguson and Holyoak.

Monday, February 26, 2024

Bureau of Consumer Protection: Online Advertising and Marketing

  • The FTC announced that Kevin Lipsitz, an officer of the company SuperGoodDeals.com, will be banned from selling personal protective equipment (PPE) and will be required to pay over $145,000 to the FTC. The Commission first sued Lipsitz and SuperGoodDeals.com in July 2020, after the company allegedly sought to capitalize on the soaring demand for PPE from consumers worried about being exposed to COVID-19. According to the FTC, SuperGoodDeals' website claimed PPE was "in stock," and touted "Pay Today, Ships Tomorrow", however, in numerous instances there were no masks in stock and it took weeks to ship the PPE merchandise customers ordered. The proposed order contains a total monetary judgment of over $1,088,000, which is partially suspended based on the defendants' inability to pay the full amount.

Tuesday, February 27, 2024

Bureau of Consumer Protection: Online Advertising and Marketing; Artificial Intelligence

  • The FTC announced a settlement with various individuals and companies including, Automators AI, Empire Ecommerce, and Onyx Distribution,resolving allegations that the defendants lured consumers into investing millions of dollars in online stores supposedly powered by artificial intelligence with the promise of providing consumers passive investment income. The FTC's complaint alleged that a large majority of the defendants' clients did not make the promised earnings or recoup their sizable investments. In addition to injunctive relief, the settlement order contains a monetary judgment of over $21,765,000, which is partially suspended based on the defendants' inability to pay the full amount.

Wednesday, February 28, 2024

Bureau of Consumer Protection: Credit and Finance

  • The FTC announced that it is launching a claims process for small businesses harmed by payment processing company First American Payment System. According to its 2022 complaint, First American harmed merchants by (1) deceiving them about pricing and savings with hidden terms, (2) imposing surprise cancellation fees, (3) using an online enrollment system that concealed key contract terms, and (4) making "zombie" withdrawals from the merchants' bank accounts even after the merchant had withdrawn consent to access the account. Under a proposed federal court order, the defendants will be required to return $4.9 million to harmed businesses and cease any potentially deceptive practices.

Thursday, February 29, 2024

Bureau of Consumer Protection: Right-to-Repair

  • The FTC announced that, Christine M. Todaro, an attorney in the FTC's Bureau of Consumer Protection, appeared on behalf of the FTC before the Colorado Attorney General's Committee on Business Affairs and Labor to show the Commission's support of proposed legislation (HB 24-1121), which would expand Colorado's right-to-repair laws to digital electronic equipment. More specifically, the proposed law would require manufacturers to provide manuals, software and other tools to facilitate independent repairs of certain "digital electronic equipment," meaning hardware manufactured or sold for the first time in Colorado after July 1, 2015 and cell phones made or sold in the state after July 2021. The proposed legislation also prohibits manufacturers from engaging in a repair restriction practice known as "parts pairing", which is when a manufacturer requires owners and independent repair providers to obtain the manufacturer's approval before replacement parts can be fully integrated into a device. Other FTC officials have expressed support for other proposed state legislation regarding parts pairing. For instance, Samuel Levine, Director of the FTC's Bureau of Consumer Protection and Hannah Garden-Monheit, Director of the FTC's Office of Policy and Planning, issued a letter supporting proposed right-to-repair legislation in Oregon.

Tuesday, March 5, 2024

Bureau of Competition & Bureau of Consumer Protection: Healthcare; Private Equity

  • The FTC held a virtual workshop, Private Capital, Public Impact: An FTC Workshop on Private Equity in Health Care on March 5, 2024. The workshop focused on private equity investment in health care markets. FTC Chair Khan noted that the FTC is focused on "private equity acquisitions of healthcare service providers such as outpatient clinics, nursing homes, and physician practices" based on consumer concerns with the "growing financialization in the healthcare industry [that] can force medical professionals to subordinate their medical judgment to corporate decision-makers' profit motives at the expense of patient health." During the workshop, the FTC announced a joint public inquiry into corporate profiteering in healthcare alongside the Department of Justice and Department of Health & Human Services (described below). The two panels wereThe Human Impact of Private Equity in Health CareandBuyouts in Health Care: Who Wins, Who Loses?Various FTC, Department of Justice, and Department of Health & Human Services professionals spoke, as well as Rhode Island Attorney General Neronha. If interested, you can access a transcript of the workshop and a video recording.
  • The FTC, Department of Justice Antitrust Division, and the Department of Health and Human Services announced their joint public inquiry into private equity and corporate control in the healthcare industry. The agencies published a Request For Information (RFI) seeking public commentary on "deals conducted by health systems, private payers, private equity funds, and other alternative asset managers that involved health care providers, facilities, or ancillary products or services." Any market participants are encouraged to share comments. The RFI provides a sixty-day comment period, meaning all comments must be submitted by May 6, 2024. The public can submit comments to this inquiry at regulations.gov. The FTC made clear that it would scrutinize private equity transactions related to the healthcare industry.

Wednesday, March 6, 2024

Bureau of Consumer Protection: Artificial Intelligence; Privacy and Security

  • The FTC hosted its eighth annual PrivacyCon event, which examined trends in consumer privacy and data security via topics such as the economics of privacy, health privacy issues, children's and teen's privacy, data surveillance, deepfakes, privacy-enhancing technologies, and artificial intelligence. The goal of the conference is to bring legal scholars, experts, and researchers to discuss privacy policy with the FTC. FTC Chair Khan stated "establishing clear rules of the road on data and privacy are more essential than ever." If interested, you can access a transcript of the workshop and a video recording.

Thursday, March 7, 2024

Bureau of Competition: Mergers; Energy; Natural Gas

  • The FTC is reviewing XCL Resources Holdings, LLC's (XCL), petition for prior approval to acquire Altamont Energy, LLC, an oil and gas operator of Utah. The petition was required under the FTC's 2022 final order regarding EnCap Energy Capital Fund XI, L.P.'s (Encap), the parent company of XCL, $1.4 billion acquisition of EP Energy Corp. The final order required Encap to seek prior approval before acquiring another producer of crude oil in certain Utah counties. XCL's petition was published in the Federal Register and the public has thirty days to submit comments on the petition.

Bureau of Consumer Protection: Telemarketing; Robocalls

  • The FTC announced its final rule extending telemarketing fraud protections to business-to-business calls and updating the rule's recordkeeping requirements based on technological developments. This final rule was proposed in April 2022. Further, the FTC announced a proposed rulemaking allowing the FTC to address tech-support scams. The rules provide new protections from telemarketing scams and fraud, including scams against businesses and scams employing support call related deceptions. The FTC voted 3-0 to approve each of the rules. These FTC actions are based on the agency's review of the Telemarketing Sales Rule, allowing the FTC to address the modernization of telemarketing scams and advances in the technology used to engage in such scams.

Bureau of Consumer Protection: Protection of Elders

  • The FTC will host an online meeting of the Scams Against Older Adults Advisory Group on April 2, 2024 at 2 PM EST. The Advisory Group includes four committees addressing the following areas: 1) expanding consumer education and outreach efforts; 2) improving industry training on scam prevention; 3) identifying innovative or high-tech methods to detect and stop scams; and 4) reviewing research on effective consumer messaging to prevent scams. The Advisory Group was formed from the Stop Senior Scams Act, passed by Congress in 2022, and includes representatives from government agencies, advocacy groups, and private industry.

Friday, March 8, 2024

Agency Announcement

  • The FTC formally welcomed Commissioner Andrew N. Ferguson and Commissioner Melissa Holyoak. Commissioners Ferguson and Holyoak were nominated on July 11, 2023 by President Biden. Commissioner Holyoak's term will end on September 25, 2025. Commissioner Ferguson's term will end on September 25, 2030. The FTC Chair Khan congratulated both commissioners on their confirmation, as well as Commissioner Slaughter on her confirmation to a second term. Commissioner Slaughter's second term will end on September 25, 2029.

Bureau of Consumer Protection: Junk Fees

  • Samuel Levine, the Director of the Bureau of Consumer Protection, sent a letter to the Minnesota House of Representatives and a letter to the Illinois Senate and General Assembly regarding junk fee legislation. Director Levine's letters provide the state legislatures with information regarding the FTC's concurrent efforts in regards to junk fees. The letters define junk fees as "unfair or deceptive fees that are charged for goods or services that have little or no added value to the consumer, including goods or services that consumers would reasonably assume to be included within the overall advertised price." The letter also addressed the FTC's October 2023 notice of proposed rulemaking seeking public comment on a proposed rule to ban hidden fees, prohibit fee misrepresentation, and require disclosure and/or notice regarding fees.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
19 March 2024

FTC Updates (February 26 – March 11, 2024)

United States Consumer Protection

Contributor

Our founders aspired to create a different kind of law firm when they launched Crowell & Moring in 1979. From those bold beginnings, our mission has been to provide our clients with the best services of any law firm in the world through a spirit of trust, respect, cooperation, collaboration, and a commitment to giving back to the communities around us.
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