18 April 2024

FTC Updates (March 18 – 29, 2024)

Crowell & Moring LLP


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As we close out the last week of March, the FTC updates include highlights from key findings from the International Competition Network on building tech capacity in law enforcement...
United States Consumer Protection
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As we close out the last week of March, the FTC updates include highlights from key findings from the International Competition Network on building tech capacity in law enforcement, banning the use of algorithms for price-fixing in the hotel industry, protecting child privacy data from software companies, and seeking information on the contracting practices of large health care organizations and drug wholesalers. All this, and more, after the jump.

March 18, 2024

Bureau of Consumer Protection: Deceptive/Misleading Conduct, Finance

  • Biz2Credit and Womply have agreed to settle after the FTC took action against the companies for making false promises to small businesses seeking to take part in the Paycheck Protection Program (PPP) during the COVID-19 pandemic. Biz2Credit will pay $33 million and Womply will pay $26 million to the FTC for small businesses that were deceived when attempting to secure loans during COVID-19. The FTC alleged that Biz2Credit and its subsidiary deceptively advertised that consumers' emergency PPP loan applications would be processed between 10-14 days, although it actually took over a month to process. Since the loans provided through the PPP were on a first-come, first-served basis, some Biz2Credit consumers were left without any funds when the government stopped accepting new PPP loan applications. The FTC further alleged that Biz2Credit ignored consumers' demands to withdraw their loan applications, which delayed and sometimes prevented consumers from obtaining PPP funds elsewhere. In addition to the monetary judgment, the settlement also prohibits Biz2Credit from 1) misrepresenting key information about loan applications or material facts about a government benefit, and 2) failing to allow consumers to withdraw their applications. The FTC alleged that Womply and its CEO advertised that small businesses could successfully get PPP funding when applying through Womply, but that more than 60% of Womply applications never resulted in funding. The complaint further alleges that Womply advertised that their automatic processes would help small business owners secure PPP loans fast, but that this was not the reality due to issues that slowed down their applications. In addition to the monetary judgment, the settlement also prohibits Womply and its CEO from making any false, deceptive, or unsubstantiated claims about financial services or products.

March 21, 2024

Bureau of Consumer Protection: Deceptive/Misleading Conduct, Consumer Refunds

  • The FTC and the Utah Division of Consumer Protection sued Response Marketing Group, LLC in November 2019, alleging that the company, as well as its affiliates Nudge, LLC and BuyPD, LLC, and real estate celebrities Scott Yancey and Dean R. Graziosi used false promises to sell consumers a real estate investment training program. The company and its principals agreed to a settlement that requires them to pay $15 million in refunds and permanently bans them from selling "wealth creation" products anywhere in the country. Yancey and Gracey agreed to a settlement that requires the payment of an additional $1.7 million in refunds.

Bureau of Consumer Protection: Advertising and Marketing

  • On October 11, 2023, the FTC announced a proposed rule to prohibit Unfair or Deceptive Fees ("Junk Fees") that would ban businesses from adding hidden or bonus fees and encourage transparency between businesses and consumers. The FTC will hold a virtual informal hearing on April 24, 2024 on its proposed rule on junk fees so that interested organizations will have the opportunity to provide oral statements, and 17 commenters have requested to present their positions.

March 22, 2024

Consumer Protection: Deceptive/Misleading Conduct

  • In honor of Fraud Prevention Month, the FTC is partnering with the Canada Competition Bureau, the partnership's current chair, U.S. Postal Inspection Service, U.S. Secret Service, Canadian Anti-Fraud Centre, Canada Post, Canada Revenue Agency, and several local police departments in Quebec to engage in outreach aimed at combatting fraud. The partnership will share intelligence and materials, with the goal of preventing consumers from being scammed.

March 26, 2024

Consumer Protection: Office of International Affairs

  • On March 26, 2024, the FTC and other member agencies of the International Competition Network (ICN) jointly issued a statement about how regulatory agencies can increase their tech capacity to keep pace with the increasing use of technology across industries. The joint statement emerged from the inaugural Technology Forum that convened March 25-26 in Washington DC. Separately, a number of U.S. federal and state agencies, including the FTC, also released agency-specific action statements on tech capacity. The FTC also released a new staff report that details the evolution of the agency's work to expand its technological expertise and the agency's Office of Technology, created in early 2023.

March 28, 2024

Bureau of Competition: Unfair Methods of Competition

  • The FTC joined the Justice Department's (DOJ) Antitrust Division in filing a statement of interest with the District of New Jersey in the case of Cornish-Adebiyi v. Caesars Entertainment, which bans hotels from using algorithms to collude on room pricing and from using algorithms to engage in practices that would be illegal if done by a real person. The statement highlights that first, plaintiffs do not need to identify direct communications between competitors to allege an agreement under Section 1 of the Sherman Act, and second, an agreement to use shared pricing recommendations, list prices or pricing algorithms is still unlawful even when the co-conspirators retain some pricing discretion. The FTC and the DOJ have a strong interest in protecting consumers from algorithmic collusion, and their statement provides guidance to any firm that uses an algorithm to set prices.

March 29, 2024

Bureau of Consumer Protection: Online Privacy, Privacy and Cybersecurity

  • In a March 29th decision, the FTC denied internet and software companies from using facial recognition technologies as a means of obtaining parental consent. The 2023 application, submitted by the Entertainment Software Rating Board, Yoti, and SuperAwesome requested approval for the use of "Privacy-Protective Facial Age Estimation" technology, which analyzes the geometry of a user's face to confirm that they are an adult. Under COPPA, online sites and services directed to children under 13, and those that have actual knowledge they are collecting personal information from children under 13, must obtain parental consent before collecting, using, or disclosing personal information from a child. The Commission voted 4-0 to deny the application without prejudice to the applicants filing in the future, when the Commission anticipates that additional information will be available.

Bureau of Competition: Prescription Drugs, Healthcare

  • The FTC and the U.S. Department of Health and Human Services (HHS) are extending the deadline for the public to comment to May 30, 2024 on a joint Request for Information (RFI) that seeks to understand how the practices of group purchasing organizations (GPOs) and drug wholesalers may contribute to generic drug shortages. The RFI also seeks public comment on the contracting practices and market concentrations of large health care GPOs and drug wholesalers.

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