FederalTradeCommission

March2008

TheFTCin2008:AForcefor

ConsumersandCompetition
The FTC in 2008:

A Force for 

Consumers and Competition

Federal Trade Commission 

Deborah Platt Majoras, Chairman

Pamela Jones Harbour, Commissioner

Jon Leibowitz, Commissioner

William E. Kovacic, Commissioner

J. Thomas Rosch, Commissioner
The online version of this report contains hyperlinks to news releases, reports, cases, campaigns, and other information referenced in this report. 

The report is available at www.ftc.gov/os/2008/03/ChairmansReport2008.pdf.

Federal Trade Commission Headquarters Building

600 Pennsylvania Avenue, N.W., Washington D.C.
The FTC in 2008: A FORCE for consumers and competition

Contents

Letter from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

A Year in Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section One: Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Chapter 1. Competition Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

A. Merger Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

B. Nonmerger Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

C. Guidance, Transparency, and Process Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Chapter 2. Competition Policy Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

A. Research and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

B. Hearings and Workshops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

C. Advocacy Letters and Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

D. Amicus Briefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

E. Congressional Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Chapter 3. Competition – Consumer and Business Education and Outreach . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section Two: Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Chapter 4. Consumer Protection Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

A. Fraud and Deception Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

B. Privacy and Data Security Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

C. Consumer Protection Law Enforcement Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Chapter 5. Consumer Protection Policy Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

A. Rulemakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

B. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

C. Hearings and Workshops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

D. Inter-governmental Task Force . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

E. Advocacy Letters, Comments, and Amicus Briefs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

F. Congressional Testimony . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Chapter 6. Consumer Protection – Consumer and Business Education and Outreach . . . . . . . . . . . . . . . . . . 55

Section Three: International Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Chapter 7. Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

A. Promoting Cooperation and Convergence Through Bilateral Relationships . . . . . . . . . . . . . . . . . . . . . 59

B. Promoting Convergence Through Multilateral Competition Fora . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Chapter 8. Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

A. The U.S. SAFE WEB Act and International Law Enforcement Cooperation . . . . . . . . . . . . . . . . . . . . 62

B. International Policy Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Chapter 9. Outreach and International Technical Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Senior Staff of the FTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

FTC Annual Awards – September 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Principal Contributors to Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Federal Trade Commission
The FTC in 2008: A FORCE for consumers and competition

“Our job is not to substitute our judgment for that of 

consumers or to save them from bad choices; rather, it is to 

ensure that they obtain the truthful information they need 

to make their own choices. When markets function in this 

manner, consumers win – securing a broader selection of 

innovative products at lower prices.”

– Chairman Majoras, Opening Remarks, Carbon Offsets Workshop 

(Jan. 8, 2008)

Letter from the Chairman

Consumers are the driving force behind the mission of the Federal Trade 

Commission. We make decisions on how to spend taxpayer resources by 

identifying and understanding the great number of consumer and economic 

issues that our global economy produces and tackling those that are most 

relevant to Americans. It is critical that the FTC enforces our nation’s antitrust 

and consumer protection laws to ensure that consumers receive the benefits of 

a robust, competitive, and fair marketplace in the form of lower prices, higherquality goods, more product choices, and greater innovation. 

Over the past year, the Commission has continued 

to scrutinize market developments and tailor an agenda 

that meets the significant challenges of a quickly evolving 

global marketplace. The Commission has rooted out 

economic “villains” by actively pursuing the latest 

generation of fraudsters working to deceive the public by 

touting the newest cure-all treatment or credit scam; those 

that pervert the promise of the electronic age and the 

Internet by hijacking consumers’ computers and stealing 

their most sensitive personal information; and those that 

mock the competitive marketplace by engaging in anticompetitive conduct that 

raises the specter of increased prices or decreased consumer choice.

These twelve months have been characterized by significant litigation activity 

on both sides of the house in federal district and appellate courts, as well as in 

the FTC’s administrative Part III process. Appellate decisions in such matters 

as Chicago Bridge, QT, Inc., and Prochnow, litigated merger cases like Whole 

Foods and Equitable/Dominion, and FTC Part III decisions like Rambus and 

Evanston promote validation and development of sound legal standards and 

provide guidance to the antitrust agencies and the consumer, legal, and business 

communities. And the Commission continues to obtain temporary restraining 

orders in consumer protection cases, halting mortgage foreclosure rescue scams 

and deceptive telemarketing operations. Increasingly, the decisions of our courts 

are highly scrutinized by our colleagues at the more than 100 sister agencies 

around the world. While we work to ensure that each case we choose to litigate 

has a solid evidentiary, legal, and economic basis, we, of course, do not always 

prevail. While no one relishes losses, they, too, have value in setting legal and 

evidentiary standards in our unique common law system. 

To cast a wide net to police anticompetitive or deceptive conduct, the 

Commission has leveraged its limited resources by teaming with civil and 

criminal authorities here and around the world. For example, our work 

with criminal enforcement authorities over the past year has led to 81 FTC 

defendants and their associates being charged with crimes and 47 convictions 

or guilty pleas. We also are highly engaged in working with the federal 

banking agencies and state attorneys general on the current mortgage crisis 

and with dozens of partners in the fight against identity theft. 
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Federal Trade Commission

Understanding markets and trends is no easy feat. The Commission 

continued to study significant market issues to educate ourselves, the public, and 

other policymakers. Our timely report on the “net neutrality” Internet access 

issue was well-received, and our public workshops on behavioral marketing and 

the marketing of “green” products like carbon offsets contributed to some of the 

most important debates in marketing today. And backstopping all of our other 

work, we continued to educate, educate, educate. An educated consumer is an 

empowered one, and this year, the Commission released innovative consumer 

and business education projects, including videos that teach how to spot phishing 

scams, an interactive tutorial that teaches how to handle data securely, and a suite 

of products (publications, radio public service announcements and classified 

ads, newsletter articles, and a syndicated article for community newspapers) that 

teach how to recognize and avoid both deceptive mortgage offers and mortgage 

foreclosure assistance scams. Since last year’s Annual Report, the Commission 

has distributed nearly 8 million print publications in English and Spanish and 

logged more than 34.1 million accesses to its publications on the FTC website. 

I am extremely honored to have served as FTC Chairman for more than 

three-and-a-half years. As I prepare to leave the Commission, I continue to 

marvel at the sheer breadth of the FTC’s work, the creativity and dedication 

of our staff, and the positive impact of the agency’s actions on the lives of 

Americans. I am confident that the FTC will continue its strong record of taking 

their cues from, and acting on behalf of, American consumers.

Deborah Platt Majoras

Chairman


The FTC in 2008: A FORCE for consumers and competition

A Year in Highlights

The Commission continued to be very busy in the past year by engaging in 

numerous competition and consumer protection law enforcement investigations 

and cases, preparing advocacy and policy projects and reports, building its 

working relationships with foreign counterparts, and educating millions of 

consumers and businesses with its outreach materials. 

In its competition mission, the Commission aggressively: 

Scrutinized mergers in many industries, filing actions to enjoin mergers 

deemed to be anticompetitive and reaching settlements requiring 

divestitures where appropriate to preserve competition while allowing 

the beneficial aspects of the merger to proceed. For example, the agency 

required divestitures to resolve competitive problems involving five 

generic drugs in its review of Mylan’s $6.6 billion acquisition of Merck’s 

generic subsidiary. The Commission ruled in the Evanston matter that 

a hospital acquisition was anticompetitive and raised prices for acute 

care inpatient services, and fashioned a remedy that would reintroduce 

competition in that market. 

The Commission filed two actions to enjoin mergers in energy markets, 

including an action to preserve competition in the market for natural 

gas distribution in Allegheny County, Pennsylvania, in the Equitable/

Dominion matter that led the parties to abandon the transaction and a 

court of appeals to vacate the district court decision. The Commission 

also brought actions in various retail markets, including the Whole Foods/

Wild Oats case, and settled cases to preserve competition in the retail 

pharmacy and grocery store markets. A federal court of appeals upheld a 

Commission administrative ruling in the Chicago Bridge/Pitt-Des Moines

matter that a consummated merger in four markets for industrial storage 

tanks was anticompetitive. 

Policed anticompetitive conduct in the health care, energy, real estate, 

and high technology industries, with a particular a focus on competitor 

collaboration and exclusionary conduct. For example, in the health 

care industry, the agency filed a new action against Cephalon, Inc. 

alleging that the manufacturer entered into illegal agreements to keep 

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generic formulations of its branded product Provigil off the market, and 

concluded its case in the Warner Chilcott/Barr matter involving an alleged 

agreement to keep a generic oral contraceptive drug off the market. 

In the real estate industry, the agency continued to challenge real 

estate board rules that the Commission alleged restrained competition 

and restricted consumers from receiving services from nontraditional 

brokers. For example, the Commission brought an action alleging 

that RealComp prohibited information for nontraditional listings to be 

transmitted to public real estate websites; the administrative law judge’s 

decision concluding that the Commission failed to show that RealComp’s 

conduct substantially lessened competition in the relevant market is 

now on appeal. The agency also continued to litigate its claims against 

exclusionary conduct in a standard-setting organization, arguing before 

the court of appeals that Rambus, Inc. unlawfully monopolized markets 

for four computer memory technologies that were incorporated into 

industry standards for dynamic random access memory chips. 

Filed two civil penalties actions for violations of the Hart-Scott-Rodino 

Act’s premerger reporting requirements to ensure that parties to some 

mergers do not have an unfair advantage.

Promoted sound competition policy through myriad research and 

reports, studies, hearings, workshops, advocacy filings, amicus briefs, and 

testimony before Congress. For example, the agency issued reports on 

Internet broadband connectivity competition policy, intellectual property 

and competition, competition in the real estate brokerage industry, 

competition in public and private postal services, and the Spring/Summer 

2006 gasoline price increases.

The Commission also held a 3-day conference concerning energy 

markets, concluded a 29-session hearing on single-firm conduct, and 

held a workshop on unilateral effects analysis and litigation. Finally, 

the agency filed competition advocacy letters and comments that, 

among others, advocated for increased competition between lawyers 

and nonlawyers where appropriate, promoted competition in the area of 

pharmacy benefit management, advocated against collective bargaining 

for health care providers, and furthered competition in the electricity 

transmission and gasoline retail markets. 

In its consumer protection mission, the Commission actively: 

Pursued law enforcement actions to enjoin deceptive lending, debt 

negotiation and settlement, debt collection, mortgage, and subprime 

credit schemes that prey on financially strapped consumers. The agency 

also held a public workshop on current and evolving debt collection 

practices, issued a report on improving consumer mortgage disclosures, 

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The FTC in 2008: A FORCE for consumers and competition

and filed advocacy comments on payment processing and disclosures for 

subprime mortgage lending. 

Filed enforcement cases to protect consumers’ personal and financial data 

from technology-driven threats during the complete life cycle of personal 

data, including its collection, storage, use, and disposal. For example, the 

agency brought and settled its first case alleging violations of the FTC’s 

Disposal Rule against American United Mortgage Company, claiming 

that the mortgage broker left sensitive consumer loan documents in and 

around an unsecured dumpster. 

The agency also engaged in policy and advocacy work related to identity 

theft. It released its second national survey of the incidence and impact 

of identity theft, worked with other agencies to develop and release a 

report from the President’s Identity Theft Task Force that discussed the 

coordinated plan of the Commission and other federal agencies to address 

and combat identity theft, held workshops on consumer authentication 

and behavioral marketing, and proposed principles on behavioral 

marketing. 

Monitored compliance with previous orders to detect repeat offenders 

and deter order violations, including a $61 million judgment in a civil 

contempt action against Julian Gumpel for violating a 1998 federal court 

order, and a contempt ruling against Kevin Trudeau for violating a 2004 

federal court order enjoining him from making misrepresentations of the 

contents of his books in his infomercials. 

Worked with criminal authorities through its Criminal Liaison Unit to 

facilitate the prosecutions of criminal consumer fraud, and that in the 

past year, led to 81 FTC defendants and their associates being charged 

with crimes, and 47 such defendants and their associates being convicted 

or pleading guilty, with sentences imposed totaling more than 141 years.

Continued enforcement efforts in the technology area against spyware 

and adware programs that are installed on consumers’ computers without 

their knowledge or consent. For example, the Commission challenged 

DirectRevenue LLC and its principals for their allegedly unlawful practices 

in connection with the distribution of adware, ultimately resulting in a 

$1.5 million settlement. 

The agency also pursued deceptive and unfair spam practices under its 

CAN-SPAM Act authority, settling three cases targeting deceptive spam 

and obtaining nearly $4 million in civil penalties, including a $2.9 

million civil penalty against ValueClick, the highest the Commission 

has obtained in this area. The agency also obtained a judgment of more 

than $2.5 million against Sili Neutraceuticals, LLC and its principal for 

unsolicited messages regarding dietary supplements.

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Filed cases against defendants who made deceptive health, safety, and 

weight loss claims, including those making unsubstantiated claims to 

prevent, treat, or cure a wide variety of serious diseases. For example, 

the agency charged the defendants in the J.W. McLain case with making 

deceptive claims that their herbal tea could prevent or cure AIDS, 

diabetes, cancer, arthritis, strokes, and heart disease; the consent order 

imposed a $31.7 million suspended judgment on the defendants and 

required them to forfeit their frozen assets and the proceeds from their 

business opportunity sales. 

A federal court of appeals upheld a ruling that the defendants in FTC v. 

QT, Inc., who falsely marketed the “Q-Ray Ionized Bracelet” as providing 

therapeutic relief from arthritis and other chronic conditions, had to 

return nearly $16 million in net profits. The agency also issued a report 

on the exposure of children to TV advertising, and held a forum with 

the Department of Health and Human Services on childhood obesity 

that discussed significant industry self-regulatory initiatives designed to 

encourage healthier eating choices. 

Initiated a major crackdown on violators of the agency’s Do Not Call 

provisions, involving six settlements against telemarketers, including ADT

and Craftmatic, that resulted in nearly $7.7 million in civil penalties, and 

another $3 million suspended civil penalty judgment against Voice-Mail 

Broadcasting Corp., a large “voice blaster” that allegedly placed over 46 

million unlawful recorded calls to consumers. 

Held a public workshop on carbon offsets and renewable energy 

certificates that explored advertising claims relating to these products. 

Some of the Commission’s activities reflect the close relationship between the 

agency’s two missions. For example, after a thorough antitrust review, the agency 

determined not to challenge Google, Inc.’s proposed acquisition of Internet 

advertising server DoubleClick, Inc., concluding that the proposed acquisition 

was unlikely to substantially lessen competition in any relevant antitrust market. 

At the same time, however, recognizing that the proposed acquisition raised 

concerns about consumer privacy in the online advertising marketplace that were 

not unique to the proposed merger, the Commission reiterated its commitment 

to protecting consumers’ privacy and data security by releasing a set of proposed 

behavioral marketing principles that could be used by businesses generally to 

protect consumers’ online privacy. 

The Commission’s Office of International Affairs (OIA) continued to 

build upon its bilateral and multilateral relationships to enable the agency to 

accomplish its law enforcement and advocacy missions. For example, the OIA 

effectively utilized its expanded authority under the U.S. SAFE WEB Act to 

cooperate with foreign law enforcement authorities and share information to 

protect consumers, and pursued convergence toward sound antitrust enforcement 

and policy through the International Competition Network and other venues. 

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The FTC in 2008: A FORCE for consumers and competition

It also successfully launched the International Fellows program through which 

several foreign officials worked at the FTC, contributing to the agency’s work 

while strengthening inter-agency relationships. 

Finally, the Commission continues to receive accolades for its work, as well 

as for its commitments to a nondiscriminatory work environment. For example, 

the agency received the Hispanic Bar Association of the District of Columbia’s 

2007 Employer Award for its commitment to Latino professionals, diversity in 

the workplace, and its efforts to recruit and retain Latino attorneys. 


Federal Trade Commission


The FTC in 2008: A FORCE for consumers and competition

Section One: Competition Mission 

Each year, more people around the globe 

embrace the promise inherent in open and 

competitive markets. They too have come 

to understand that competition among 

independent businesses is good for consumers 

– individuals and businesses – and is good 

for the economy. Competitive markets 

yield lower prices and better quality goods 

and services, and a vigorous marketplace 

provides the incentive and opportunity for 

the development of new ideas and innovative 

products and services. But competitive 

markets require clear rules fairly applied. The 

Commission is dedicated to that task, and 

uses a variety of tools to promote competition 

and protect consumers from anticompetitive 

mergers and business conduct. Through 

enforcement, study, advocacy, and education, 

the FTC’s competition mission is to remove 

private or public impediments that prevent consumers from receiving the benefits 

of such competition. 

This was a year for antitrust in the news, with the Supreme Court issuing 

several important rulings on a variety of competition issues which generated 

interest from a wide audience. In addition, the Antitrust Modernization 

Commission completed its work, issuing a report that endorsed free-market 

principles as the primary driver of success in the American economy, and 

concluding that the state of the U.S. antitrust laws is “sound.” With this 

reaffirmation of the importance of effective antitrust policies, the Commission is 

committed to its role in enforcing the rules of the marketplace to encourage fair 

competition wherever and whenever it can produce positive results for consumers 

and for the economy.

The Commission effectively manages its limited resources by addressing 

anticompetitive mergers and conduct in those industries that most directly 

Enforcement Actions by Sector

FY 05 Through FY 08*

Energy, 17.3%

Health Care & 

Pharmaceutical, 

39.5%

Other, 17.3%

Technology, 2.5%

Services & NonHealth Care 

Professions, 

23.5%

* Represents Fiscal Year 2008 through February 29, 2008.
Federal Trade Commission

impact consumers, such as health care, energy, retail goods, technology, and real 

estate. In the past year, the Commission’s merger and nonmerger enforcement 

actions in these and other industries confirm that much of the Commission’s 

competition work has a direct impact on consumers by promoting competition 

for the products and services they regularly purchase. From groceries and generic 

drugs to gasoline and garden apartments, the Commission seeks to prevent the 

kinds of anticompetitive mergers and conduct in markets that affect consumers 

every day. 

Chapter 1. Competition Law Enforcement

A. Merger Enforcement

The Commission continues to face a demanding merger review workload 

as the number of mergers requiring pre-merger notification continues to 

increase, and the proposed mergers and the products and services at issue grow 

in complexity. Over the past three years, the Commission has faced a 30% 

increase in pre-merger filings and a comparable increase in second requests issued. 

Effective and efficient merger review is critical to the agency’s ability to deal with 

the pressures of keeping pace with the substantial stream of merger filings every 

year.

1. Health Care Merger Enforcement

The rapidly rising cost of health care is a matter of concern for consumers, 

employers, insurers, and the nation as a whole. Spending on health-related 

products and services surpassed $2.1 trillion in 2006, and now accounts for more 

than 16% of Gross Domestic Product. The cost of prescription drugs alone was 

more than $216 billion in 2006. The Commission will continue to challenge 

mergers in the health care industry that threaten to further escalate costs or 

dampen incentives to innovate. This year, the Commission challenged several 

mergers in the health care industry, maintaining competition in markets for 

generic drugs, poultry vaccines, treatments for vertebral compression fractures, 

kidney dialysis services, and retail pharmacies. 

HSR Transactions, Second Requests, and Merger Enforcement Actions

Fiscal Year HSR Transactions Second Requests

Issued

Merger Enforcement Actions

# # #

HSR premerger 

violation

2005 1,610 25 14 1

2006 1,755 28 16 0

2007 2,108 31 22 1

 2008* 767 8 5 1

* Represents Fiscal Year 2008 through February 29, 2008.


The FTC in 2008: A FORCE for consumers and competition

Generic Drugs. Generic formulations of widely used branded medicines 

bring down the costs of treatment for many conditions as patients substitute 

lower-cost generic drugs that use the same active ingredients and have the same 

therapeutic effectiveness as the brand-name drug. 

Consumer acceptance of generic drugs has helped 

contain rising health care costs, and the Commission is 

committed to promoting competition between generic 

drug makers and branded pharmaceuticals and among 

generic drug manufacturers.

Actavis Group/Abrika. In April 2007, the 

Commission prevented a merger-to-monopoly in the sale of generic 

isradipine capsules by challenging the proposed $235 million purchase 

of Abrika Pharmaceuticals, Inc. by the Actavis Group, an international 

generic pharmaceuticals company. To maintain competition in the 

market for this important generic drug, used to lower blood pressure 

and to treat hypertension, ischemia, 

and depression, the consent order 

requires the divestiture of all rights and 

assets necessary to produce, market, 

and sell generic isradipine to Cobalt 

Laboratories, Inc.

Mylan/Merck. To resolve competitive 

concerns in the U.S. market for 

five generic drugs, the Commission 

challenged Mylan Laboratories’ 

proposed acquisition of the generic 

arm of Merck Pharmaceuticals, a 

transaction valued at approximately $6.6 billion. Under a September 

2007 consent order with the Commission, Mylan and Merck must divest 

all assets relating to flecainide acetate tablets, acebutolol hydrochloride 

capsules, guanfacine hydrochloride tablets, nicardipine hydrochloride 

capsules, and sotalol hydrochloride. The generic drugs at issue are used 

for the treatment of many conditions, including hypertension and 

heart arrhythmia. The order requires the divestiture of all assets related 

to the relevant products to Amneal Pharmaceuticals, a generic drug 

manufacturer. 

Hospitals, Clinics and Surgical Treatment Options. Competition among 

health care providers and treatment options also helps to contain health care 

costs. This includes competition between facilities, such as hospitals or clinics, 

that provide a similar array of services to patients living nearby. Similarly, when 

a patient is faced with a difficult health condition, the availability of multiple 

technically advanced treatment options can improve outcomes and reduce 

recovery times. These benefits can occur when medical facilities compete 

to improve treatment techniques, and the Commission seeks to maintain 

competition when reviewing mergers in this field.

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“Without question, the overall challenge in U.S. health 

care markets is the cost: How can we contain steadily rising 

costs, while maintaining the life-saving innovation and 

quality that admirably characterizes the U.S. market?” 

– Chairman Majoras, Keynote Address before the ABA Section of 

Antitrust Law Fall Forum (Nov. 15, 2007)
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Hospitals. In August 2007, the Commission ruled that Evanston 

Northwestern Healthcare Corp.’s 2000 acquisition of Highland Park 

Hospital was anticompetitive and resulted in higher prices for acute 

care inpatient hospital services in parts of Chicago’s northern suburbs. 

The Commission found that this consummated merger enabled the 

hospitals to raise prices through an exercise of market power. The 

Commission cited economic evidence that post-merger price increases 

were substantial and not explained by ordinary competitive forces. 

The Commission concluded that in this “highly unusual case,” the 

divestiture remedy imposed by the administrative law judge would be 

too costly and potentially risky, and instead imposed a conduct remedy. 

The Commission’s order requires Evanston to set up two separate and 

independent contract negotiation teams to bargain with managed 

care organizations to revive competition between Evanston’s two 

hospitals and the Highland Park hospital. 

Kidney Dialysis Clinics. In September 2007, the Commission settled 

charges stemming from American Renal Associates’ (ARA) proposed 

acquisition of five clinics from Fresenius AG, which would have made 

ARA the only operator of dialysis clinics in the Warwick/Cranston 

area of Rhode Island. In addition to the sale of the five clinics, the 

purchase agreement called for the closure by the seller of an additional 

three Fresenius clinics in Rhode Island and Massachusetts. The parties 

terminated their purchase agreement after FTC staff raised antitrust 

concerns, but the Commission challenged the closure of the three clinics 

as a naked agreement to pay a competitor to exit the market, and also 

alleged a Section 7 violation in the Warwick/Cranston market for dialysis 

services. The Commission’s order bars the parties from entering into 

any agreement to close dialysis clinics, and requires ARA to notify the 

Commission if it intends to acquire any dialysis centers in the Warwick/

Cranston area for a period of 10 years.

Innovative Medical Treatment Options. In October 2007, the 

Commission challenged Kyphon Inc.’s $220 million proposed 

acquisition of the spinal assets of Disc-O-Tech Medical Technologies, 

Ltd. and Discotech Orthopedic Technologies (collectively Disc-OTech) as anticompetitive in the market for minimally invasive vertebral 







Rich Cunningham

Bureau of Competition

Mergers I

Since coming to the FTC 

from law school in 2004, Rich 

has contributed significantly 

to resolving competitive 

problems presented by the 

mergers in Boston Scientific/

Guidant, Thermo/Fisher 

Scientific, Hologic/Fischer, 

Chevron/USA Petroleum, 

and Kyphon/Disc-o-Tech, 

and helped challenge the 

defendants’ economic 

testimony in Whole Foods/

Wild Oats.

Notably, Rich took 

primary staff responsibility 

during his first year in 

DaVita/Gambro, a merger 

of two national networks of 

dialysis centers. In 2007, 

Rich received the FTC’s 

Stephen Nye Award, given 

to junior attorneys who have 

demonstrated outstanding 

performance.
11

The FTC in 2008: A FORCE for consumers and competition

compression fracture treatment products in the U.S. Disc-O-Tech’s 

Confidence products promised real benefits to patients in treating these 

painful fractures in a minimally invasive way, and threatened Kyphon’s 

near-monopoly on treatment options. The Commission’s consent 

order required that Kyphon divest all assets, intellectual property, and 

development rights related to the Confidence brand to an FTC-approved 

buyer.

Animal Health Products. In November 2007, the Commission charged 

that Schering-Plough’s proposed $14.4 billion acquisition of Organon Biosciences 

N.V. threatened to substantially reduce competition in the U.S. market for three 

popular vaccines used to treat poultry, a staple in American food markets. The 

November 2007 order settling the charges required the sale of assets necessary 

to develop, manufacture, and market these vaccines to Wyeth. In addition, 

Schering-Plough was required to sign a supply and transition services agreement 

with Wyeth, under which Schering will provide the vaccines for a period of two 

years, allowing time for the necessary FDA approvals.

2. Energy Industry Merger Enforcement

Energy industry mergers also took top billing this year in the competition 

workload. The Commission carefully reviews mergers in this vital industry that 

provides the engine for economic growth to ensure that consumers receive the 

benefits of competition among energy companies. To that end, the Commission 

filed two preliminary injunction actions in federal court to block energy market 

mergers in the past year. 

Western Refining/Giant Industries. In May 2007, the Commission 

issued an administrative complaint and initiated federal court action to 

block Western Refining, Inc.’s $1.4 billion proposed acquisition of rival 

energy company Giant Industries, Inc. to preserve competition in the 

supply of bulk light petroleum products, including motor gasoline, diesel 

fuels, and jet fuels, in northern New Mexico. After a week-long trial, the 

federal district court denied the Commission’s motion for a preliminary 

injunction, rejecting arguments that Giant had unique opportunities 

to increase supply and lower fuel prices in northern New Mexico. In 

October, the Commission dismissed its administrative complaint, 

concluding that further prosecution would not be 

in the public interest.

Equitable/Dominion. In March 2007, the 

Commission filed an administrative complaint, 

and in April 2007, a federal court injunction 

action, to block Equitable Resources’ proposed 

acquisition of The Peoples Natural Gas Company, 

a subsidiary of Dominion Resources. The 

Commission challenged the merger-to-monopoly 

in natural gas distribution as detrimental 





“Competition between Dominion and Equitable results 

in substantial discounts from regulated rates for commercial 

and industrial customers that are served by more than one 

local distribution company, while ‘captive’ consumers who do 

not enjoy such competition are charged regulated rates. . . . 

[Our economists showed] that there were competitive effects 

even though prices were regulated and evaluated efficiency 

claims made by the parties in the distribution of natural gas.”

– BE Director Michael R. Baye, interview in The Antitrust Source

(Feb. 2008)
12

Federal Trade Commission

to nonresidential customers in certain areas of Allegheny County, 

Pennsylvania, which includes Pittsburgh. In May 2007, the federal 

district court in Pittsburgh denied the FTC’s motion for a preliminary 

injunction and dismissed the complaint, ruling that because the 

Pennsylvania Public Utility Commission has the power to approve the 

merger, the Commission is barred from taking action under the state 

action doctrine. In June 2007, the U.S. Court of Appeals for the Third 

Circuit granted the Commission’s motion for an injunction pending 

appeal. The parties abandoned the transaction in January 2008, and in 

February 2008, the Commission dismissed the administrative complaint 

and moved to vacate the district court’s decision. The Third Circuit 

granted the Commission’s motion to vacate in February 2008.

3. Merger Enforcement in Retail Markets

Every year, the Commission reviews mergers that threaten competition in a 

wide variety of everyday retail markets, from groceries to funeral home services. 

The Commission’s merger investigations in such cases can be very time- and 

resource-intensive since they often require the examination of market conditions 

in dozens, or sometimes hundreds, of local markets. Likewise, effective relief in 

these markets may require many separate divestitures to preserve competition. 

For instance, last year’s consent order in SCI/Alderwoods required the divestiture 

of funeral homes in 29 markets, and of cemeteries in 12 markets, across the 

U.S., all of which were overseen by Commission staff this year to assure effective 

relief. Again this year, the Commission challenged several mergers that raised 

competitive concerns in local retail markets, one involving retail pharmacies and 

two between grocery store chains. 

Whole Foods/Wild Oats. In June 2007, the Commission issued 

an administrative complaint, and sought a federal court temporary 

restraining order (TRO) and preliminary injunction, against Whole 

Foods Market, Inc.’s proposed acquisition of its 

chief rival, Wild Oats Markets, Inc. According to 

the complaint, the approximately $670 million 

deal raised competition problems in 21 local 

markets where Whole Foods and Wild Oats 

both operated stores and were each other’s closest 

competitors among premium natural and organic 

supermarkets. The district court granted the TRO, 

but subsequently denied the preliminary injunction 

after an abbreviated hearing, concluding that the 

merger’s likely effect would not be substantially to 

reduce competition in violation of Section 7 of the Clayton Act. The 

Commission has appealed the district court’s ruling on grounds that 

the lower court failed to apply the proper legal standard that governs 

preliminary injunction applications by the Commission in Section 7 

cases.


13

The FTC in 2008: A FORCE for consumers and competition

Rite Aid/Brooks and Eckerd. In June 2007, the Commission charged 

that Rite Aid Corporation’s $3.5 billion acquisition of competitors 

Brooks and Eckerd Pharmacies from the Canadian drug store operator 

Jean Coutu Group, Inc. was anticompetitive and required the sale of 

retail pharmacies located in 23 cities along the East Coast. According 

to the Commission’s complaint, the merger would have substantially 

reduced competition in the sale of pharmacy services to customers in 

those areas, where customers view stores operated by the two companies 

as their two best options. The consent order requires Rite Aid to divest 

pharmacies in those cities to buyers pre-approved by the Commission. 

The investigation, which included cooperation from the state attorneys 

general of Maryland, New Jersey, New York, Pennsylvania, Vermont, 

Virginia, and Maine, was handled by the agency’s Northeast Regional 

Office.

A&P/Pathmark. In November 2007, the 

Commission intervened in the proposed $1.3 

billion acquisition of Pathmark Stores, Inc. by 

The Great Atlantic & Pacific Tea Company, Inc. 

(A&P), alleging the transaction would have reduced 

competition among grocery stores in the highly 

concentrated markets of Staten Island and Shirley, 

Long Island, New York. A&P operates stores under 

the A&P, A&P Super Foodmart, Food Basics, Food 

Emporium, Super Fresh, and Waldbaum’s banners. 

The Commission’s consent order requires A&P to divest five supermarkets 

in Staten Island to King Kullen Grocery Company, and one supermarket 

in Shirley to Stop & Shop Supermarket Company.

4. Other Merger Enforcement 

The Commission also scrutinizes mergers, and files enforcement actions 

to block those found likely to be anticompetitive, in other industries where 

necessary to protect consumers.

Chicago Bridge/Pitt-Des Moines. In January 2008, the U.S. Court 

of Appeals for the Fifth Circuit upheld a Commission order requiring 

Chicago Bridge & Iron Co., N.V. and its U.S. subsidiary (CB&I) to 

divest assets acquired from Pitt-Des Moines, Inc. used in the business of 

designing, engineering, and building field-erected cryogenic storage tanks. 

In its 2005 order, the Commission had ruled that CB&I’s acquisition 

of these assets in 2001, during a pending FTC investigation, would 

likely result in a substantial lessening of competition or tend to create 

a monopoly in four markets for industrial storage tanks in the U.S., in 

violation of Section 7 of the Clayton Act and Section 5 of the FTC Act. 

The court endorsed the Commission’s findings, based on an extensive 

review of many years of bidding data, that the merged firms controlled 

over 70% of the market, and that new entry was unlikely given the high 






14

Federal Trade Commission

entry barriers based on the incumbents’ reputation and control of skilled 

crews.

Jarden/K2. The Commission charged that the acquisition of K2, Inc., 

a sporting goods manufacturer, by Jarden Corporation would likely 

harm competition. The proposed $1.2 billion transaction would have 

joined two of the nation’s leading producers of monofilament fishing 

line, the most common type of line used in the U.S. The August 2007 

order settling the charges requires Jarden to sell all assets related to the 

manufacture and sale of four varieties of monofilament fishing line to 

sporting goods company W.C. Bradley/Zebco.

Owens Corning/Compagnie de Saint Gobain. In October 2007, the 

Commission remedied competitive problems raised by Owens Corning’s 

proposed acquisition of glass fiber reinforcements and composite fabric 

assets from Compagnie de Saint Gobain. The investigation involved 

cooperation among staff of the FTC, the European Commission, 

and Mexico’s Federal Competition Commission. After staff from the 

competition agencies raised antitrust concerns, the parties modified their 

agreement to exclude Saint Gobain’s glass fiber reinforcement assets in 

the U.S. and certain assets in Europe. The Commission’s consent order 

addressed additional competitive problems in the highly concentrated 

North American market for continuous filament mat, which is used in 

the production of non-electrical laminate, marine parts and accessories, 

and other products. The order requires Owens Corning to divest 

sufficient U.S. continuous filament mat facilities, assets, and intellectual 

property to enable the buyer effectively to produce and sell the products 

in competition with the new Owens Corning/Saint Gobain joint venture.

B. Nonmerger Enforcement

Over the past year, the Commission also has had an active nonmerger 

agenda, investigating and challenging anticompetitive conduct in the health care, 

energy, real estate, and technology sectors. In addition to aggressively filing new 

enforcement actions, the FTC continues to litigate several important cases in the 

federal courts of appeals. The Commission remains at the forefront of developing 

antitrust standards for competitor collaboration and single-firm conduct in these 

important and dynamic industries.

1. Health Care Nonmerger Enforcement

The Commission continues to use its enforcement powers to challenge 

anticompetitive agreements between branded and generic drug manufacturers, 

settling one case involving the marketing of a generic oral contraceptive drug, 

and filing a new action in the market for drugs to treat sleep disorders. The 

Commission also challenged a price-fixing agreement among competing 

physicians, and brought to a successful close a long-running action against a 

state dental board’s efforts to restrict hygienists’ provision of preventive care to 

schoolchildren.




15

The FTC in 2008: A FORCE for consumers and competition

“Today’s suit against Cephalon seeks to undo a course of 

anticompetitive conduct that is harming American consumers 

by depriving them of access to lower-cost generic alternatives 

to an important branded drug.”

– BC Director Jeffrey Schmidt, “FTC Sues Cephalon Inc. for 

Unlawfully Blocking Sale of Lower-Cost Generic Versions of 

Branded Drug Until 2012” (press release, Feb. 13, 2008)

Cephalon, Inc. In February 2008, the 

Commission charged that Cephalon engaged 

in illegal conduct to prevent competition for its 

branded drug, Provigil, by paying four firms to 

refrain from selling generic versions of the drug 

until 2012. Provigil is used to treat excessive 

sleepiness in patients with sleep apnea, narcolepsy, 

and shift-work sleep disorder. The four companies 

had applied to the FDA for approval to market a 

generic formulation, and challenged the validity of the only remaining 

patent on Provigil, a formulation patent related to the size of the 

particles used in the drug. Cephalon entered into agreements with these 

companies, paying more than $200 million in exchange for agreements 

not to sell generic Provigil until 2012. No other generic company could 

enter the market until all of these four “first filers” either relinquished 

their marketing exclusivity or 180 days after one of them entered the 

market. By these agreements, Cephalon effectively prevented any 

generic from entering the market until at least 2012. The Commission’s 

complaint before the Washington, D.C. federal district court alleges that 

Cephalon’s conduct in signing patent-litigation settlement agreements 

that included payments designed to prevent generic competition 

constituted an abuse of monopoly power that is unlawful under Section 5 

of the FTC Act.

Warner Chilcott/Barr Laboratories. In 2007, the Commission settled 

with Barr Laboratories concluding its federal court action challenging an 

agreement between Warner Chilcott and Barr in which, the Commission 

alleged, Barr agreed not to sell a lower-priced generic substitute of Warner 

Chilcott’s branded Ovcon 35, an oral contraceptive drug, for several years 

for $20 million. In September 2006, faced with a preliminary injunction 

action by the Commission, Warner Chilcott waived the exclusionary 





Commissioner Leibowitz: Promoting Affordable Prescription Drug Products

Commissioner Jon Leibowitz continues to play an active role to ensure that consumers have 

access to affordable drug products. In particular, he has focused on eliminating exclusion patent 

settlements in which branded pharmaceutical companies pay potential generic competitors to stay off 

the market as part of a patent settlement. These settlements can delay generic entry for many years 

and cost consumers – who lose the benefits of lower prices – tens of billions of dollars. Over the last 

20 years, generic pharmaceutical products have been one of the few constraints on health care costs. 

If exclusion settlements continue, however, consumers will lose the benefits of generic entry. Twice 

in 2007, Commissioner Leibowitz testified on behalf of the Commission in favor of legislation that 

would clearly prohibit these anticompetitive settlements: in January, before the Senate Judiciary Committee and, in 

May, before the Subcommittee on Commerce, Trade, and Consumer Protection of the House Committee on Energy and 

Commerce.
16

Federal Trade Commission

provision in its agreement and Barr immediately announced that it would 

begin marketing generic Ovcon in the U.S. Warner Chilcott settled with 

the Commission in October 2006, agreeing to certain terms designed to 

protect generic entry into the market. In November 2007, Barr agreed 

to refrain from entering into similar supply agreements with branded 

companies.

Connecticut Chiropractic Association. In March 2008, the 

Commission challenged an allegedly illegal group boycott by two 

chiropractic associations and their counsel aimed at a cost-saving 

Connecticut health plan. According to the FTC, the Connecticut 

Chiropractic Association, the Connecticut Chiropractic Council and 

CCA’s legal counsel conspired through a campaign of meetings and 

other communications to organize their members to refuse to deal 

with American Specialty Health, which offered a chiropractic benefits 

administration program in the state. In settling the matter, the 

Commission accepted a proposed consent order that prohibits the parties 

from seeking agreement among competing chiropractors to negotiate 

with payors on behalf of any chiropractor, or to refuse to deal with any 

payor.

Colegio de Optometras. In July 2007, the Commission charged a 

group of optometrists in Puerto Rico with violating the FTC Act by 

orchestrating agreements among members of the Colegio de Optometras 

to refuse, or threaten to refuse, to accept vision and health care contracts 

except on collectively agreed-upon terms. Two leaders of the group were 

also charged with facilitating the agreement by urging members not 

to participate in the vision network. The Commission’s consent order 

settling these charges bars the group and the two leaders from engaging 

in such conduct, while allowing them to undertake certain kinds of 

joint contracting arrangements by which physician participants control 

costs and improve quality by managing the provision of services. FTC 

staff worked with the Office of Monopolistic Affairs of Puerto Rico’s 

Department of Justice on this case.

South Carolina State Board of Dentistry. This past year, the 

Commission settled a 2003 complaint charging the South Carolina 

State Board of Dentistry with unlawfully restraining competition by 

enacting a rule that required a dentist to examine every child before a 

dental hygienist could provide preventive dental care – such as cleanings 

– in schools. The Board, which is a state regulatory agency composed 

primarily of practicing dentists, claimed that its actions were immune 

from antitrust challenge under the state action doctrine, but that 

argument was rejected in a 2004 Commission opinion holding that 

the Board’s conduct was directly contrary to state law. In 2006, the 

U.S. Court of Appeals for the Fourth Circuit dismissed the Board’s 

interlocutory petition for review for lack of jurisdiction, and the Supreme 

Court denied certiorari in January 2007. The FTC’s June 2007 consent 







Lawrence

DeMille-Wagman

Office of the

General Counsel

Larry is an attorney who 

has represented the FTC in 

federal courts of appeals 

for over 20 years. In 2004, 

in Mainstream Marketing 

v. FTC, Larry successfully 

defended the FTC’s Do Not 

Call rule, which now blocks 

unwanted telemarketing 

calls from over 150 million 

telephones. In TransUnion 

v. FTC, Larry won a ruling 

upholding an FTC order 

preventing credit bureaus 

from selling credit reports 

to marketers who used 

the information to target 

unsolicited ads to consumers. 

In FTC v. Check Investors, 

he argued in support of a 

court order applying the 

FDCPA to halt abusive debt 

collection practices by a 

company specializing in 

collecting dishonored checks. 

Larry received the FTC’s Louis 

D. Brandeis litigation award 

in 2001.
17

The FTC in 2008: A FORCE for consumers and competition

“American homeowners and future homeowners owe 

a great debt of gratitude to the FTC . . . for [its] ongoing 

dedication to reverse the protectionist efforts of real 

estate organizations such as Realcomp to interfere in the 

marketplace in order to force American homeowners to pay 

more than necessary for real estate services.”

– American Homeowners Grassroots Alliance, January 2008

order requires the Board to publicly support the current state public 

health program that allows hygienists to provide preventive dental care to 

schoolchildren, especially those from low-income families.

2. Real Estate Nonmerger Enforcement

The Commission continues to challenge realtor board rules that restrain 

competition and hinder consumer choice in markets throughout the country. 

This work is the product of a 2006 enforcement sweep of the real estate brokerage 

industry, which resulted in seven separate actions against realtor boards. Six of 

these were resolved by consent order requiring each realtor board to discontinue 

enforcing the polices that, the Commission alleged, kept nontraditional brokers 

from competing, and in one investigation led to an administrative complaint 

against a realtor group. The Commission also settled an action raising similar 

concerns with a Milwaukee-based realtor group in the past year. 

RealComp. In October 2006, the Commission 

issued an administrative complaint charging 

Realcomp with violating Section 5 of the FTC 

Act by prohibiting information on Exclusive 

Agency listings and other forms of nontraditional 

listings from being transmitted from the multiple 

listing service (MLS) it maintains to public real 

estate websites. The complaint further alleged 

that the conduct was collusive and exclusionary, 

because the brokers enacting the rules were essentially agreeing among 

themselves how to compete with one another, and were withholding the 

valuable benefits of the MLS from nontraditional real estate brokers. In 

December 2007, an administrative law judge dismissed the complaint, 

ruling that Commission staff had not met its burden of demonstrating 

that the group’s policies unreasonably restrained or substantially lessen 

competition under a standard rule of reason analysis. The ALJ found 

that “despite Realcomp’s market power and the implementation of 

the Website Policy, discount brokerage services continue to be widely 

available.” Commission staff is appealing the ALJ’s decision, and the 

Commission will hear arguments in the case in April 2008.

Multiple Listing Service, Inc. The FTC settled charges that Multiple 

Listing Service, Inc. (MLS, Inc.), a group of real estate professionals 

based in Milwaukee, Wisconsin, adopted rules that withheld valuable 

benefits of the multiple listing service it controls from consumers who 

chose to enter into nontraditional listing contracts with real estate 

brokers. The rules blocked less-than-full-service listings from being 

transmitted by MLS, Inc. to popular Internet websites, but provided this 

important benefit for traditional forms of listings. Under the terms of 

the December 2007 consent order, MLS, Inc. is barred from adopting 

or enforcing any rule that treats one type of real estate listing agreement 

more advantageously than any other, and from interfering with the ability 




18

Federal Trade Commission

of its members to enter into any kind of lawful listing agreement with 

home sellers.

3. Technology Nonmerger Enforcement

Competition in the high technology sector, such as in the computer 

hardware and software industries, is critical to consumers and the economy. The 

Commission is vigilant against conduct that seeks to distort competition in these 

dynamic markets.

Rambus. The Commission continues to litigate its claims that Rambus, 

Inc. unlawfully monopolized markets for four computer memory 

technologies that were incorporated into industry standards for dynamic 

random access memory (DRAM) chips. DRAMs are widely used in 

personal computers, servers, printers, and cameras. In its July 2006 

opinion, the Commission found that, through a course of deceptive 

conduct, Rambus was able to distort a critical standard-setting process 

and engage in an anticompetitive “hold up” of the computer memory 

industry. The Commission found that Rambus illegally acquired 

monopoly power through exclusionary acts, and issued an order limiting 

the royalty rates Rambus may collect under its licensing agreements 

including with those firms that may have already incorporated its DRAM 

technology. Rambus appealed the Commission’s order to the U.S. 

Court of Appeals for the District of Columbia Circuit, which heard oral 

arguments in February 2008.

N-Data. In January 2008, the Commission charged that Negotiated 

Data Solutions LLC (N-Data) violated Section 5 of the FTC Act by 

engaging in unfair methods of competition. N-Data acquired patent 

rights originally held by National Semiconductor Corp. that were 

included in an IEEE industry standard for autonegotiation technology, 

the technology that allows Ethernet devices made by different 

manufacturers to work together. Ethernet is a computer networking 

standard that is used in nearly every computer sold in the U.S. N-Data 

reneged on National Semiconductor’s commitment to charge a one-time 

royalty of $1,000 to manufacturers or sellers of products using the IEEE 

standard, and demanded higher royalties from users. In a consent order 

resolving the charges, the Commission ordered N-Data to stop enforcing 

the patents at issue unless N-Data has first offered a license under the 

original terms. Chairman Majoras dissented from the Commission’s 

decision on the grounds that, unlike the conduct of patent-holders in 

other standard-setting cases brought by the Commission, there were 

no allegations here of deception or improper or exclusionary conduct 

to induce the standard-setting body to include N-Data’s technology in 

the standard that was adopted. Commissioner Kovacic also dissented, 

arguing that the conduct at issue did not constitute an unfair method of 

competition or an unfair act or practice under Section 5 of the FTC Act.




19

The FTC in 2008: A FORCE for consumers and competition

4. Energy Nonmerger Enforcement

On the nonmerger front, the Commission also guards against anticompetitive 

conduct in the energy industry and brings enforcement actions when necessary.

American Petroleum Company, Inc. In July 

2007, the Commission charged that a motor 

oil lubricant importer illegally conspired with 

its competitors to restrict the importation and 

sale of these products in Puerto Rico, which 

resulted in higher prices paid by consumers. 

According to the FTC’s complaint, during 2005 

and 2006, American Petroleum joined with 

numerous others in the Puerto Rico lubricants 

industry to lobby for the delay, modification, or 

repeal of Puerto Rico Law 278, which imposes 

an environmental recovery fee of 50 cents per 

quart. With the effective date of the law approaching, the importers 

adopted a strategy of refusing to import lubricants as a means of forcing a 

change. The consent order settling the charges bars American Petroleum 

from conspiring with its competitors to restrict output, refuse to deal, or 

boycott any lubricant buyer or potential buyer.

C. Guidance, Transparency, and Process Issues

During the last year, the Commission and its staff sought to provide factspecific guidance in a detailed closing statement accompanying an investigation 

and in two advisory letters. These instances presented opportunities to 

clarify standards of review and competitive analysis. In addition, with DOJ 

authorization, the Commission filed two separate civil penalties actions 

for violations of the Hart-Scott-Rodino (HSR) Act’s premerger reporting 

requirements. HSR rules and regulations form the foundation of the 

Commission’s merger review process, and the Commission is dedicated to 

investigating potential violations of the HSR rules and bringing civil penalties 

actions when appropriate so as not to give parties to some mergers an unfair 

advantage.

Google/DoubleClick. In December 2007, the 

Commission announced that it would not seek to block 

Google, Inc.’s proposed acquisition of Internet advertising 

server DoubleClick, Inc. Among the reasons the 

Commission provided in its extensive statement outlining 

its decision were: the evidence showed that Google and 

DoubleClick were not direct competitors in any relevant 

antitrust market, that current competition among firms 

in the third party ad serving market was vigorous and was 

likely to increase, and that it was unlikely that Google 

could effectively foreclose competition in the related ad 

intermediation market following the acquisition. To address 





“Petitioning the government to repeal a law you don’t like 

is perfectly legal and, in fact, is a basic constitutional right. 

But where firms take direct action in the marketplace as a 

means of pressuring the government, they cross the line from 

permissible to illegal conduct. That’s what happened here, and 

that’s why we brought this case.”

– BC Director Jeffrey Schmidt, “FTC Charges Puerto Rico Lubricant 

Importer with Illegal Agreement: Consent Order Bars Company from 

Conspiring to Limit Imports and Sales” (press release, June 14, 2007)
20

Federal Trade Commission

consumer privacy concerns that were raised during the investigation 

but are not limited to the activities of the merging companies, the 

Commission proposed self-regulatory privacy principles for online 

behavioral advertising and requested comments from interested parties.

MedSouth Follow-Up Advisory Letter. In 2002, Commission staff 

issued an advisory opinion concerning a proposed joint venture involving 

a clinically integrated network of physicians, to be known as MedSouth, 

Inc. This past year, staff conducted its own “check up” of the operation 

of the Denver-based group. After receiving information and data from 

MedSouth, staff confirmed in a follow-up letter dated June 18, 2007, that 

it had no present intention to challenge the group’s operation, noting that 

concerns about the market power of the group had diminished over time 

as the number of physicians participating in the venture had dropped. 

Greater Rochester Independent Practice Association, Inc. Advisory 

Letter. Commission staff advised a multi-specialty physician practice 

group of primary care and specialist physicians practicing in the 

Rochester, New York area, that it had no present intention to challenge 

the organization’s operation as a non-exclusive physician network joint 

venture. The physician group requested an advisory opinion on its plan 

to integrate and coordinate patient services among the 575 physician 

members. FTC staff found that, although the group could contract 

jointly, the non-exclusive nature of the joint venture allowed members 

to negotiate separately with health plans and other customers choosing 

not to purchase network services, and that there were other physician 

networks operating in the area. The group’s proposal to institute “best 

practices” and monitor treatment and outcomes offers opportunities 

for significant benefits for patients, and joint contracting may be 

reasonably necessary to achieve efficiencies and reduce costs through the 

coordination of care among network providers. 

Premerger Filing Violations. During the last year, the Commission 

filed, with DOJ authorization, two civil penalty actions against businesses 

and individuals for violating the premerger reporting requirements of the 

Hart-Scott-Rodino Act. In May 2007, James D. Dondero paid $250,000 

to settle charges that a hedge fund he managed did not file premerger 

documents for the acquisition of shares in Neighborcare, Inc., which 

were in excess of the $50 million HSR filing threshold. Separately, in 

December 2007, the FTC obtained $1.1 million in civil penalties from 

ValueAct Capital Partners, an investment firm, to settle charges that it 

had failed to make the required HSR filings related to certain 2005 stock 

acquisitions. ValueAct failed to file HSR documents on similar purchases 

in 2003, but had made corrective filings once notified of the need to 

file, and the FTC did not take action at that time. When the firm made 

additional stock purchases in 2005 and again failed to make appropriate 

and timely HSR filings, the FTC sought civil penalties for violations of 

the HSR Act. 






21

The FTC in 2008: A FORCE for consumers and competition

Chapter 2. Competition Policy Tools

In addition to – and to support – its enforcement work, the FTC promotes 

competition through a wide variety of activities, such as research and reports, 

workshops, advocacy filings, amicus briefs, and testimony before Congress. 

This work helps inform the Commission and others about emerging legal and 

economic issues affecting competition enforcement. Through this “competition 

R&D,” the agency invests in its resources to maintain its expertise and shares 

important information with other policymakers, the antitrust bar, businesses, 

and the general public thereby continuing to provide leadership on competition 

policy.

A. Research and Reports

The Commission continues its efforts to address antitrust issues of national 

importance through conducting research and issuing reports. In the past year, 

Commission staff worked on a wide range of subjects, from evolving legal 

standards for single-firm conduct and intellectual property issues relating to 

competition policy, to industry studies in energy, real estate, broadband, and 

postal services.

1. Energy

Electric Energy. In April 2007, the Electric Energy Market Competition 

Task Force – comprised of representatives of the FTC, the Federal Energy 

Regulatory Commission, and the Departments of Justice, Energy, and 

Agriculture – transmitted a report to Congress concerning competition in 

the wholesale and retail markets for electric energy. The Task Force report 

– submitted in response to a directive contained in the Energy Policy 

Act of 2005 – addressed a number of key issues involving competition in 

wholesale electric power markets including whether competition in such 

markets has resulted in sufficient generation supply and transmission 

to provide wholesale customers with the kind of choice that generally 

is associated with competitive markets. The report also discussed 

competition in retail electric power markets, including the experience 

of a number of states that have implemented retail competition, as well 

as a number of complex issues that states may wish to consider as they 

evaluate their retail electric competition policies.

2006 Gasoline Price Increases. In August 

2007, the FTC and DOJ sent to President Bush 

a “Report on Spring/Summer 2006 Nationwide 

Gasoline Price Increases,” explaining that the 

gasoline price increases in 2006 were not the 

result of violations of the antitrust laws, but 

stemmed from the following market factors: 

(1) seasonal effects of the summer driving season; 

(2) crude oil price increases; (3) ethanol price 




22

Federal Trade Commission

Internet Access

Task Force

The Commission’s Internet 

Access Task Force was 

established by Chairman 

Majoras in August 2006 

to examine broadband 

Internet connectivity issues, 

including the regulation of 

broadband providers on data 

prioritization, exclusive deals, 

and vertical integration. In 

addition to its 2007 Broadband 

Report and 2006 Wi-Fi Report, 

the Task Force currently is 

exploring the competition and 

consumer protection issues 

raised by the emergence of 

Voice over Internet Protocol, 

or VoIP, as a replacement for 

wireline telephone service.

increases; (4) capacity reductions due to refiners’ transition from the fuel 

additive methyl tertiary-butyl ether to ethanol; (5) refinery outages due to 

external events such as hurricanes; and (6) increased consumer demand 

for gasoline beyond the seasonal effects of the summer driving season. 

Ethanol Production. In November 2007, the Commission issued 

its third annual report on the state of ethanol production in the U.S. 

The report noted that, as of September 2007, 13 firms had entered 

into the production of ethanol during the preceding year, bringing the 

total number of U.S. producers to 103. As new firms have entered, 

the market, which is unconcentrated by any measure of capacity or 

production, has become even more unconcentrated. The FTC concluded 

that current levels of market concentration would not support a 

presumption that a single firm, or a small group of firms, could wield 

sufficient market power to set or coordinate price or output levels.

2. Technology 

Broadband Report. In June 2007, the FTC released a staff report, 

“Broadband Connectivity Competition Policy,” that urged caution 

in enacting so-called “network neutrality” regulations. The report, 

the work of the Commission’s Internet Access Task Force, provides 

important background information on the technical functioning of the 

Internet, identifies guiding principles for policymakers, and cautions 

against imposing new regulations in the evolving, dynamic broadband 

Internet industry in the absence of significant market failure or 

demonstrated consumer harm. This report follows a 2006 Task Force 

report, “Municipal Provision of Wireless Internet,” which identified the 

potential benefits and risks to competition and consumers associated with 

municipal provision of Internet service, thus providing a framework for 

policymakers considering whether and how municipalities should provide 

such service.

3. Intellectual Property 

Second Report on Intellectual Property and Competition. In 

April 2007, the FTC and DOJ issued a joint report, “Antitrust 

Enforcement and Intellectual Property Rights: Promoting Innovation and 

Competition,” addressing issues arising when antitrust law is applied to 

conduct involving intellectual property rights. This is the second report, 

of two, to come out of a series of 24 hearings spanning 10 months, 

during which the agencies received comments and heard testimony from 

over 300 business, government, and academic commentators offering 

diverse perspectives. The report emphasizes that the agencies use a 

flexible rule of reason approach for the vast majority of conduct involving 

intellectual property rights, in order to promote the common goals of 

encouraging innovation and competition. In 2003, the FTC issued 

the first report on these hearings, “To Promote Innovation: The Proper






Greg Luib

Office of

Policy Planning

As Assistant Director of 

the Office of Policy Planning, 

Greg has been significantly 

involved in the Commission’s 

policy work in the last year 

across a number of topics. 

He served as a principal 

drafter of the joint FTC/DOJ 

report on “Competition in 

the Real Estate Brokerage 

Industry.”

As a member of the 

FTC’s Internet Access Task 

Force, Greg oversaw the 

drafting of the staff report 

on “Broadband Connectivity 

Competition Policy,” which 

addressed the complex and 

controversial subject of 

network neutrality regulation.

Greg was awarded the 

Commission’s 2007 Paul Rand 

Dixon award for his efforts in 

the area of competition policy 

development and advocacy.

23

The FTC in 2008: A FORCE for consumers and competition

Balance of Competition and Patent Law and Policy.” That report urged 

that the role of competition in promoting innovation be considered when 

formulating patent policy. 

4. Other

Real Estate Report. In May 2007, the FTC 

and DOJ issued a joint report on the nature 

of competition in the real estate brokerage 

industry, including structural characteristics of 

the industry, the recent growth of nontraditional 

brokerage models, the impact of the Internet on 

consumers of brokerage services, and obstacles 

to a more competitive environment. The 

report compiled information gathered during 

a joint FTC/DOJ workshop in October 2005. 

In conjunction with the report, the FTC issued a new consumer alert, 

“Buying a Home: It’s a Big Deal,” with tips for using the services of a real 

estate professional when purchasing a home. 

Postal Service Study. In January 2008, the 

Commission issued a report, required by the 

Postal Accountability and Enhancement Act, 

that examined federal and state laws that 

apply differently to the U.S. Postal Service 

(USPS) and to its private competitors offering 

comparable products. The report concluded 

that legal constraints increase the USPS’s costs, 

and implicit subsidies partially mask those costs 

from consumers. Taken together, consumers 

buy more competitive mail products from the USPS and more resources 

are used to produce these products than would occur in a market without 

these distortions. The report also laid out some options for Congress and 

the Postal Regulatory Commission to consider to minimize or eliminate 

these market distortions.

Authorized Generics Study. The Commission is conducting a study 

on authorized generic drugs. The study is intended to help understand 

the circumstances under which innovator companies launch generics; to 

provide data and analysis regarding the effects of authorized generics on 

short-term price competition, particularly during the Hatch-Waxman 

Act’s exclusivity period, and on long-term prospects for generic entry; and 

to add to the research on the effect of generic drug entry on prescription 

drug prices. In 2007, the Commission issued orders to branded and 

generic manufacturers and marketers of pharmaceuticals, requiring 

responses to information requests. Staff will prepare a report based on the 

information that is received.






24

Federal Trade Commission

B. Hearings and Workshops

The Commission also organizes public hearings and workshops to gain a 

deeper understanding of the complex economic and legal issues surrounding 

various antitrust issues and to help it develop effective policy research and 

development tools. These events generally bring together experts from various 

legal, business, academic, and government backgrounds to exchange ideas, 

challenge positions, and reflect on new issues to study.

1. Hearings

Single-Firm Conduct Hearings. Between June 2006 and May 2007, the 

FTC and DOJ Antitrust Division held a series of joint public hearings 

to study the antitrust implications of single-firm conduct. The hearings 

included 29 sessions with approximately 120 panelists that discussed 

when specific types of single-firm conduct may be anticompetitive and 

violate Section 2 of the Sherman Act, and when such conduct is procompetitive and lawful. The hearings focused on the identification and 

analytical meaning of monopoly power; circumstances that determine 

exclusionary conduct; unilateral refusals to deal with rivals; predatory 

pricing and bidding; loyalty and bundled discounts; exclusive dealing; 

tying; misleading and deceptive conduct; remedies; historical and 

strategic business perspectives; the use of empirical data; and international 

perspectives. Agency staff is preparing a report that draws conclusions 

based on the hearings and relevant scholarship.

2. Workshops

Energy Conference. In April 2007, the FTC hosted a three-day public 

conference, Energy Markets in the 21st Century: Competition Policy in 

Perspective, that examined: (1) the relationship between market forces 

and government policy in energy markets; (2) the dependence of the 

U.S. transportation sector on petroleum; (3) the effects of electric power 

industry restructuring on competition and consumers; (4) technological 

developments in the industry; (5) the security of U.S. energy supplies; 

and (6) the government’s role in maintaining competition and protecting 

energy consumers. Based on presentations at the conference, as well as 

additional research and analysis, the Commission expects to issue a report 

that will address a number of key energy issues, including the security of 

energy supplies and proposals for addressing climate change concerns.

Grocery Store Antitrust. In May 2007, the FTC’s Bureau of Economics 

held a one-day conference on the antitrust analysis of the grocery 

industry including both historical perspectives and current methods of 

analysis. The presentations included recent academic work related to 

competition in this industry, a historical review of the Commission’s 

actions in this industry, current economic analysis of grocery and retail 

competition, and recent work on new methods for analyzing grocery and 

retail competition.







in the 21st century:

Competition Policy in Perspective

energy markets
25

The FTC in 2008: A FORCE for consumers and competition

Unilateral Effects. In February 2008, the FTC convened a public 

workshop, “Unilateral Effects Analysis and Litigation,” that brought 

together recognized legal and economic experts to discuss how unilateral 

effects theories are applied to mergers of firms selling competing but 

differentiated products as well as judicial perspectives on such theories. 

Among economists, unilateral effects is a widely accepted theory of 

competitive harm. Yet both the FTC and DOJ have experienced some 

difficulties litigating differentiated product cases under a unilateral 

effects theory. Panelists discussed, from the trial attorney’s point of view, 

effective strategies for litigating mergers under unilateral effects theory 

and the relative importance of presenting business documents, customer 

testimony, industry experts, and other non-economic market evidence 

when bringing a unilateral effects case. Other panelists examined the 

importance of econometric and non-econometric evidence when relied 

upon by experts, and how reliance on such evidence may bolster or 

undermine the credibility of the expert. The workshop included a moot 

court-style presentation, moderated by two federal judges, that examined 

different litigation strategies.

C. Advocacy Letters and Comments

Providing policymakers with a framework to 

analyze competition issues is an important component 

of the Commission’s mission to promote competition 

for the benefit of consumers. Government-imposed 

impediments can be among the most durable and effective 

restraints on competition. Thus, in response to requests, 

the FTC advises state and federal entities on the potential 

competitive impact of pending governmental actions 

focusing on the same critical economic sectors that receive emphasis in FTC law 

enforcement: health care, energy, real estate, and others that have a major impact 

on consumers’ wallets.

Unauthorized Practice of Law. During the last year, FTC staff filed 

comments before a number of state entities arguing against proposals 

to prevent non-lawyers from performing certain tasks. In April 2007, 

FTC and DOJ filed joint comments with the New York State Assembly 

Committee on the Judiciary opposing a proposal to expand the scope 

of activities that must be performed by a lawyer during a real estate 

transaction. In addition, in comments filed with the Connecticut 

Superior Court and the Supreme Court of Hawaii (jointly with DOJ) in 

the past year, FTC staff communicated its long-standing position that 

non-lawyers should be permitted to compete with lawyers in areas where 

no specialized legal knowledge and training is demonstrably necessary 

to protect the interests of consumers because such lawyer/non-lawyer 

competition provides consumers with a broader range of service options 

and lower prices.





“The challenge for the FTC, looking ahead, is to ensure 

that private and public restrictions do not conspire to 

inhibit the introduction of innovative solutions. Some of 

these solutions may work, and some may fail; but our job 

as competition enforcers is to ensure that anticompetitive 

restrictions do not doom them to failure.”

– Chairman Majoras, Keynote Address before the ABA Section of 

Antitrust Law Fall Forum (Nov. 15, 2007)
26

Federal Trade Commission

Health Care.

Pharmacy Benefit Managers. In April 2007, FTC staff provided 

comments on legislation in New Jersey that would regulate the 

contractual relationship between pharmacy benefit managers and 

both health benefit plans and pharmacies. The comments argued that 

the proposed law would limit the abilities of these parties to enter 

into efficient, mutually beneficial contracts and might increase costs 

of pharmaceutical care for employers, unions, and consumers. For 

example, according to FTC staff, the bill might adversely impact the 

efficient use of mail-order pharmacies, or impede price competition 

among pharmaceutical companies or pharmacies. 

Limited Service Clinics. In October 2007, the Commission filed 

comments with the Massachusetts Department of Public Health, 

commending the flexibility of proposed regulations for new limited 

service clinics (LSCs), sometimes referred to as retail clinics, as 

a means to expand access to basic health care services for certain 

patients. At the same time, staff expressed concern that a proposed 

requirement that all LSC advertising – and no other clinic advertising 

– be pre-screened and pre-approved could deprive consumers of 

useful information about available care and act as a barrier to entry 

for new competitors.

Service Provider Collective Bargaining. In January and February 

2008, FTC staff provided comments on initiatives to permit 

collective bargaining by health care service providers in Puerto 

Rico and Ohio, respectively. In Puerto Rico, proposed legislation 

sought to permit collective bargaining on fees and other matters by 

health care service providers. In Ohio, an executive order sought to 

require collective bargaining, via a single representative, for certain 

home health care workers. In each case, FTC staff argued that 

such collective bargaining could raise prices for, and thereby reduce 

access to, health care services, without ensuring better quality care 

as a countervailing benefit for consumers. For those reasons, the 

Commission has enforced the antitrust laws when certain private 

groups of health care providers have colluded to fix prices, and the 

Commission consistently has opposed legislative proposals to exempt 

from antitrust scrutiny various categories of health care providers.

Certificates of Need. In February 2008, the Commission 

submitted written testimony to a committee in the Alaska House of 

Representatives on legislation that would modify or repeal certain 

aspects of Alaska’s certificate of need (CON) law, which applies to 

health care facilities in that state. The Commission observed that, 

although CON laws were intended to help contain health care 

spending, the best available research does not support the conclusion 

that CON laws actually reduce such expenditures. Rather, CON laws 











Supreme Court 

Decision

The Supreme Court’s 2007 

seminal decision on rule of 

reason treatment for minimum 

resale price maintenance in 

Leegin Creative Leather 

Products, Inc. v. PSKS, 

Inc., for which DOJ and FTC 

submitted a joint amicus

brief, cited FTC studies in 

overturning the century-old 

standard from Dr. Miles.

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27

The FTC in 2008: A FORCE for consumers and competition

tend to create barriers to entry for health care service providers who 

may contribute to qualitative competition and provide consumers 

with important choices in the market. Moreover, CON laws may 

be subject to abuse by incumbent providers, who can seek to exploit 

a state’s CON process to forestall the entry of competitors in their 

markets.

Energy.

Electricity Transmission. In May 2007, the FTC filed comments 

in response to the Federal Energy Regulatory Commission’s (FERC) 

Notice of Proposed Rulemaking that would create standards to 

prevent electricity transmission providers from cross-subsidizing or 

discriminating in favor of their energy affiliates. The Commission 

encouraged FERC to consider expanding the rules to cover 

discrimination not only in favor of marketing affiliates but also in 

favor of non-marketing affiliates, in both the natural gas and electric 

power sectors. In September 2007, the Commission provided 

comments to FERC regarding regulatory reforms designed to 

promote more vigorous competition in organized wholesale electric 

power markets. The FTC comments suggested ways to strengthen 

competition and prevent the exercise of market power by electricity 

generators, including taking greater account of the competitive 

benefits of demand response and ensuring the independence of 

market monitors in the organized wholesale markets.

Gasoline Industry. In May 2007, FTC staff submitted comments 

advocating against proposed Connecticut legislation requiring 

gasoline retailers to base their price on historic gasoline costs and 

banning zone pricing. The comments noted that limiting retailers’ 

ability to react to wholesale price increases is likely to harm consumers 

by reducing the market’s ability to ameliorate supply shortages and 

by causing retailers to hold smaller inventories of gasoline than they 

otherwise would. Further, staff explained how zone pricing can allow 

refiners and lessee-dealers more efficiently to share risk. In June 2007, 

FTC staff filed comments on a proposal to repeal Washington, D.C.’s 

current ban on jobber (i.e., wholesaler) operation of retail service 

stations, explaining that such divorcement provisions are associated 

with higher retail gasoline prices. Staff supported the proposal, but 

also noted that a total repeal of D.C.’s divorcement provision, which 

also applies to refiners, producers, and manufacturers, likely would 

benefit consumers more than the proposed partial repeal.

Real Estate. In May 2007, the FTC and DOJ filed a joint comment 

with Michigan Governor Jennifer M. Granholm opposing proposed 

legislation that would set minimum service requirements for all real estate 

professionals in the state regardless of whether consumers actually wanted 

all of the services. The agencies raised concerns about unnecessary and 








28

Federal Trade Commission

confusing requirements for brokers, and limits on advertising that would 

not provide benefits to consumers and could hamper brokers offering 

nontraditional service models.

D. Amicus Briefs

During the past year, the FTC filed two amicus briefs to assist federal courts 

of appeals in resolving important competition-related issues. 

In re DDAVP Direct Purchaser Antitrust Litigation. In May 2007, the 

Commission and DOJ filed a joint amicus brief in support of a group of 

plaintiffs who were direct purchasers of the brand-name drug DDAVP. 

The plaintiffs alleged that the patent for the active ingredient in DDAVP 

had been obtained by fraud on the Patent and Trademark Office, and 

that, by maintaining and enforcing that patent, two drug companies 

who owned the patent, and a third company that was the exclusive 

licensee, had violated Section 2 of the Sherman Act. The brief urged the 

Second Circuit to reverse the district court’s decision, which held that the 

plaintiffs lacked standing to bring monopolization claims against the drug 

companies.

In re Ciprofloxacin Hydrochloride Antitrust Litigation. The 

Commission filed in January 2008 an amicus brief urging the Federal 

Circuit to overturn a district court decision that immunized from the 

antitrust laws agreements entered into by the holder of a pharmaceutical 

patent and generic competitors. Pursuant to these agreements, the patent 

holder paid the competitors nearly $400 million in exclusion payments. 

In exchange, the competitors agreed to delay entering the market with 

their generic drug until the patent on the brand-name version had 

expired. In its brief, the Commission argued that, outside the patent 

context, an agreement to pay a potential competitor not to compete 

constitutes a well established violation of the antitrust laws, and the 

presence of a patent, without more, does not immunize that agreement 

from antitrust scrutiny. 

E. Congressional Testimony

The FTC’s Commissioners and senior staff testified before Congress in the 

past year on several important competition-related topics, including patent 

settlements between generic and branded drug manufacturers, gasoline pricing, 

and a proposed antitrust exemption for independent pharmacies.

Health Care. During the last year, Commissioners and other senior FTC 

staff provided congressional testimony on health care-related subjects. 

In May 2007, Commissioner Leibowitz presented testimony discussing 

recent court decisions that have made it more difficult to bring antitrust 

cases to stop anticompetitive exclusion payment settlements between 






29

The FTC in 2008: A FORCE for consumers and competition

branded drug manufacturers and their generic competitors, and the 

Commission’s support for effective legislation to prevent this practice.

In October 2007, David P. Wales, Deputy Director of the Bureau of 

Competition, presented the Commission’s views on H.R. 971, the 

proposed “Community Pharmacy Fairness Act of 2007,” that would 

create an antitrust exemption for pharmacies to bargain jointly for higher 

fees and more favorable contract terms from health plans. As with 

previous attempts to create a special exemption for health care providers, 

the Commission opposed the bill, which threatens to raise prices to 

consumers, particularly seniors, for much-needed medicines. 

Energy. In May 2007, Commissioner William E. Kovacic testified on 

behalf of the Commission before the House Energy and Commerce 

Subcommittee on Oversight and Investigations concerning the FTC’s 

varied initiatives to protect competitive markets in the production, 

distribution, and sale of gasoline and other petroleum products. The 

testimony emphasized the FTC’s vigorous monitoring and enforcement 

activities in the petroleum industry and the agency’s numerous research 

efforts – in the form of conferences, studies, and reports – that inform 

and complement its work.

Also in May 2007, Michael A. Salinger, then-Director of the 

Commission’s Bureau of Economics, presented FTC testimony on 

petroleum industry concentration before the Joint Economic Committee 

of Congress. The testimony described the Commission’s efforts to protect 

competitive markets in the production, distribution, and sale of gasoline 

through the agency’s comprehensive merger program and its monitoring 

of wholesale and retail gasoline prices. The testimony pointed to recent 

energy enforcement actions, noting that the Commission has brought 

more merger cases – and has obtained merger relief in many instances 

– at lower market concentration levels in the petroleum industry than in 

any other industry. 

Chapter 3. Competition – Consumer and Business 

Education and Outreach

In conjunction with its law enforcement and advocacy work, the 

Commission also strives to bolster confidence in the marketplace through public 

education and outreach efforts directed at both consumers and businesses. As 

part of this effort, the agency has developed a multi-dimensional outreach 

program to inform consumers – individuals and businesses alike – about the 

benefits of competitive markets and the importance of antitrust enforcement 

in promoting competitive prices, higher quality goods and services, and more 

choices. To promote transparency and provide answers about the Commission’s 

mission, the agency continues to develop resources to help explain the benefits of 

the antitrust laws, including a broad collection of brochures, articles, reports, fact 


30

Federal Trade Commission

sheets, and other products to reach the general public, attorneys, and the business 

community. The FTC also works with other public and private organizations to 

widely disseminate its important message. 

Competition Counts. The Commission continues to expand efforts to 

educate the public about the benefits of competition, distributing its 

consumer brochure, Competition Counts: How Consumers Win When 

Businesses Compete, at events promoting the work of the agency and with 

students and foreign visitors. The brochure also is available in Spanish.

Promoting Competition, Protecting Consumers: A Guide to the 

Antitrust Laws. This spring, the Bureau of Competition will introduce 

new resources for individuals and businesses who have questions about 

the antitrust laws. Promoting Competition, Protecting Consumers: A 

Guide to the Antitrust Laws contains fact sheets on individual topics, such 

as price fixing, refusals to deal, and merger review, and provides case 

examples and answers to Frequently Asked Questions. The guides can 

be found on the agency’s website and are downloadable in PDF format. 

With newly designed web pages, these resources include links to the 

Commission’s competition guidance material, such as the Horizontal 

Merger Guidelines, Guidelines for Collaborations Among Competitors, 

and policy statements in health care and international operations.

Bureau of Competition User’s Guide. In April 2007, BC Director 

Jeff Schmidt released the Bureau of Competition User’s Guide, a resource 

for anyone needing to know about the work of the Bureau and who to 

contact about competition issues. The guide contains helpful information 

about the Offices and Divisions of the Bureau of Competition, describes 

the types of investigations handled by each shop, and includes contact 

information for managers and staff. The User’s Guide is available in print 

and online, and was updated in March 2008. 

Industry-specific Websites. The Commission’s website is organized 

to provide “few clicks” access for the public and practitioners to access 

important information relating to its competition work in a variety of 

vital industries. The FTC maintains four mini-websites with all the 

latest developments in FTC policy and enforcement in the oil and gas, 

health care, real estate, and technology fields. In the past year, the agency 

also developed three new mini-websites devoted to attorney regulation, 

alcohol regulation, and optometry regulation, to highlight the FTC’s 

efforts to promote competition in these important sectors. 

Competition-related Consumer Education. The Commission 

continues to supplement its antitrust enforcement and policy work 

with information aimed at consumers and businesses to assist them in 

recognizing anticompetitive conduct and understanding the potentially 

detrimental effects of corporate mergers or other restrictive corporate 

behavior. For example, when issuing the joint FTC/DOJ Real Estate 










31

The FTC in 2008: A FORCE for consumers and competition

Report, the FTC published “Buying a Home – It’s a Big Deal” offering 

home buyers information on tips for selecting a real estate broker, using 

the Internet to shop for homes, and new choices available from brokers 

offering nontraditional services which can result in a lower purchase 

price. 
32

Federal Trade Commission
33

The FTC in 2008: A FORCE for consumers and competition

Section Two: Consumer Protection 

Mission 

The FTC protects the public from unfair, deceptive, and fraudulent practices 

in the marketplace and addresses consumer protection issues that touch all 

Americans. Dedicated to carrying out this mission, the Commission has pursued 

a vigorous and effective law enforcement program in a dynamic marketplace. 

Increased globalization, fast-paced changes in technology, 

and scams that adapt and evolve with the marketplace 

are just three issues that the FTC faces. Through the 

efforts of a dedicated, professional staff, the FTC handles 

a growing workload, invigorated by the challenges of the 

21st century. During the past year, the agency’s consumer 

protection work has focused on data security and identity 

theft, technology risks to consumers such as spam and 

spyware, fraud in the marketing of health care products, 

deceptive financial practices in the subprime mortgage 

and credit repair industries, telemarketing fraud, and 

Do Not Call enforcement. Because many of the frauds 

that the FTC pursues civilly also often are criminal violations, the Criminal 

Liaison Unit cooperates with criminal authorities bringing the collective powers 

of different government agencies to bear upon serious misconduct in many 

consumer protection areas. 

In fulfilling its consumer protection mission, the FTC employs a variety 

of cutting-edge tools to help the agency stay at the forefront of emerging 

technologies and rapidly evolving fraudulent schemes. These tools include law 

enforcement, consumer education, business guidance, market research, and the 

encouragement of sound self-regulatory programs. The FTC’s informationgathering arsenal includes public workshops, rulemakings, reports, and domestic 

and international databases. The FTC combines these efforts to empower 

consumers and to inform policymakers, businesses, and the public as a whole. 

“Our job continues to be empowering consumers to 

participate fully in the global marketplace that presents new 

opportunities. We ensure that consumers receive adequate 

market information; that consumers are not buried under an 

onslaught of unwanted noise masquerading as information; 

and that consumers’ own personal information is protected 

from unauthorized access in the marketplace.”

– Chairman Majoras, Keynote Address before the Federal 

Communications Bar Association’s Annual Meeting (June 27, 2007)
34

Federal Trade Commission

Chapter 4. Consumer Protection Law Enforcement

A. Fraud and Deception Law Enforcement

One of the FTC’s highest priorities is vigorously fighting fraudulent and 

deceptive practices that harm consumers. From March 2007 through February 

2008, the FTC filed 38 actions in federal district court and obtained 111 

judgments and orders requiring defendants to pay over $240 million in remedies. 

This figure includes more than $161 million in consumer redress and referrals 

to the Department of Justice which resulted in 16 civil penalty orders and more 

than $11 million in civil penalties. In many of these cases, the FTC worked with 

local, state, federal, and international law enforcement authorities to achieve 

effective results. The following are examples of enforcement actions initiated 

by the Bureau of Consumer Protection challenging a myriad of illegal conduct 

extending across various industries.

Deceptive Lending and Other Credit Schemes. Financial issues impact all 

consumers – whether they are purchasing a home, trying to establish credit or 

improve their credit rating, or managing rising debt. Thus, protecting consumers 

in the financial services marketplace is a critical part of the FTC’s consumer 

protection mission. The FTC has focused recent efforts in this area on subprime 

lending, misleading mortgage claims, abusive debt collection practices, and 

deceptive marketing of debt reduction programs that can have financially and 

emotionally devastating effects on consumers, resulting in higher-cost loans, 

foreclosures, ruined credit histories, bankruptcy, and unwarranted fears of arrest 

and incarceration. 

Debt Negotiation and Settlement. In March 2007, the Commission 

filed a complaint in Debt Set, Inc., alleging that the defendants, marketers 

of debt reduction programs, had deceptively represented to consumers 

the amount of debt they could reduce, the associated fees, and other 

key loan terms. In January 2008, five of the six defendants agreed to a 

settlement prohibiting them from making any such misrepresentations, 



Top Consumer Fraud Complaints in 2007

1. Identity Theft 258,427 complaints 32%

2. Shop-at-Home/Catalog Sales 62,811 complaints 8%

3. Internet Services 42,266 complaints 5%

4. Foreign Money Offers 32,868 complaints 4%

5. Prizes/Sweepstakes and Lotteries 32,162 complaints 4%

6. Computer Equipment and Software 27,036 complaints 3%

7. Internet Auctions 24,376 complaints 3%

8. Health Care Claims 16,097 complaints 2%

9. Travel, Vacations, and Timeshares 14,903 complaints 2%

10. Advance-Fee Loans and Credit Protection/Repair 14,342 complaints 2%
Allison Brown

Bureau of Consumer 

Protection

Division of Financial 

Practices 

A Division of Financial 

Practices’ attorney since 

2000, Allison is a skilled 

advocate and litigator. 

She has played a key 

role in many of the FTC’s 

landmark financial services 

cases, including Fairbanks/

Select Portfolio Servicing, 

AmeriDebt, and Mercantile 

Mortgage. Allison’s skill at 

analyzing financial policy 

issues was evident in the 

December 2007 FTC staff 

comment to the Office of 

Thrift Supervision explaining 

the evolution of unfairness 

concepts and their historical 

application to financial 

services issues. Allison 

also assessed the policy 

implications of innovations 

in payment technology as 

part of the Commission’s 

November 2006 Tech-ade 

Hearings, and has taken the 

lead on consumer protection 

policy issues related to 

payment processing.

35

The FTC in 2008: A FORCE for consumers and competition

requiring disclosures of all fees and costs, and imposing a $1 million 

judgment suspended upon payment of $390,000. In October 2007, 

in Edge Solutions, Inc., the FTC filed a complaint against marketers of 

debt settlement services for failing to provide the promised services, and 

instead, increasing many consumers’ debt. The complaint alleges that 

defendants, who marketed their services on several websites posting a 

toll-free number, often failed to contact each of the consumers’ creditors 

and to negotiate settlements – causing consumers to accumulate fees and 

litigation costs.

Debt Collection. In November 2007, the Commission obtained its 

largest civil penalty ever against a debt collector, LTD Financial Services, 

for violations of the Fair Debt Collection Practices Act (FDCPA). In 

that case, the debt collector agreed to pay $1.3 million in civil penalties 

to resolve charges that it misled, threatened, and harassed consumers. 

Notably, the FTC charged the individual owners and top managers 

with the violations, and the order enjoins them individually from such 

violations in the future. Additionally, in September 2007, the Third 

Circuit Court of Appeals upheld a judgment in favor of the FTC in 

Check Investors, Inc., ordering the debt collector who deceived and 

harassed consumers to pay $10.2 million in consumer redress – the 

largest amount of monetary relief the Commission has ever obtained 

against a debt collector.

Mortgage/Subprime Credit. The FTC has brought 21 enforcement 

actions in the past decade against both large and small companies 

in the mortgage lending industry in various regions of the country, 

collectively returning more than $320 million to consumers. In the past 

year, there has been a sharp increase in delinquencies and foreclosures 

in the mortgage market. As a result, unscrupulous actors now have 

greater opportunities to take advantage of people facing serious financial 

hardship. Therefore, the FTC has intensified its focus on protecting 

consumers in this area.

Safe Harbour Foundation. In February 2008, the Commission filed 

a complaint against Safe Harbour Foundation, five other business 

entities, and three individuals for their role in a mortgage foreclosure 

fraud that saddled consumers with high-cost, interest-only, short-term 

balloon loans, secured by second mortgages on their homes. The 

complaint alleged that acting through Safe Harbour, the individual 

defendants contacted consumers facing foreclosure with offers to “save 

your home from foreclosure. GUARANTEED!” The Commission 

charged that the defendants violated the Home Ownership and 

Equity Protection Act (HOEPA), the Truth in Lending Act, and the 

FTC Act by significantly understating the annual percentage rate for 

the loans. In addition, the Commission alleged that the individual 

defendants are in civil contempt for violating orders entered in 

2004 in FTC v. Bay Area Business Council, Inc., which prohibited 






36

Federal Trade Commission

them from participating in the sale of “credit-related products” to 

consumers.

Payday Loans. In the area of unsecured consumer credit, such as 

payday loans, the FTC takes legal action when lenders fail to provide 

disclosures or other information that the law requires. In February 

2008, the Commission announced that three Internet payday lenders 

agreed to settlements resolving charges that they violated the Truth 

in Lending Act (TILA) by failing to disclose annual percentage rates 

(APRs) in ads stating the cost of credit. APRs assist consumers in 

comparison shopping for loans. The orders in these cases would 

require the respondents to disclose APR information in similar ads 

in the future, as well as to comply with TILA and its implementing 

Regulation Z. 

Mortgage Advertising. To address the growth in advertising of 

nontraditional mortgage products, in the summer of 2007, FTC staff 

conducted a nationwide review of home mortgage advertisements

that focused on claims for very low monthly payment amounts or 

interest rates, without adequate disclosures of other important loan 

terms. The review included advertisements 

appearing in websites, newspapers, magazines, 

direct mail, and unsolicited email and faxes, 

including some advertisements in Spanish. As 

a result of this review, in September 2007, FTC 

staff sent letters to more than 200 mortgage 

brokers, lenders, and media outlets warning 

them that their advertisements for home 

mortgage products may contain deceptive or 

otherwise unlawful claims, and is currently 

investigating several mortgage advertisers and 

will continue to monitor the claims made in 

mortgage advertising.

Deceptive Health, Safety, and Weight Loss Claims. Too often, consumers 

fall prey to fraudulent health marketing because they are desperate for help. In 

2006, Americans spent over $2.1 trillion on health care services and products and 

that number is projected to increase to over $4.3 trillion by 2017. Fifty million 

Americans suffer from a chronic pain condition and have found no effective cure 

or treatment. Seventy million Americans are trying to lose weight. Through its 

law enforcement efforts, the FTC continues to take action against companies that 

take advantage of these consumers. From March 2007 through February 2008, 

the FTC initiated or resolved 23 law enforcement actions challenging 36 such 

products and associated claims.

Telebrands Corp. In August 2007, the FTC filed a federal court 

action seeking redress for consumers who spent over $16 million on the 

defendants’ ab belts and accessories. In 2005, the Commission upheld an 






37

The FTC in 2008: A FORCE for consumers and competition

administrative law judge’s finding that Telebrands made deceptive claims 

that using the electronic muscle stimulation belt caused weight loss, welldefined abdominal muscles, and was an effective alternative to regular 

exercise. The Fourth Circuit Court of Appeals upheld the Commission’s 

decision in 2006, paving the way for the Commission’s 2007 redress 

action. 

Contact Lens Rule. The Commission continued its enforcement of 

the Contact Lens Rule, bringing cases this year involving the unlawful 

sale of non-corrective, cosmetic contact lenses without a prescription. 

The Commission obtained two consent orders imposing civil penalties 

against defendants BeWild, Inc. and Pretty Eyes, LLC and their individual 

owners. The BeWild defendants were ordered to pay $11,000 in civil 

penalties; the settlement with the Pretty Eyes defendants includes a 

$25,000 civil penalty, suspended upon payment of $2,500. Additionally, 

the staff sent 25 warning letters in August and October 2007 to contact 

lens prescribers who may have failed to provide patients with their 

prescriptions, and to cosmetic contact lens sellers who appeared to be 

selling lenses without prescriptions.

Alternative Hormone Replacement Therapy Products. In October 

2007 and January 2008, the FTC announced settlements with a total 

of seven marketers of natural progesterone creams for claiming their 

products prevented, treated, cured, or reduced the risk of developing 

osteoporosis, estrogen-induced endometrial (uterine) cancer, and breast 

cancer without supporting scientific evidence. The settlements bar the 

marketers from making unsubstantiated health claims in the future.

Serious Disease Prevention Claims. In December 2007, the FTC 

settled charges in the J.W. McLain case that the defendants made 

deceptive claims that their herbal tea could prevent, treat, or cure AIDS, 

diabetes, cancer, arthritis, strokes, and heart disease. The FTC obtained 

a $31.7 million suspended judgment and an order for the defendants to 

forfeit all of their frozen assets and proceeds of their business opportunity 







“For the Q-Ray Ionized Bracelet . . . all statements about 

how the product works – Q-Rays, ionization, enhancing the 

flow of bio-energy, and the like – are blather. Defendants 

might as well have said: ‘Beneficent creatures from the 17th 

Dimension use this bracelet as a beacon to locate people who 

need pain relief, and whisk them off to their homeworld every 

night to provide help in ways unknown to our science.’” 

– Chief Judge Frank Easterbrook, FTC v. QT, Inc., Civil Action No. 

07-1662 (7th Cir. Jan. 3, 2008) upholding a ruling in favor of the FTC 

requiring marketers of the “Q-Ray Ionized Bracelet” to relinquish 

almost $16 million in net profits as part of a maximum $87 million 

they must refund consumers.

Spear Systems, Inc. 

In the first action brought 

by the FTC using the U.S. 

SAFE WEB Act, the court 

granted an ex parte temporary 

restraining order prohibiting 

the defendants, operating 

domestically and from Canada 

and Australia, from sending 

commercial email messages 

that violate the CAN-SPAM 

Act and from making false 

and unsubstantiated product 

claims about hoodia weightloss products and human 

growth hormone anti-aging 

products. The Commission 

used its authority under SAFE 

WEB to advance the case by 

sharing non-public information 

with Canadian and Australian 

law enforcement authorities, 

which enabled them to provide 

assistance to FTC staff in its 

pre-complaint investigation. 

The U.S. SAFE WEB Act, 

signed into law at the end of 

2006, provides the FTC with 

enhanced tools to cooperate 

with foreign law enforcement 

authorities on consumer 

protection enforcement 

matters that cross national 

borders. In addition to 

facilitating informationsharing for law enforcement 

efforts, the U.S. SAFE WEB 

Act also gives the FTC 

enhanced authority to provide 

investigative assistance, 

protect the confidentiality 

of information from foreign 

sources, and strengthen 

enforcement relationships.
38

Federal Trade Commission

sales. In February 2008, the FTC settled charges that the defendants 

in the 7 Day Marketing matter disseminated false and unsubstantiated 

claims that their colon-cleansing program effectively prevented, 

treated, and cured diseases such as AIDS, cancer, Alzheimer’s disease, 

and diabetes, and caused rapid, safe, and substantial weight loss. The 

settlement includes a $14.45 million suspended judgment upon payment 

of $70,000. 

Hispanic Law Enforcement Initiative. The FTC continues aggressively 

to combat consumer fraud against Hispanics. Since the introduction of the 

Hispanic Law Enforcement Initiative in 2004, the FTC has filed 42 actions 

against 146 businesses and individuals alleged to have fraudulently sold a variety 

of fraudulent products and services to Spanish-speaking consumers. Examples of 

law enforcement successes this year include:

Tono Records. In June 2007, the FTC obtained a temporary restraining 

order and an asset freeze against an operation that victimized Spanishspeaking consumers who had previously inquired about an Englishlanguage instruction course. The FTC charged that the defendants posed 

as debt collectors and repeatedly called consumers seeking payments 

that they did not owe. In August 2007, the FTC obtained a preliminary 

injunction and in September, the court entered a default judgment 

against the corporate defendants.

Remote Response. In August 2007, the FTC obtained federal court 

orders against advance-fee credit card marketers who advertised on 

Spanish-language television and whom the FTC alleged defrauded 

consumers out of more than $4 million. The court ordered the 

defendants to turn over assets valued at more than $500,000, and 

banned them from telemarketing and from selling credit cards or similar 

products.

Natural Solutions. In September 2007, the FTC 

obtained a district court judgment against dietary 

supplement marketers advertising a purported cancer 

treatment in Spanish-language infomercials. The 

court ordered the defendants to pay over $3 million in 

full redress to consumers. The court also permanently 

barred the defendants from making unsubstantiated 

health claims, and ordered the defendants to notify all 

consumers that they had no evidence to substantiate 

their cancer prevention and treatment claims.

Payment Processors. In December 2007, the FTC, joined by seven state 

attorneys general, filed a complaint against payment processor Your Money 

Access for attempting to debit more than $200 million from consumers’ bank 

accounts on behalf of telemarketers and Internet-based merchants. This was the 

seventh case filed by the FTC challenging illegal payment processing activity. In 







“Lying to consumers about debts they don’t owe and 

harassing and threatening them when they don’t pay are 

illegal business practices, period. We will aggressively 

pursue companies that use these tactics to extort money from 

consumers.”

– BCP Director Lydia Parnes, “FTC Stops Alleged Extortion Scheme 

Aimed at Hispanics Nationwide” (press release, June 21, 2007)

Sunny Health 

Nutrition Technology 

& Products, Inc.

The Commission entered 

into a stipulated final order in 

2006 to settle charges alleging 

that defendants had made 

false and unsubstantiated 

claims for three dietary 

supplements. The order 

required defendants to pay 

$375,000, out of a total 

monetary judgment of $1.9 

million, based on their 

purported inability to pay. 

When the FTC subsequently 

discovered that defendants 

failed to disclose at least $1.8 

million kept in an undisclosed 

PayPal account, it immediately 

sought and obtained a 

temporary restraining 

order to freeze the funds in 

December 2006. In April 2007, 

defendants were ordered 

to remit $1.9 million, the 

full amount of the monetary 

judgment.
39

The FTC in 2008: A FORCE for consumers and competition

March 2008, the FTC obtained a settlement with the largest billing aggregator, 

BSG Clearing Solutions North America, LLC, and two of its subsidiaries, which 

allegedly “crammed” approximately $30 million in unauthorized collect call 

charges on consumers’ telephone bills. The settlement requires the defendants 

to pay $1.9 million in redress and provides comprehensive injunctive relief 

regarding the due diligence they must undertake before providing billing services 

for a new vendor, and the minimum steps they must take when they learn about 

complaints regarding unauthorized charges for telecommunications services.

Business Opportunity Schemes. For over a decade, 

the FTC has led a federal-state partnership to aggressively 

combat business opportunity and work-at-home frauds, 

and to educate the public to detect and avoid these scams.

Home Business System. In August 2007, the 

FTC obtained preliminary relief in federal court 

shutting down a work-at-home scheme that 

promised Spanish-speaking consumers earnings of $1,400 a week to stuff 

envelopes. The Commission alleged that most consumers who paid a 

$45 “registration deposit” never heard from the company again and that 

those who did were simply told to replicate the fraudulent envelopestuffing scheme by making the same false claims to other consumers. In 

January 2008, the Court entered a stipulated preliminary injunction 

that continued the asset freeze and the conduct prohibitions concerning 

misrepresentations. 

Business Card Experts, Inc. In 

October 2007, the FTC announced a 

settlement resolving allegations that the 

company and its principals deceptively 

marketed business card dealerships, 

using false earnings claims and phony 

references, to convince nearly 1,300 

consumers to invest between $5,000 

and $25,000 each. In addition to 

halting the scheme, the order includes 

a judgment of more than $16 million 

and more than $3.5 million for 

disgorgement which will be suspended 

once the defendants have relinquished 

assets subject to an asset freeze, 

including accounts totaling approximately $5 million. The settlement is 

a result of last year’s Project Fal$e Hope$, an FTC-led effort that targeted 

bogus business opportunities and work-at-home scams. 

Project Scofflaw. In a comprehensive effort to detect repeat offenders and 

deter order violations, FTC staff monitor compliance with administrative and 

federal court orders entered in FTC consumer protection cases. These orders 





“I purchased the rights to sell franchise opportunities in 

several different territories. After doing so, I came to realize 

that I was lied to about the opportunity, which meant that I 

would also have to lie to others about the opportunity in order 

to sell franchises, or even to sell my territory.” 

– Utah consumer, June 2007

Significant Redress Orders

International Product Design, Inc. $61,000,000

Nationwide Connections, Inc. $34,426,697

Stefanchik Organization $17,775,369

Centurion Financial Benefits $10,552,162

Holiday Enterprises, Inc. $8,980,880

Prime One Benefits $8,089,774

Business Card Experts $5,129,592

Bezeredi $4,755,363

Premier Benefits Inc. / Universal Premier Services Inc. $3,937,000

Blue Hippo Funding, LLC $3,500,000

Zango, Inc. f/k/a 180solutions, Inc. $3,000,000
40

Federal Trade Commission

address a wide range of consumer protection issues, including advertising and 

financial practices, data security, high-tech fraud, and telemarketing. Project 

Scofflaw has three basic purposes: (1) to conduct investigations and identify 

those who violate FTC-obtained court orders; (2) to stop the deceptive acts as 

quickly as possible through civil contempt actions; and (3) where appropriate, 

to refer egregious and knowing violators to the Department of Justice for 

criminal contempt prosecution. The following cases demonstrate the agency’s 

commitment to enforcement of its orders.

Gumpel. In August 2007, the FTC obtained a $61 million judgment 

in a civil contempt action against Julian Gumpel and related businesses 

for violating a 1998 federal court order by orchestrating an invention 

promotion scheme. Earlier, in May 2007, the court had held the 

defendants in contempt for, among other things, failing to disclose to 

consumers that none of its clients had successfully marketed an invention. 

In July, the Court found that they were jointly and severally liable for 

consumer losses, and finally, in August, permanently banned them from 

offering invention promotion services. 

Trudeau. In November 2007, the FTC obtained a contempt ruling 

against Kevin Trudeau for violating a 2004 federal court order 

that enjoins him from misrepresenting the content of his books in 

infomercials. In the contempt action, the FTC charged Trudeau with 

misrepresenting the contents of his book, “The Weight Loss Cure ‘They’ 

Don’t Want You To Know About,” by claiming in infomercials that the 

book’s weight loss protocol was “easy” and ultimately enabled consumers 

to eat “everything they want” without gaining weight. In fact, Trudeau’s 





Commissioner Kovacic: Achieving Effective Deterrence for Serious Fraud: 

The Development of the FTC’s Criminal Liaison Unit

Since the early 1970s, FTC enforcement efforts against serious fraud featured progressively 

stronger efforts to use civil sanctions to deprive wrongdoers of the gains of illegal activity, to 

compensate victims, and to deter misconduct. By the early part of this decade, the Commission 

saw that even harsh monetary sanctions by themselves were unlikely to deter the worst forms of 

misconduct. Those who engage in serious fraud knowingly operate illegitimate enterprises and 

have no concern for building or preserving a good reputation. They often dissipate or hide wrongful 

earnings, which leaves little to be recovered through nominally powerful civil orders for restitution, 

disgorgement, or civil penalties.

To raise the stakes for egregious misconduct, the Commission in 2004 established a Criminal Liaison Unit (CLU) 

to assist public authorities with criminal enforcement powers to bring criminal cases. Located in the Division of 

Enforcement of the Bureau of Consumer Protection, the CLU helps criminal enforcement bodies to assemble criminal 

fraud cases and builds relationships to assist in the identification and prosecution of future cases. 

The FTC’s experience with the CLU underscores the possible gains for public policy from innovative measures to 

engage individual government bodies in cooperative ventures with complimentary law enforcement agencies that yield 

results unattainable from single agency efforts.
41

The FTC in 2008: A FORCE for consumers and competition

weight loss protocol contains hundreds of strict mandates, as well as lifelong dietary restrictions.

Criminal Liaison Unit. The FTC’s Criminal Liaison Unit works with 

criminal authorities to encourage prosecutions of criminal consumer fraud and 

to assist in those prosecutions where appropriate. From March 2007 to February 

2008, federal and state criminal authorities have charged 81 FTC defendants 

and their associates with crimes arising from acts investigated or prosecuted by 

the Commission. During this period, 47 such defendants and their associates 

were convicted or pled guilty. Sentences imposed totaled 141 years and 9 

months (1,701 months) in prison, including four 10-year sentences, one 11-year 

sentence, and one 13-year sentence. In two cases, FTC attorneys were designated 

as Special Assistant United States Attorneys in order to prosecute the offenders. 

Bay Area Business Council. In March 2007, federal prosecutors 

indicted Peter Porcelli for mail fraud, wire fraud, and for conspiracy 

to engage in mail fraud, wire fraud, and money laundering. In May 

2007, Porcelli entered into a plea agreement and in October, the court 

sentenced him to 13 years in federal prison and ordered him to pay 

restitution. The FTC had previously obtained summary judgment 

against Porcelli and Bay Area Business Council for their deceptive 

telemarketing of purported credit cards, including a $12.5 million 

judgment, a result that was affirmed by the Seventh Circuit Court of 

Appeals.

GoInternet. In September 2007, a grand jury in Philadelphia returned 

a 26-count indictment against Neal Saferstein, Tyrone Barr, and Billy 

D. Light, three officers responsible for GoInternet, a website design and 

hosting firm that “crammed” charges onto consumers’ telephone bills. 

The criminal case arose out of a June 2000 FTC action and a subsequent 

civil contempt proceeding filed in August 2003. The indictment 

included charges for conspiracy to commit perjury during the FTC’s civil 

contempt proceeding. In November 2007, Billy D. Light pled guilty to 

the criminal charge and awaits sentencing. An attorney from the FTC’s 

East Central Regional Office is serving as a Special AUSA on the case. 

Costa Rican Sweepstakes Fraud. In January 2008, after a one week 

trial, a North Carolina jury returned a guilty verdict on all 23 charged 

counts of a federal indictment against Giuseppe Pileggi, the ringleader 

in a $15 million Costa Rican sweepstakes scam that convinced elderly 

Americans to pay purported taxes and insurance on non-existent 

lottery winnings. The jury also found Pileggi liable for $8.3 million in 

victim losses. Pileggi now faces a sentence of 50 years (pursuant to an 

extradition agreement with Costa Rica, Pileggi can only be sentenced 

to 50 years rather than facing the Federal Sentencing Guidelines’ 

recommendation of up to life imprisonment). An attorney from the 

FTC’s Division of Enforcement served as a Special AUSA on the case. 

Forty-five defendants have been indicted; thus far, 27 have pled guilty, 







The FTC’s Own

Privacy Initiatives

Chairman Majoras has 

stated that the FTC must “set 

the gold standard” when it 

comes to protecting consumers’ 

sensitive information within the 

agency. In an effort to meet 

this challenge, Chief Privacy 

Officer Marc Groman and the 

Privacy Steering Committee 

(PSC), intensified efforts to 

strengthen the FTC’s policies 

and educate staff about privacy 

issues. The cornerstone of the 

education program is “Privacy 

Week,” now an annual event. 

The FTC also introduced a 

privacy portal on its internal 

website, and published policies 

in its Administrative Manual 

governing the use, storage, 

sharing, and disposal of 

sensitive personally identifiable 

information (PII). 

The PSC reviewed the 

FTC’s 38 existing Privacy Act 

Systems of Records Notices, 

completed three Privacy Impact 

Assessments, and drafted 

six others. It also initiated a 

review of FTC use of Social 

Security numbers, with the goal 

of eliminating their unnecessary 

use and storage by the end 

of 2008. In June 2007, the 

FTC became one of the first 

federal agencies to develop 

a formal Breach Notification 

Response Plan. The Inspector 

General ranked the FTC’s 

program to control and protect 

PII as “Excellent,” the highest 

possible grade, and commented 

that the “FTC staff are aware 

of the heightened attention to 

ensuring that PII is adequately 

protected.”
42

Federal Trade Commission

and three have been sentenced – two to 10-year sentences and one to 

a 23-month sentence. There currently are eight fugitives and three 

defendants awaiting extradition from Costa Rica and Argentina. 

B. Privacy and Data Security Law Enforcement

The protection of consumers’ privacy and data security is a central part of the 

FTC’s consumer protection mission. The continued growth of the Internet and 

sophisticated computer systems provides tremendous benefits to consumers, such 

as enabling fast and convenient access to products, services, and information. 

Yet, at the same time, if the sensitive information needed to enable these services 

is not protected adequately, or if consumers’ identities are not authenticated 

properly, consumers are subject to increased threats to the security of their 

personal data, computers, and email. This year, the FTC fought vigorously to 

protect consumers from these technology-driven threats.

Data Security Enforcement. Data security remained one of the agency’s top 

enforcement priorities this year as a result of continued data security breaches 

and losses or thefts of sensitive consumer information. The FTC’s enforcement 

tools include laws and regulations such as the Safeguards Rule issued under the 

Gramm-Leach-Bliley Act, which requires financial institutions to take reasonable 

measures to protect customer data, and the Disposal Rule under the FACT Act, 

which requires companies to properly dispose of credit report data. The FTC’s 

data security enforcement seeks to protect the complete life-cycle of personal 

data, including its collection, storage, use, and disposal. To date, the FTC has 

brought 17 enforcement actions challenging inadequate security practices by 

companies that handle sensitive consumer data. 

American United Mortgage Company. In December 2007, the FTC 

announced a $50,000 civil penalty settlement with a mortgage broker 

resolving allegations that it left sensitive consumer loan documents in and 

around an unsecured dumpster and otherwise failed to protect customer 

information. This case was the first ever to allege violations of the FTC’s 

Disposal Rule.

Other recent data security enforcement actions include Goal Financial, 

filed in March 2008, settling allegations against a lender that it failed 

to provide reasonable security for sensitive consumer loan information, 

leading to a series of breaches from 2004 to 2006; 

ValueClick, filed in March 2008, resolving allegations that 

e-commerce marketers misrepresented that they encrypted 

credit card information collected from consumers online 

and used appropriate measures to protect sensitive 

customer information; and Life is Good, filed in January 

2008, resolving charges against a retailer that its failure 

to secure customers’ credit card information, which led 

to a breach in 2006, violated its privacy policy and was a 

deceptive practice.





Spyware Principles

Three guiding principles 

inform the FTC’s efforts to 

combat spyware: 

(1) a consumer’s computer 

belongs to him or her, not 

to the software distributor; 

(2) buried disclosures do 

not work, just as they 

have never worked in 

more traditional areas of 

commerce; and 

(3) if a distributor puts a 

program on a consumer’s 

computer that the 

consumer does not want, 

the consumer must be able 

to uninstall or disable it.
43

The FTC in 2008: A FORCE for consumers and competition

“Every business, whether large or small, must take 

reasonable and appropriate measures to protect sensitive 

consumer information, from acquisition to disposal. This 

agency will continue to prosecute companies that fail to 

fulfill their legal responsibility to protect consumers’ personal 

information.”

– Chairman Majoras, “Company Will Pay $50,000 Penalty for 

Tossing Consumer’s Credit Report Information in Unsecured 

Dumpster” (press release, Dec. 18, 2007)

Pretexting. This past year, the FTC continued its enforcement against 

the use of pretexting and other illegal practices to obtain and sell consumers’ 

confidential telephone and financial records. In three cases, Information 

Search, Inc. (March 2007), Eye in the Sky Investigations, Inc. (June 2007), and 

CEO Group, Inc.

(December 2007), the 

FTC obtained orders 

resolving charges 

against several online 

data brokers that they 

allegedly obtained and 

sold telephone records 

without consumers’ 

knowledge or consent. 

The orders bar the 

defendants from 

marketing or selling 

consumers’ phone records and impose over $260,000 in suspended judgments 

requiring them to pay a total of approximately $138,000, their profits from their 

scheme. 

 Spyware and Adware. This year, the FTC continued its enforcement 

against spyware and adware programs that are installed on consumers’ computers 

without their knowledge or consent and are used to monitor their computer use, 

take control of or damage their computers, or send them volumes of disruptive 

advertising. 

Direct Revenue. In June 2007, the FTC approved a $1.5 million 

administrative consent order with DirectRevenue LLC and four of its 

principals addressing their allegedly unlawful practices in connection 

with the distribution of adware. According to the FTC’s complaint, the 

respondents, directly and through their affiliates, offered consumers free 

content and software without disclosing adequately that downloading the 

items would result in the installation of adware, which delivered pop-up 

ads and was difficult to detect and remove. The FTC’s order prohibits 

the respondents from delivering ads to any consumer’s computer through 

adware that was installed on the computer before October 1, 2005, 

downloading adware without consumers’ express consent, and exploiting 

security vulnerabilities. The order further requires that DirectRevenue 

clearly identify all of its ads, establish and maintain effective, user-friendly 

mechanisms through which consumers can register complaints and easily 

uninstall the adware, and monitor its affiliates’ compliance with the FTC 

order.

Odysseus Marketing. In January 2008, the FTC initiated a civil 

contempt action against Walter Rines, his company, and Sanford 

Wallace, for violating a 2005 federal court order that enjoins them 

from misrepresenting the features of their software and surreptitiously 





Fair Credit 

Reporting Act

In September 2007, the FTC 

announced settlements with 

Ingenix, Inc. and Milliman, 

Inc., both of whom provide 

individual medical profiles, 

including prescription drug 

purchase histories of insurance 

policy applicants, to health 

and life insurance companies 

that use them in making 

underwriting decisions. The 

FTC’s complaints charged 

that as consumer reporting 

agencies (CRAs), the 

companies failed to provide 

insurance companies with the 

Notice to Users of Consumer 

Reports required by the Fair 

Credit Reporting Act (FCRA).

According to the 

complaints: (a) the medical 

profiles are consumer 

reports because they include 

information that bears on 

an individual’s personal 

characteristics and are used to 

determine their eligibility for 

insurance; and (b) Ingenix and 

Milliman are CRAs because 

they assemble and evaluate 

consumer report information 

for the purpose of furnishing it 

to third parties. 

Under the FTC’s orders, 

Ingenix and Milliman will 

provide the required notices to 

users of their consumer reports 

and otherwise comply with the 

FCRA. Both consent orders 

became final in February 2008. 
44

Federal Trade Commission

downloading spyware to consumers’ computers. The Commission 

charged that the defendants violated the order by obtaining personal 

information from users of the social networking site MySpace through 

“phishing” messages that appeared to be sponsored by MySpace; 

by “pagejacking” or redirecting users to other websites; and by 

“mousetrapping” or modifying and disabling users’ web browser 

navigation controls.

CAN-SPAM. Since 1997, when the FTC brought its first enforcement 

action targeting unsolicited commercial email, or “spam,” the FTC actively 

has pursued deceptive and unfair spam practices through 93 law enforcement 

actions against 250 individuals and companies, 30 of which targeted violators 

of the CAN-SPAM Act. This past year, the FTC continued its aggressive law 

enforcement of the CAN-SPAM Act, which generally prohibits deceptive sender 

and subject-line content in commercial email and provides consumers with 

the right to opt out of future commercial email campaigns. The Commission 

recently settled three cases targeting deceptive spam, Adteractive, Member 

Source Media, and ValueClick, obtaining nearly $4 million in civil penalties 

against three online advertisers offering “free” gifts that were not free. The $2.9 

million civil penalty in ValueClick is the Commission’s highest CAN-SPAM 

penalty on record, and is three times greater than the previous record amount. 

In January 2008, the FTC obtained an over $2.5 million judgment against Sili 

Neutraceuticals, LLC and its principal for making misrepresentations about 

dietary supplements in violation of the FTC Act and for various CAN-SPAM 

violations, including sending commercial email messages that had misleading 

subject headings and that failed to provide clear and conspicuous notice of the 

opportunity to decline to receive further spam from the sender, a functioning 

return email address, and/or the senders’ valid physical postal address. 

Children’s Privacy and Security. Making the Internet 

more secure for children has long been a part of the FTC’s 

civil law enforcement mission. The FTC actively enforces 

the Children’s Online Privacy Protection Act of 1998 

(COPPA) by bringing civil penalty actions against operators 

of child-directed and general audience websites that fail 

to obtain parental consent prior to collecting, using, or 

disclosing personal information from children under age 

13. Since COPPA’s enactment, the FTC has brought 13 

actions, obtaining over $1.9 million in civil penalties. In 

its 2007 “Implementing the Children’s Online Privacy 

Protection Act: A Report to Congress,” the FTC committed to examine newly 

emerging websites that offer to children aspects of the highly popular “social 

networking” experience, in order to ensure that such sites are complying with 

COPPA. 

Imbee.com. In January 2008, the FTC announced a $130,000 civil 

penalty settlement with the operators of the child-directed social 

networking site imbee.com. The settlement resolves charges that the 



AdultFriendFinder

Using its unfairness 

authority under the FTC 

Act, in December 2007, the 

FTC obtained a stipulated 

permanent injunction 

against the operator of 

AdultFriendFinder.com, 

touted as “the world’s 

largest sex and swingers 

personals community.” The 

Commission had alleged that, 

to lure consumers to its sites, 

AdultFriendFinder delivered 

pop-up ads containing 

graphic, sexually explicit 

images. These images often 

were foisted on consumers, 

including minors, who were 

not visiting sexually-oriented 

websites, but rather were 

generally surfing the web. 

The order bars the 

defendant from disseminating 

sexually explicit online ads 

to consumers who are not 

seeking out sexually explicit 

material; it also requires 

the defendant to monitor 

its marketing affiliates and 

other third parties involved in 

advertising its sexually explicit 

websites for compliance with 

the order.
45

The FTC in 2008: A FORCE for consumers and competition

defendants violated COPPA by collecting and maintaining personal 

information from over 10,500 children without first obtaining parental 

consent; failing to post a comprehensive privacy policy; and failing to 

clearly and completely disclose the site’s information collection practices 

in their direct notices to parents. In addition to the civil penalty, the 

Commission’s settlement requires the defendants to comply with COPPA 

and to link to the agency’s comprehensive children’s privacy website and 

social networking educational materials.

Do Not Call Enforcement. This past year, the 

FTC continued to vigorously enforce the Do Not Call 

(DNC) provisions of the Telemarketing Sales Rule, which 

prohibits most commercial telemarketing to consumers 

who place their telephone numbers on the National Do 

Not Call Registry, and prohibits “abandoned calls” that 

fail to connect consumers to a live operator within two 

seconds. Since the FTC began enforcing compliance 

with the Registry in October 2003, the agency has filed 

36 enforcement actions against 68 individuals and 93 

corporate defendants. In 31 of those cases, the FTC 

obtained orders requiring payment of more than $16 million in civil penalties, 

and more than $8 million in consumer redress.

In November 2007, the Commission announced a major crackdown on 

DNC violators, involving six settlements against telemarketers, including 

ADT and Craftmatic, resulting in nearly $7.7 million in civil penalties. 

One additional complaint, against Global Mortgage 

Funding, remains in litigation. In January 2008, the 

Commission announced a $3 million suspended civil penalty 

judgment and a payment of $180,000 against Voice-Mail 

Broadcasting Corp., a large “voice blaster” that allegedly 

placed over 46 million unlawful recorded calls to consumers.

C. Consumer Protection Law Enforcement Tools

The FTC continually improves its methods for identifying fraud and 

deception, as well as privacy and data security violations. The FTC’s tools, 

including various databases, for collecting and analyzing information about 

consumer experiences in the marketplace are critical to the FTC’s consumer 

protection mission. Some of these databases and other resources are made 

available to other law enforcement agencies to facilitate their use in stopping such 

prohibited practices.

Consumer Response Center. The Consumer Response Center (CRC) is in 

its 11th year of collecting key information from, and providing key information 

to, consumers and law enforcement. This year, the CRC handled more than 

35,000 inquiries and complaints from consumers and businesses each week. 

These contacts come via the FTC’s toll-free numbers (1-877-FTC-HELP and 

1-877-ID-THEFT), the FTC’s website, and by U.S. mail. 



“Consumers have made clear that they greatly value the 

Do Not Call Registry, and they must be able to depend on 

its privacy protection. By bringing enforcement actions, like 

those announced today, we will ensure that the small number 

of bad actors pay a price for not adhering to the law and 

respecting consumers’ privacy requests.”

– Chairman Majoras, “FTC Announces Law Enforcement Crackdown 

on Do Not Call Violators” (press release, Nov. 7, 2007)

Significant Civil Penalty Cases

Craftmatic Industries, Inc. $4,400,000

ADT Security Services, Inc. $2,000,000

LTD Financial Services $1,375,000

Ameriquest $1,000,000
46

Federal Trade Commission

Consumer Sentinel. Consumer Sentinel, the FTC’s fraud and identity 

theft complaint database, now contains over 4 million fraud and identity theft 

complaints. Sentinel is accessible to more than 1,700 law enforcement agencies 

worldwide that use the database to share information, coordinate investigations, 

and pursue leads.

National Do Not Call Registry. The Registry protects consumers from 

unwanted commercial telemarketing calls. In December 2007, Congress took 

important steps reaffirming the continued success of the Do Not Call program by 

passing legislation that permanently reauthorizes the Registry and eliminates the 

need for consumers to re-register their telephone numbers. The legislation also 

authorizes the Commission to collect fees from telemarketers, sellers, and service 

providers who access registered telephone numbers through the Registry and 

sets forth how those fees must be used. As of February 

2008, more than 155 million telephone numbers were 

on the Registry. The Registry also collects Do Not Call 

complaints from consumers and shares them with other 

law enforcement agencies through Consumer Sentinel. 

The Registry serves as a model for the international 

community: Australia, Canada, and Mexico now have 

established their own Do Not Call programs.

Identity Theft Tools. Consumers continue to file complaints and receive 

assistance on resolving identity theft from both the FTC’s toll-free hotline and 

website, and identity theft remains the leading type of consumer fraud complaint 

received by the FTC. The FTC continues to cooperate with the Identity Theft 

Assistance Center, a joint initiative of the financial services industry, which 

provides its identity theft complaint data to the FTC. More than 1,600 law 

enforcement agencies have access to identity theft complaints through Consumer 

Sentinel. In addition, the FTC coordinates ID theft law enforcement training for 

state and local law enforcers. To date, the FTC, together with its partners, has 

conducted 28 training seminars attended by more than 3,800 officers from more 

than 1,250 agencies.

Spam Database. For the last 10 years, the FTC has maintained an electronic 

address to which the agency encourages consumers and businesses to forward 

“spam” (unsolicited commercial email). This mailbox, spam@uce.gov, continues 

to receive approximately 270,000 pieces of spam daily, demonstrating that spam 

remains a serious source of concern for Internet users. The total amount of spam 

received by the FTC increased from more than 407 million last year to more than 

500 million this year. The spam database is instrumental to the development 

of the FTC’s CAN-SPAM Act enforcement activities as well as cases brought by 

other federal and state agencies. 

“Just a THANK YOU for everything you are doing to 

enforce the DO NOT CALL lists . . . . Keep up the good work 

allowing us to eat dinner in peace and not being bombarded 

by . . . other relentless violators.” 

– Massachusetts consumer, November 2007
47

The FTC in 2008: A FORCE for consumers and competition

Chapter 5. Consumer Protection Policy Tools

As a complement to its law enforcement actions, the FTC promotes 

consumer protection interests through a variety of policy tools, including 

rulemakings, reports, hearings and workshops, inter-governmental task forces, 

advocacy letters and comments, amicus briefs, and congressional testimony. 

These activities enable the FTC to work with industry, other government entities, 

the media, and the public to effectively collect and disseminate information, and 

to establish policies that protect consumers.

A. Rulemakings

The FTC engages in rulemakings where necessary to ensure that its rules 

protect consumers, are consistent with its statutory mandate, and benefit 

consumers without overly burdening business.

Model Privacy Notices. In March 2007, the FTC, joined by seven other 

federal regulators, issued a notice of proposed rulemaking requesting 

comment on a model privacy form that financial institutions can use for 

their privacy notices to consumers required by the Gramm-Leach-Bliley 

Act. The proposed model form resulted from a year of consumer research 

and testing.

Appliance Labeling Rulemaking. In August 2007, the FTC concluded 

a two-year review of the FTC’s Appliance Labeling Rule. As a result of 

substantial public comment and consumer research, the agency amended 

the Rule to improve the design and content of the EnergyGuide label 

required on most new appliances sold in the U.S. The new EnergyGuide 

label has a streamlined look and will display estimated yearly operating 

costs prominently for most appliance types. This will help consumers 

assess trade-offs between the energy costs of their appliances and other 

expenditures.

FACT Act. In November 2007, the FTC, together with other federal 

financial regulatory agencies, completed work on three of the rules 

required under the Fair and Accurate Credit Transactions Act of 2003 

(the FACT Act), and issued notices of proposed rulemaking for two 

additional rules. As part of this effort, the agencies issued the final 

Affiliate Marketing Notice Rule, which provides consumers with notice 

and a right to opt out of affiliates’ use of certain personal information for 

marketing purposes. The agencies then issued the final Identity Theft Red 

Flags and Discrepancy Rules, requiring creditors to establish reasonable 

procedures to identify identity theft risks, and providing guidance for 

users of consumer reports notified of a discrepancy between the address in 

a consumer’s credit file and that on a credit application. The additional 

proposed rules prescribe guidelines and regulations to ensure the accuracy 

and integrity of information furnished to credit reporting agencies, and 

identify the circumstances under which information furnishers must 

investigate a dispute about the accuracy or completeness of information.







Your cost will depend on your utility rates and use.

Refrigerator-Freezer

 Automatic Defrost

 Side-Mounted Freezer

 Through-the-Door Ice

XYZ Corporation

Model ABC-L

Capacity: 23 Cubic Feet

U.S. Government Federal law prohibits removal of this label before consumer purchase.

Cost range based only on models of similar capacity with automatic defrost, 

side-mounted freezer, and through-the-door ice.

Estimated operating cost based on a 2007 national average electricity cost of 

10.65 cents per kWh.

For more information, visit www.ftc.gov/appliances.







$67

$57 $74

Estimated Yearly Operating Cost

630kWh

Estimated Yearly Electricity Use

Cost Range of Similar Models

F A C T S WHAT DOES [name of financial institution] DO

WITH YOUR PERSONAL INFORMATION?

If you want to limit our sharing

Contact us By telephone: [toll-free telephone] — our menu will prompt you through your choices

On the web: [web address]

By mail: mark your choices below, fill in and send form to:

[mailing address]

Unless we hear from you, we can begin sharing your information 30 days from the

date of this letter. However, you can contact us at any time to limit our sharing.

Check your choices

Your choices will apply to

everyone on your account.

Check any/all you want to limit: (See page 1)

� Do not share information about my creditworthiness with your affiliates for their 

everyday business purposes.

� Do not allow your affiliates to use my personal information to market to me. 

(I will receive a renewal notice for this use for marketing in 5 years.)

� Do not share my personal information with nonaffiliates to market their products

and services to me.

Your name Mail to:

[mailing address] Your address

Account number

p. 3 of 3

F A C T S WHAT DOES [name of financial institution] DO

WITH YOUR PERSONAL INFORMATION?

Sharing practices

How often does [name of financial 

institution] notify me about their practices?

We must notify you about our sharing practices when you open an account 

and each year while you are a customer.

How does [name of financial institution] protect my personal 

information?

To protect your personal information from unauthorized access and use, we 

use security measures that comply with federal law. These measures include

computer safeguards and secured files and buildings.

How does [name of financial institution] collect my personal 

information?

We collect your personal information, for example, when you

� open an account or deposit money

� pay your bills or apply for a loan

� use your credit or debit card

We also collect your personal information from others, such as credit 

bureaus, affiliates, or other companies.

Why can’t I limit all sharing? Federal law gives you the right to limit sharing only for

� affiliates’ everyday business purposes—information about your

creditworthiness

� affiliates to market to you

� nonaffiliates to market to you

State laws and individual companies may give you additional rights to limit 

sharing.

Definitions

Everyday business purposes The actions necessary by financial companies to run their business and 

manage customer accounts, such as

� processing transactions, mailing, and auditing services

� providing information to credit bureaus

� responding to court orders and legal investigations

Affi liates Companies related by common ownership or control. They can be financial

and nonfinancial companies.

� [affiliate information]

Nonaffi liates Companies not related by common ownership or control. They can be

financial and nonfinancial companies.

� [nonaffiliate information]

Joint marketing A formal agreement between nonaffiliated financial companies that 

together market financial products or services to you.

� [joint marketing]

p. 2 of 3

F A C T S

Why?

What?

How?

WHAT DOES [name of financial institution] DO

WITH YOUR PERSONAL INFORMATION?

Financial companies choose how they share your personal information. Federal law 

gives consumers the right to limit some but not all sharing. Federal law also requires 

us to tell you how we collect, share, and protect your personal information. Please

read this notice carefully to understand what we do.

The types of personal information we collect and share depend on the product or

service you have with us. This information can include:

� Social Security number and income

� account balances and payment history

� credit history and credit scores

When you close your account, we continue to share information about you according 

to our policies.

All financial companies need to share customers’ personal information to run their 

everyday business—to process transactions, maintain customer accounts, and report

to credit bureaus. In the section below, we list the reasons financial companies 

can share their customers’ personal information; the reasons [name of financial

institution] chooses to share; and whether you can limit this sharing.

Reasons we can share your personal information Does [name of financial 

institution] share? Can you limit this sharing?

For our everyday business purposes—

to process your transactions, maintain your account,

and report to credit bureaus

For our marketing purposes—

to offer our products and services to you

For joint marketing with other financial companies

For our affiliates’ everyday business purposes—

information about your transactions and experiences

For our affiliates’ everyday business purposes—

information about your creditworthiness

For our affiliates to market to you

For nonaffiliates to market to you

Contact Us Call [toll-free telephone] or go to [web address]

p. 1 of 3
Janis K. Pappalardo

Bureau of Economics 

Division of Consumer 

Protection

Jan is an economist 

specializing in the role of 

consumer information in 

markets. She has worked on 

many consumer protection 

issues related to health, 

finance, and the environment, 

including advertising case 

analysis, policy advocacy, 

and original research. 

Recently, Jan played a key 

role in the consumer research 

underlying the redesign of 

the EnergyGuide label that 

brought cost of operation 

back to prominent placement 

on the label. 

In June 2007, Jan coauthored a study, Improving 

Consumer Mortgage 

Disclosures, with James M.

Lacko, in which the authors 

developed and tested 

a prototype mortgage 

disclosure that significantly 

improved both prime and 

subprime consumers’ ability 

to recognize mortgage costs 

compared to current federal 

forms.

48

Federal Trade Commission

B. Reports

This year, the FTC continued to analyze marketplace issues of ongoing 

importance to consumers and report its findings to the public. Such reports 

often are the results of hearings, workshops, or independent analyses of industry 

data.

Hispanic Initiative Surf Report. In January 2007, 

the FTC led a Hispanic Work-at-Home web surf with 

60 national and international partners to investigate 

the incidence of deception in Spanish-language 

work-at-home advertisements. The resulting report, 

released in October 2007, revealed that two-thirds 

of the advertisements reviewed exhibited indicia of 

fraud, such as specific earnings claims, representations 

that the business opportunity was free from risk, and 

advertisements offering the types of work-at-home opportunities (e.g., 

craft assembly, envelope stuffing, and medical billing) that have been 

identified as fraudulent in many past law enforcement cases. 

Improving Consumer Mortgage Disclosures: An 

Empirical Assessment of Current and Prototype 

Disclosure Forms. In June 2007, the FTC reported 

that, based on testing of disclosure forms with hundreds 

of consumers, current mortgage disclosures fail to 

convey key loan costs to many consumers, and that 

better disclosures (as shown by the models developed 

for the study) can significantly improve consumer 

understanding of their loans.

Spam Summit Report. In July 2007, staff hosted 

a two-day “Spam Summit: The Next Generation of 

Threats and Solutions.” The resulting December 2007 

report details panelists’ views that spam has increasingly 

become a significant global vector for the dissemination 

of malware and the propagation of financial crimes. It 

also provides an update on technological solutions, such 

as email authentication and email reputation services, 

and highlights the importance of anti-spam and antiphishing education. 

Children’s Exposure to TV Advertising in 1977 and 

2004: Information for the Obesity Debate. In July 

2007, the FTC issued a comprehensive analysis of the 

exposure of children to television advertising that found 

that, while children in 2004 were exposed to more 

television ads, there were fewer paid ads, and fewer food 

ads compared to 30 years ago. This report provides a 








49

The FTC in 2008: A FORCE for consumers and competition

baseline against which to measure future changes in children’s exposure 

to television advertising as policymakers, industry, and parents react to 

concerns about childhood obesity.

Credit-Based Insurance Scores in Automobile Insurance. In 

July 2007, the FTC issued a report presenting the results of a study 

concerning the use of credit-based insurance scores by the automobile 

insurance industry. Insurance companies increasingly are using creditbased insurance scores in deciding whether and at what price to offer 

coverage to consumers. The study found that scores are effective 

predictors of the automobile insurance claims that consumers will file 

and that, on average, higher-risk consumers will pay higher premiums. 

The study also found that African-Americans and Hispanics tend to 

have lower scores than non-Hispanic whites and Asians, and that the 

use of scores would likely lead these groups, on average, to pay more for 

automobile insurance. The study further noted that use of credit-based 

insurance scores may result in certain benefits for consumers, including 

offering insurance to higher-risk consumers as a result of the greater 

accuracy in evaluating risk, and making the process of granting and 

pricing insurance quicker and cheaper, thus passing on cost savings to 

consumers in the form of lower premiums. 

Consumer Fraud in the United States: The 

Second FTC Survey. In October 2007, the FTC 

issued a report detailing the results of a statistical 

survey taken in 2005 of consumer fraud in the 

U.S. The survey showed that 30.2 million adults 

– 13.5% of the adult population – were victims 

of fraud. More people – an estimated 4.8 million 

consumers – were victims of fraudulent weight 

loss products than any of the other frauds covered 

by the survey. Fraudulent foreign lottery offers 

and buyers club memberships tied for second 

place. Twenty percent of African Americans, 18% 

of Hispanics, and 12% of non-Hispanic whites are estimated to have 

been victims. The survey also found that younger consumers, those who 

did not complete college, and those with high levels of debt were more 

likely to be victims of fraud. Finally, consumers between 65 and 74 years 

of age were 32% less likely to report having experienced fraud than those 

between 35 and 44. 

Identity Theft Survey. In November 2007, the Commission released 

the second national survey of the incidence and impact of identity theft. 

Reflecting consumer experience from calendar year 2005, the survey 

found that identity theft continues to exact a heavy toll on consumers 

and the marketplace. More than 8 million adults reported that they 

experienced identity theft, with about one-third reporting “new account” 

fraud (where the thief opens new accounts in the victim’s name) and two-







“The FTC uses a one-two punch to fight fraud. Our 

enforcement program stops the most widespread and 

egregious practices, and our education program helps alert 

consumers to the tricks of the fraud trade. We encourage 

everyone to click on our Web site – ftc.gov – not only to find 

out how to recognize a scam, but also to report it. That’s the 

best way to help end rip-offs of all kinds.”

– BCP Director Lydia Parnes, “FTC Releases Consumer Fraud 

Survey: 30.2 Million Americans – 13.5 Percent of U.S. Adults – Fell 

Victim to Fraud” (press release, Oct. 29, 2007)
50

Federal Trade Commission

thirds reporting “existing account” fraud (where the thief gains access to 

the victim’s existing account(s)). The median amount stolen per identity 

theft incident was $500. 

C. Hearings and Workshops

The FTC holds hearings and workshops to engage in in-depth analysis of 

important, emerging, and often contentious marketplace issues. These hearings 

and workshops are powerful policy research and development tools that enable 

the FTC to study and learn from the experiences of consumers, businesses, 

academia, as well as government and other experts in various fields.

 Conference on Behavioral Economics and Consumer Policy. In 

April 2007, the FTC’s Bureau of Economics sponsored a conference to 

explore research into how consumer behavior should influence consumer 

protection policy; in September 2007, FTC staff issued a summary report 

of the conference. The event brought together economists and other 

professionals from academia and government. Discussions included 

the rapidly growing field of Behavioral Economics, which uses insights 

from psychological research to identify ways in which consumers may 

systematically fail to act in their own best interests due to behavioral traits 

such as self-control problems, failure to process information objectively, 

and inaccurately predicting the costs and benefits of prospective choices.

Workshops on Consumer Authentication. During the past year, the 

Commission held two workshops to explore ways to improve consumer 

authentication – the process by which organizations establish that a 

consumer is whom he or she purports to be – and thus reduce identity 

theft. The April 2007 workshop, Proof Positive: New Directions for ID 

Authentication, discussed the broad issues of consumer authentication, the 

use of new technologies to authenticate consumers, and the challenges 

of implementing those technologies. The December 2007 workshop, 

Security in Numbers: SSNs and ID Theft, provided an in-depth look at 

the role of Social Security numbers in the authentication process. These 

workshops will culminate in a series of recommendations to the President 

on the issues of consumer authentication and Social Security number use 

on behalf of the President’s Identity Theft Task Force.

Forum on Childhood Obesity. In July 2007, the FTC and the 

Department of Health and Human Services conducted a Forum on 

Childhood Obesity. The 2007 Forum showcased some significant selfregulatory initiatives adopted after the FTC’s 2005 Childhood Obesity 

workshop, including the Children’s Food and Beverage Advertising 

Initiative launched by the Council of Better Business Bureaus and the 

BBB’s National Advertising Review Council. To date, 13 major food 

companies have joined the Initiative, which seeks to change the profile of 

food advertising directed to children under 12 and to encourage healthier 

eating choices. 







Proof

FTC pu New Directions for ID Authentication

Positive

blic workshop

7 18 2007

weighing in a check-up on

marketing,

self-regulation, &

childhood obesity
51

The FTC in 2008: A FORCE for consumers and competition

Debt Collection Workshop. In October 2007, FTC staff hosted 

a two-day workshop examining technological, economic, and legal 

changes in the debt collection industry and their impact on consumers 

and businesses. The workshop brought together consumer advocates, 

industry representatives, state and federal regulators, and other experts to 

discuss a wide range of topics, including consumer and debt collectors’ 

perspectives, methods for locating consumers, credit reporting, and 

collection litigation practices.

Behavioral Advertising Town Hall. In November 2007, the FTC 

hosted a Town Hall meeting on behavioral advertising, the practice of 

tracking consumers’ activities online to provide advertising targeted 

to individual consumers’ interests. Interested parties discussed recent 

changes in the online advertising marketplace, how data is collected and 

used for behavioral advertising, the effectiveness of consumer disclosures 

in this area, and what standards currently, or should, govern behavioral 

advertising in the future. In December 2007, 

the FTC staff issued for public comment 

proposed self-regulatory principles for 

behavioral advertising. FTC staff drew on 

the concerns raised at the Town Hall, while 

remaining mindful of the need to maintain 

vigorous competition in the online advertising 

sector. 

Guides for the Use of Environmental 

Marketing (Green Guides). The 

Commission is holding a series of public 

workshops in connection with its review of the Green Guides and in 

response to the increase in green marketing claims. In January 2008, 

the Commission held the Carbon Offsets and Renewable Energy 

Certificates Workshop that was widely attended by experts, academics, 

industry members, and other federal agencies to address the marketing 

of greenhouse gas reduction credits (commonly referred to as “carbon 

offsets”) and renewable energy certificates. The workshop explored 

advertising claims related to these products, as well as issues of consumer 

perception, substantiation, and self-regulation. The next workshop, 

addressing green packaging claims, is scheduled for April 2008. 

D. Inter-governmental Task Force

The President’s Identity Theft Task Force. In April 2007, the 

President’s Identity Theft Task Force, led by the Attorney General and 

the FTC Chairman, released its coordinated plan to address identity 

theft, Combating Identity Theft: A Strategic Plan. Developed by the 17 

Task Force agencies, the plan addresses the life cycle of identity theft and 

proposes 31 initiatives to: (1) prevent identity theft by making consumer 

data less available through improved data security, and less valuable to 









Collecting

Consumer

The Challenges of Change

Tracking, Targeting, & Technology

ehavioral Advertising

f

carbon offsets & renewable energy certificates

eco in the market

tc
52

Federal Trade Commission

thieves by improving consumer authentication; (2) help 

consumers recover from identity theft by providing them 

with more and better resources; and (3) enhance efforts 

to prosecute and punish identity thieves. Agencies and 

departments throughout the government already have 

implemented many of the recommendations. 

E. Advocacy Letters, Comments, and 

Amicus Briefs

Filing advocacy letters, comments, and amicus briefs 

helps the FTC to advance its consumer protection 

mission and serves as an important complement to the 

FTC’s law enforcement efforts. This past year, the FTC shared its widespread 

expertise by submitting comments and advisory opinions to other agencies 

considering actions that affect consumers’ rights, and by filing amicus briefs in 

appellate courts where important consumer litigation is pending.

Electronic Payments System. In April 2007, FTC staff submitted a 

comment to the Electronic Payments Association (NACHA) supporting 

its proposed rule changes to adopt stronger self-regulatory measures to 

prevent payment processing fraud. The FTC staff comment also noted 

that NACHA’s proposals were consistent with the FTC’s efforts to stop 

processing of unauthorized debits from consumer bank accounts.

Attorney Advertising.

In re Petition for Review of Committee on Attorney Advertising 

Opinion 39, No. 60,003. The Commission filed an amicus brief in 

May 2007 urging the New Jersey Supreme Court to overturn a ruling 

issued by that court’s Committee on Attorney Advertising, which had 

held that it was impermissible for lawyers to advertise that they had 

been designated by organizations such as “Super Lawyers” or “Best 

Lawyers in America.” The Commission’s brief noted that consumers 

benefit from non-deceptive advertising by attorneys, and also pointed 

out that there are other means of assuring that attorney ratings are 

not used deceptively. In addition, the Commission’s brief urged the 

court to clarify its Rules of Professional Conduct so that the attorney 

advertising provisions in those rules would apply only to false or 

misleading advertising.

Staff Comments. In May 2007, FTC staff filed comments with the 

Indiana Supreme Court on proposed amendments to state rules for 

attorney advertising, expressing general support for the amendments 

because they would prohibit false, deceptive, and misleading 

advertisements, but would not impose blanket prohibitions on 

specific forms of advertising. Staff, however, recommended revisions 

to clarify that some programs that offered efficient and lower-cost 

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“I am filing this complaint on behalf of my elderly 

father. He was contacted by [Company X] two months after 

my mother passed away. They are very aggressive, and 

misrepresented why he should buy the [product]. He has now 

spent all his retirement savings, paid large penalties for early 

withdrawal, and has over $100,000 in credit card debt. He is 

now needing in-home health care and he has no money. . . . 

We want this company stopped from doing this to someone 

else.” 

– Nevada consumer, March 2007
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The FTC in 2008: A FORCE for consumers and competition

referrals for consumers, such as online legal matching services, were 

permitted. In August 2007, FTC staff filed comments with the 

Louisiana State Bar Association cautioning against adopting rules that 

ban an entire class of attorney advertising without some evidence that 

it actually or inherently is deceptive or misleading.

Protecting Military Consumers from Predatory Lending Practices. In 

June 2007, FTC staff submitted comments to the Department of Defense 

supporting its proposed regulation implementing limitations on terms 

of credit extended to service members and dependents. The proposed 

regulation required oral and written disclosures, a 36% rate cap, and 

other lending limitations. The FTC comments supported these proposed 

regulations as narrowly tailored to protect military consumers while still 

allowing them to seek and obtain credit. 

Debt Collection Practices. In October 2007, the FTC issued an 

advisory opinion concluding that the Fair Debt Collection Practices 

Act (FDCPA) allows a debt collector to notify a consumer that it has 

ceased trying to collect a debt the consumer has disputed in writing. 

ACA International, a debt collection trade association, had asked the 

Commission to address whether this activity would violate the FDCPA’s 

provisions which prohibit debt collectors from contacting a consumer 

once the consumer has disputed a debt in writing. The FTC’s opinion 

found that such a notification would benefit consumers, in that they 

would no longer have to worry about further contacts from that collector.

Disclosures for Subprime Mortgage Lending. In November 2007, 

FTC staff submitted comments to several federal banking agencies in 

response to their request for comments on proposed mortgage disclosure 

documents for subprime mortgage lending. Based on FTC staff research 

demonstrating that consumers frequently do not understand current 

mortgage disclosures, the comments stated that consumers likely would 

benefit from one clear disclosure document alerting them to the major 

costs and features of a mortgage. 

Unfair and Deceptive Practices in Financial Services. In December 

2007, the FTC filed a comment with the Office of Thrift Supervision 

(OTS) in response to its request for information regarding whether the 

OTS should expand its current prohibitions against unfair or deceptive 

acts and practices of financial institutions under its jurisdiction. The 

comment set forth the general principles of unfairness and deception 

under the FTC Act and described how the Commission has applied 

these principals to protect consumers of financial services. Further, it 

recommended that the OTS consider the Commission’s experience in 

determining whether to use its authority to issue new rules. 

Alcohol Labeling. In January 2008, the FTC filed a comment with the 

Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau 

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Federal Trade Commission

(TTB) on alcohol labeling. TTB had proposed to adopt a mandatory 

“Serving Facts” panel, require that labels contain a disclosure of alcohol 

content by volume (ABV), and permit disclosure of pure alcohol 

content in fluid ounces per serving. The FTC comment supported 

TTB’s proposal to increase substantially the amount of information 

contained on alcohol labels, but also recommended several refinements 

in an effort to help consumers identify products containing lower levels 

of “pure alcohol” and to facilitate compliance with government health 

recommendations.

F. Congressional Testimony

The FTC’s Commissioners and senior Commission staff testified in the last 

year before the U.S. Congress on a wide range of pressing consumer protectionrelated issues, including tobacco advertising, financial services, telemarketing, and 

identity theft, consistently advocating strong consumer protection measures and 

initiatives.

Identity Theft. In March 2007, BCP Director Lydia Parnes testified 

before the House Judiciary Subcommittee on Crime, Terrorism and 

Homeland Security to discuss innovative solutions for 

the evolving problem of identity theft. In June 2007, 

Joel Winston, Associate Director for the Division of 

Privacy and Identity Protection, testified before the House 

Ways and Means Subcommittee on Social Security on 

protecting privacy of the Social Security number from 

identity theft; in December 2007, he testified before the 

House Judiciary Subcommittee on Crime, Terrorism, and 

Homeland Security on protecting consumer privacy and 

combating identity theft.

Financial Services. In June 2007, Chairman Majoras presented 

testimony before the House Financial Services Committee summarizing 

the FTC’s efforts to combat unfair, deceptive, and other illegal practices 

in the consumer financial services industry. In July 2007, BCP Director 

Lydia Parnes testified before the Subcommittee on Oversight and 

Investigations of the House Financial Services Committee to discuss the 

FTC’s efforts to combat unfair, deceptive, and other illegal practices in 

the mortgage lending industry, including its fair lending enforcement 

program. In October 2007, Commissioner J. Thomas Rosch testified 

before the Subcommittee regarding the findings of the FTC’s study of 

credit-based insurance scores in automobile insurance.

Telemarketing. BCP Director Lydia Parnes testified in July 2007 before 

the Senate Committee on Commerce, Science, and Transportation on 

FTC enforcement of the anti-fraud provisions of the Telemarketing 

Sales Rule, the requirements of the Do Not Call Registry, and the Credit 

Repair Organizations Act. In October 2007, she testified before the

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“In November 2006, I went to purchase a car. When the 

car salesman was checking my credit, he asked if I would be 

able to pay off this car because I had other loans. He said 

that I had purchased two houses and two Mercedes in Los 

Angeles, CA. That’s when I had found out that I was a victim 

of identity theft. . . . I am reporting my complaint hoping to get 

help with the identity theft.” 

– Georgia consumer, June 2007
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The FTC in 2008: A FORCE for consumers and competition

House Subcommittee on Commerce, Trade, and Consumer Protection of 

the Committee on Energy and Commerce on enhancing FTC consumer 

protection in financial dealings, with telemarketers, and on the Internet. 

Cigarette Testing. The FTC renewed its recommendation that 

Congress consider giving authority over cigarette testing to one of the 

federal government’s science-based public health agencies. In testimony 

presented before the Senate Committee on Commerce, Science, and 

Transportation in November 2007, Commissioner William Kovacic 

discussed the FTC’s responsibilities in the area of tobacco advertising 

generally, and specifically explained cigarette testing and the marketing of 

cigarettes based on machine-measured tar and nicotine yields.

Chapter 6. Consumer Protection – Consumer and 

Business Education and Outreach

Through print and online publications, websites and 

videos, interactive quizzes and tutorials, special events and 

interviews, the FTC educates consumers and businesses 

about their rights and responsibilities in the marketplace. 

The FTC also provides tools to enable law enforcement to 

help identity theft victims and to learn how to recognize, 

investigate, and prepare an identity theft case. Since 

March 2007, the FTC has distributed more than 7.6 

million print publications in English and Spanish and 

logged more than 34.1 million accesses to publications on 

the FTC website. FTC campaigns and materials give consumers the tools they 

need to protect their sensitive data, make informed decisions, find help, and spot 

a scam, whether they are dealing with credit, telemarketing, weight loss promises, 

social networking, spam, or any other issue under the FTC’s jurisdiction. 

Business Education

Slip Showing? Federal Law Requires All Businesses to Truncate 

Credit Card Information on Receipts. In May 2007, the Commission 

distributed this alert to remind merchants to comply with this provision 

of the FACT Act. 

In December 2007, the FTC premiered Protecting Personal 

Information: A Guide for Business – An Interactive Tutorial, an 

innovative online tutorial that guides businesses on practical and low- or 

no-cost ways to keep sensitive data secure. Although the specifics depend 

on the type of company and the kind of information it keeps, the basic 

principles on securing sensitive data are the same: any business that keeps 

personal information needs to take stock, scale down, lock it, pitch it, and 

plan ahead. The tutorial explains each of these principles, and includes 

checklists of steps to take to improve data security. 

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“The FTC has long been a leader in educating consumers 

about market facts and risks and how to avoid those risks 

and in educating business about compliance, and now more 

than ever, with the Internet global marketplace developing so 

rapidly, education is critical.”

– Chairman Majoras, Remarks before the Computer and 

Communication Industry Association (Apr. 17, 2007)
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Federal Trade Commission

Hispanic Outreach. Staff held presentations for the sales teams of 12 

Hispanic media outlets, as well as staff at the standards and compliance 

departments of Univision and Telemundo, focusing on advertising law and 

spotting ads with questionable claims targeted at Hispanic consumers. 

Other business education outreach events this past year included the 

FTC’s Green Lights & Red Flags seminars, held in four cities across the 

U.S., which teach businesses how they can comply with state and federal 

truth-in-advertising standards. 

Consumer Education: Identity Theft

Deter∙Detect∙Defend campaign. The one-stop shop for information 

on preventing and dealing with ID theft continues to be www.ftc.

gov/idtheft with over 6.1 million accesses to the website. In addition 

to articles, videos, forms, and sample letters for consumers, businesses, 

and law enforcement, the site includes a Statement of Rights for victims. 

Since March 2007, the FTC also has distributed more than 22,000 of its 

Consumer Education Kits, which equip consumers to give presentations 

in their communities on avoiding ID theft. In February 2008, the 

President’s Task Force and the U.S. Postal Service sent the FTC’s ID theft 

brochure to every household in the U.S., numbering 121 million pieces.

Resources for Law Enforcement and the Military. Because it often 

falls to local law enforcers to help ID theft victims, the FTC created 

Fighting Identity Theft: A Law Enforcer’s Resource. This CD shows law 

enforcement officers and investigators how to assist victims, coordinate 

efforts, reach out to the community, and advise local businesses about 

data security. As a result of FTC efforts to reach out to the military, the 

Naval Media Center worked with the FTC to create short television 

and radio items, video clips, podcasts, and print and online articles for 

thousands of sailors and civilians. The associations for military credit 

unions and banks gave out the FTC’s Consumer Education Kit to their 

member institutions for use with their customers. 

Officer and Prosecutor Training. The FTC worked with partner 

agencies to train state and local law enforcement officers how to 

recognize, investigate, and prepare an ID theft case. Staff have given onsite training to more than 3,300 officers from more than 1,000 agencies, 

as well as to newly appointed identity theft coordinators in every 

U.S. Attorney’s Office. The training involves using the Identity Theft 

Data Clearinghouse, a repository of more than 1.4 million consumer 

complaints, maintained by the FTC.

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Green Lights Red Flags: FTC Rules of the Road

for Advertisers 

&
57

The FTC in 2008: A FORCE for consumers and competition

Consumer Education: Online Safety and Security

OnguardOnline.gov, the FTC’s interagency website that educates 

consumers about how to guard against Internet fraud, secure their 

computers, and protect personal information, continues to grow. 

Articles on malware, broadband services, and securing laptops, as well as 

interactive quizzes and updated versions of popular articles for parents 

and teens on social networking, were added this past year. The site also 

added a “Safer Surfing for Kids” page targeted to parents offering tips on 

how to protect their younger children online. Since last March, the site 

has logged more than 2.8 million unique visits to the English and Spanish 

versions.

Consumer Education: Phishing and Telemarketing Fraud 

To educate consumers about the practice of phishing, a scam where 

Internet fraudsters send spam or pop-up messages to lure personal and 

financial information from unsuspecting victims, the FTC is releasing 

three 30-second videos featuring a “fishy” visitor whose fin-fitted business 

suit clues consumers into the fact that they are being scammed. BCP also 

is holding a roundtable with communications and technology experts in 

Washington, D.C. in April 2008 on how financial institutions can better 

educate their customers about phishing. 

Consumer Education: Financial Literacy

The FTC promoted consumer education through the 10th annual 

National Consumer Protection Week in March 2008. This year’s theme, 

“Financial Literacy: A Sound Investment,” allowed the FTC to provide 

consumers information about making well-informed financial decisions, 

avoiding credit and mortgage scams, reviewing their credit report, and 

protecting their personal information.

Timely Consumer Education 

With mortgage concerns on many minds this year, the FTC published 

a variety of relevant articles for consumers in both English and Spanish, 

including: Deceptive Mortgage Ads: What They Say; What They 

Leave Out, Mortgage Payments Sending You Reeling? Here’s What to 

Do, and How to Manage Your Mortgage If Your Lender Closes or Files 

for Bankruptcy. To help consumers understand the jargon they may 

encounter when buying or selling a home, the FTC also created The Real 

Estate Marketplace Glossary: How to Talk the Talk. More than 20,000 

of these publications already have been distributed, and 44,000 accessed 

online. 

When the California wildfires struck, and later during the 2007 winter 

holidays, the FTC gave consumers information on how to avoid charity 

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March 2-8, 2008

National Consumer Protection Week

FinancialLiteracy

 a Sound Investment
58

Federal Trade Commission

scams and make the most of their donations. In addition, in November 

2007, the FTC released 10 Tips For Smart Holiday Shopping Online, 

with staff doing a radio media tour on Cyber Monday, the Monday 

immediately following Black Friday, the ceremonial kick-off of the 

holiday online shopping season in the U.S. between Thanksgiving Day 

and Christmas.
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The FTC in 2008: A FORCE for consumers and competition

Section Three: International Activities

 Through its Office of International Affairs (OIA), created in January 2007, 

the FTC continues to develop strong working relationships with overseas 

antitrust and consumer protection agencies, as well 

as assuming a major role in important multilateral 

organizations. Over the past year, the OIA’s priorities 

have been to use its new authority under the U.S. SAFE 

WEB Act to facilitate greater cross-border cooperation 

in its consumer protection cases, to pursue convergence 

in antitrust enforcement through the International 

Competition Network and other venues, and to examine 

the FTC’s future role in providing technical assistance 

to newer competition and consumer protection agencies 

developing their own enforcement and policy agendas. 

Chapter 7. Competition 

A. Promoting Cooperation and Convergence Through 

Bilateral Relationships 

The FTC routinely cooperates with foreign antitrust agencies to further its 

competition enforcement agenda, resulting in closer collaboration on crossborder cases and convergence toward consistent competition policies based on 

sound economic principles. The FTC closely coordinates its efforts with antitrust 

agencies abroad to resolve cases of mutual concern, resulting in more effective 

review of multijurisdictional mergers and suspected anticompetitive behavior. In 

the past year, the Commission coordinated its international efforts in its merger 

enforcement program in several cases, including: 

Google/DoubleClick. In December 2007, the Commission closed 

its investigation of Google, Inc.’s proposed $3.1 billion acquisition 

of Internet advertising server DoubleClick Inc., concluding that the 

acquisition was unlikely to substantially lessen competition. While the 

Commission stated that the acquisition would not harm competition in 

the relevant market, it noted its potential impact on consumer privacy 

and issued a set of proposed behavioral marketing principles. FTC staff 



“I have become keenly aware that enforcing our antitrust 

laws, while critical, is not enough. Rather, . . . we must serve 

as ambassadors and defenders of competitive markets; that 

means standing up for competition in the face of business 

interests seeking government protectionism and overintervention.”

– Chairman Majoras, Remarks before the U.S. Chamber of 

Commerce, Global Regulatory Cooperation Project (July 17, 2007)
Dina Kallay

Office of

International Affairs

As Counsel for 

Intellectual Property and 

International Antitrust, Dina 

is at the center of some 

of the FTC’s most exciting 

international antitrust 

activities. Dina came to the 

FTC having worked for the 

antitrust agencies of Israel 

and the European Union (DG 

COMP), in private practice 

in Israel and the U.S., and 

as an academic and author 

on antitrust and intellectual 

property interface issues. 

Dina has focused on 

furthering the FTC’s antitrust 

work with China, preparing 

comments on China’s new 

Antimonopoly Law, and 

delivering a speech on U.S. 

and Chinese merger law at 

a Beijing conference hosted 

by the Chinese government. 

Dina also contributes greatly 

to the agency’s work in the 

International Competition 

Network, serving as the lead 

drafter of a report on the 

objectives of monopolization 

rules around the world.

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Federal Trade Commission

cooperated closely on the transaction with agency staff in Australia, 

Canada, and the European Union. 

Owens Corning/St. Gobain. The FTC worked closely with the 

European Commission (EC), Canada’s Competition Bureau, and the 

Mexican Federal Competition Commission to resolve the proposed 

combination of Owens Corning and St. Gobain, which competed 

in markets for certain types of glass fiber reinforcements used in the 

construction, automotive, and electronics sectors. The FTC and EC both 

accepted a consent order with the parties in October 2007.

The OIA continues to build the FTC’s bilateral connections through ongoing 

discussions and continuing case coordination both in the U.S. and abroad. The 

OIA regularly communicates on competition cases and policy matters with 

our counterpart law enforcement partners abroad, including those in Canada, 

Mexico, the EU and its members, Australia, Japan, and Korea. Chairman 

Majoras led formal bilateral consultations with the EU and Japan, and met 

with counterparts from Chile, Brazil, the Russian Federation, and the United 

Kingdom. The FTC also continues to consult with colleagues from India and 

China, the world’s two most populous nations, as they develop and implement 

their antitrust laws. FTC senior staff visited both jurisdictions over the past year 

and, along with the DOJ Antitrust Division, provided valuable advice to their 

competition officials, including through a four-day merger training program. 

The FTC also participates in the cabinet-level Strategic Economic Dialogue 

between the U.S. and China. 

The OIA also uses its strong bilateral relationships with foreign agencies 

to promote convergence toward sound competition policy. Many foreign 

jurisdictions request FTC input on new competition policy matters. For 

example, during the past year, the FTC consulted with the EC regarding its 

review of its nonhorizontal merger guidelines and merger remedies guidelines, 

with the Japan Fair Trade Commission on its revised intellectual property 

guidelines, with the Korea Fair Trade Commission regarding proposed 

amendments to its enforcement decree concerning excessive pricing, and with 

Canada’s Competition Policy Review Panel concerning the relationship between 

competition and competitiveness. Through the OIA, the FTC will continue to 

share its expertise when requested with its foreign competition counterparts.

B. Promoting Convergence Through Multilateral 

Competition Fora 

Multilateral competition organizations provide valuable opportunities to 

promote international cooperation and for competition officials to share insights 

on law enforcement and policy initiatives. The FTC participates actively in 

several such organizations, including the International Competition Network 

(ICN), the Organization for Economic Cooperation and Development (OECD), 

the United Nations Conference on Trade and Development (UNCTAD), and the 

Asia-Pacific Economic Cooperation (APEC). 

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The FTC in 2008: A FORCE for consumers and competition

ICN. The ICN, currently consisting of 102 competition agency members 

from 91 jurisdictions, is an important venue in which antitrust authorities 

work towards procedural and substantive convergence, including promoting 

best practices in antitrust enforcement and policy. The FTC plays a major 

role in significant ICN projects. For example, the FTC co-chairs the ICN’s 

Unilateral Conduct Working Group, which is developing guidance documents 

on the definition and analysis of market dominance, including by state-created 

monopolies, and is laying the groundwork for future convergence on the analysis 

of types of unilateral conduct beginning with predatory pricing and exclusive 

dealing. The Commission also chairs the ICN subgroup on Merger Notification 

and Procedures, which just held a successful workshop on the implementation 

of the ICN’s Recommended Practices for Merger Notification and Review 

Procedures in the Czech Republic, attended by nearly 100 delegates from over 

40 jurisdictions. This ICN subgroup is also developing guidance for member 

jurisdictions on setting notification thresholds with a sufficient nexus to the 

jurisdiction. The OIA staff also play an important role in the ICN’s working 

group on Competition Policy Implementation, which assists new antitrust 

authorities in developing their institutional capabilities. Finally, the FTC serves 

on the ICN’s Steering Group, and will play an active part at the ICN’s eighth 

annual conference in Kyoto, Japan in April 2008. 

OECD. The OECD Competition Committee is a key forum for 

competition officials from developed countries to share their experiences and 

discuss best practices. Topics addressed at the Committee’s recent sessions 

include refusals to deal, facilitating practices in oligopolies, regulation and 

competition involving taxi services, providing effective guidance to businesses 

on monopolization and abuse of dominance, competitive restrictions in the 

legal profession, and dynamic efficiencies in merger analysis. Upcoming topics 

include resale price maintenance, the use of market studies, and monopsony. 

Most U.S. OECD submissions to the Committee are available on the FTC’s 

Commissioner Rosch: Global Convergence

Commissioner J. Thomas Rosch has given thought to the forces driving the current phenomenon 

of technological and commercial convergence. He considers the principal factors contributing to 

this convergence to include product markets that are increasingly worldwide in scope, the growth of 

business transactions conducted online, and the ability of standard setting to enable interoperability. 

However, protectionism, threats to computer security, disparate national standards governing how 

data is transmitted internationally, the unlawful capture of the standard-setting process, and the 

failure of firms to make their products interoperable may impede the continued pace of global 

convergence. Commissioner Rosch believes that the FTC and its counterparts around the world can do much to 

neutralize the threats to convergence by promoting convergence among the world’s substantive antitrust rules and 

policies and among the various consumer protection laws governing privacy and data security. He is heartened by the 

FTC’s participation in various regional frameworks governing the cross-border transfer of personal data, by efforts to 

update laws on consumer dispute resolution and redress, and by efforts to strengthen the international cooperation in 

U.S. law enforcement efforts. Commissioner Rosch looks forward to continuing to work with the FTC’s counterparts to 

protect consumers and competition on a worldwide basis.
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Federal Trade Commission

website. The OECD held in February 2008 a Global Forum on Competition 

with representatives from 51 agencies in non-member developing countries that 

included a program on the relationship between competition and consumer 

protection, with Chairman Majoras chairing a key panel. The FTC staff also 

continues to participate in regional OECD programs designed for non-members, 

including the Latin American Competition Forum. 

UNCTAD. OIA staff also is involved in UNCTAD’s Intergovernmental 

Group of Competition Experts and regional competition programs. In the 

past year, the Commission participated in UNCTAD’s programs on agency 

independence and accountability and on the relative competency between 

different agencies in applying competition rules. FTC staff will participate in 

UNCTAD’s future work, including the development of reports on intellectual 

property and the abuse of dominance.

Free trade agreements. U.S. free trade agreements often include provisions 

regarding competition matters. The FTC monitors competition issues in free 

trade negotiations and participates as appropriate in U.S. delegations that 

negotiate these provisions.

Chapter 8. Consumer Protection 

The emergence of new consumer markets and consumer policy models 

around the world, together with ever-evolving technological advances, have 

raised new and complex global consumer protection challenges. Issues such as 

spam, phishing, spyware, telemarketing fraud, identity theft, data security, and 

privacy cross national borders and raise both enforcement and policy issues that 

require the FTC to work closely with its counterparts in foreign agencies and 

international organizations. The continued growth of Internet and mobilebased business-to-consumer commerce, as well as the dawn of technologyenabled consumer-to-consumer interactions, raise fresh consumer protection and 

privacy concerns. To confront these challenges, the FTC, through its OIA staff, 

provides a broad-based international consumer protection program that focuses 

on providing consumers in the global marketplace with sound and effective 

protections that maximize economic benefit and consumer choice.

A. The U.S. SAFE WEB Act and International Law 

Enforcement Cooperation

 SAFE WEB. The FTC continues to expand its international enforcement 

cooperation efforts using the tools provided by the U.S. SAFE WEB Act of 2006. 

The Act enhances the FTC’s ability to cooperate with foreign law enforcement 

authorities on consumer protection enforcement matters that cross national 

borders, including spam, spyware, and telemarketing fraud, misleading health 

and safety claims, and privacy and security breaches.

In the past year, the FTC focused on implementing the Act, and published 

new (and amended) rules to facilitate international information sharing. Since 
Steven M. 

Wernikoff

Midwest Region

Steve is an attorney 

with the Midwest Region 

who serves as lead counsel 

in complex cases involving 

spam, online advertising, 

credit card fraud, privacy, and 

Internet auctions.

Working closely with U.S. 

and international partners, 

Steve has coordinated 

sweeps leading to dozens of 

civil and criminal actions. In 

October 2007, Steve filed the 

first case involving the FTC’s 

use of the U.S. SAFE WEB 

Act to pursue defendants in 

Australia, Canada, and the 

U.S. 

He also serves as 

an adjunct professor at 

Northwestern University 

School of Law, teaching a 

course on Internet fraud 

and advertising law. Steve 

received the FTC’s Paul Rand 

Dixon Award in 2003.

63

The FTC in 2008: A FORCE for consumers and competition

the rules went into effect in May 2007, the FTC has shared information 17 times 

with foreign agencies in cross-border consumer protection matters involving 

fraudulent telemarketing scams, deceptive mail schemes, and spam cases. This 

information sharing has benefitted U.S. consumers. For example, the FTC used 

its SAFE WEB authority to share key information obtained in its investigation of 

a Canadian-based allegedly bogus lottery and prize-promotion scam, Cash Corner 

Services, with Canadian partners for use in related Canadian law enforcement 

activities. In Spear Systems, the FTC shared information with counterparts in 

Australia and Canada about an international spam enterprise, with defendants in 

the U.S., Canada, and Australia, in which spammers drove traffic to websites that 

deceptively sold two kinds of purported weight loss and anti-aging products. The 

FTC has also used its new authority to provide investigative assistance to foreign 

agencies in two other spam investigations in foreign countries. The increasing use 

of the FTC’s new authority is removing some of the key roadblocks to effective 

international enforcement cooperation.

The FTC will continue to focus on the U.S. SAFE WEB Act in 2008, 

including its efforts to enter into cooperation agreements with several important 

foreign jurisdictions, and to improve its ability to obtain remedies, including 

restitution for injured U.S. and foreign consumers, in cross-border cases. The 

FTC will continue its outreach efforts to international and domestic partners to 

achieve the promise of the U.S. SAFE WEB Act.

Canada. The FTC maintains its strong working relationship with consumer 

protection and other law enforcement officials in Canada, in particular to 

confront the mutual problem of mass-marketing fraud, including telemarketing 

fraud, across the U.S.-Canadian border. For example, the FTC works closely 

with Competition Bureau Canada on numerous cases and projects, and 

participates in regional partnerships with Canadian enforcers based in Canada’s 

Atlantic Provinces, Project Colt in Quebec, the Vancouver-based Project 

Emptor, and the Toronto Strategic Partnership. In the past year, the FTC has 

used its SAFE WEB authority to augment these efforts, resulting in successful 

investigations and cases on both sides of the border.

International Enforcement Organizations. The FTC continues to 

cooperate with law enforcement partners in international organizations on 

consumer protection matters. For example, the FTC continues to participate 

actively in the International Consumer Protection Enforcement Network 

(ICPEN). It supported ICPEN’s operations this year by hosting the Secretariat 

and working with its Chilean president to include non-member Latin American 

consumer protection agencies at ICPEN’s fall 2007 meeting. The FTC also 

participates in the leadership of the London Action Plan (LAP), a global network 

of industry representatives and law enforcement agencies from more than 20 

countries involved in the fight against spam, phishing, and other online threats. 

Through its participation in the LAP, in October 2007, the FTC organized a 

first ever joint meeting in the U.S. of the Contact Network of Spam Authorities, 

a network of spam enforcement authorities from EU Member States, and the 

Messaging Anti-Abuse Working Group, a global organization of private network 
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Federal Trade Commission

operators, email service providers, and vendors that works against online abuse 

and exploitation. 

 Cross-Border Cases. In the past year, the FTC’s Bureau of Consumer 

Protection, with assistance from the OIA, filed six new cases with a major 

international aspect in the federal courts, including five cases that involved 

significant cooperation with its Canadian counterparts, and continued to litigate 

and investigate dozens of other matters involving foreign parties, witnesses, 

and evidence. The FTC sought cooperation from enforcement agencies in 15 

countries in these litigation matters. 

B. International Policy Cooperation 

New global trends also require the FTC to engage in policy efforts to develop 

flexible, market-oriented standards to address long-standing, as well as emerging, 

consumer protection issues. To achieve these goals, the FTC works directly with 

its counterparts on a bilateral level, and also participates actively in international 

organizations.

Bilateral Relationships. The FTC works closely on consumer protection 

and privacy issues on a bilateral basis both with developed economies – such as 

those in the European Union and Canada – and with emerging economies like 

China. In June 2007, the FTC signed a memorandum of understanding (MOU) 

with China’s consumer protection agency, the State Administration for Industry 

& Commerce (SAIC), to facilitate greater policy-level cooperation in consumer 

protection matters affecting both nations. The key provisions of the non-binding 

MOU provide for the exchange of views on consumer protection laws and policy 

issues, consideration of possible collaborative projects such as seminars, and staff 

visits to both countries. The FTC will continue these contacts with SAIC and 

other Chinese agencies in the coming year.

International Consumer Policy. The FTC continues to participate actively 

in the OECD’s consumer protection policy work. In July 2007, the FTC, 

working through the OECD, agreed with its partners on a set of principles to 

address the practical and legal obstacles that many consumers face when trying 

to resolve disputes with businesses, in their own country or abroad, particularly 

in cross-border e-commerce transactions. The FTC has also been providing 

input on international consumer protection issues that will be on the agenda at 

the OECD’s June 2008 ministerial-level meeting on the “Future of the Internet 

Economy,” which is intended to provide guidance to governments and other 

stakeholders developing policies relating to technology and the Internet. The 

FTC will also continue to work with other international organizations such as the 

Organization of American States on consumer policy matters.

Privacy and Security Issues. The FTC also has been engaged in recent years 

in furthering international cooperation on privacy and data security matters, 

focusing the international community on the critical importance of enforcement. 

In June 2007, the FTC, working with its foreign partners through the OECD, 

The Safe Web Fellows 

Program

In response to the U.S. 

SAFE WEB Act provision 

authorizing the FTC to 

strengthen international 

enforcement relationships 

with counterpart agencies 

abroad, the FTC created an 

International Fellows Pilot 

Program to enable foreign 

competition and consumer 

protection agency officials to 

work at the FTC. In the past 

year, the FTC hosted fellows 

from Brazil’s Administrative 

Council for Economic Defense, 

Canada’s Competition Bureau, 

the New Brunswick (Canada) 

Office of the Attorney General, 

and Hungary’s Office of 

Economic Competition. 

Each fellow spent three 

months working with FTC 

legal and economic staff 

on investigations and 

enforcement actions. The 

FTC also envisions exchange 

programs for its staff with 

agencies abroad, and already 

has detailed an OIA attorney 

to the United Kingdom’s 

Office of Fair Trading. The 

pilot program will evolve into 

a permanent program in the 

coming year.
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The FTC in 2008: A FORCE for consumers and competition

developed a framework for privacy regulators and law enforcement authorities to 

facilitate cross-border privacy law enforcement cooperation and provide greater 

protection for consumers’ personal information. The FTC also continues to 

participate actively in privacy and data security work at the Asia Pacific Economic 

Cooperation (APEC) and other multilateral organizations. In 2008, the FTC 

will participate, along with other U.S. government agencies and APEC member 

economies, in a pilot project to develop a system for cross-border data transfers 

under the APEC Privacy Framework.

Chapter 9. Outreach and International Technical 

Assistance

OIA staff continue to assist developing nations moving towards marketbased economies by assisting with the development and implementation of 

competition and consumer protection laws and policies. In addition to a formal 

technical assistance program, staff also met with hundreds of foreign officials in 

Washington, D.C. and in foreign capitals on both competition and consumer 

protection issues. 

The OIA’s technical assistance program is actively engaged in providing 

training sessions to enforcement agency staff in developing nations, in close 

cooperation with DOJ’s Antitrust Division when antitrust issues are involved. 

Beginning in the early 1990s, the program has conducted many training missions 

in developing nations, building on the Commission’s legal and economic 

expertise. In a typical session, an FTC/DOJ lawyer and economist team might 

conduct a three- or four-day interactive case simulation that involves substantive 

matters likely to arise in an actual investigation. These programs, which have to 

date primarily been funded by the U.S. Agency for International Development 

(USAID), play a significant role in the Commission’s efforts to promote sound 

competition and consumer protection policies around the world. The FTC plans 

Commissioner Jones Harbour: APEC Privacy Framework

In 2007, Commissioner Harbour focused on the FTC’s privacy work within the Asia Pacific Economic 

Cooperation (APEC) forum. This year, APEC’s privacy work centered around implementation of 

its Privacy Framework through the development of cross-border privacy rules. As part of the U.S. 

delegation, Commissioner Harbour participated in numerous meetings of APEC’s Electronic Commerce 

Steering Group and its Data Privacy Subgroup, as well as related gatherings in Australia, Mexico, 

Japan, and Vietnam. The Commission’s involvement in APEC will continue in 2008.

APEC’s Privacy Framework includes nine broad privacy principles, along with domestic and 

international implementation guidance. The project is an effort to coordinate cross-border enforcement so that 

participating global businesses may transfer consumer data internationally, pursuant to a set of uniform rules. Each 

APEC economy may implement the cross-border rules network differently, and the likely approach in the U.S. will be a 

combination of industry self-regulation and backstop government enforcement through Section 5 of the FTC Act. APEC 

recently approved an official pilot project, and participating economies currently are working to develop system details 

and to test it on a small scale.
66

Federal Trade Commission

to continue its work with USAID and other funding sources to pursue additional 

opportunities to enlarge this program, particularly regarding consumer protection 

issues.

In 2007, the Commission sent 26 different staff experts to 13 countries on 31 

technical assistance missions. The FTC was most active in the 10-nation ASEAN 

community (including Indonesia and Vietnam), India, Russia, Azerbaijan, 

Armenia, South Africa, Moldova, Guatemala, and Egypt. In the early part of the 

year, the FTC maintained a resident advisor in Jakarta, Indonesia, who worked 

with the ASEAN Office of the Secretary General, as well as with the competition 

and consumer protection officials in Indonesia, Thailand, and Vietnam. In 

related work, the FTC assisted USAID in a worldwide project assessing the 

progress of commercial law reform. In 2007, FTC staff joined USAID teams of 

experts in the Philippines and Tanzania.

In its appropriations to the FTC for fiscal year 2008, Congress encouraged 

the FTC to use appropriated funds for international competition and consumer 

protection technical assistance to developing nations. The FTC is identifying 

high priority assistance targets, and is launching a program of assistance that will 

operate in tandem with its long-standing USAID-funded program.

 In February 2008, the FTC and DOJ conducted a one-day workshop, 

Charting the Future Course of International Technical Assistance, involving 

foreign and domestic experts, to describe how their programs have 

worked and to obtain perspectives of other aid providers, academics, and 

private practitioners with a view toward improving the Commission’s 

program and charting a course for its future.


67

The FTC in 2008: A FORCE for consumers and competition

Looking Ahead

This year, the FTC reaffirmed its presence as a force for consumers and 

competition both in the U.S. and abroad as we focused on industries directly 

impacting consumers. Increased globalization and lightning-speed changes in 

technology required us to adapt and evolve our efforts, and at every turn, the 

FTC responded with powerful initiatives. 

At its core, the FTC is a law enforcement agency, and in the coming year, 

we will continue to focus our antitrust and consumer protection scrutiny on 

areas of high impact for consumers – health care, privacy, real estate, financial 

services, energy, and technology. Moreover, we will maintain our strong tradition 

of holding those responsible for fraudulent business schemes civilly, and where 

appropriate, criminally accountable for their actions. Fraud often does not stop 

or start at our borders, and we will expand our successful implementation of the 

U.S. SAFE WEB Act so that we may assist others in reaching fraud wherever it 

lies. 

We are experiencing a time of economic, as well as technological, change, 

and the FTC’s enforcement initiatives will continue to be supported by research 

and public exploration of matters of grave concern to consumers. For example, 

in the coming year, we will explore recent health care delivery innovations, such 

as limited service clinics, price and quality transparency, and health information 

technology. We will continue to study mortgage disclosures, with an eye towards 

developing improved disclosures to help consumers better understand the 

mortgage products available to them. As consumers become more conscious of 

the impact consumption has on the economy and on the environment, we will 

continue the public dialogue on green marketing claims. We also will report on 

energy markets in the 21st century, including a review of the security of energy 

supplies and proposals for addressing climate change concerns. 

Consumers must be well-informed in order to participate in the global 

marketplace. We will continue our outstanding tradition of issuing clear, 

practical guidance to consumers, not only explaining their consumer protection 

rights and responsibilities in the marketplace, but also promoting competition 

and explaining why competition matters. 
68

Federal Trade Commission

We must continue to serve as ambassadors and defenders of competitive 

markets. As such, the FTC commits to strengthening relationships with our 

enforcement counterparts around the world, and to pursuing global antitrust 

convergence. Through our technical assistance programs, we will reach out 

to young competition and consumer protection agencies, including in key 

jurisdictions such as China and India.

Throughout, the FTC is proud to remain a steady hand for consumers and 

competition.
69

The FTC in 2008: A FORCE for consumers and competition

Senior Staff of the FTC

Chief of Staff Brian Huseman

Executive Director Charles Schneider

Deputy Executive Director Sonna L. Stampone

Director, Bureau of Competition Jeffrey Schmidt

Deputy Directors Kenneth L. Glazer

 David P. Wales

Director, Bureau of Consumer Protection Lydia B. Parnes

Deputy Directors Eileen Harrington

 Mary Beth Richards

Director, Bureau of Economics Michael R. Baye

Deputy Directors Mark Frankena

 Pauline Ippolito

Paul A. Pautler

General Counsel William Blumenthal

Deputy General Counsels William E. Cohen

 John F. Daly

Christian S. White

Director, Office of International Affairs Randolph W. Tritell

Deputy Directors James C. Hamill

 Elizabeth Kraus

Hugh G. Stevenson

Director, Office of Congressional Relations Jeanne Bumpus

Director, Office of Public Affairs Nancy Ness Judy

Director, Office of Policy Planning Maureen K. Ohlhausen

Deputy Director James C. Cooper

Secretary of the Commission Donald S. Clark

Chief Administrative Law Judge Stephen J. McGuire

Inspector General Howard L. Sribnick
70

Federal Trade Commission

FTC Annual Awards – September 2007

Chairman’s Award

Matthew Reilly

Louis D. Brandeis Award

John Jacobs

Janet D. Steiger Outstanding Team Award 

Privacy Steering Committee 

Redress/Enforcement Database Team 

Rambus Team

FOIA Team 

Richard C. Foster Award

James Baker

Jeanne McGraw

Neal Reed 

James M. Mead Award

Jose Cocoa

Pete Dykstra

Michelle Kambara

Diane Pierce 

Paul Rand Dixon Award

Christopher Adams

Loretta Garrison

Jonathan Klarfeld

Gregory Luib

John Parisi

Carole Reynolds

Nadine Samter

Anne R. Schenof

Mary Gardiner Jones Award

Voni Eason

Ed Glennon
71

The FTC in 2008: A FORCE for consumers and competition

Awards for Excellence in Supervision

Jacalyn Johnson

Nancy Judy

Peter Richman

David Robbins

Aileen Thompson

Otis B. Johnson Award

Bonnie Curtin

Sheryl Drexler

Teresa Martin

Elisabeth Murphy

Francis Walker Award

David Schmidt

Outstanding Scholarship Award

John Simpson

Stephen Nye Award

Sarah Botha

Richard Cunningham

Gerry Sachs

Leon Higgenbotham, Jr. Award

David Shonka

Eleanor F. Greasley Award

Judy Armstrong

Bernadette Harding

Bernadette Harmon
72

Federal Trade Commission

Principal Contributors to Report

Michael D. Bergman and Phyllis H. Marcus Project Coordinators

Dawne Holz and Jonathan Morgan Graphics and Design

Jeanine Balbach and Kelly Signs Bureau of Competition

Laura Schneider Bureau of Consumer Protection

Liz Callison Bureau of Economics

Russell W. Damtoft Office of International Affairs

Gregory P. Luib Office of Policy Planning 

Contributing staff members also include William E. Cohen, Rachel Miller 

Dawson, Stacy Feuer, Marc Groman, Brian Huseman, Daniel Kaufman, Vincent 

Law, Brandon Remington, Stefano Sciolli, John H. Seesel, Marianne Watts, Larry 

DeMille-Wagman, and Beth Arvan Wiggins.
Federal Trade Commission Satellite Building

601 New Jersey Avenue, N.W., Washington D.C.