# Federal Trade Commission - Protecting America's Consumers

- FTC Action Leads to $2 Million Penalty Against Kubota for False Made in USA Claims Tractor maker Kubota North America Corporation will pay a $2 million civil penalty as a result of a Federal Trade Commission action against the company for falsely labeling some of its replacement parts as being “Made in USA.”Under a stipulated court order filed by the Department of Justice on the FTC’s behalf and agreed to by the company, Kubota will be prohibited from making deceptive claims in addition to requiring them to pay the penalty, which is the largest ever in a Made in USA case.“Today’s settlement includes the largest civil penalty assessed for violating the Made in USA Labeling Rule,” said Samuel Levine, Director of the Bureau of Consumer Protection.  “The FTC will continue cracking down on deceptive Made in USA claims that cheat consumers and honest businesses.”  The complaint filed in the case charges that since at least 2021, Kubota has labeled thousands of replacement parts for its tractors and other agricultural equipment as Made In USA, even though they were made entirely overseas. In addition, after the company moved manufacturing for some parts to other countries, it failed to update the products’ labeling to reflect that change, leaving them labeled as “Made in USA,” according to the complaint. Kubota was previously sued by the FTC in 1999 for falsely claiming that a line of lawn tractors it manufactured was Made in USA, and was subject to an FTC order in that case that expired in 2019.The stipulated order against Kubota, which the company has agreed to, includes a number of requirements about the claims the company makes: Restriction on unqualified claims: Kubota will be prohibited from making unqualified U.S.-origin claims for any product, unless it can show that the product’s final assembly or processing—and all significant processing—takes place in the U.S., and that all or virtually all ingredients or components of the product are made and sourced in the U.S. Requirement for qualified claims: Kubota is required to include in any qualified Made in USA claims a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing. Requirement for assembly claims: Kubota must also ensure, when claiming a product is assembled in the U.S., that it is last substantially transformed in the U.S., its principal assembly takes place in the U.S., and U.S. assembly operations are substantial. Civil Penalty: The order includes a civil penalty of $2 million, which must be paid to the U.S. Treasury.The FTC is committed to ensuring that “Made in USA” claims are truthful. The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides guidance on making non-deceptive “Made in USA” claims. In addition, the FTC’s Made in USA Labeling Rule went into effect on Aug. 13, 2021. Companies that violate the Rule from that date forward may be subject to civil penalties.The Commission vote to authorize the staff to refer the complaint to the DOJ and to approve the stipulated consent decree was 3-0. The DOJ filed the complaint and stipulated consent decree on behalf of the Commission in U.S. District Court for the Northern District of Texas. NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Consent decrees have the force of law when approved and signed by the District Court judge.The lead staff attorney on this matter was Julia Solomon Ensor in the Bureau of Consumer Protection.
- FTC Sends Warning Letters to Funeral Homes After First Undercover Phone Sweep The Federal Trade Commission is sending warning letters to 39 funeral homes across the country after investigators conducted the agency’s first undercover phone sweep and discovered several violations of the Funeral Rule, including funeral homes that failed to provide accurate pricing information or failed to give out price information entirely.The Funeral Rule gives consumers important rights when making funeral arrangements, including requiring that funeral homes must “tell persons who ask by telephone about the funeral provider’s offerings or prices any accurate information from [their] price lists.... and any other readily available information that reasonably answers the question[s].”  Throughout 2023, investigators and other staff from the FTC’s East Central Region, Northwest Region, Southeast Region, Southwest Region, Midwest Region, Western Region – Los Angeles, Western Region – San Francisco offices and the Bureau of Consumer Protection’s Division of Marketing Practices placed undercover calls to more than 250 funeral homes from across the country to try to obtain price information. Staff determined that 39 funeral homes violated the Funeral Rule on these calls.   On 38 of the calls, funeral homes either refused to answer questions about pricing at all or provided inconsistent pricing for identical services.On one of those calls, the funeral home also misrepresented that the local health code required remains to be embalmed if more than a certain number of people wanted to view the remains when it was not actually required by the local health code. Embalming is a process of preserving a body after death. Most states do not require a body to be embalmed, and the few states that require embalming only do so in limited circumstances, such as if refrigeration is not available.  On another call, the funeral home promised to send a General Price List, which is required to include important disclosures and itemized services, but instead provided a list of package prices that did not meet the Funeral Rule requirements for a General Price List.The agency sent letters to the following funeral homes: A Psalm of Life, A. J. Desmond & Sons Funeral Directors, Airport Mortuary & Shipping Services, Benito & Azzaro Gardens Chapel, Boxwell Brothers Funeral Directors, Burch-Messier Walnut Street Chapel, Burns Funeral Home Inc., Byles-MacDougall Funeral Home, Dae Han Mortuary, Davis Funeral Home, Edward Hugh McBride Funeral Home, Ferdinand Funeral Homes & Crematory, SCI Texas Funeral Services, L.L.C. d/b/a Forest Park Westheimer Funeral Home & Cemetery, Gresser Funeral Home, Heritage Funeral Service and Crematory, Joe Jackson Heights Funeral Chapel, Kearns Memorial LLC, King of Prussia Crematory d/b/a Bacchi Funeral Home & Crematory, Laurel Hill Funeral Home, Lester C. Litesey Funeral Home, Lynch Funeral Home Inc., McCormick and Son Mortuary, McWhite’s Funeral Home, Messinger Indian School Mortuary, Monti Rago Funeral Home, Inc., Morris Funerals & Cremation Services, L.L.C., Mountain View Funeral Home and Crematory, Nieto Funerals & Cremations, O.H. Pye, III Funeral Home, Plummer Funeral Home, Ruby Memorial, Shadow Mountain Mortuary, Staples Funeral Home & Cremation Care, Stephens Funeral Home, Todd Memorial Chapel, Walton's Funerals & Cremation - Chapel of the Valley, West-Hurtt Funeral Home, Wimberg Funeral Home, and Woyasz & Son Funeral Service. The letters reiterate that the Funeral Rule requires funeral providers to disclose prices and other information to people arranging funerals, including itemized price information over the telephone, and asks the funeral homes to take prompt remedial action to make sure they are no longer violating the Funeral Rule. Failure to comply with the rule result in penalties of up to $51,744 per violation.To promote compliance with the Funeral Rule, the FTC offers a comprehensive business guide: Complying with the Funeral Rule. The FTC also provides consumer guides, in English and Spanish, to help inform consumers about their rights under the Funeral Rule, including Shopping for Funeral Services by Phone or Online, and Shopping for Funeral Services.The staff on this matter are Melissa Dickey, Rebecca Plett, Sammi Nachtigal, and Luis Gallegos from the FTC’s Bureau of Consumer Protection.
- FTC Acts to Stop FloatMe’s Deceptive ‘Free Money’ Promises, Discriminatory Cash Advance Practices, and Baseless Claims around Algorithmic Underwriting The Federal Trade Commission is charging online cash advance provider FloatMe and its co-founders with using empty promises of quick and free cash advances to entice consumers to join its service, only to fail to deliver the promised advance amounts, make it difficult to cancel, and discriminate against consumers who receive public assistance. FloatMe is also being charged with making baseless claims that cash advance limits would be increased by an algorithm or another automated system.  Under the terms of a settlement order, FloatMe, as well as its co-founders Joshua Sanchez and Ryan Cleary, are required to provide $3 million to be used to refund customers, stop the company’s deceptive marketing, make it easier for consumers to cancel their subscriptions, and institute a fair lending program.“FloatMe lured consumers in with false promises of free money advances, and then used dark patterns to make it difficult for consumers to cancel,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue to hold companies accountable for unfair, deceptive, and discriminatory credit practices, whether they call their products loans, advances, income-share agreements or something else.”In its complaint against FloatMe, the FTC says that the company charged consumers $1.99 per month to join the app, and promised that consumers could access up to $50 in cash advances instantly as part of their membership.The FTC said, however, that consumers were only able to access $20 in advances when they signed up and were charged a $4 fee if they wanted to get cash “instantly,” otherwise they had to wait up to three days for the promised funds. This stood in contrast to FloatMe’s ads that said consumers could get “emergency funds” for free “within minutes.”When consumers contacted FloatMe to request a larger cash advance amount, the company told them that their advance limit could be increased by an algorithm over time, but the complaint charges that the algorithm did not exist. In fact, one company supervisor admitted the company’s claim was “a lie” in an email to colleagues. Instead of an algorithm, the complaint points to a complicated series of steps that required manual intervention to increase a consumer’s limit, which rarely happened.The complaint also charges that FloatMe used dark patterns and other tricks to make it difficult for customers to cancel their subscriptions. In fact, the complaint alleges that Sanchez acknowledged in an internal communication that the cancellation process “make[s] it difficult for someone to quit.” At first, FloatMe’s cancellation process, according to the complaint, was manual-only, delay-filled, and error-ridden. Even after numerous consumer complaints caused the company to change its cancellation process in 2020, the issues still persisted, including a system that refused cancellation requests without actually informing the consumer of that decision.FloatMe also illegally discriminated against consumers who receive public assistance like Social Security, military, and unemployment benefits, according to the complaint. The company failed to consider any income received through a public assistance program in determining whether a consumer was eligible to receive an advance, and it declined advances to consumers whose income came from public assistance. Despite this, FloatMe still charged these consumers for its monthly subscription, even though they could not access the main service offered by the company.The complaint charges that FloatMe’s practices violate the FTC Act, the Restore Online Shoppers’ Confidence Act, and the Equal Credit Opportunity Act.The court order, which was agreed to by the defendants in the case, requires them to pay $3 million to the FTC to be used to provide refunds to consumers. It also prohibits them from deceiving consumers about their products or services, including misrepresenting that they use an algorithm or artificial intelligence. The order requires them to get consumers’ express, informed consent for charges and provide an easy method for cancellation. The order also prohibits the defendants from deploying discriminatory practices and requires them to enact a fair lending program. In addition, the order requires defendants to create and maintain records of consumer testing, including A/B and multivariate testing, which are real-time experiments that companies can use to steer consumer behavior.The Commission vote authorizing the staff to file the complaint and stipulated final order was 3-0. The FTC filed the complaint and final order in the U.S. District Court for the Western District of Texas. The Court entered the order on January 23, 2024.NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.The staff attorneys on this matter are Angel Reyes and James Doty of the FTC’s Bureau of Consumer Protection.
- FTC Hosts Virtual Tech Summit on January 25 Focused on Artificial Intelligence WHAT: 	The Federal Trade Commission’s Office of Technology is hosting a virtual summit to discuss key developments in the rapidly evolving field of artificial intelligence.WHEN:	Thursday, January 25, 2024 Noon ET – 4:30 p.m. ET WHERE:	The event is free and will be held online. Registration is not required to view the webcast. A link to view the summit will be posted to www.ftc.gov the day of the event and on the event page.WHO:	The summit will feature remarks by FTC Chair Lina M. Khan as well as Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya and include three panel discussions with representatives from academia, industry, civil society organizations, and government.TWITTER/X:	Follow the discussion using the hashtag #TechSummitAI.
- FTC Finalizes Order Requiring Old Southern Brass to Stop False Made In USA and Veteran Affiliation Claims Following a public comment period, the Federal Trade Commission finalized a consent order settling charges that Florida-based EXOTOUSA LLC, (doing business as Old Southern Brass) falsely claimed that certain company products were manufactured in the U.S, and that the company was veteran-operated and donated 10 percent of its sales to military service charities.The FTC’s complaint against the company, first announced in December 2023, said that the company made numerous claims that its products were “Made in USA,” but in spite of such claims, many of the company’s products were wholly imported from China or contained significant imported content. The company falsely claimed various forms of affiliation with the U.S. military, including being veteran-operated and contributing a portion of proceeds to military charity groups, according to the complaint.The final order requires the company to pay $150,000 to the FTC, stop making false claims, and comply with specific requirements relating to future country-of-origin claims. The order also includes a monetary judgment of $4,572,137.66, which is partially suspended based on the defendants’ inability to pay the full amount.The Commission vote to approve the final order was 3-0.
- FTC Issues Opinion Finding that TurboTax Maker Intuit Inc. Engaged in Deceptive Practices The Federal Trade Commission has issued an Opinion and Final Order that Intuit Inc., the maker of the popular TurboTax tax filing software, engaged in deceptive advertising in violation of the FTC Act and deceived consumers when it ran ads for “free” tax products and services for which many consumers were ineligible.In its Opinion, the Commission upheld the Chief Administrative Law Judge (ALJ), D. Michael Chappell’s opinion that Intuit has engaged in deceptive advertising in violation of Section 5 of the FTC Act and said that the defenses that Intuit raised lack merit. The Commission ordered Intuit to cease making the deceptive claims as outlined by complaint counsel, who are FTC staff in the Bureau of Consumer Protection.The Commission’s Final Order prohibits Intuit from advertising or marketing that any good or service is free unless it is free for all consumers or it discloses clearly and conspicuously and in close proximity to the “free” claim the percentage of taxpayers or consumers that qualify for the free product or service. Alternatively, if the good or service is not free for a majority of consumers, it could disclose that a majority of consumers do not qualify.The order also requires that Intuit disclose clearly and conspicuously all the terms, conditions, and obligations that are required in order to obtain the “free” good or service. If the advertisement is space constrained and not displayed on any TurboTax website, app, email or other company owned or controlled platform, Intuit is not required to include all the terms and conditions in the advertisement itself but must disclose either that a majority of consumers do not qualify for free (if true) or the percentage that do as well as provide a link in such space-constrained online ads that details all the terms and conditions, according to the Commission order.The order also prohibits Intuit from misrepresenting any material facts about its products or services such as the price, refund policies or consumers’ ability to claim a tax credit or deduction or to file their taxes online accurately without using TurboTax’s paid service.The Commission voted 3-0 to issue the opinion and order.
- Statement from Samuel Levine, Director of FTC Bureau of Consumer Protection, Regarding the Commission’s Order and Opinion in the Intuit TurboTax Case Following is a statement from Samuel Levine, Director of the Federal Trade Commission’s Bureau of Consumer Protection, regarding the Commission’s opinion and order in the case against Intuit Inc.:The Commission’s opinion finding that Intuit has engaged in a “broad, enduring, and willful” deceptive advertising campaign is a major win for consumers and honest marketers. In its opinion, the Commission conducted its own review of the facts and law to decide that Intuit’s claims that TurboTax was a “free” service were wholly unsupported, and that the vast majority of tax filers were not eligible for the “free” version of the service. Instead, they were upgraded into costly deluxe and premium products. As the Commission has long understood, “free” is a powerful lure, one that Intuit deployed in scores of ads. Its attempts to qualify its “free” claim were ineffective and often inconspicuous. The Commission found that Intuit’s “‘simple returns only’ disclosure is anything but clear and unambiguous,” and “does not change the strong and powerful net impression of the ‘free’ ads.” The Commission concluded that “Intuit’s deceptive advertising campaign has been widespread,” and that it “lasted for years and continues to the present day.”  It found that Intuit kept running the ads “knowing that they led consumers to believe that they could file their returns for free.” The Commission described these violations as “egregious.”The Commission has issued an order setting forth a  clear standard that Intuit must follow. They must stop their deceptive ads and tell the truth about how many people are actually eligible for their supposed “free” products. The order also sends a message across industry – “free” means free – not “free for a few” or “free for some.” Businesses can expect an FTC enforcement action if they harness the power of “free” in the dishonest way Intuit did.I congratulate our team in the Division of Marketing Practices for securing this hard-fought victory for American consumers. 
- FTC Order Will Ban InMarket from Selling Precise Consumer Location Data Data aggregator InMarket Media will be prohibited from selling or licensing any precise location data to settle Federal Trade Commission charges that the company did not fully inform consumers and obtain their consent before collecting and using their location data for advertising and marketing.Under the proposed order, InMarket will also be prohibited from selling, licensing, transferring, or sharing any product or service that categorizes or targets consumers based on sensitive location data.“All too often, Americans are tracked by serial data hoarders that endlessly vacuum up and use personal information. Today’s FTC action makes clear that firms do not have free license to monetize data tracking people’s precise location,” said FTC Chair Lina M. Khan. “We’ll continue to use all our tools to protect Americans from unchecked corporate surveillance.”Texas-based InMarket collects location information from a variety of sources, including its own apps and from third-party apps that incorporate its software development kit (SDK). InMarket cross-references consumers’ location histories with advertising-related points of interest to identify consumers who have visited those locations and then sorts consumers, based on their visits to these points of interest, into audience segments to which it can target advertising based on their past behavior.InMarket has maintained nearly 2,000 such audience segment lists that have included such categories as “parents of preschoolers,” “Christian church goers,” and “wealthy and not healthy.” InMarket can display ads based on this information to users of apps that incorporate its SDK and also offers a product that sends ads to consumers based on their location.In its complaint, the FTC says InMarket failed to obtain informed consent from users of its own apps, shopping rewards app CheckPoints and shopping list app ListEase. For example, when the company requests to use a consumer’s location data, it states that the data will be used for the app’s function, such as to provide shopping reward points or to remind consumers about items on their shopping list, and fails to inform users that the location data will also be combined with other data obtained about those users and used for targeted advertising.The FTC says that InMarket also failed to ensure that third-party apps that incorporate the company’s SDK have obtained informed consent. In fact, the company failed to tell third party apps that the location data provided through InMarket’s SDK will be combined with other data to create profiles of consumers, according to the complaint.The FTC also says that the company’s policy of retaining geolocation data for five years was unnecessary to carry out the purposes for which it was collected and increased the risk that this sensitive data could be disclosed, misused, and linked back to the consumer, thereby exposing sensitive information about the consumer.This is the second case the FTC has brought in recent weeks involving the unfair collection of location data, which can reveal sensitive information about a person’s life. Earlier this month, the FTC announced a settlement with X-Mode Social and its successor Outlogic over allegations the company sold precise location data that could be used to track people’s visits to sensitive locations such as medical and reproductive health clinics, places of religious worship and domestic abuse shelters.In addition to the ban on selling or licensing precise location data—a first for the FTC—the proposed order also requires InMarket to take several steps to strengthen protections for consumers. Under the proposed order, the company:Must delete or destroy all the location data it previously collected and any products produced from this data unless it obtains consumer consent or ensures the data has been deidentified or rendered non-sensitive;Must provide a simple and easy-to-find way for consumers to withdraw their consent for the collection and use of their location data for InMarket apps and a mechanism to request deletion of any location data that InMarket previously collected;Must notify consumers whose location data was collected through InMarket’s apps about the FTC’s action against the company and provide them with a way to opt out of data collection or request to delete their data;Will be limited from collecting or using location data from InMarket apps unless it obtains consumers’ informed consent to the collection of their location data;Will be required to create a sensitive location data program to prevent the company from using, selling, licensing, transferring, or otherwise sharing any products or services that categorize or target consumers based on sensitive location data;Must develop an SDK supplier assessment program to ensure that companies that provide location data to InMarket via its SDK are obtaining informed consent from consumers for the collection, use and sale of the data or must stop using such information; andEstablish and implement a comprehensive privacy program that protects the privacy of consumers’ personal information and also create a data retention schedule. The Commission voted 3-0 to issue the administrative complaint and to accept the proposed consent agreement with InMarket.The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days after publication in the Federal Register after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments will appear in the published notice. Once processed, comments will be posted on Regulations.gov.NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $51,744. The lead staff attorneys on this matter are Gorana Neskovic, David Walko and Elizabeth Averill from the FTC’s Bureau of Consumer Protection.
- FTC Pauses CARS Rule Effective Date The Federal Trade Commission has issued an order postponing the effective date of the Combatting Auto Retail Scams (CARS) Rule while a legal challenge against the rule is pending.Two industry groups have petitioned to overturn the rule, asserting that the rule should be stayed while the court challenge is pending. In its order, the Commission notes that these assertions rest on mischaracterizations of what the rule requires. Specifically, the Commission’s order points to the inaccurate argument that the rule will increase compliance costs for car dealers, which is not true for dealers who currently follow the law. The Commission’s order states, “In fact, the rule does not impose substantial costs, if any, on dealers that presently comply with the law, and to the extent there are costs, those are outweighed by the benefits to consumers, to law-abiding dealers, and to fair competition—as honest dealers will not be at a competitive disadvantage relative to dishonest dealers.” The Commission’s order explains that the petitioners’ suggestion that legally compliant dealers have to make unnecessary changes to satisfy petitioners’ misunderstandings of the rule have created uncertainty. The Commission further notes that if the court reviewing the rule grants expedited review, as the litigants requested, a stay of the effective date should not postpone implementation of the rule by more than a few months, if at all. The rule was set to go into effect July 30, 2024.As the Commission noted when finalizing the rule, the CARS Rule will save consumers more than $3.4 billion and an estimated 72 million hours each year shopping for vehicles by targeting persistent and illegal bait-and-switch scams and junk fees in the car buying process.The Commission vote to approve the issuance of the order was 3-0.
- FTC Signs on to Multilateral Arrangement to Bolster Cooperation on Privacy and Data Security Enforcement The Federal Trade Commission has agreed to participate in an international multilateral arrangement that will enable the agency to cooperate, provide assistance with investigations and share information with other privacy authorities around the world that participate in the program.The FTC’s participation in the Global Cooperation Arrangement for Privacy Enforcement (Global CAPE) ensures the agency can keep pace with the increasingly global nature of commerce. The FTC’s participation in the nonbinding Global CAPE will help the agency to cooperate with other members of the organization on privacy and data security related law enforcement issues without having to negotiate a separate memorandum of understanding with each participant.Global CAPE was created to supplement the Asian Pacific Economic Cooperation Cross-border Privacy Rules (APEC CBPR), which also facilitates cooperation and assistance in privacy and data security investigations among APEC’s Asian Pacific countries. The new arrangement will allow for participation by countries outside the Asia Pacific area.The Commission voted 3-0 to authorize staff to participate in the Global CAPE.
- FTC Announces Claims Process for Consumers Harmed by Lanier Law Mortgage Relief Scheme The Federal Trade Commission is launching a claims process for consumers harmed by a deceptive mortgage relief operation known as Lanier Law that collected upfront fees of thousands of dollars and promised consumers lower monthly payments but failed to deliver.The agency is mailing notices to 2,503 consumers who are eligible to request a payment. Many of these consumers will also receive a notice by email. The deadline to file a claim is March 18, 2024. Eligible consumers can file a claim online at www.ftc.gov/LanierLaw. Consumers who have questions or need help filing a claim can email LanierLaw@refundadministrator.com or call 866-590-8211. The Commission never requires people to pay money or provide account information to apply for a refund.The FTC first took action against Lanier Law in 2014 as part of a joint law enforcement sweep by federal and state authorities. According to the complaint, Lanier Law operated under a number of names including Surety Law Group, Redstone Law Group, Fortress Law Group, and Liberty & Trust Law Group of Florida. In 2016, as a result of the FTC’s action, the defendants were barred from the debt relief business and one of the scheme’s owners, Michael W. Lanier, was disbarred.The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of refunds in FTC cases.
- FTC Action Leads to Ban for Ganadores Real Estate and Income Scam, its Owner, and Managers A Federal Trade Commission lawsuit has led to the permanent end to a business opportunity scam known as Ganadores Online and Ganadores Inversiones Bienes Raíces that targeted Spanish-speaking consumers with brazen and false money-making pitches for online businesses and real estate investments.Under the terms of proposed federal court orders, several defendants in the case—including the companies behind Ganadores, the companies’ owners and managers Richard and Sara Alvarez, and an employee who played a key role in the marketing of the scheme, Bryce Chamberlain— will be permanently banned from selling ecommerce or real estate coaching services and will be required to turn over substantial assets to the FTC, which will be used to provide refunds to consumers harmed by the scam.“Ganadores scammed hard-working people with false promises of financial freedom, leaving many consumers with nothing but crushing credit card debt,” said Samuel Levine, the Director of the FTC’s Bureau of Consumer Protection. “We have taken decisive action to end that egregious conduct and recover ill-gotten gains, and we will continue to vigorously pursue those who engage in violations of the laws we enforce.”The FTC sued Ganadores in June 2023, charging that the scam targeted Spanish-speaking consumers with false or unfounded earnings claims and other deceptive promises relating to business opportunities, including that its “infallible system” could help consumers find financial freedom, replace their day jobs, and give their families financial independence. The complaint charged that after consumers paid significant amounts—sometimes tens of thousands of dollars—for training and coaching, they discovered that Ganadores failed to deliver the training and mentoring that they promised and that they did not make any money.When consumers realized that Ganadores’ promises were false and sought refunds, the defendants often refused, telling consumers they had only three days to seek a refund. The complaint also charges that while the company’s marketing and sales were conducted largely in Spanish and many of its targeted audience had limited or no English fluency, the company’s contracts with consumers, including key disclosures, were often provided exclusively in English.The settlements include two proposed court orders: one order against the companies and Richard Alvarez and Sara Alvarez; and the other order against Bryce Chamberlain. Both orders include a number of key provisions:Ban on ecommerce and real estate coaching: The order would permanently ban the defendants from offering any business coaching on ecommerce or real estate.Prohibition on misleading earnings claims: The orders would require the defendants to be able to back up claims they make about how much consumers can earn using any product or service that the defendants market or sell.Prohibition on other practices: The orders would specifically prohibit the defendants from repeating the unlawful practices that they engaged in.Turn over assets: The order against the companies and the Alvarezes would require them to surrender funds, real estate, and other assets with a total value of approximately $6 million. The order against Chamberlain requires him to turn over $35,000 to the FTC.The orders contain a total monetary judgment of $29,175,000, which is partially suspended but for the asset transfers described above, based on the defendants’ inability to pay the full amount. If the defendants are found to have lied to the FTC about their financial status, the full judgment would be immediately payable.The case against defendant Robert Shemin is ongoing.The Commission vote approving the stipulated final order was 3-0. The FTC filed the proposed order in the U.S. District Court for the Middle District of Florida.NOTE: Stipulated final orders or injunctions have the force of law when approved and signed by the District Court judge.The FTC staff attorneys on this matter are J. Ronald Brooke, Jr. and Virginia Rosa of the FTC’s Bureau of Consumer Protection. The FTC would like to thank the Orlando Police Department for their valuable assistance in this matter.
- Federal Trade Commission Seeks Public Comments on Improvements to the EnergyGuide Labeling Rule The Federal Trade Commission is seeking public comments on proposed improvements to the Energy Labeling Rule to modernize and expand its coverage to help reduce energy costs for consumers. The FTC’s Energy Labeling Rule requires manufacturers to attach labels to major home appliances and other consumer products to help consumers compare the energy usage and costs of competing models. The labels help consumers anticipate their energy usage and avoid costly surprises after they have bought a product.  In an advance notice of proposed rulemaking (ANPR) announced in October 2022, the FTC requested comments on potential improvements to the rule, including whether it should add new consumer product categories to the labeling program, change the rule’s labeling requirements to match consumer shopping patterns and streamline existing requirements.After considering the comments received, the FTC is now seeking comments on a notice of proposed rulemaking (NPRM) to help develop a final rule that would formally implement the proposed updates. The NPRM addresses four basic issue categories related to the energy labeling program: 1) new product labels for air cleaners, clothes dryers, miscellaneous refrigeration products, and portable electric spas; 2) changes to labels for several existing products; 3) revisions to the current requirements for affixing labels on showroom models; and 4) several other minor amendments to improve the rule. Specifically:The NPRM proposes new product labels for previously unlabeled air cleaners, clothes dryers, miscellaneous refrigerator products, and portable electric spas; Seeks comment on new issues commenters raised regarding existing labels for clothes washers, televisions, and heating products including water heaters, pool heaters, and boilers; Proposes several amendments to match label format and location to consumer shopping patterns. It would require manufacturers to affix labels to large appliances prepared for showroom display only. For all other such units, manufacturers could include the label with the product in other ways, such as in the literature bag. In addition, retailers would be responsible for ensuring that units displayed in showrooms bear a label; and Proposes minor amendments addressing a range of miscellaneous issues such as compliance dates for ranges, television data updates, and format and placement requirements for labels.  The Commission vote approving publication of the notice in the Federal Register notice was 3-0. The NPRM will be published in the Federal Register shortly. Once it has been published, consumers can submit comments electronically. They also may submit comments in writing by following the instructions in the “Supplementary Information” section of the Federal Register notice.The Commission is publishing a separate Federal Register notice containing routine updates to EnergyGuide labels for televisions. The vote approving publication of that notice was 3-0. The staff attorneys working on both notices are Hampton Newsome and Hong Park in the FTC’s Bureau of Consumer Protection.
- FTC Publishes Inflation-Adjusted Civil Penalty Amounts for 2024 The Federal Trade Commission has adjusted the maximum civil penalty dollar amounts for violations of 16 provisions of law the FTC enforces, as required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The Act directs agencies to implement annual inflation adjustments based on a prescribed formula. The new maximum civil penalty amounts became effective once they were published in the Federal Register on January 10.The maximum civil penalty amount has increased from $50,120 to $51,744 for violations of Sections 5(l), 5(m)(1)(A), and 5(m)(1)(B) of the FTC Act, Section 7A(g)(l) of the Clayton Act, and Section 525(b) of the Energy Policy and Conservation Act. It has increased from $659 to $680 for violations of Section 10 of the FTC Act.The maximum civil penalty amount has increased from $1,426,319 to $1,472,546 for violations of Section 814(a) of the Energy Independence and Security Act of 2007. The maximum civil penalty amounts for other law violations within the agency’s jurisdiction are listed in the Federal Register notice. The Commission vote to publish the Federal Register notice amending Commission Rule 1.98 was 3-0
- FTC Announces Tentative Agenda for January 18 Open Commission Meeting Today, Federal Trade Commission Chair Lina M. Khan announced that an open meeting of the Commission will be held virtually on Thursday, January 18, 2024. The open meeting will commence at 11 a.m. ET and will begin with time for members of the public to address the Commission.The following items will be on the tentative agenda for the January 18 Commission meeting:Business Before the Commission:Presentation on Proposed Changes to the Children’s Online Privacy Protection Rule:Staff from the FTC’s Division of Privacy and Identity Protection will provide an overview of the proposed changes to the COPPA Rule, which include requiring a separate opt-in for targeted advertising, increasing accountability for operators using the support for internal operations exception, imposing limits on “nudging” children without parental consent, and strengthening the data security and data retention requirements.Presentation on Combating Auto Retail Scams Rule (CARS Rule): Staff from the FTC’s Division of Financial Practices will provide an overview of the new CARS Rule, which targets bait-and-switch tactics and junk fees, and includes clear protections for military members. At the start of the meeting, Chair Khan will offer brief remarks and will then invite members of the public to share feedback on the Commission’s work generally and bring relevant matters to the Commission’s attention. Members of the public must sign up for an opportunity to address the Commission virtually at the January 18 event. Each commenter will be given two minutes to share their comments. Those who cannot participate during the event may submit written comments or a link to a prerecorded video through a webform. Speaker registration and comment submission will be available through Tuesday, January 16, 2023 at 8 p.m. ET. A link to the event will be available on the day of the event, shortly before the meeting starts via FTC.gov. The event will be recorded, and the webcast and any related comments will be available on the Commission’s website after the meeting. The Commission retains discretion to make public comments available following the event on ftc.gov.
- FTC Announces Claims Process for Consumers Affected by CafePress’s Data Security Failures The Federal Trade Commission is launching a claims process for consumers who had their Social Security numbers exposed in a data breach involving online merchandise platform CafePress. The claims process stems from a settlement the FTC announced in March 2022 with CafePress over allegations the company failed to implement reasonable security measures to protect sensitive information stored on its network, including plain text Social Security numbers, inadequately encrypted passwords, and answers to password reset questions. The company’s data security failures led to a data breach that exposed this sensitive data including Social Security numbers.Under the settlement with the FTC, Residual Pumpkin Entity, LLC, the former owner of CafePress, and PlanetArt, LLC, which bought CafePress in 2020, were required to implement comprehensive information security programs to address the security problems identified in the complaint. Residual Pumpkin also agreed to pay $500,000, which the FTC is using to compensate victims impacted by the data breach.The FTC is sending email notices to 184,491 consumers who may be eligible for a payment. Consumers can apply if they were misled by CafePress’s data security claims and had their Social Security Number exposed in the CafePress data breach. Most consumers will be notified by email and a handful of people will receive a notice in the mail. Eligible consumers can file a claim online at www.ftc.gov/CafePress. Consumers who have questions or need help filing a claim can email info@CafePressSettlement.com or call 1-833-415-2795. The deadline to file a claim is March 10, 2024.The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of refunds in FTC cases.
- FTC Issues Notice Regarding Requests to the Click-to-Cancel Informal Hearing On December 4, 2023, the Federal Trade Commission announced it will be holding a virtual informal hearing on January 16 on proposed amendments to the Negative Option Rule. During the hearing, which will be open to the public and viewable on the FTC’s website, six nongovernmental organizations will provide oral statements addressing issues raised to date during the rulemaking process. The Commission has issued a notice addressing issues raised in documents submitted in response to the notice of informal hearing. The Commission vote approving publication of the notice was 3-0.
- FTC Extends Deadline for Fortnite Players to Request Refunds for Unwanted Items The Federal Trade Commission has extended the deadline for Fortnite gamers and their parents or guardians to submit a claim for compensation from the agency’s 2023 settlement with Epic Games over allegations that the video game maker used dark patterns and other deceptive practices to trick players into making unwanted purchases. The new deadline is February 29, 2024.Epic agreed to pay $245 million, which the FTC will use to pay claims, as part of the settlement. In September and October, the FTC notified more than 37 million people by email that they may be eligible for compensation. The original deadline to submit a claim was January 17, 2024. The online claim form is available at www.ftc.gov/Fortnite. Those submitting a claim do not need to submit receipts or other documentation at this time, and their Fortnite account will not be affected by their claim. Consumers who have questions about the claims process can contact the administrator by phone at 1-833-915-0880 or by email at admin@fortniterefund.com.
- FTC to Hold Informal Hearing on Proposed Rule Banning Fake Reviews and Testimonials The Federal Trade Commission will hold an informal hearing on its proposed rule banning fake reviews and testimonials at 10 a.m. ET on February 13, 2024.During the hearing, which will be open to the public and available via webcast, three interested parties will provide oral statements addressing issues raised during the rulemaking process.On July 31, 2023, the FTC published a Federal Register notice proposing a new rule to stop marketers from using illicit review and endorsement practices such as using fake reviews, suppressing honest negative reviews, and paying for positive reviews, which deceive consumers looking for real feedback on a product or service and undercut honest businesses.In response to the proposed rulemaking, three of the 100 commenters requested to present their positions at an informal hearing. They include the Interactive Advertising Bureau, Fake Review Watch, and a group of academic researchers.The Commission vote approving publication of the notice was 3-0. It will be published in the Federal Register shortly.The lead staffer on this matter is Michael Ostheimer in the FTC’s Bureau of Consumer Protection.
- FTC Order Prohibits Data Broker X-Mode Social and Outlogic from Selling Sensitive Location Data Data broker X-Mode Social and its successor Outlogic will be prohibited from sharing or selling any sensitive location data to settle Federal Trade Commission allegations that the company sold precise location data that could be used to track people’s visits to sensitive locations such as medical and reproductive health clinics, places of religious worship and domestic abuse shelters.In its first settlement with a data broker concerning the collection and sale of sensitive location information, the FTC also charged that Virginia-based X-Mode Social and Outlogic, LLC, the successor firm to which X-Mode transferred most of its operations in 2021, failed to put in place reasonable and appropriate safeguards on the use of such information by third parties. Today’s action underscores the FTC’s strong commitment to restraining the collection, sale, or disclosure of consumer' sensitive location data.“Geolocation data can reveal not just where a person lives and whom they spend time with but also, for example, which medical treatments they seek and where they worship. The FTC’s action against X-Mode makes clear that businesses do not have free license to market and sell Americans’ sensitive location data,” said FTC Chair Lina M. Khan. “By securing a first-ever ban on the use and sale of sensitive location data, the FTC is continuing its critical work to protect Americans from intrusive data brokers and unchecked corporate surveillance.”The raw location data that X-Mode/Outlogic has sold is associated with mobile advertising IDs, which are unique identifiers associated with each mobile device. This raw location data is not anonymized, and is capable of matching an individual consumer’s mobile device with the locations they visited. In fact, some companies offer services that help companies match such data to individual consumers.X-Mode/Outlogic sells and licenses precise location data that it collects from third-party apps that incorporate its software development kit (SDK) into their apps, from its own mobile apps, and by purchasing location data from other data brokers and aggregators. The company sells consumer location data to hundreds of clients in industries ranging from real estate to finance, as well as private government contractors for their own purposes, such as advertising or brand analytics.According to the FTC’s complaint, until May 2023, the company did not have any policies in place to remove sensitive locations from the raw location data it sold. The FTC says X-Mode/Outlogic did not implement reasonable or appropriate safeguards against downstream use of the precise location data it sells, putting consumers’ sensitive personal information at risk.The information revealed through the location data that X-Mode/Outlogic sold not only violated consumers’ privacy but also exposed them to potential discrimination, physical violence, emotional distress, and other harms, according to the complaint.The FTC also says the company failed to ensure that users of its own apps, Drunk Mode and Walk Against Humanity, as well as third party apps that used the X-Mode/Outlogic’s SDK were fully informed about how their location data would be used. For example, X-Mode/Outlogic provided third party apps that use the company’s SDK with sample privacy disclosures that did not fully inform consumers about which entities would receive the data and also failed to ensure these third-party apps obtained informed consumer consent to grant X-Mode/Outlogic access to their sensitive location data.The company also failed to employ the necessary technical safeguards and oversight to ensure that it honored requests by some android users to opt out of tracking and personalized ads, according to the complaint.The company's business has also involved creating custom audience segments based on characteristics of consumers. For at least one contract, X-Mode provided a private clinical research company information for marketing and advertising purposes about consumers who had visited certain internal medical facilities and then pharmacies or specialty infusion centers within a certain radius in the Columbus, Ohio area.The FTC says these practices violate the FTC Act’s prohibition against unfair and deceptive practices.In addition to the limits on sharing certain sensitive locations, the proposed order requires X-Mode/Outlogic to create a program to ensure it develops and maintains a comprehensive list of sensitive locations, and ensure it is not sharing, selling or transferring location data about such locations. Other provisions of the proposed order require the company to:Delete or destroy all the location data it previously collected and any products produced from this data unless it obtains consumer consent or ensures the data has been deidentified or rendered non-sensitive;Develop a supplier assessment program to ensure that companies that provide location data to X-Mode/Outlogic are obtaining informed consent from consumers for the collection, use and sale of the data or stop using such information;Implement procedures to ensure that recipients of its location data do not associate the data with locations that provide services to LGBTQ+ people such as bars or service organizations, with locations of public gatherings of individuals at political or social demonstrations or protests, or use location data to determine the identity or location of a specific individual;Provide a simple and easy-to-find way for consumers to withdraw their consent for the collection and use of their location data and for the deletion of any location data that was previously collected;Provide a clear and conspicuous means for consumers to request the identity of any individuals and businesses to whom their personal data has been sold or shared or give consumers a way to delete their personal location data from the commercial databases of all recipients of the data; andEstablish and implement a comprehensive privacy program that protects the privacy of consumers’ personal information and also create a data retention schedule.The proposed order also limits the company from collecting or using location data when consumers have opted out of targeted advertising or tracking or if the company cannot verify records showing that consumers have provided consent to the collection of location data.The Commission voted 3-0 to issue the proposed administrative complaint and to accept the consent agreement. Chair Khan, joined by Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya, issued a separate statement.The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days after publication in the Federal Register after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments will appear in the published notice. Once processed, comments will be posted on Regulations.gov.NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $50,120. The lead staff attorneys on this matter are Bhavna Changrani and Brian Shull from the FTC’s Bureau of Consumer Protection.
- FTC Sends More Than $1.2 Million in Refunds to Consumers Harmed by Deceptive Mortgage Loan Modification Scam The Federal Trade Commission is sending more than $1.2 million in refunds to consumers who lost money to Consumer Defense, a deceptive mortgage modification scheme.  The FTC is sending payments to 6,261 consumers, who will receive $201.34 each. Recipients should cash their checks within 90 days, as indicated on the check. Consumers who have questions about their payment should contact the refund administrator, JND Legal Administration, at 877-595-0141 or visit the FTC website to view frequently asked questions. The Commission never requires people to pay money or provide account information to get a refund.According to the FTC’s 2018 complaint, Consumer Defense operated under a number of names, including Preferred Law and American Home Loan Counselors, and deceived financially distressed homeowners by falsely promising to prevent foreclosure and make their mortgages more affordable. The defendants typically charged homeowners unlawful upfront fees in monthly installments of $650, falsely promising expert legal assistance. In many instances, consumers paid hundreds or thousands of dollars only to learn that the defendants had not obtained the promised loan modifications, and in some cases had never even contacted the lenders. In 2019, a federal court ruled in favor of the FTC in the case, and ordered that the defendants’ assets be turned over to the FTC and liquidated to provide refunds to harmed consumers. The defendants, however, appealed the case, which was not resolved until 2022 when an appellate court upheld the ruling but sent the case back to the district court to re-enter the monetary judgment pursuant to Section 19 of the FTC Act after the U.S. Supreme Court's 2021 ruling stating that the Commission lacks authority under Section 13(b) of the FTC Act to seek monetary relief in federal court. In 2023, the district court entered a monetary judgment under Section 19 of the FTC Act for the defendants' violations of the Mortgage Assistance Relief Services Rule.The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of refunds in FTC cases.
- FTC Issues Biennial Report to Congress on the National Do Not Call Registry The Federal Trade Commission issued its biennial report to Congress on the National Do Not Call (DNC) Registry that shows the number of consumers who have placed their telephone numbers on the Registry over the past two years has reached more than 249 million.The report also notes that the FTC has received more than two million Do Not Call complaints in fiscal year (FY) 2023 with people overwhelmingly reporting these violations came via robocalls, as opposed to live telemarketing.Imposter scam, medical needs and prescription scam calls led the list of commonly reported call topics in FY 2023, followed by calls related to reducing debt and energy, solar, and utilities. In response to the consistently high number of complaints from the public about impersonator scams, the FTC recently continued its rulemaking initiative to combat business and government impersonation fraud. A data spotlight issued in June 2023 found that bogus bank fraud warnings were the most common form of text message scam reported to the agency, and that many of the most common text scams impersonate well-known businesses.The DNC Registry was created to provide consumers with a choice regarding whether or not to receive telemarketing calls. Accordingly, it is important that the FTC continue to work alongside the Federal Communications Commission to ensure that the Registry is effective and accessible for both consumers and telemarketers, the report notes. As new technology provides new challenges, both agencies actively seek to address and confront them by, among other things, encouraging private industry, other government agencies, academia, and other interested parties to create and develop new strategies to help consumers avoid unwanted telemarketing calls.The FTC continues to track how technology affects the Registry and the consumers and telemarketers who access it. As a result of new technologies such as Voice over Internet Protocol (VoIP) services, callers, including law-breakers, are now able to make higher volumes of calls inexpensively from anywhere in the world. Technological developments also allow illegal telemarketers to fake, or “spoof,” the caller ID information that accompanies their calls, allowing them to conceal their identity from consumers. The report details how FTC’s law enforcement initiatives have evolved to keep up with these ever-changing technologies.The report also includes updates on other DNC-related enforcement actions, including the pursuit of VoIP service providers who facilitate illegal calls through its Project point of No Entry, suits against platforms and soundboard technology providers, and July 2023’s Operation Stop Scam Calls, a coordinated sweep involving more than 180 actions brought by more than 100 federal and state law enforcement partners. Finally, the report details four public challenges the FTC has held to spur private-sector development of technological solutions that will help stop illegal robocalls.Biennial Report DataAt the end of FY 2023, the DNC Registry had 249.5 million active registrations, an increase of more than 2.7 million from the previous fiscal year. According to the report, during FY 2022, 2,116 businesses and other entities paid more than $14.3 million to access the Registry and 1,963 entities paid Registry access fees totaling more than $14.9 million in FY 2023.The Commission also publishes an annual Do Not Call Registry Data Book that provides substantial detail on registration numbers and other statistical information about the Registry. Similar information is also available the FTC’s Tableau public page, which is updated regularly and allows users to interact with the data to drill down to state or county data.The Commission vote approving the report and its submission to Congress was 3-0.The staff attorney on this matter is Ami Dziekan of the FTC’s Bureau of Consumer Protection.
- FTC to Host Virtual Summit on Artificial Intelligence The Federal Trade Commission’s Office of Technology is hosting a virtual tech summit on January 25, 2024 that will bring together a diverse group of stakeholders to discuss key developments in the rapidly evolving field of artificial intelligence (AI), looking across the layers of technology related to AI. The summit will bring together representatives from academia, industry, civil society organizations, and government to discuss the state of technology, emerging market trends, and real-world impacts of AI. The discussions will also explore how to cultivate a marketplace that allows both consumers and businesses, including startups and small businesses, to thrive. FTC Chair Lina M. Khan and Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya will provide remarks at the summit. The event will also feature three panel discussions. These include discussions on the hardware and other key infrastructure that will be needed for AI development; issues related to the data and models used in AI; and AI-powered consumer applications. The summit will begin at noon and take place online. The tentative agenda is available on the event website. Information on how to participate will also be posted to the event page soon.
- FTC, Connecticut Take Action Against Manchester City Nissan for Deceiving Consumers, Forcing Junk Fees The Federal Trade Commission and the State of Connecticut are taking action against auto dealer Manchester City Nissan (MCN), along with its owner and a number of key employees, for systematically deceiving consumers about the price of certified used cars, add-ons, and government fees.The complaint alleges that the dealership, in addition to deceiving consumers, regularly charges them junk fees for certification, add-on products, and government charges without the consumers’ consent, sometimes costing them thousands of dollars in unwanted and unauthorized charges.Connecticut also alleges that all these practices are deceptive or unfair under Connecticut law.“With this action against Manchester City Nissan, its top executives, and its managers, the Commission and its partner, the State of Connecticut, continue to crack down on deceit and unfairness in the auto industry,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “This action follows on the heels of the Commission’s announcement of the Combating Auto Retail Scams (CARS) Rule, and once again makes clear that bait-and-switch tactics and hidden junk fees have no role in honest dealmaking.”“Today’s action sends a strong warning to any dealership engaging in these types of deceptive practices that misconduct will not be tolerated,” said Connecticut Attorney General William Tong. “Manchester City Nissan’s egregious business practices appear to have violated multiple laws, and we’re going to hold them accountable on behalf of all the consumers they deceived.”Double Charges for “Certified Pre-Owned” VehiclesAccording to the complaint, MCN advertises numerous cars, including Nissan vehicles, as being “certified pre-owned.” This term refers to a used vehicle that has been inspected and repaired to the manufacturer’s specifications, which comes with an extended warranty from the carmaker. Nissan’s rules prohibit dealers from charging a fee for certification beyond the price of the car.However, the complaint alleges the dealership and its employees regularly tack on a certification charge for these vehicles when consumers arrive looking to buy the advertised cars. One example cited in the complaint describes a consumer that came in looking to buy a certified pre-owned car advertised for $15,700, but then the dealer added a $5,295.65 junk “inspection fee” for a car it had already inspected.In addition, the complaint alleges that MCN often charges consumers extra for an inspection or repair that has already occurred, but then fails to report to Nissan that the certified car was sold, leaving consumers without the additional warranty that was promised in MCN’s advertising.Bogus Add-OnsThe complaint alleges that MCN and its employees frequently charge consumers for bogus add-ons they did not agree to pay. They often charge consumers for add-ons such as General Asset Protection (GAP), service contracts, maintenance contracts, and Total Loss Protection (TLP). TLP, in particular, appears in 90 percent of all sales by MCN.One consumer, as described in the complaint, negotiated a price of $20,500 for a Nissan Rogue Sport, but when she went to sign the sales contracts, her promised monthly payment had increased, which she attributed to a credit issue. Instead, she found that MCN had tacked more than $7,000 in add-ons to the amount she financed for the car.Bogus Government FeesMCN and its employees also regularly deceive consumers during the sales process about government-imposed taxes and fees, claiming that junk fees added by MCN are required by the government or deceptively inflating the actual government fees to register the car and keeping the difference as profit.An example cited in the complaint shows that MCN told one consumer that Connecticut registration and other state fees were $345. But, in fact, Connecticut registration and other fees were only $208.20.The complaint charges Chase Nissan (which does business as MCN) along with its principals Patrick Dibre and Refaat (Brian) Soboh, general manager Michael Hamadi, finance manager Aiham Alkhatib, and sales managers Matthew Chmielinksi and Fred (Freddy) Mojica with violating the FTC Act and the Connecticut Unfair Trade Practices Act.The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the District of Connecticut.NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.The FTC staff attorneys on this matter are Samuel Jacobson and Edward Smith of the FTC’s Bureau of Consumer Protection.
- FTC Now Accepting Submissions for Voice Cloning Challenge The Federal Trade Commission today began accepting submissions for its Voice Cloning Challenge, which is aimed at promoting the development of ideas to protect consumers from the misuse of artificial intelligence-enabled voice cloning for fraud and other harms.The exploratory challenge, announced in November, is focused on encouraging multidisciplinary approaches—from product to policies to procedures—for preventing, monitoring, and evaluating malicious use of voice cloning technology.The FTC will accept submissions online until January 12, 2024. Information on how to submit a proposal for the challenge as well as complete rules can be found on the challenge website. The challenge winners will be announced in early 2024.The FTC  encourages anyone with ideas to go the Voice Cloning Challenge website and share their entries during the open submission period.
- California-based Lead Generator Agrees to Settlement Banning It from Making or Assisting Others in Making Telemarketing Calls, Including Robocalls California-based lead generator Response Tree LLC and its president, Derek Thomas Doherty, will be banned from making or assisting anyone else in making robocalls or calls to phone numbers on the FTC’s Do Not Call (DNC) Registry under a proposed order settling Federal Trade Commission charges that they operated more than 50 websites designed to trick consumers into providing their personal information for supposed mortgage refinancing loans and other services.The defendants allegedly sold the personal information of hundreds of thousands of consumers as leads to telemarketers who used them to make millions of illegal telemarketing calls, including robocalls, to consumers nationwide.Telemarketing campaigns allegedly assisted and facilitated by the defendants’ illegal lead generation operations were used to sell a multitude of products and services, including solar panels, hearing aids, and extended auto warranties. These campaigns, which made robocalls and calls to numbers on the DNC Registry, were illegal, as the telemarketers did not have consumers’ consent to be called, according to a complaint filed by the Department of Justice on referral from the FTC.“Response Tree fueled millions of illegal telemarketing calls by tricking consumers into turning over their personal information and selling that information to telemarketers,” said Samuel Levine, Director of the Bureau of Consumer Protection. “The FTC will continue to target every corner of the illegal telemarketing ecosystem to protect consumers and hold wrongdoers accountable.” The complaint alleges that the defendants’ websites—including PatriotRefi.com, AbodeDefense.com, and TheRetailRewards.com—were actually “consent farms” that used deceptive and manipulative “dark patterns” to induce consumers to provide their personal information, obscuring hard-to-find and inadequate disclosures about how the information would be used. The defendants claimed that, in providing this information, the consumers consented to receive telemarketing calls. Third parties then bought the defendants’ leads and used the personal information to conduct illegal telemarketing campaigns, according to the complaint.Through their PatriotRefi.com website, for example, the defendants allegedly duped consumers into providing their personal information under the guise of requesting a quote for a home mortgage refinance loan. After consumers input their personal information and clicked a button labeled “GET YOUR FAST FREE QUOTE,” the defendants captured the information and stored it in a database to sell to telemarketers and others.Many or all consumers who provided their personal information to PatriotRefi.com never received home refinance quotes, according to the complaint. Instead, PatriotRefi.com was designed to compile lead lists by harvesting and selling consumers’ personal information without consumers’ informed consent. The complaint further alleges the defendants sold the leads they obtained, knowing that they did not obtain the requisite consent to receive telemarketing calls, including robocalls.According to the complaint, at their peak, the defendants’ consent farm operations offered an average of 10,000 “real-time” leads for sale every day, and on some days had up to 50,000 illegally farmed leads for sale. In all, between 2019 and 2022, Response Tree and Doherty sold millions of deceptively collected leads.The proposed order settling the complaint, which must be approved by the court before it can go into effect, bans the defendants from initiating or helping anyone else initiate telemarketing robocalls. It also bans them from calling, or assisting anyone else in calling, phone numbers on the DNC Registry and from selling, transferring, or disclosing consumer information in connection with lead generation activities.The order also imposes a $7 million judgment against the defendants, which will be suspended based on their inability to pay. If they are later found to have misrepresented their financial condition, however, the full amount will immediately become due.The Commission vote approving the complaint and stipulated final order and referring it to the U.S. Department of Justice (DOJ) for filing was 3-0. The DOJ filed the complaint and proposed final order in the U.S. District Court for the District of Central District of California.The staff attorneys on this matter are Karina A. Layugan, Matthew H. Fine, and Jeffrey Tang of the FTC’s Western Region Los Angeles office.NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.
- XCast Labs Will Be Banned from Supporting Illegal Telemarketing Practices to Settle FTC Charges It Assisted and Facilitated in Sending Hundreds of Millions of Illegal Robocalls Voice over Internet Protocol (VoIP) provider XCast Labs, Inc., agreed to settle Federal Trade Commission charges that it funneled hundreds of millions of illegal robocalls through its network, even after receiving multiple warnings about the unlawful conduct. Under the proposed court order, XCast Labs will be required to implement a screening process and end its relationships with firms that are not complying with telemarketing-related laws. The Department of Justice litigated the case and filed the proposed order on the FTC’s behalf. “XCast was warned several times that illegal robocallers were using its services and did nothing,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Companies that turn a blind eye to illegal robocalling should expect to hear from the FTC.”“Today’s order is another example of the Justice Department’s efforts to protect American consumers from illegal robocalls and to stop telecommunications providers from enabling those calls,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to work with the Federal Trade Commission to enforce the Telemarketing Sales Rule.”XCast Labs, headquartered in Los Angeles, is a nationwide provider of VoIP technology, providing services that allow its customers to send and receive phone calls, including robocalls, over the internet. Telemarketers who blast illegal robocalls typically use VoIP service providers like XCast Labs to transmit their calls.According to the May 2023 complaint, the FTC sent letters to several VoIP providers, including XCast Labs, in early 2020 warning them that assisting and facilitating illegal telemarketing or robocalling is against the law. XCast Labs received dozens of “traceback” inquiries from US Telecom’s Industry Traceback Group regarding suspected illegal calls that originated on XCast Labs’ network, as well as inquiries from law enforcement agencies about transmission of suspected illegal traffic on the XCast Labs network.Even after receiving these direct warnings, XCast Labs transmitted illegal robocalls to consumers. The FTC also discovered that many of these suspect robocalls were part of organized campaigns to generate telemarketing leads by impersonating officials from the Social Security Administration.The proposed order, to which XCast Labs has agreed, prohibits the company from violating the Telemarketing Sales Rule in the future. It also bans XCast Labs from assisting and facilitating any high-risk customer, including those that are engaged in initiating, causing, or transmitting telemarketing robocalls or calling numbers on the DNC Registry and any telephone call using Caller ID spoofing to display a phone number that the calling party does not have the legal authority to use.Next, the order permanently bars XCast Labs from providing VoIP services to any company with which it does not have an automated procedure to block calls that display invalid Caller ID phone numbers or that are not authenticated through the FCC’s STIR/SHAKEN Authentication Framework. Further, the order requires XCast Labs to screen current and prospective VoIP customers to ensure they are not violating telemarking-related laws and terminate relationships with any customer that does not pass the screening process.Additionally, the order requires XCast Labs to pay a $10 million civil penalty, which will be suspended based on its inability to pay. If the company is later found to have misrepresented its financial condition, the full amount will immediately become due.The Department of Justice filed the proposed order in the U.S. District Court for Central District of California.Thomas Biesty and Frances Kern of the Bureau of Consumer Protection were the primary FTC staff on this matter.NOTE: Consent order the force of law when approved and signed by the District Court judge.
- FTC Sues Grand Canyon University for Deceptive Advertising and Illegal Telemarketing The Federal Trade Commission has filed suit against Grand Canyon Education (GCE), Inc., Grand Canyon University (GCU), and Brian Mueller—the CEO of GCE and president of GCU—for deceiving prospective doctoral students about the cost and course requirements of its doctoral programs and about being a nonprofit, while also engaging in deceptive and abusive telemarketing practices.In a complaint filed in federal court, the FTC says that GCU and GCE told prospective students that the total cost of GCU’s “accelerated” doctoral programs was equal to the cost of just 20 courses (or 60 credits). In reality, the school requires that almost all doctoral students take additional “continuation courses” that add thousands of dollars in costs. The U.S. Department of Education reported that fewer than 2% of GCU doctoral program graduates completed their program within the cost that GCU advertises, and almost 78% of these students take five or more continuation courses.The FTC’s complaint also says that, despite operating the school for the profit of GCE and its investors, the defendants deceptively marketed the school as a nonprofit. The FTC alleges that GCU has been operated for the profit of GCE and its stockholders, and pays 60% of its revenue to GCE pursuant to an agreement designating GCE as the exclusive provider for most university-related services. Even though he serves as GCU’s president, Mueller also benefits as both CEO and a stockholder of GCE, and receives bonuses tied to GCE’s performance. "Grand Canyon deceived students by holding itself out as a non-profit institution and misrepresenting the costs and number of courses required to earn doctoral degrees," said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. "We will continue to aggressively pursue those who seek to take advantage of students."The defendants also used abusive telemarketing calls to try to boost enrollment at GCU, according to the complaint. GCE advertised on websites and social media urging prospective students to submit their contact information on digital forms. GCE telemarketers then used the information to illegally contact people who have specifically requested not to be called, as well as people on the National Do Not Call Registry. GCE has also made illegal calls to numbers it purchased from lead generators.  The FTC says the defendants’ deceptive claims and abusive telemarketing calls violated the FTC Act and the Telemarketing Sales Rule and asks the court to provide redress to consumers and prohibit the institution from further violations of the law.The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the District of Arizona.NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.The lead staff attorneys on this matter are Michael Tankersley, Naomi Takagi, and Brian Berggren of the FTC’s Bureau of Consumer Protection.
- Federal Trade Commission Extends Public Comment Period on Proposed Rule Prohibiting Junk Fees for 30 Days, until February 7, 2024 On October 11, 2023, the Federal Trade Commission announced it is seeking public comments on a new proposed rule to prohibit junk fees, which are hidden and bogus fees that can harm consumers and undercut honest businesses. The FTC has estimated that these fees can cost consumers tens of billions of dollars per year in unexpected costs. The public comment period originally was set to expire on January 8, 2024.Because the existing deadline falls immediately after the holiday season, the Commission has extended the public comment period for 30 days, until February 7, 2024. Information about how to submit comments can be found in the Federal Register notice announcing the extension. The Commission vote approving the extension of the public comment period was 3-0.
- FTC Proposes Strengthening Children’s Privacy Rule to Further Limit Companies’ Ability to Monetize Children’s Data The Federal Trade Commission has proposed changes to the Children’s Online Privacy Protection Rule (COPPA Rule) that would place new restrictions on the use and disclosure of children’s personal information and further limit the ability of companies to condition access to services on monetizing children’s data. The proposal aims to shift the burden from parents to providers to ensure that digital services are safe and secure for children. In a notice of proposed rulemaking, the FTC is seeking comment on proposed changes to the COPPA Rule aimed at addressing the evolving ways personal information is being collected, used, and disclosed, including to monetize children’s data, and clarifying and streamlining the rule. The COPPA Rule, which first went into effect in 2000, requires certain websites and other online services that collect personal information from children under the age of 13 to provide notice to parents and obtain verifiable parental consent before collecting, using, or disclosing personal information from these children. The rule also limits the personal data that websites and other online services can collect from children, limits how long they can retain such data, and requires them to secure the data.“Kids must be able to play and learn online without being endlessly tracked by companies looking to hoard and monetize their personal data,” said FTC Chair Lina M. Khan. “The proposed changes to COPPA are much-needed, especially in an era where online tools are essential for navigating daily life—and where firms are deploying increasingly sophisticated digital tools to surveil children. By requiring firms to better safeguard kids’ data, our proposal places affirmative obligations on service providers and prohibits them from outsourcing their responsibilities to parents.” The FTC initiated the latest review of the COPPA Rule in 2019 and received more than 175,000 comments on its request for public comment on whether changes were needed to the rule. The agency also held a workshop in October 2019 on whether to update the COPPA Rule in light of evolving business practices in the online children’s marketplace, including the increased use of voice-enabled connected devices, educational technology, and general audience platforms hosting third-party child-directed content.The FTC last made changes to the COPPA Rule in 2013 to reflect the increasing use of mobile devices and social networking by, among other things, expanding the definition of personal information to include persistent identifiers such as cookies that track a child’s activity online, as well as geolocation information, photos, videos, and audio recordings.In a notice that will be published in the Federal Register shortly, the FTC has proposed several changes to the rule, including:Requiring Separate Opt-In For Targeted Advertising: Building off the existing consent requirement in section 312.5, website and online service operators covered by COPPA would now be required to obtain separate verifiable parental consent to disclose information to third parties including third-party advertisers—unless the disclosure is integral to the nature of the website or online service. Firms cannot condition access to services on disclosure of personal information to third parties. Prohibition against conditioning a child’s participation on collection of personal information: The proposal reinforces the current rule’s prohibition on conditioning participation in an activity on the collection of personal data to make clear that it serves as an outright ban on collecting more personal information than is reasonably necessary for a child to participate in a game, offering of a prize, or another activity. In addition, the FTC is considering adding new language to this section to clarify the meaning of “activity.”  Limits on the support for the internal operations exception: The current rule allows operators to collect persistent identifiers without first obtaining verifiable parental consent as long as the operator does not collect any other personal information and uses the persistent identifier solely to provide “support for the internal operations of the website or online service.” The proposed rule changes would require operators utilizing this exception to provide an online notice that states the specific internal operations for which the operator has collected a persistent identifier and how they will ensure that such identifier is not used or disclosed to contact a specific individual, including through targeted advertising.Limits on nudging kids to stay online: Operators would be prohibited from using online contact information and persistent identifiers collected under COPPA’s multiple contact and support for the internal operations exceptions to send push notifications to children to prompt or encourage them to use their service more. Operators that use personal information collected from a child to prompt or encourage use of their service would also be required to flag such usage in their COPPA-required direct and online notices.Changes related to Ed Tech: The FTC has proposed codifying its current guidance related to the use of education technology to prohibit commercial use of children’s information and implement additional safeguards. The proposed rule would allow schools and school districts to authorize ed tech providers to collect, use, and disclose students’ personal information but only for a school-authorized educational purpose and not for any commercial purpose.Increasing accountability for Safe Harbor programs: The proposed rule would increase transparency and accountability of COPPA Safe Harbor programs, including by requiring each program to publicly disclose its membership list and report additional information to the Commission.Strengthening data security requirements: The FTC has proposed strengthening the COPPA Rule’s data security requirements by mandating that operators establish, implement, and maintain a written children’s personal information security program that contains safeguards that are appropriate to the sensitivity of the personal information collected from children.Limits on data retention: The FTC also would strengthen the COPPA Rule’s data retention limits by allowing for personal information to be retained only for as long as necessary to fulfill the specific purpose for which it was collected. The proposed change would also prohibit operators from using retained information for any secondary purpose, and it explicitly states that operators cannot retain the information indefinitely. The Rule would also require operators to establish, and make public, a written data retention policy for children’s personal information.In addition, the FTC has proposed changes to some definitions in the rule, including expanding the definition of “personal information” to include biometric identifiers, and stating that the Commission will consider marketing materials, representations to consumers or third parties, reviews by users or third parties, and the age of users on similar websites or services when determining whether a website or online service is directed to children. The public will have 60 days to submit a comment on the proposed changes to the COPPA Rule after the notice is published in the Federal Register. Information on how to submit a comment will be included in the Federal Register notice. Once submitted, comments will be posted to Regulations.gov.The Commission voted 3-0 to publish the notice of proposed rulemaking in the Federal Register.  Commissioner Alvaro Bedoya released a statement.The lead attorneys on this matter are Manmeet Dhindsa and James Trilling in the FTC’s Bureau of Consumer Protection.