In mid-March, the FTC continued to back consumers' right to repair, submitting a comment with the DOJ's Antitrust Division to the U.S. Copyright Office in support of renewing and expanding exemptions for repair in the Digital Millennium Copyright Act (DMCA). The Commission is refunding consumers who were misled into purchasing goods, making student loan payments, and charitable donations for cancer patients. In the first FTC enforcement action of its kind, a supplements company faces penalties for "hijacking" another product's reviews as its own to boost sales. The Commission highlighted a Notice of Proposed Rulemaking for the EnergyGuide Labeling Rule and Telemarketing Sales Rule. Members of the public are invited to join an open Commission meeting on March 21, 2024. Finally, the FTC appointed a new Administrative Law Judge, Jay L. Himes. More news on the FTC's busy week, after the jump.

Monday, March 11, 2024

Bureau of Consumer Protection: Charity Fraud

  • The FTC announced its lawsuit against Cancer Recovery Foundation International, also known as Women's Cancer Fund, and its operator Gregory Anderson for deceiving donors who were led to believe that their charitable contributions would assist cancer patients. Ten states joined the FTC's complaint filed in the Southern District of Texas on Monday. According to the complaint, Women's Cancer Fund used deceptive phone pitches and letters signed by Anderson to collect over $18 million in donations. Rather than pay for basic living expenses of cancer patients and their families as promised, most of the money paid for-profit fundraisers. Specifically, from 2017 to 2022, of the $18.25 million raised, only 1.1% went toward helping women with cancer while 4.2% paid Anderson, 9.5% paid overhead costs, and 85.2% paid for-profit fundraisers.
  • Beyond harming the women who should have received the funds, Samuel Levine, Director of the FTC's Bureau of Consumer Protection, stated that this illegal conduct "hurts donors and deprives legitimate charities of needed funding." The FTC has information about how to donate safely on its website.

Tuesday, March 12, 2024

Bureau of Consumer Protection: Energy Labeling Rule

  • The FTC announced that it is extending the deadline for public commenton a notice of proposed rulemaking for the Engery Guide Labeling Rule. With the goal of reducing energy costs for consumers, the new rule addresses "(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."The new deadline to submit comments is April 19, 2024.

Office of Administrative Law Judges: New Appointment

  • The FTC announced the appointment of Jay L. Himes as Administrative Law Judge. Himes joins Judge D. Michael Chappell in the independent fact-finding related to the FTC's administrative litigation and rulemaking proceedings. Prior to his appointment, Himes was special litigation counsel for the Office of the Attorney General for New York, where he was previously Chief of the Antitrust Bureau. Before then, Himes worked at law firms in antitrust and litigation practices.

Wednesday, March 13, 2024

Bureau of Consumer Protection: Student Debt Relief Scheme

  • The FTC announced that it is sending refunds totaling over $4.1 million to consumers who were deceived by Mission Hills Federal and Federal Direct Group in a student loan debt relief scheme. In its 2019 complaint, the FTC alleged that Mission Hills Federal and Federal Direct Group had, since 2014, falsely claimed to lower students' monthly payments by charging hundreds to thousands of dollars in illegal upfront fees. Further, defendants falsely claimed to act as the students' loan servicer so that students sent their monthly payments directly to defendants. Defendants kept many of these payments rather than applying them to the students' loans. Now, the FTC is sending checks to 27,584 consumers who were defrauded by this student debt relief scheme. For more information, consumers can contact the refund administrator, JND Legal Administration, or review FAQs on the FTC website.

Office of Policy Planning: Supply Disruptions Report

  • The FTC issued an Infant Formula Supply Disruptions Report that discusses the market factors that contributed to the formula shortage in 2022. The report comes after a 2022 Request for Information related to the disruptions and infant formula market generally. The FTC relied on these responses to aid its analysis for this report. Specifically, the FTC investigated the impact of certain features of the infant formula market on the supply disruptions and the possibility of strengthening the market with competition-based reforms.

Thursday, March 14, 2024

Bureau of Consumer Protection: Right-to-Repair

  • The FTC and DOJ's Antitrust Division submitted a comment to the U.S. Copyright Office in support of regulations for consumers' right to repair their products. The comment advocates for the renewal and expansion of exemptions for repair in the Digital Millennium Copyright Act (DMCA). The FTC and DOJ claim that these repair exemptions "would promote competition in markets for replacement parts, repair, and maintenance services" and "facilitate competition in markets for repairable products," thus, giving consumers less expensive and increased options for repair. Technology protection measures put in place by manufacturers to protect its copyrighted content can also prevent third-party businesses from repairing a product. This not only harms business but also limits options and raises prices for consumers to repair their products.
  • The FTC has a proven track record of supporting repair-related exemptions. This comment follows Christine Todaro's, an attorney in the FTC's Bureau of Consumer Protection, appearance before the Colorado Attorney General's Committee on Business Affairs and Labor in support of proposed legislation (HB 24-1121), which would expand Colorado's right-to-repair laws to digital electronic equipment. Crowell covered the FTC's support of this proposed legislation in a separate update.

Bureau of Competition: Open Commission Meeting

  • FTC Chair Lina Khan announced an open Commission meeting scheduled on March 21, 2024 at 11 a.m. ET. At the meeting, the Division of Marketing Practices will present on the FTC's finalization of a Telemarketing Sales Rule (TSR) amendment. The amendment prohibits business-to-business misrepresentations in telemarketing and requires thorough recordkeeping. The Division will report on the Notice of Proposed Rulemaking to further amend the TSR to protect consumers on inbound telemarketing calls for technical support services. The tentative agenda also includes discussing a report that details how supply chain disruptions impact consumer goods suppliers and retailers. To speak at the virtual meeting, members of the public must sign up. If unable to participate live, individuals can submit written comments or a video. The registration and comment submission deadline is March 19, 2023.

Bureau of Consumer Protection: Online Advertising and Marketing

  • The FTC announced that it is sending over $527,000 in total refunds to 32,689 consumers deceived by The Bountiful Company in their purchase of certain supplements. In its complaint, the FTC alleged that Bountiful fraudulently listed reviews on Amazon, higher ratings, and "#1 Best Seller" and "Amazon Choice" endorsements for new supplements. This is the FTC's first enforcement action based on "review hijacking," in which a marketer steals a different product's reviews to increase sales. The FTC ordered Bountiful to pay monetary relief and cease deceptive practices. Consumers can contact the refund administrator, Analytics, or review FAQs on the FTC website.

Bureau of Consumer Protection: Misleading Technology Services

  • The FTC announced a $26 million settlement with Restoro Cyprus Limited and Reimage Cyprus Limited, two technology support companies. According to the FTC's complaint, these companies used deceptive marketing to convince consumers to pay for technology repair services. Samuel Levine, Director of the FTC's Bureau of Consumer Protection, commented: "These companies used scare tactics andlies about threats to consumers' personal computers to bilk consumers, particularly older consumers, out of tens of millions of dollars." Specifically, the companies used fake Microsoft Windows pop-ups alerting consumers to false viruses and malware that required immediate action to resolve. The companies then sold software to "fix" the issues that required a phone call to install. Over the phone, telemarketers misrepresented that routine computer messages signaled real problems that required additional purchase of services. Under the proposed order, in addition to the monetary penalty, Restoro and Reimage must not deceive consumers through telemarketing or misrepresent issues related to the sale, marketing, or distribution of its products or services.

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