The FTC has placed Twitter in the hot seat again for privacy related practices that it alleges impacted over 140 million users. The Commission has also resolved actions pertaining to alleged magazine subscription scams and credit card laundering. In addition, the FTC is turning to the public to gather information regarding the recent infant formula shortage. These stories and more after the jump.
Tuesday, May 24, 2022
Food and Beverage Competition
- The FTC announced a public inquiry into the ongoing shortage for infant formula. The inquiry seeks information about the nature and prevalence of any deceptive, fraudulent, or unfair business practices aimed at taking advantage of consumers. The inquiry also sets out to illuminate what has led to the concentration in the infant formula market and the fragility of the supply chains. The FTC will partner with the USDA to analyze the results of the public inquiry. Chair Lina M. Khan issued a statement in conjunction with the inquiry noting that although the FTC does not regulate the safety of the impacted products the Commission can take steps to address “anticompetitive, unfair, or deceptive acts or practices that have contributed to or are worsening this problem.” The FTC is encouraging comments be submitted to regulations.gov by Friday, June 24, 2022 at 11:59pm ET.
Bureau of Consumer Protection: Credit and Finance
- The FTC finalized an order against Electronic Payment Systems, for allegedly opening credit card processing merchant accounts for fictitious companies on behalf of Money Now Funding, a business opportunity scam. The Commission filed an administrative complaint in March 2022, alleging that the company opened credit card processing merchant accounts for fake companies, and then used those companies to help Money Now Funding launder millions of dollars of consumers’ credit card payments, a growing practice called “factoring” or “credit card laundering.” The settlement order prohibits defendants from engaging in certain actions such as credit card laundering, providing payment processing services to merchants likely to engage in deceptive or misleading conduct, and requires defendants to screen potential merchants who conduct telemarketing or other activities that could harm consumers.
Wednesday, May 25, 2022
Bureau of Consumer Protection: Advertising, Marketing, and Consumer Privacy
- The FTC filed a complaint against Twitter, Inc. for allegedly profiting from users’ phone numbers and email addresses by allowing advertisers to use the data to target specific ads to certain users. According to the complaint, from 2014 to 2019, more than 140 million Twitter users provided their phone numbers or email addresses after Twitter informed them that the information would make their accounts more secure but never mentioned that the data would allow advertisers to use the information for targeted ads. The FTC alleges that Twitter has violated the FTC Act, a 2011 FTC order that explicitly prohibited the company from misrepresenting its privacy and security practices, and the EU-U.S. Privacy Shield and Swiss-U.S. Privacy Shield agreements. The proposed order includes injunctive remedies and a $150 million penalty. Chair Lina M. Khan and Commissioner Rebecca Kelly Slaughter issued a joint statement and Commissioners Noah Joshua Phillips and Christine S. Wilson issued a separate joint statement reiterating the FTC’s priority to protect consumers’ privacy and enforce Commission orders.
FTC Internal Operations: Commissioner Alvaro M. Bedoya’s Legal Staff
- Commissioner Alvaro Bedoya announced his inaugural legal staff which will include, (1) Danielle Estrada, as an attorney-advisor for consumer protection; (2) Max Miller, as an attorney-advisor for competition; (3) Aaron Rieke, as chief of staff and as an attorney-advisor; and (4) Catherine Sanchez, as attorney-advisor for competition. Together, the team has more than 35 years of civil law enforcement experience.
Bureau of Consumer Protection: Advertising, Marketing, and Telemarketing
- The FTC resolved an action against Publishers Business Services, an alleged purveyor of a subscription scam, and its officers for allegedly engaging in a deceptive telemarketing scheme that offered “free” or low-cost magazine subscriptions that were hard to cancel and exorbitantly priced. This is the second time the FTC has taken action against defendants, filing a complaint in 2008 and securing a permanent injunction in 2010. The proposed order requires a suspended judgment of $14.47 million and requires defendants to forgo any claims to the money it has already paid to the commission. In addition, it requires the defendants to monitor their compliance with the proposed order, and they may face significant contempt remedies. The FTC highlighted the impact of the Supreme Court’s decision in AMG Capital Management LLC v. FTC by noting that it had been originally awarded $24 million at trial. However, the action was vacated following AMG Capital Management leading to the suspended judgment of $14.47 million.
For further information, please contact:
Tiffany Aguiar , Partner, Crowell & Moring
taguiar@crowell.com
