In late March, the FTC released the agency’s 2016 Annual Highlights, which the FTC says include some of the Commission’s “biggest successes” to date. Acting FTC Chairwoman Maureen Ohlhausen has said, “2016 was a historic year for the FTC. We obtained almost $12 billion in redress for consumers, and took action in more than a dozen merger cases to preserve competition. The Commission’s enforcement, policy and consumer and business education work shows our strong commitment to protecting consumers and promoting competition and innovation.”
FTC Focuses on Healthcare and Technology in 2016
As it relates to the FTC’s enforcement efforts in 2016, the agency focused on its work across healthcare and technology, as well as numerous other consumer products and services. The FTC says it successfully blocked two proposed mergers between hospitals in Pennsylvania and Chicago, and negotiated settlements in several other pharmaceutical related mergers, including generic drugs used to treat conditions such as colitis, epilepsy, and several generic injectable drugs. Also on the healthcare front, the FTC notes that it ordered its largest divestiture to date when Teva agreed to sell assets related to 79 products as part of its deal to Allergan, and that the agency continued to fight anticompetitive reverse payment agreements in the wake of the Supreme Court’s ruling in FTC v. Actavis.
FTC Continues Efforts to Protect Consumers from Deceptive Health Claims
On the consumer protection side, the FTC says that it continued to take aim at deceptive health claims, including claims made by LearningRx over its “brain training” programs, claims made by Supple as it relates to their liquid supplements, and claims made by Aura Labs regarding its blood pressure measuring mobile app. The FTC also sets forth as part of its 2016 highlights the Commission’s continued focus on deceptive weight loss claims, which saw the FTC charge an affiliate marketing program for sending millions of spam emails with links to fake news sites about fictitious and phony weight-loss products.
Data Security and Consumer Privacy a “Priority” for the FTC in 2016
On the technology front, the FTC reports that it took action to preserve competition in the worldwide market for specially designed transistors used in auto ignition systems. The FTC’s 2016 highlights in technology enforcement also included the agency’s efforts to curb Invibio’s monopoly over high-performance polymer used to make medical implants.
As for consumer protection in the technology sector, the FTC remained focused on data security and consumer privacy in 2016. The FTC aimed its data security and consumer privacy efforts at several different targets in 2016. First, the FTC targeted digital advertising company Turn who the FTC says deceived consumers by tracking them online and through their mobile apps, even after consumers took steps to opt out of such tracking.
Misleading Data Security Practices Become a Popular Issue for the FTC in 2016
Next, the FTC took aim at InMobi for alleged violations of the Children’s Online Privacy Protection Act (“COPPA”) for deceptively tracking the locations of hundreds of millions of consumers, including children, without their knowledge or consent to serve them geo-targeted advertising. Finally, the FTC came to terms over a settlement with Toronto-based dating site Ashley Madison, who agreed to settle FTC and state charges that the company deceived consumers and failed to protect 36 million users’ account and profile information in relation to a massive breach of their network. Similar settlements over misleading data security practices were reached in the cases of Practice Fusion and ASUSTek Computer.
FTC Highlights Enforcement Efforts Regarding Competition
Turning to consumers products and services, and manufactured goods, the FTC’s 2016 highlights include the agency’s enforcement efforts against 1-800 Contacts, who the FTC alleged unlawfully orchestrated a web of anticompetitive agreement with rivals that suppressed competition for certain online search advertising auctions, restricting advertising to consumers, and resulting in some consumers paying higher prices for contact lenses. The FTC also acted to block the proposed merger between Staples and Office Depot, a merger that the FTC says “was likely to increase the cost of consumable office supplies bought by some of the largest businesses in the United States.”
FTC Secures Massive Settlement Against VW
Perhaps most notably among the FTC’s efforts in 2016 was FTC’s action against Volkswagen. Ultimately, Volkswagen agreed to settle the FTC’s charges that its “clean diesel” claims deceived consumers for approximately $10 billion. Other notable settlements in this area included those with Herbalife, Vemma Nutrition Company, Lord & Taylor, and Warner Bros. Home Entertainment.
Education-Related Claims Take Center Stage
A somewhat new area of focus for the FTC in 2016 was allegedly misleading education-related claims. In the FTC’s first enforcement action against an education lead generator, the FTC alleged that Gigats.com operated a deceptive scheme to generate sales leads, which the FTC said gathered information from applicants and steered them to “employment specialists” who tried to sign them up for education programs that were paying Gigats for leads. Additionally, DeVry University was charged with deceiving prospective students as it relates to their likelihood of finding jobs in their fields of study and that they would earn more than graduates with bachelor’s degrees from other schools. DeVry and its parent company agree to pay more than $100 million to students the FTC says were harmed by its deceptive advertising.
FTC’s Efforts to Stop Fraud Among Highlights for 2016
Among the FTC’s other enforcement highlights in 2016 were the Commission’s efforts to put a stop to fraud related activities. On that front, the FTC charged Blue Saguaro Marketing and another related fraudulent telemarketing scheme with deceiving senior citizens and veterans about worthless money-making opportunities purportedly connected to Amazon.com. The FTC also obtained its largest ever litigated judgment ($1.3 billion) against operators of payday lending scheme AMG Services.
In another case, a federal court imposed a $43.1 million judgment against Ideal Financial Solutions and its subsidiaries, and a $36.6 million judgment against Jared Mosher, for allegedly operating a massive scam that used consumers’ information from payday loan applications to take money from their bank accounts without their knowledge or consent. The FTC also reports that it continued its efforts to crack down on debt collectors (Stark Law), debt relief services (Good Ebusiness and Consumer Assistance Project and Student Aid Center), and imposter scams (D&S Marketing Solutions, DOTAuthority, and OMICS Group) in 2016.
Enforcing Prior Orders
Beyond bring enforcement actions, the FTC also sought to enforce a number of prior orders entered in previous enforcement actions. There, the Commission’s 2016 highlights include an $85,000 civil penalty against Dallas area auto dealers (Southwest Kia), a $5.2 million payment by Billing Services Group to resolve agency allegations that it violated a court order that settled earlier FTC charges of phone bill cramming, and a contempt finding against Blue Hippo that ultimately led to an additional $13.4 million being recovered for consumers following a successful appeal. The FTC also partnered with criminal authorities in 2016, which used information from the FTC to charge 103 criminal defendants and secure dozens of convictions, with an average prison sentence of 3.7 years.
FTC Advocates Positions to States and State Legislatures on Various Topics in 2016
On the policy front, the FTC sent advocacy comments to a number of states and state legislatures regarding a variety of topics. The FTC also wrote four comments concerning privacy and data security. Two of those comments went to the FCC. The first, from Commission staff and authorized by a unanimous Commission vote, offered constructive criticism of the FCC’s proposed privacy requirements for broadband internet providers. The second, from the BCP Bureau Director, discussed the privacy enforcement implications of the proposed set-top box rule. The other two comments went to the National Highway Traffic Safety Administration (“NHTSA”) regarding revisions to the Federal Automated Vehicles Policy, and to the National Telecommunications and Information Administration (“NTIA”) regarding its study of the internet of things.
Amicus Briefs and Testimony Before Congress Among FTC Highlights for 2016
The FTC’s 2016 policy highlights also included eight amicus briefs on topics ranging from pharmaceutical markets (In Re Nexium), reverse payments (Wellbutrin), and the Fair Credit Reporting Act (Rivera v. JP Morgan Chase). FTC Commissioners also appeared several times before Congress to testify on consumer privacy, the pet medication industry, fraud affecting seniors, agency enforcement of consumer protection and antitrust laws, occupational licensing, and international antitrust enforcement. The FTC also testified on agency processes and potential reform.
FTC Hosts Workshops, Which Offer Preview of Coming Attractions
Also in 2016, the FTC hosted a number of workshops, which provide businesses a preview of industries that the FTC is likely to focus on in the months after the workshop. In 2016, the FTC hosted workshops on state regulation of automobile sales, solar distributed generation, security, technology issues, marketplace lending, and crowdfunding and peer-to-peer payment systems. Beyond the workshops, the FTC also issued a number of reports and enforcement policy statements, as well as engaging internationally with foreign countries over consumer issues.
FTC Tries to Business Better Understand Their “Rights and Legal Responsibilities”
Lastly, the FTC’s 2016 highlights included efforts by the agency to work to help businesses understand their rights and legal responsibilities, and inform people about ways to avoid fraud and deceptive business practices. According to the FTC:
In addition to the many educational products the agency released in 2016, the FTC published more than 30 blog posts through its Competition Matters blog on topics like merger remedies and antitrust laws in job markets, and more than 140 blog posts for business people and attorneys. The FTC also published almost 200 blog posts for consumers in English and more than 140 blog posts for consumers in Spanish on topics including scams pushing people to pay with iTunes gift cards and IRS scams. The Commission also unveiled its free mobile-friendly financial readiness tool at Military.Consumer.gov, which helps members of the military community navigate personal financial decisions in light of the unique challenges they face, such as frequent relocations and deployment.
FTC’s 2016 Highlights Provide Not Only a Review, But Also a Preview and Roadmap for FTC Actions
Based on the above, 2016 was a very busy year for the FTC. Most notably, the FTC sought to foreclose several hospital mergers, and at least on two occasions the agency was successful in preventing such mergers. The FTC also continued its focus on data security and consumer privacy, as well as allegedly deceptive health related claims. It is likely that these efforts will continue into 2017 and beyond. Businesses that may become the target of FTC enforcement actions would do well to review the Commission’s 2016 highlights in order to ensure they are being compliant and to learn more about the FTC goes about its business.
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