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FTC Alleges Amazon Unlawfully Billed Parents for Millions of Dollars in Children’s Unauthorized In-App Charges

July 10, 2014 Comments off

FTC Alleges Amazon Unlawfully Billed Parents for Millions of Dollars in Children’s Unauthorized In-App Charges
Source: Federal Trade Commission

Amazon.com, Inc. has billed parents and other account holders for millions of dollars in unauthorized in-app charges incurred by children, according to a Federal Trade Commission complaint filed today in federal court.

The FTC’s lawsuit seeks a court order requiring refunds to consumers for the unauthorized charges and permanently banning the company from billing parents and other account holders for in-app charges without their consent. According to the complaint, Amazon keeps 30 percent of all in-app charges.

Amazon offers many children’s apps in its appstore for download to mobile devices such as the Kindle Fire. In its complaint, the FTC alleges that Amazon violated the FTC Act by billing parents and other Amazon account holders for charges incurred by their children without the permission of the parent or other account holder. Amazon’s setup allowed children playing these kids’ games to spend unlimited amounts of money to pay for virtual items within the apps such as “coins,” “stars,” and “acorns” without parental involvement.

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FTC Alleges T-Mobile Crammed Bogus Charges onto Customers’ Phone Bills

July 1, 2014 Comments off

FTC Alleges T-Mobile Crammed Bogus Charges onto Customers’ Phone Bills
Source: Federal Trade Commission

In a complaint filed today, the Federal Trade Commission is charging mobile phone service provider T-Mobile USA, Inc., with making hundreds of millions of dollars by placing charges on mobile phone bills for purported “premium” SMS subscriptions that, in many cases, were bogus charges that were never authorized by its customers.

The FTC alleges that T-Mobile received anywhere from 35 to 40 percent of the total amount charged to consumers for subscriptions for content such as flirting tips, horoscope information or celebrity gossip that typically cost $9.99 per month. According to the FTC’s complaint, T-Mobile in some cases continued to bill its customers for these services offered by scammers years after becoming aware of signs that the charges were fraudulent.

In a process known as “third-party billing,” a phone company places charges on a consumer’s bill for services offered by another company, often receiving a substantial percentage of the amount charged. When the charges are placed on the bill without the consumer’s authorization, it is known as “cramming.”

The FTC’s complaint alleges that in some cases, T-Mobile was charging consumers for services that had refund rates of up to 40 percent in a single month. The FTC has alleged that because such a large number of people were seeking refunds, it was an obvious sign to T-Mobile that the charges were never authorized by its customers. As the complaint notes, the refund rate likely significantly understates the percentage of consumers who were crammed. The complaint also states that internal company documents show that T-Mobile had received a high number of consumer complaints at least as early as 2012.

FTC Recommends Congress Require the Data Broker Industry to be More Transparent and Give Consumers Greater Control Over Their Personal Information

May 28, 2014 Comments off

FTC Recommends Congress Require the Data Broker Industry to be More Transparent and Give Consumers Greater Control Over Their Personal Information
Source: Federal Trade Commission

In a report issued today on the data broker industry, the Federal Trade Commission finds that data brokers operate with a fundamental lack of transparency. The Commission recommends that Congress consider enacting legislation to make data broker practices more visible to consumers and to give consumers greater control over the immense amounts of personal information about them collected and shared by data brokers.

The report, “Data Brokers: A Call for Transparency and Accountability” is the result of a study of nine data brokers, representing a cross-section of the industry, undertaken by the FTC to shed light on the data broker industry. Data brokers obtain and share vast amounts of consumer information, typically behind the scenes, without consumer knowledge. Data brokers sell this information for marketing campaigns and fraud prevention, among other purposes. Although consumers benefit from data broker practices which, for example, help enable consumers to find and enjoy the products and services they prefer, data broker practices also raise privacy concerns.

See also: A Review of the Data Broker Industry: Collection, Use, and Sale of Consumer Data for Marketing Purposes (U.S. Senate Committee on Commerce, Science and Transportation)

Snapchat Settles FTC Charges That Promises of Disappearing Messages Were False

May 8, 2014 Comments off

Snapchat Settles FTC Charges That Promises of Disappearing Messages Were False
Source: Federal Trade Commission

Snapchat, the developer of a popular mobile messaging app, has agreed to settle Federal Trade Commission charges that it deceived consumers with promises about the disappearing nature of messages sent through the service. The FTC case also alleged that the company deceived consumers over the amount of personal data it collected and the security measures taken to protect that data from misuse and unauthorized disclosure. In fact, the case alleges, Snapchat’s failure to secure its Find Friends feature resulted in a security breach that enabled attackers to compile a database of 4.6 million Snapchat usernames and phone numbers.

According to the FTC’s complaint, Snapchat made multiple misrepresentations to consumers about its product that stood in stark contrast to how the app actually worked.

FTC Announces Top National Consumer Complaints for 2013

March 14, 2014 Comments off

FTC Announces Top National Consumer Complaints for 2013
Source: Federal Trade Commission

Identity theft continues to top the Federal Trade Commission’s national ranking of consumer complaints, and American consumers reported losing over $1.6 billion to fraud overall in 2013, according to the FTC’s annual report on consumer complaints released today.

The Commission received more than two million complaints overall, as reported in the agency’s Consumer Sentinel Network Data Book 2013, of which 290,056, or 14 percent, were identity theft related. Thirty percent of these incidents were tax- or wage-related, which continues to be the largest category within identity theft complaints.

The highest reported age group for identity theft is 20-29, with 20 percent of complaints. Rich says that educating consumers on this topic is a top priority for the agency. Some of the FTC resources include Signs of Identity Theft, Immediate Steps to Repair Identity Theft, and How to Keep Your Personal Information Secure.

Of the more than 1.1 million fraud complaints (classified separately from identity theft) the Commission received, 61 percent of consumers reported an amount of money they had paid, which collectively added up to more than $1.6 billion.

As Holiday Shopping Season Gets Underway, FTC Reminds Internet Retailers to Ensure Consumers Have Access to Warranty Information

December 11, 2013 Comments off

As Holiday Shopping Season Gets Underway, FTC Reminds Internet Retailers to Ensure Consumers Have Access to Warranty Information
Source: Federal Trade Commission

Federal Trade Commission staff is asking top Internet retailers to review their websites to ensure that they provide complete and accurate information about product warranties before consumers make their online purchases, as required by the FTC’s Pre-Sale Availability Rule.

The Rule requires retailers to make warranties available at the time of purchase for all warranted consumer products that cost more than $15. However, a recent staff survey found several instances of Internet sellers offering warranted consumer electronics and appliances for sale without disclosing complete warranty information.

FTC Issues FY 2013 National Do Not Call Registry Data Book

December 11, 2013 Comments off

FTC Issues FY 2013 National Do Not Call Registry Data Book
Source: Federal Trade Commission

The Federal Trade Commission today issued the National Do Not Call Registry Data Book for Fiscal Year 2013. The FTC’s National Do Not Call Registry lets consumers choose not to receive telemarketing calls. In its fifth year of publication, the Data Book contains a wealth of information about the Registry for FY 2013 (from October 1, 2012 to September 30, 2013), including:

  • The number of active registrations and consumer complaints since the Registry began in 2003;
  • FY 2013 complaint figures by month and type;
  • FY 2013 registration and complaint figures for all 50 states and the District of Columbia by population;
  • Rankings of the number of Do Not Call registrations by state population;
  • The number of entities accessing the Registry by fiscal year; and
  • An appendix on registration and complaint figures by state and area code.

According to the Data Book, at the end of FY 2013, the Do Not Call Registry contained 223,429,112 actively registered phone numbers, up from 217,568,284 at the end of FY 2012. In addition, the number of consumer complaints about unwanted telemarketing calls received decreased from 3,840,569 during FY 2012 to 3,748,655 during FY 2013.

FTC Approves Changes to Vocational Schools Guides

November 20, 2013 Comments off

FTC Approves Changes to Vocational Schools Guides
Source: Federal Trade Commission

The Federal Trade Commission revised its Vocational School Guides, which advise against deceptive marketing practices by businesses that offer vocational training.

Created in 1972, the Vocational School Guides (formally known as Guides for Private Vocational and Distance Education Schools) address misrepresenting accreditation, the transferability of credit to other schools, government or employment agency affiliation, and testimonials or endorsements. They also warn against misrepresenting teacher or enrollment qualifications, the nature of courses, the availability of financial aid, and the availability of jobs for graduates. In addition, the Guides address the use of deceptive diplomas or certificates, and placing classified ads that appear to be “help wanted” ads.

In 2009, the FTC sought public comment on the Guides as part of its systematic review of all current FTC rules and guides. In response to those comments, the FTC has amended the Guides to address more specifically misrepresentations:

  • commonly used in recruitment, including those regarding completion/dropout rates and post-graduation job prospects;
  • about whether completion of a program will qualify students to take a licensing exam;
  • concerning a student’s score on an admissions test, how long it takes to complete a course or program, or a student’s likelihood of success; and
  • regarding the likelihood of financial aid or help with language barriers or learning disabilities, or how much credit students will receive for courses completed elsewhere.

FTC Poses Eight Questions to Ask When Choosing a College After Military Service

November 12, 2013 Comments off

FTC Poses Eight Questions to Ask When Choosing a College After Military Service
Source: Federal Trade Commission

The Federal Trade Commission is advising servicemembers, veterans, and their families that some for-profit schools may be more interested in gaining access to their post 9/11 GI Bill benefits than helping them fulfill their education goals. To help servicemembers identify a school that will meet their needs as they transition to student status, the FTC released a new tip sheet.

The guidance, 8 Questions to Ask When Choosing a College, encourages servicemembers, veterans and their families to carefully assess the schools they’re interested in attending, whether working toward a certificate or a higher degree. Using words such as “veteran” or “military-approved” may not necessarily equate to better education and support.

FTC Closes Seven-month Investigation of Proposed Office Depot/OfficeMax Merger

November 6, 2013 Comments off

FTC Closes Seven-month Investigation of Proposed Office Depot/OfficeMax Merger
Source: Federal Trade Commission

The Federal Trade Commission has unanimously voted to close its seven-month investigation into the proposed $1.2 billion merger of office supply superstores Office Depot, Inc. and OfficeMax, Inc. and has issued a Commission statement detailing the basis for its decision.

While the FTC successfully challenged the proposed merger of office supply superstores Staples, Inc., and Office Depot in 1997, the Commission observes in today’s statement that its investigation, “has shown that the market for the sale of consumable office supplies has changed significantly in the intervening years.” As a result, office supply superstores “today face significant competition and . . . the proposed merger is unlikely to substantially lessen competition in the retail sale of consumable office supplies.”

Aaron’s Rent-To-Own Chain Settles FTC Charges That it Enabled Computer Spying by Franchisees

October 28, 2013 Comments off

Aaron’s Rent-To-Own Chain Settles FTC Charges That it Enabled Computer Spying by Franchisees
Source: Federal Trade Commission

Aaron’s, Inc., a national, Atlanta-based rent-to-own retailer, has agreed to settle FTC charges that it knowingly played a direct and vital role in its franchisees’ installation and use of software on rental computers that secretly monitored consumers including by taking webcam pictures of them in their homes.

According to the FTC’s complaint, Aaron’s franchisees used the software, which surreptitiously tracked consumers’ locations, captured images through the computers’ webcams – including those of adults engaged in intimate activities – and activated keyloggers that captured users’ login credentials for email accounts and financial and social media sites.

“Consumers have a right to rent computers free of cyberspying and to know when and how they are being tracked by a company,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “By enabling their franchisees to use this invasive software, Aaron’s facilitated a violation of many consumers’ privacy.”

FTC Proposes Changes to Wool Products Labeling Rules

September 18, 2013 Comments off

FTC Proposes Changes to Wool Products Labeling Rules
Source: Federal Trade Commission

The Federal Trade Commission is seeking public comment on proposed changes to its Wool Products Labeling Rules as part of its systematic review of all current FTC rules and guides.

The Wool Products Labeling Rules require that labels on wool products disclose the manufacturer’s or marketer’s name, the country where the product was processed or manufactured, and information about the fiber content. The FTC first issued the Rules under the Wool Products Labeling Act of 1939, known as the Wool Act. The agency completed its last review of the Rules in 1998 and modified the Rules in 1998 and 2000. In 2006, the Wool Act was amended by the Wool Suit Fabric Labeling Fairness and International Standards Conforming Act, which provides that wool products identified as cashmere or as containing very fine wools are misbranded unless they have no more than the average fiber diameter specified in the Act.

In January 2012, the FTC sought comment on the Rules. In response to the comments received, the FTC proposes changes designed to clarify and update the Rules, to make them more flexible, and to align them with the Commission’s proposed amendments to the Textile Rules. The proposed changes include incorporating the Wool Act’s new definitions for cashmere and very fine wools, clarifying descriptions of products containing virgin or new wool, and revising the Rules to allow certain hang-tags disclosing fiber trademarks and performance even if they do not disclose the product’s full fiber content.

FTC Advises Consumers on Preventing, Identifying, and Dealing With Hacked Email or Social Networking Accounts

August 8, 2013 Comments off

FTC Advises Consumers on Preventing, Identifying, and Dealing With Hacked Email or Social Networking Accounts
Source: Federal Trade Commission

The Federal Trade Commission has new tips to help people deal with email and social networking hacks, whether it’s lessening the chances of a hack in the first place, or recovering from a hack once it happens.

Hacked Email, new guidance from the FTC, identifies signs an account may have been hacked such as friends and family members receiving messages the user didn’t send, a sent folder emptied, social media posts the user didn’t create, or email or other accounts the user can’t open.

If consumers think they have been hacked, the FTC encourages them to take the following actions:

  • Make sure security software is up-to-date and delete malware;
  • Change passwords;
  • Check with their email provider or social networking site for information about restoring the account;
  • Check account settings; and
  • Tell your friends

Using unique passwords for important sites like banking and email and safeguarding user names and passwords can help users protect themselves from hackers. The FTC recommends users turn on two-factor authentication if a service provider offers it; not click on links or open attachments from unknown users; and only download free software from sites a user knows and trusts. When using a public computer, do not let web browsers remember passwords, and log out of all accounts when finished.

FTC Acts Against Spam Text and Robocalling Operations

August 7, 2013 Comments off

FTC Acts Against Spam Text and Robocalling Operations
Source: Federal Trade Commission

The Federal Trade Commission has moved to shut down an international network of scammers that sent millions of unwanted text messages to consumers, using the lure of “free” gift cards and electronics to entice consumers into an elaborate scheme designed to take their money and target them for illegal robocalls.

In its complaint, the FTC alleges that scammers sent unwanted text messages to consumers, many of whom had to pay for receiving the texts. The messages promised consumers free gifts or prizes, including gift cards worth $1,000 to major retailers such as Best Buy, Walmart and Target.

Consumers who clicked on the links in the messages found themselves caught in a confusing and elaborate process that required them to provide sensitive personal information, apply for credit or pay to subscribe to services to get the supposedly “free” cards. In addition, consumers’ phone numbers were signed up to receive unwanted automated telemarketing calls, also known as robocalls.

This complaint builds on a nationwide sweep conducted by the Commission in March to crack down on scammers who use these spam text messages to deceive consumers.

The FTC complaint names nine defendants who allegedly were involved in various aspects of the operation in violation of the FTC Act and the Telemarketing Sales Rule. It seeks injunctions against the defendants preventing them from continuing their alleged deceptive and unfair practices as well as requiring them to pay monetary relief.

According to the complaint, when consumers followed the links included in the unwanted messages, they were directed to sites that collected a substantial amount of personal information, including in some instances health information, before being allowed to continue toward receiving the supposed gift cards. In many cases, the information was requested under the guise of being shipping information for the supposed gift cards. The Commission alleges that in addition to selling the information for marketing purposes, the defendants also made unwanted automated telemarketing calls to consumers selling products such as home security, satellite television and travel services.

Once consumers entered their personal information, they were directed to another site and told they would have to participate in a number of “offers” to be eligible for their gift card. In some cases, consumers were obligated to sign up for as many as 13 of the offers. These offers frequently included recurring subscriptions for which consumers were required to provide credit card information and pay up front for “shipping and handling” charges. In other cases, they required consumers to submit applications for credit that would be reflected in their credit reports and possibly affect their credit score.

In most, if not all, instances, it would be impossible for a consumer to receive the allegedly “free” merchandise without spending money, according to the complaint.

FTC Approves Final Orders Settling Charges Against Retailers Accused of Marketing Real Fur Products as Fake Fur

August 7, 2013 Comments off

FTC Approves Final Orders Settling Charges Against Retailers Accused of Marketing Real Fur Products as Fake Fur
Source: Federal Trade Commission

The Federal Trade Commission has approved final orders settling charges that retailers Neiman Marcus, DrJays.com and Eminent Inc. sold products containing real fur when they were advertised as containing “faux” fur, and that they did not identify the animal that produced the fur. Neiman Marcus also allegedly labeled a rabbit fur product as containing mink fur, and failed to disclose the country of origin for three fur products as required by the Fur Act and the Fur Rules (formally, the Fur Products Labeling Act and the Rules and Regulations Under the Fur Products Labeling Act).

Under the settlement orders [Neiman Marcus, DrJays.com, Eminent], the respondents are prohibited, for 20 years, from violating the Fur Act and the Fur Rules, including misrepresenting that real fur is fake or faux.

FTC Conducts Undercover Inspections of Funeral Homes in Eight States to Press Funeral Homes to Comply with Consumer Protection Law

July 24, 2013 Comments off

FTC Conducts Undercover Inspections of Funeral Homes in Eight States to Press Funeral Homes to Comply with Consumer Protection Law
Source: Federal Trade Commission

Investigators working undercover in eight states detected significant violations of Federal Trade Commission consumer protection requirements in 23 of 127 funeral homes they visited during 2012.

The FTC conducts undercover inspections every year to make sure that funeral homes are complying with the agency’s Funeral Rule. The Rule, issued in 1984, gives consumers important rights when making funeral arrangements. Key provisions of the Rule require funeral homes to provide consumers with an itemized price list at the start of an in-person discussion of funeral arrangements, as well as a casket price list before consumers view any caskets. The Rule also prohibits funeral homes from requiring consumers to buy any item, such as a casket, as a condition of obtaining any other funeral good or service. By requiring itemized prices, the Funeral Rule enables consumers to compare prices and buy only the goods and services they want.

Funeral homes with significant violations can enter a training program designed to increase compliance with the Funeral Rule. The three-year program is known as the Funeral Rule Offenders Program (FROP), and is an alternative to an FTC lawsuit that could lead to a federal court order and civil penalties of up to $16,000 per violation. It is run by the National Funeral Directors Association and provides participants with a legal review of the price disclosures required by the Funeral Rule, and on-going training, testing and monitoring for compliance with the Rule. In addition, funeral homes that participate in the program make a voluntary payment to the U.S. Treasury in place of a civil penalty, and pay annual administrative fees to the Association.

FTC Releases Draft Strategic Plan for Fiscal Years 2014-2018

July 17, 2013 Comments off

FTC Releases Draft Strategic Plan for Fiscal Years 2014-2018
Source: Federal Trade Commission

The Federal Trade Commission has approved the release of the agency’s draft Strategic Plan for Fiscal Years 2014-2018 for stakeholder review and comment, as required under the GPRA Modernization Act of 2010 (GPRAMA), using guidance issued by the Office of Management and Budget. Every four years, each government agency is required to prepare and submit an updated strategic plan covering activities for at least the following five years. The FTC’s last updated strategic plan was prepared in FY 2009.

This strategic plan presents strategic goals, objectives, strategies, and performance goals for the next five years. It details how the plan will be implemented in the areas of consumer protection, maintaining competition, and organizational performance, on an objective-by-objective basis. The plan also explains external factors affecting achievement of the goals and evaluations and research efforts. Finally, it includes an overview of the planning process.

World’s Largest Debt Collection Operation Settles FTC Charges, Will Pay $3.2 Million Penalty

July 16, 2013 Comments off

World’s Largest Debt Collection Operation Settles FTC Charges, Will Pay $3.2 Million Penalty
Source: Federal Trade Commission

The world’s largest debt collection operation, Expert Global Solutions and its subsidiaries, has agreed to stop harassing consumers with allegedly illegal debt collection calls and to pay a $3.2 million civil penalty – the largest ever obtained by the Federal Trade Commission against a third-party debt collector.

In its complaint, the FTC charged that the companies violated the Fair Debt Collection Practices Act and the FTC Act by using tactics such as calling consumers multiple times per day, calling even after being asked to stop, calling early in the morning or late at night, calling consumers’ workplaces despite knowing that the employers prohibited such calls, and leaving phone messages that disclosed the debtor’s name, and the existence of the debt, to third parties. According to the FTC’s complaint, the companies also continued collection efforts without verifying the debt, even after consumers said they did not owe it.

Under the proposed order, whenever a consumer disputes the validity or the amount of the debt, the defendants must either close the account and end collection efforts, or suspend collection until they have conducted a reasonable investigation and verified that their information about the debt is accurate and complete. The proposed order also restricts situations in which the defendants can leave voicemails that disclose the alleged debtor’s name and the fact that he or she may owe a debt.

Also under the proposed order, the defendants must: stop falsely representing that they will not call a number to collect a debt; not harass, oppress, or abuse a consumer while attempting to collect a debt; not communicate with third parties about a consumer’s debt; not communicate with a consumer at his or her workplace if it is clearly inconvenient or prohibited by the consumer’s employer; except in limited circumstances, cease communications if a consumer has requested no further contact or if a consumer refuses to pay a debt; and not violate any provision of the Fair Debt Collection Practices Act. The defendants also are required to record at least 75 percent of all their debt collection calls beginning one year after the date of the order, and retain the recordings for 90 days after they are made.

FTC Consumer Protection Staff Updates Agency’s Guidance to Search Engine Industry on the Need to Distinguish Between Advertisements and Search Results

July 9, 2013 Comments off

FTC Consumer Protection Staff Updates Agency’s Guidance to Search Engine Industry on the Need to Distinguish Between Advertisements and Search Results
Source: Federal Trade Commission

In an ongoing effort to ensure that its guidance for online advertisers stays current with changes in digital media, the Federal Trade Commission’s consumer protection staff sent letters to search engine companies to update guidance published in 2002 on distinguishing paid search results and other forms of advertising from natural search results. The letters note that in recent years, paid search results have become less distinguishable as advertising, and the FTC is urging the search industry to make sure the distinction is clear.

The letters are the latest example of the FTC’s work to update its guidance for digital advertisers, which also includes recent updates to the Dot Com Disclosures and Endorsements and Testimonials Guides. The letters also respond to requests from industry and consumer organizations to update the 2002 guidance.

According to both the FTC staff’s original search engine guidance and the updated guidance, failing to clearly and prominently distinguish advertising from natural search results could be a deceptive practice. The updated guidance emphasizes the need for visual cues, labels, or other techniques to effectively distinguish advertisements, in order to avoid misleading consumers, and it makes recommendations for ensuring that disclosures commonly used to identify advertising are noticeable and understandable to consumers.

The letters note that the principles of the original guidance still apply, even as search and the business of search continue to evolve. The letters observe that social media, mobile apps, voice assistants on mobile devices, and specialized search results that are integrated into general search results offer consumers new ways of getting information. The guidance advises that regardless of the precise form that search takes now or in the future, paid search results and other forms of advertising should be clearly distinguishable from natural search results.

The updated guidance has been sent to the general-purpose search engines AOL, Ask.com, Bing, Blekko, DuckDuckGo, Google, and Yahoo!, as well as 17 of the most heavily trafficked search engines that specialize in the areas of shopping, travel, and local business, and that display advertisements to consumers.

FTC Issues Revised Business Guide on ‘Red Flags’ Identity Theft Rule

June 19, 2013 Comments off

FTC Issues Revised Business Guide on ‘Red Flags’ Identity Theft Rule

Source: Federal Trade Commission

The Federal Trade Commission has issued revised guidance designed to help businesses comply with the requirements of the Red Flags Rule, which protects consumers by requiring businesses to watch for and respond to warning signs or “red flags” of identity theft.

The guidance outlines which businesses – financial institutions and some creditors – are covered by the Rule and what is required of businesses to protect consumers from identity theft. The rule was revised late last year to more narrowly define the types of creditors subject to the rule’s requirements.

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