FTC Updates (January 1 – January 19, 2024) – Dodd-Frank, Consumer Protection Act

As we enter 2024, the FTC is pushing forward on all fronts. The
Bureau of Consumer Protection announced both settlements and
actions, especially related to telemarketing and robocalls, as well
as automotive industry junk fees and illegal uses of consumer
location data. And, the FTC has scheduled a summit on Artificial
Intelligence on January 25. This, and more, after the jump.

Tuesday, January 2, 2024

Bureau of Consumer Protection: Advertising and Marketing;
Telemarketing; Robocalls

• The FTC announced a proposed settlement with XCast
  Labs, Inc., a Voice over Internet Protocol (VoIP) provider. The agreement would settle the FTC’s
  allegations that XCast Labs allowed hundreds of millions of illegal
  robocalls through its network, even after receiving warnings about
  such conduct. Under the settlement, XCast Labs will be required to
  implement a screening process of current and potential clients to
  ensure compliance with the FTC’s telemarketing rules. The
  settlement order will permanently bar XCast Labs from providing
  services to any company that does not have an automated procedure
  to block calls displaying invalid Caller ID phone numbers or that
  fail to be authenticated in the FCC’s STIR/SHAKEN
  Authentication Framework. Finally, the settlement imposes a $10
  million civil penalty, but the penalty will be suspended based on
  an inability to pay. The complaint, filed in May 2023, stated the FTC
  sent warning letters to VoIP providers, including XCast Labs, in
  early 2020 warning the providers that assisting or facilitating
  illegal telemarketing or robocalling is against the law. The
  Department of Justice litigated the case and filed the proposed
  order on the FTC’s behalf.

Bureau of Consumer Protection: Advertising and Marketing;
Telemarketing; Robocalls

• The FTC announced a proposed settlement with Response
  Tree LLC and its president, Derek Thomas Doherty. Response Tree allegedly sold personal information of hundreds
  of thousands of consumers to telemarketers who used the information
  to make millions of illegal telemarketing calls nationwide. The settlement will ban Response Tree from making
  or assisting others in making robocalls or calls to numbers on the
  FTC’s Do-Not-Call Registry. The settlement order charges
  Response Tree with operating over fifty websites designed to trick
  consumers into providing their personal information for mortgage
  refinancing loans and other services. These websites are described
  as ‘consent farms’ that use manipulative dark patterns to
  induce consumers to provide their personal information and obscure
  inadequate disclosures regarding how the personal information will
  be used. Third parties then purchase the consumers’ personal
  information to use in illegal telemarketing campaigns. The
  settlement order imposes a $7 million judgment against the
  defendants, which will be suspended based on inability to pay. The
  FTC voted 3-0 to file the complaint and stipulated final
  order.

Thursday, January 4, 2024

Bureau of Consumer Protection: Deceptive Business Conduct;
Credit and Finance; Automobiles

• The FTC and the State of Connecticut announced an action against auto-dealer
  Manchester City Nissan, as well as a number of key employees, for
  allegedly deceiving consumers about the price of used cars,
  add-ons, and government fees. The complaint alleges that Manchester City Nissan
  charged various junk fees without consumers’ notice or consent.
  These junk fees include double charges for ‘certified
  pre-owned’ vehicles, bogus add-ons, and bogus government fees.
  The complaint cites violations of the FTC Act and the Connecticut
  Unfair Trade Practices Act. The FTC voted 3-0 to authorize the
  complaint filed in the U.S. District Court for the District of
  Connecticut.

Friday, January 5, 2024

Office of Technology: Artificial Intelligence; Consumer
Protection; Competition

• The FTC’s Office of Technology will host a virtual technology summit on January
  25, 2024 at noon that will bring together various stakeholders to
  discuss key developments in the evolving field of Artificial
  Intelligence. The event will include three panels and the
  stakeholders will include representatives from academia, industry,
  civil society organizations, and the government to discuss the
  technology, market trends, and real-world impacts of artificial
  intelligence. Chair Lina Khan and Commissioners Rebecca Slaughter
  and Alvaro Bedoya all plan to provide remarks at the Summit. The
  summit will take place online and further details can be found at
  the event website.

Bureau of Consumer Protection: Do Not Call Registry;
Telemarketing

• The FTC issued its Biennial Report to Congress Under
  the Do-Not-Call Registry Fee Extension Act of 2007 (the
  “Act”) for Fiscal years 2022 and 2023. In 2008, Congress
  passed the Act requiring a biennial report on the National Do Not
  Call Registry. The Registry has over 249 million active
  registrations, which increased by 2.6 million phone numbers in
  2023. Over 10,000 sellers, telemarketers, and exempt organizations
  subscribe to the Registry and pay fees totaling nearly $15 million.
  The Registry allows consumers to register numbers and submit
  complaints regarding suspected violations, as well as helps
  businesses and law enforcement investigate potential violations of
  Do Not Call rules.

Office of the Executive Director: Operations

• The FTC issued an order approving the Horseracing
  Integrity and Safety Authority’s 2024 budget as submitted to
  the Commission. On March 27, 2023, the FTC adopted procedures for
  the FTC’s review and approval of the Horseracing Integrity and
  Safety Authority’s annual budget. The FTC published the Horseracing Integrity and Safety
  Authority’s proposed 2024 budget in the Federal Register,
  allowed for public comment, and now has voted 3-0 to approve the
  proposed budget.

Tuesday, January 9, 2024

Bureau of Consumer Protection; Debt Relief; Consumer Refunds

• The FTC is sending payments of $201.34 each to 6,261 consumers
  who lost money due to Consumer Defense, an alleged deceptive
  mortgage modification scheme. According to the FTC’s 2018 complaint, Consumer Defense operated under a
  number of names, including Preferred Law and American Home Loan
  Counselors (“defendants”), and promised homeowners
  foreclose prevention and more affordable mortgage payments. Under
  the Consumer Defense scheme, homeowners were unlawfully charged
  upfront fees in monthly installments of $650 and were falsely
  promised legal assistance. Once consumers paid these fees, they
  learned that the defendants had not obtained the promised loan
  modifications and sometimes had never even contacted the lenders.
  In 2019, a federal court ruled in favor of the FTC in the case,
  ordering defendants’ assets to be turned over to the FTC and
  liquidated. The defendants appealed the case, and an appellate
  court in 2022 upheld the ruling but returned the case back
  to the district court to re-enter the monetary judgment pursuant to
  Section 19 of the FTC. In 2023, the district court entered a monetary judgmentfor the
  defendants’ violations of the Mortgage Assistance Relief
  Services Rule.

Bureau of Consumer Protection: Consumer Privacy; Online
Advertising and Marketing

• The FTC issued a proposed order in relation to the complaint against X-Mode Social and its
  successor, Outlogic, which alleged 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,
  failed to put in place reasonable and appropriate safeguards on the
  use of such information by third parties, and failed to ensure that
  users of their own apps were informed that their location data
  would be used. X-Mode and Outlogic collect precise location data
  from third-party apps that incorporate its software development kit
  into their apps. The company then sells and licenses consumer
  location data to hundreds of clients in various industries. The
  proposed order requires X-Mode/Outlogic to create a program to
  ensure it develops and maintains a list of sensitive locations, and
  ensure it is not sharing, selling or transferring location data
  about those sensitive locations and limits the company from
  collecting or using location data when consumers have opted out.
  The Commission voted 3-0 to accept the consent agreement.

Bureau of Consumer Protection; Advertising and Marketing

• The FTC will hold an informal hearing on its proposed rule banning fake reviews and
  testimonials at 10 a.m. ET on February 13, 2024. 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. During the hearing, three
  interested parties will provide statements addressing issues raised
  during the rulemaking process. The hearing will be open to the
  public and available via webcast.

Wednesday, January 10, 2024

Bureau of Consumer Protection: Privacy and Security

• The FTC is launching a claims process for consumers who had
  their Social Security numbers exposed in a data breach involving
  online platform CafePress. The claims process comes after a March
  2022 settlement 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, leading to a data breach of
  sensitive data. 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
  information security programs to address the security problems
  identified in the complaints in addition to paying $500,000 to
  compensate victims impacted by the data breach.

Thursday, January 11, 2024

Bureau of Competition; Bureau of Consumer Protection; FTC
Operations

• The FTC 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, effective on January 10, 2024, from 1)
  $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; 2) $659
  to $680 for violations of Section 10 of the FTC Act, and; 3)
  $1,426,319 to $1,472,546 for violations of Section 814(a) of the
  Energy Independence and Security Act of 2007. These adjustments are
  listed in the Federal Register notice.

Friday, January 12, 2024

Bureau of Competition; Merger

• The FTC has approved revised jurisdictional thresholds for Section 8 of the Clayton Act,
  which prohibits interlocking directorates. For 2024, thresholds
  under Section 8 of the Act that trigger prohibitions on certain
  interlocking memberships on corporate boards of directors are
  $48,559,000 for Section 8(a)(l) and $4,855,900 for Section
  8(a)(2)(A).

Thursday, January 18, 2024

Data Security; Consumer Privacy; Business Guidance

• The FTC announced a proposed order and complaint which would inhibit the digital
  marketing platform, InMarket Media, from using its consumers’
  locations without obtaining their consent. The complaint alleges
  that InMarket embedded location-collecting software development
  kits (SDK) into two of its own shopping awards apps, and
  subsequently made such data available to more than “300
  third-party apps downloaded to more than 390 million different
  devices.” InMarket has agreed to the terms of the proposed
  order, which prohibit it from selling or licensing precise location
  data. Further, InMarket is required to implement a prevention
  program to halt future uses of consumer location data. This case
  conveys the extent to which the FTC will act to protect consumers
  against the illegal collection of their sensitive location
  data.

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