FTC Enforcement Report
The FTC is a law enforcement agency that takes court and administrative actions to enhance competition and protect consumers. Without limitation, the mission of FTC attorney staff is to protect consumers from fraud, ensure truth in advertising, challenge deceptive or unfair privacy and security practices, and promote competition. The FTC also focuses on its order enforcement program. The enforcement program includes civil contempt actions.
In 2019, the FTC initiated enforcement actions targeting consumer fraud, deception in the marketplace, and harms to consumer privacy. The FTC focuses upon areas that have the greatest consumer impact: technology, health care, and consumer products and services.
Notable consumer protection enforcement matters from 2019 include:
- The University of Phoenix being required to pay $50 million in cash and cancel $141 million in debt owed to the school by students harmed by their alleged deceptive ads, which purportedly touted job opportunities and relationships with top tech companies;
- Record-breaking settlements in its actions against Facebook and other tech giants;
- Actions involving imposter scams to pyramid schemes, illegal robocalls and bogus business opportunities;
- A lawsuit alleging deceptive claims about a baby formula’s ability to reduce the risk that infants would develop allergies;
- Actions resolving allegations that companies deceptively promised that their products would treat a variety of conditions and chronic pain affecting older consumers;
- The first case challenging fake paid reviews on an independent retail site, resolving allegations that the defendants made false and unsubstantiated claims for their weight-loss supplement and that they paid a third-party website to write fake reviews on Amazon.com;
- The issuance of joint warning letters with the FDA to companies about allegedly deceptive or unsubstantiated claims to treat Coronavirus;
- The issuance of joint warning letters with the FDA about unsubstantiated claims that certain dietary supplements treat or cure serious medical conditions;
- The issuance of warning letters to sellers of cannabidiol (CBD) products, explaining that advertisers must possess competent and reliable scientific evidence to support their statements;
- Cases and settlements as part of Operation Call It Quits, a coordinated action against alleged scammers responsible for more than a billion illegal calls;
- The first Telemarketing Sales Rule action against a Voice over Internet Protocol (VoIP) service provider, which alleged the facilitation of the promotion of a credit card interest reduction scheme;
- Settlements relating to the use of endorsement in social media;
- An action against Devumi, LLC alleging the company sold fake followers, phony subscribers, and bogus likes to companies and individuals that wanted to boost their social media presence;
- An action against Sunday Riley Modern Skincare, LLC alleging its employees posted fake product reviews on a well-known retail website;
- An action against an online lender that paid $3.85 million to settle the FTC’s charges that the company purportedly used deceptive and unfair loan servicing practices, such as imposing unauthorized charges on consumers’ accounts and unlawfully requiring consumers to agree to automatic payments from their bank accounts;
- An action against Truly Organic Inc. and its CEO who were required to pay $1.76 million to settle the FTC’s charges that they falsely claimed that their bath and beauty products were “100% organic” and “certified organic” by the U.S. Department of Agriculture (USDA);
- Settlement of charges against a snack box company that allegedly misrepresented customer reviews as being independent, and that purportedly . The FTC alleged that the company unlawfully charged consumers automatically for six months of shipments after signing-up for a free product, because they did not opt out before the end of the month;
- A case against tech support software provider Office Depot, Inc. and settlement of charges that they falsely claimed a scan detected signs of malware, then allegedly tricked consumers into buying millions of dollars’ worth of computer repair and technical services;
- Actions against alleged illegal pyramids, including a purported multi-level marketer that deceived consumers into believing they could earn significant income as “distributors” of its health and wellness products, and a case involving a company that allegedly falsely promised recruits that they could achieve financial independence;
- An action against online dating service Match Group, Inc.—the owner of Match.com, Tinder, OKCupid, and PlentyOfFish—alleging the company used fake love interest advertisements to trick hundreds of thousands of consumers into purchasing paid subscriptions on Match.com;
- Settlement with Digital Altitude, LLC who paid $1.9 million to resolve the FTC’s allegations that they deceptively claimed people could earn “six figures in 90 days” by using a purported business coaching scheme;
- Settlement with Career Education Corporation, the operator of several post-secondary schools paid $30 million to settle the FTC’s charges that they used sales leads from lead generators that falsely told consumers they were affiliated with the U.S. military (and that allegedly used other unlawful tactics to generate leads);
- The largest forfeiture the FTC has ever obtained in a case of this kind, the operators of a sweepstakes scam surrendered a record $30 million in cash and assets;
- A federal court order stopping an operation and freezing the assets of an alleged debt collection scheme that purportedly bilked consumers out of millions of dollars, using deceptive and threatening tactics to collect phantom debts that they did not owe;
- The Commission and the Utah Division of Consumer Protection sued Nudge, LLC and affiliated companies, alleging that they made empty promises about earning money by “flipping” houses, to convince consumers to buy real estate training packages that cost thousands of dollars;
- In 2019, the FTC brought its first actions solely enforcing Consumer Review Fairness Act (CRFA), which prohibits companies from barring consumers from writing or posting negative reviews;
- A history-making settlement order with Facebook, Inc. where the company agreed to pay a record-breaking $5 billion penalty, the largest ever imposed on any company for allegedly violating consumers’ privacy;
- An Opinion and Order that data analytics company Cambridge Analytica, LLC violated the FTC Act by using deceptive tactics to collect personal information from tens of millions of Facebook users for voter profiling and targeting;
- A case against Equifax, Inc. involving allegations that the company failed to secure the massive amount of personal information stored on its network, leading to the 2017 data breach that exposed the personal information of 147 million people;
- A case against an auto dealer software provider resulting in settlement of charges that the company failed to take reasonable, readily available, and low-cost steps to secure consumers’ data, purportedly leading to a breach that exposed the personal information of about 12.5 million consumers;
- Settlement with technology company InfoTrax Systems, L.C. wherein the company must implement a comprehensive data security program to resolve allegations that the company did not have security safeguards in place, which allowed a hacker to access the personal information of a million consumers;
- Cases against 12 companies that allegedly misrepresented their participation in the EU-U.S. Privacy Shield framework, which enables companies to transfer consumer data legally from EU countries to the United States;
- Cases against tech giants relating to the protection of children’s privacy and the enforcement of the Children’s Online Privacy Protection Act (COPPA);
- An FTC’s COPPA civil penalty cases where the operators of the video social networking app ly—now known as TikTok—paid $5.7 million to settle allegations that the company illegally collected personal information from children;
- International law enforcement alongside foreign agencies, including the use of the FTC’s powers under the U.S. SAFE WEB Act to obtain information for and share information with foreign authorities in investigations ranging from government imposter to romance to cryptocurrency scams, as well as privacy and data breach investigations;
In 2017, the FTC focused upon protecting consumer privacy, promoting economic liberty, providing guidance to small businesses and reducing excessive regulations. The agency also continued its efforts to challenge anticompetitive business conduct.
Notable consumer protection enforcement matters from 2017 include:
- In coordination with eleven states and the District of Columbia, the agency launched a coordinated federal-state law enforcement initiative targeting deceptive student loan debt relief scams;
- A federal court order directing Dish Network to pay $280 million in civil penalties and to cease alleged violations of the FTC’s Telemarketing Sales Rule and other federal and state laws;
- Settlement with marketer of products that allegedly made unproven claims about lessening the effects of opiate withdrawal and overcoming opioid dependency without supporting competent and reliable scientific evidence;
- Settlement with health-related supplement sellers that allegedly made unsubstantiated claims targeted at elderly consumers;
- Charges against robocallers that allegedly placed millions of illegal calls to consumers listed on the DNC Registry;
- Settlement with a computer manufacturer following charges that it harmed consumers with preinstalled software on its laptops that compromised online security;
- Multi-million dollar settlement with one of the world’s largest manufacturers and sellers of internet-connected “smart” televisions, over charges that the software on its TVs collected viewing data on millions of consumer TVs without consumers’ knowledge or consent;
- Cases enforcing the new European Union-United States (EU-U.S.) Privacy Shield framework involving misrepresentations about completion of the certification process;
- Settlement with online tax preparation service involving allegations that it violated the Gramm-Leach-Bliley Act’s Safeguards and Privacy Rules when malicious hackers were able to gain full access to thousands of accounts and use the information to obtain taxpayers’ refunds by filing fraudulent tax returns;
- First ever case against social media influencers charged with deceptive endorsements and the failure to disclose material connections;
- The issuance of educational letters to influencers and brands to remind them of the FTC’s updated Endorsement Guides;
- Nationwide initiative to stop alleged tech support scams, including complaints, settlements, indictments and guilty pleas;
- First ever case against a company that allegedly made deceptive “organic” product claims when the substantial majority of product was non-organic;
- Enforcement action against online marketers that allegedly made false earnings claims and failed to properly disclose the recurring nature of charges;
- Charges against the operators of an alleged invention-promotion scam that purportedly deceived consumers and suppressed complaints by threatening criminal prosecution against dissatisfied customers;
- Settlement with defendants involved in selling business coaching programs and work-at-home opportunities involving charges of deceptive telemarketing;
- Settlement of charges that defendants coerced consumers into paying bogus phantom debts by posing as lawyers, threatening people with prison time or claiming police would come to their house to arrest them; and
- In 2017, the FTC also cooperated on enforcement matters with foreign agencies and organizations in numerous matters, including by using the agency’s powers under the U.S. SAFE WEB Act. The FTC also entered into a memorandum of understanding to facilitate information sharing and enforcement cooperation with the Royal Canadian Mounted Police on cross-border fraud.
In 2016, the FTC focused upon protecting the interests of consumers in areas that have the greatest impact, including, fraud, deceptive advertising, unfair marketing, privacy and data security and technology. The agency also challenged mergers that that it believed would have harmed the competitive process and consumers.
In the Commission’s largest false advertising settlement in its history, Volkswagen Group of America agreed to spend up to $10B to settle FTC charges that its “clean diesel” claims deceived consumers. The FTC also settled its lawsuit against DeVry University for allegedly deceiving students about the likelihood that they would find jobs after graduation in their field of study.
Other notable consumer protection enforcement matters from 2016 include:
- Historic settlement with Herbalife involving challenges to the company’s business operations and marketing claims involving diet, nutritional supplement and personal care products;
- Litigated judgment against payday lender charged with violating the FTC Act, the Truth in Lending Act and the Electronic Funds Transfer Act;
- An appellate ruling upholding a lower court decision requiring the operator of an affiliate marketing group to pay millions in conjunction with the alleged deceptive marketing of weight-loss supplements
- Settlement with developer and marketer of “brain training” program with agreement to cease making false and unsubstantiated claims that the programs are clinically proven to permanently improve serious health conditions and that the training improves earnings and job performance;
- Multi-million dollar settlement with marketers of indoor tanning systems charged with making false and unsubstantiated claims about the safety of their tanning systems;
- Settlement with sellers of a liquid supplement in a matter involving false and unsubstantiated advertising allegations;
- Settlement with marketers of a mobile app designed to measure blood pressure involving charges of unsubstantiated health claims;
- Charges against marketers that allegedly utilized a SPAM campaign, “fake news” websites and bogus celebrity endorsements to pitch unproven weight loss products;
- Settlement with marketers of green coffee bean extract weight-loss supplements, male enhancement products and skin care products with agreement to forfeit assets totaling approximately $9.2 million;
- The issuance of warning letters to online marketers designed to ensure that health-related claims are supported by competent and reliable scientific evidence;
- Enforcement action against defendants that allegedly operated an international tech support scam that, according to the Commission, made consumers believe that malware or hackers had compromised their computers, and that the defendants were associated with or certified by Microsoft and Apple to make repairs;
- Settlement with digital advertising company involving charges that it deceptively tracked consumers online and through their mobile devices;
- Settlement with mobile advertising network involving charges that it tracked hundreds of millions of consumers’ locations without permission in order to serve geo-targeted advertising, in violation of the Children’s Online Privacy Protection Act (COPPA);
- Unfair security practices settlement with the operators of the dating site Ashley Madison involving charges that the company deceived consumers and failed to protect 36 million users’ account and profile information in relation to a massive network breach;
- Settlement with lead generators for alleged violations of the FTC’s Telemarketing Sales Rule by making robocalls to consumers on the national DNC registry;
- The initiation of an enforcement action, in coordination with the Department of Justice, to halt a telemarketing operation that allegedly made illegal robocalls promising consumers energy savings, in an effort to generate leads to sell to solar panel installation companies;
- Settlements involving allegations of the failed to clearly and conspicuously disclose paid promotions and material connections with influencers;
- First ever enforcement action against an education lead generator, including allegations of a deceptive scheme to generate and “steer” sales leads;
- Charges against telemarketers that allegedly tricked seniors and veterans into paying for worthless money-making opportunities and a bogus grants program;
- Enforcement action against an operation that allegedly threatened and intimidated consumers to collect phantom payday loan “debts” and illegally provided portfolios of fake debt to other debt collectors
- Charges against debt relief schemes involving false representations to financially distressed homeowners and student loan borrowers; and
- Charges against operators of imposter scams that allegedly pretended to be associated with federal government agencies.Also noteworthy in 2016 was a federal court judge lifting the partial suspension of a judgment in a text SPAM case due to the discovery of evidence that the defendant concealed assets from the FTC.
In 2016, Dallas area auto dealers agreed to pay a civil penalty to settle charges that they violated an administrative order barring them from deceptively advertising the cost of buying or leasing a car. Another civil contempt settlement involved charges against a billing aggregator’s alleged violation of a court order that settled earlier FTC charges of phone bill cramming.
Also noteworthy in 2016 was a federal court judge lifting the partial suspension of a judgment in a text SPAM case due to the discovery of evidence that the defendant concealed assets from the FTC.
In 2015, the FTC focused upon emerging technologies and their impact on consumers. It also devoted resources to stopping anticompetitive consolidation.
Notable consumer protection enforcement matters from 2015 include:
- Enforcement action against online marketer that allegedly made deceptive opiate addiction and withdrawal treatment claims;
- Settlement with company that allegedly misstated supplements’ ability to treat children’s speech and behavioral disorders;
- Ruling from the D.C. Circuit affirming decision regarding deceptive and unsubstantiated claims pertaining to the ability of a popular beverage’s ability to treat, prevent or reduce the risk of heart disease and prostate cancer;
- Charges against two app developers for allegedly making deceptive and unsupported claims that their mobile apps could detect symptoms of melanoma;
- Numerous cases against marketers touting the slimming effects of various products, including an $11.9 million dollar judgment against an affiliate marketing network for allegedly using fake news sites to convince consumers that acai berry and colon cleansing weight loss products were proven effective;
- Several actions alleging fraud on new technology platforms, including
- defendants behind a mobile gaming app that allegedly misrepresented the existed of malware;
- Settlement with an entertainment network involving allegations that it deceived consumers with endorsement videos posted by paid influencers;
- Charges against the marketers of a line of weight-loss supplements that allegedly made baseless claims and threatened to enforce “gag clause” provisions against consumers to stop them from posting negative reviews and testimonials online;
- Settlement with a retail tracking firm involving allegations that it misled consumers about tracking opt-out choices;
- Settlements with app developers involving allegations that they violated the Children’s Online Privacy Protection Act by permitting third-party advertisers to collect personal information from children without obtaining parental consent;
- Settlement with Wyndham Hotels and Resorts involving allegations that the company unfairly exposed the payment card information of hundreds of thousands of consumers to hackers in three separate data breaches;
- Settlement with defendants that pitched cruise line vacations involving allegations of llegally selling cruise vacations using political survey robocalls;
- Enforcement action against DIRECTV for allegedly advertising the cost of its satellite television service in a deceptive manner;
- Settlement with direct marketer of product on television involving allegations that consumers were charged without their consent for additional products and undisclosed processing and handling fees;
- Settlement with for-profit educational institution involving allegations that it mislead students about career training credit transfers;
In 2015, the FTC also initiated enforcement actions against alleged sham charities, abusive debt collection practices and a data broker that purportedly sold payday loan applicants’ financial information to a scam operation that took millions of dollars from consumers by debiting their bank accounts and charging their credit cards without their consent.
The FTC was also active in 2015 as it pertains to order enforcement. For example, in one of the largest monetary awards obtained by the agency in a contempt action, LifeLock agreed to pay $100 million to settle charges that it violated the terms of a 2010 federal court order that required the company to secure consumers’ personal information and prohibited deceptive advertising.
Richard Newman is an FTC enforcement defense lawyer that routinely handles FTC litigation matters and investigations involving advertising compliance and marketing practices. Contact him today for a free consultation.