FTC Business Blog

First INFORM Consumers Act enforcement case filed against online marketplace Temu kkrown September 5, 2025 | 10:00AM First INFORM Consumers Act enforcement case filed against online marketplace Temu Online marketplaces and third party sellers looking for a refresher on the INFORM Consumers Act should look no further than the recent settlement with Whaleco, Inc., which operates the online marketplace Temu. The complaint alleges the company failed to provide online shoppers with required information and tools. This is the first case brought to enforce the INFORM Act.The INFORM Act, which went into effect in 2023, seeks to make online transactions more transparent. Among other things, the law requires online marketplaces to collect, verify, and disclose certain information about high-volume third party sellers. (Informing Businesses about the INFORM Consumers Act has more on how the law defines terms, what’s required of online marketplaces, and the substantial penalties the FTC and state law enforcers may seek if online marketplaces violate the law.)In 2022, Temu launched its online marketplace in the United States, where consumers can view product listings on Temu’s homepage, through search results, and in gamified shopping experiences on the platform. According to the complaint, Temu violated the INFORM Act by failing to offer a mechanism for consumers to report suspicious activity — electronically and by phone — on the gamified product listings of many high-volume third party sellers and by failing to offer a telephonic mechanism on non-gamified product listings. The complaint also alleges that Temu did not post required identifying information about sellers on its gamified product listings or mobile site, and that Temu’s disclosures, when made, were difficult to find.According to the settlement, Temu will pay a $2 million civil penalty, provide a telephonic mechanism for consumers to report suspicious activity on listings, and make other required disclosures.Is your business covered by the INFORM Act? Make sure you: Review the provisions of the INFORM Act thoroughly. Make sure you fully understand — and have measures in place to comply with — each of its requirements.Make required disclosures easy for consumers to notice. Required disclosures should stand out from any surrounding material and use plain language. Minimize or eliminate steps consumers need to take to reach required disclosures.Ensure required disclosures are available across all iterations of your platform. The INFORM Act mandates disclosures on all interfaces with product listings. And as your platforms evolve, regularly assess and update your compliance efforts.If your business sells through online platforms, check out What Third Party Sellers Need to Know About the INFORM Consumers Act. This covers what sellers are impacted by the INFORM Act, what you can expect online platforms to require of you, and what information platforms must disclose about you to consumers. It also answers some questions you may have about the law.And if you spot a violation of the INFORM Act, r­eport it to the FTC using this dedicated link.

Don’t waste your energy on a solar scam lbungo August 7, 2024 | 12:43PM Don’t waste your energy on a solar scam By Larissa Bungo Solar energy and other high efficiency home improvements can help reduce energy consumption and lower utility costs for homeowners. As going solar or using clean or renewable energy gets more popular, bad actors have joined the movement, too. Be aware of solar energy scams – everything from scammers pretending to be affiliated with the government or utility company to businesses misrepresenting the cost of improvements, savings, and financing options. If your company offers solar energy, remember that claims must not only be truthful, but also comply with established consumer protection laws, including the FTC Act and the FTC’s new Impersonation Rule.Be truthful. Every clean energy company has a responsibility to be honest and upfront with consumers. Be transparent about what you’re offering. Disclose the total cost for your product or service, be clear about financing options, and don’t overpromise cost savings that might come through tax credits, rebates, or incentives. Legitimate businesses help consumers make informed decisions about whether powering with solar or clean energy is right for them. So share FTC resources about protecting against deceptive practices, point people to the Department of Energy’s guide for homeowners and commonly asked questions, or share the Department of Treasury’s guidance on clean energy. Remind prospective customers that while tax credits, rebates, and incentives might be available for solar purchasers who qualify, offers for “free” or “no cost” solar panels are scams.Comply with the law: old and new. Reputable companies know the importance of being honest about what they’re offering – and how much it costs. It’s not only good business, it’s the law. That’s one lesson from the case the FTC and the state of California brought against Ygrene Energy Fund, a company providing home improvement financing through Property Assessed Clean Energy (PACE) loans. The FTC and California alleged Ygrene deceived homeowners about financing home improvements, trapping them with liens that made it hard to sell their homes. The settlement required Ygrene to dedicate $3 million dollars to help remove those liens placed on without consumers’ consent and provide monetary relief to the people impacted. That’s a reminder to all businesses selling clean energy systems and offering related financing: violations come with a price. And, in addition to existing laws, pay attention to new regulations and initiatives like the CFPB’s Residential Property Assessed Clean Energy Financing Proposed Rule to ensure sensible safeguards apply for consumers seeking PACE and other clean energy loans.Report solar and clean energy imposters. The FTC’s Impersonation Rule is good news for legitimate businesses and consumers, alike. The rule applies not only to government imposters – like those who misrepresent their affiliation with the government and tell tall tales about free or no cost solar energy to make sales – but also to those who misrepresent that they’re affiliated with, endorsed, or sponsored by legitimate businesses. If you spot imposters like these, or scams of any kind related to clean energy systems, tell the FTC.  Image  

Gold mine for scammers: Social media lfair January 27, 2022 | 11:04AM Gold mine for scammers: Social media By Lesley Fair Social media is a gold mine for scammers, and in the latest FTC Data Spotlight, we’re digging deeper into this deceptive trend happening across social media platforms. Why do we repeatedly ask people to file reports at ReportFraud.ftc.gov to let us know when they spot questionable conduct? Because – among other things – the FTC and law enforcement members of the Consumer Sentinel Network use that information to spot, track, and ultimately challenge illegal practices. The FTC’s latest Data Spotlight documents the disturbing trend that among consumers who report scams, a skyrocketing percentage of them crossed paths with the perpetrator on social media. In 2021, more than 95,000 people reported about $770 million in losses to fraud initiated on social media platforms. Those losses accounted for about 25% of all reported fraud losses that year. Compare those numbers to reported losses initiated on social media platforms in 2017 and it’s an eighteenfold increase. Here are some other facts to consider: Who’s getting ripped off? It might not be who you think. Reports are up for every age group, but in 2021, people between 18 to 39 were more than twice as likely as older adults to report losing money to scams that started on social media. Deceptive ads inflicted substantial consumer injury. Of the reports we received about fraud losses that started with a social media contact, 45% came from people who said they were ripped off when buying something marketed on social media. About 70% of those reports involved merchandise that consumers ordered, but never received. Some people reported ads on social media that impersonated the look of established online retailers. Investment scams accounted for big money losses with one payment method emerging as the fraudster’s favorite. Investment scams accounted for 18% of the reports we received about fraud perpetrated on social media platforms but made up 37% of the total dollar losses. Where people specified the payment method used for the investment scam, in 64% of reports it was cryptocurrency. (That should come as no surprise to people who read the FTC’s May 2021 Data Spotlight on cryptocurrency scams.) Why should these stats concern businesses? First, because when we say “consumers,” we’re talking about your family, your employees, people in your community, and you. Second, the increase in scam reports that trace back to advertising on social media should be of concern to companies that use those same platforms to promote their product honestly. Will consumers who have lost money due to advertising scams on social media think twice before opening their wallet again? Read the latest FTC Data Spotlight and check out more Spotlights that illuminate other trends in what consumers are telling us. Have you spotted a questionable business practice? Let us hear from you at ReportFraud.ftc.gov.  

En banc Court of Appeals rules in FTC’s favor on common carrier issue lfair February 28, 2018 | 2:37PM En banc Court of Appeals rules in FTC’s favor on common carrier issue By Lesley Fair If you’ve been following the FTC’s lawsuit against AT&T alleging deceptive and unfair data throttling, there’s important news. A unanimous en banc decision of the United States Court of Appeals for the Ninth Circuit ruled in the FTC’s favor on a key issue involving the agency’s jurisdiction. You’ll want to read the opinion for the details, but here’s what Acting Chairman Ohlhausen said about it: “I welcome the Ninth Circuit’s ruling as good news for consumers. It ensures that the FTC can and will continue to play its vital role in safeguarding consumer interests including privacy protection, as well as stopping anticompetitive market behavior.” Filed in 2014, the FTC’s complaint alleged that AT&T Mobility LLC failed to adequately disclose to its customers on unlimited data plans that if they reached a certain amount of data use in a given billing cycle, AT&T would slow down – or throttle – their data speeds. The FTC said that for some consumers, AT&T’s throttling reached the point that many common apps, like web browsing or GPS navigation, became difficult or nearly impossible for them to use. AT&T moved to dismiss the FTC’s suit, arguing that the company was a “common carrier” exempt from the FTC Act. The FTC responded that the common carrier exception is activity-based, not status-based – meaning that it applies only to the extent that an entity is actually engaged in common carrier activities. A company’s non-common carrier activities are still subject to the FTC Act. The district court denied AT&T’s motion to dismiss, but a three-judge panel of the United States Court of Appeals for the Ninth Circuit reversed that decision. The Ninth Circuit then agreed to hear the case en banc and that’s the opinion that was just announced. The en banc Court ruled for the FTC: We conclude that the exemption in Section 5 of the FTC Act – “except . . . common carriers subject to the Acts to regulate commerce” – bars the FTC from regulating “common carriers” only to the extent that they engage in common-carriage activity. By extension, this interpretation means that the FTC may regulate common carriers’ non-common-carriage activities. The Court further held: This statutory interpretation also accords with common sense. The FTC is the leading federal consumer protection agency and, for many decades, has been the chief federal agency on privacy policy and enforcement. Permitting the FTC to oversee unfair and deceptive non-common-carriage practices of telecommunications companies has practical ramifications. New technologies have spawned new regulatory challenges. A phone company is no longer just a phone company. The transformation of information services and the ubiquity of digital technology mean that telecommunications operators have expanded into website operation, video distribution, news and entertainment production, interactive entertainment services and devices, home security and more. Reaffirming FTC jurisdiction over activities that fall outside of common-carrier services avoids regulatory gaps and provides consistency and predictability in regulatory enforcement. Thus, the en banc Court ruled that the FTC may use Section 5 of the FTC Act’s prohibition of unfair deceptive acts or practice to challenge AT&T’s conduct alleged in the complaint to be unlawful.  

What’s on boomers’ minds? lfair July 8, 2015 | 10:36AM What’s on boomers’ minds? By Lesley Fair Baby boomers are running scared and marketers are in hot pursuit. What strikes such fear? The specter of memory loss and cognitive impairment severe enough to turn you into “a prisoner” in your own home who is “unable to recall who you are, where you live, or to whom you are related.” According to an FTC lawsuit, Brain Research Labs, KeyView Labs, MedHealth Direct, and others deceptively touted the dietary supplement Procera AVH as a solution to that problem. Ads for Procera asked consumers to imagine what their lives would be like if: “You are no longer allowed to handle your financial matters.” “You are no longer trusted to purchase anything . . . for you or anyone else.” “You are moving to a nursing home to live with strangers.” “You must sell your car, or give it to a family member.” “Your lifelong possessions are to be sold or given away.” According to the FTC, the defendants claimed Procera could prevent and reverse age-related mental decline and memory loss, and improve concentration, focus, mental clarity, and mood. Consumers paid between $40 and $80 for a 3-4 week supply. The defendants sold some buyers on the supposed benefits of an automatic shipment program, charging their credit cards for regular supplies. The pitch didn’t end there. On their site and in other promotions, the defendants brought out the heavy artillery: assurances that “a landmark clinical study” proved that their “breakthrough nutritional formula” would “help reverse up to 15 years of mental decline, effectively restoring a 50-year-old’s brainpower to that of a 35-year-old.” A print ad, for example, touted “randomized, double-blind, placebo-controlled research” where “clinicians witnessed a startling transformation in study participants’ brains.” Many of those claims were conveyed through Josh Reynolds, the stated “creator” of Procera and “Science Director” of defendant Brain Research Labs. But the FTC says the defendants didn’t have proof to back up their claims that the product would significantly improve memory, concentration, focus, clarity, and mood or stop or reverse age-related mental decline and memory loss – especially cognitive impairment severe enough to interfere with independent living. The complaint also challenges those “clinically proven” claims as false and alleges that Josh Reynolds didn’t appropriately exercise his purported expertise in endorsing the product. The proposed settlement includes broad injunctive provisions to protect consumers in the future. In addition, the defendants will pay $1.4 million with $400,000 of that reserved to satisfy a judgment in a case brought by local California law enforcement officials. The order also imposes a $61 million judgment against defendant KeyView Labs and a $91 million judgment imposed jointly against the remaining defendants. Under the terms of the settlement, KeyView will shut down the Procera automatic shipment program. What can other companies take from this case? Advertisers shouldn’t need a heads-up that misleading cognition claims are an important enforcement priority. Recent FTC actions have challenged deceptive representations about teaching toddlers to read, boosting students’ grades and SAT scores, and improving memory in older adults, to name just a few. Many consumers are concerned about cognition at every stage of life, but companies shouldn’t rush into the market unless they have – at minimum – competent and reliable scientific evidence to support their claims. There may not be an I in T-E-A-M, but there are three of ‘em in L-I-A-B-I-L-I-T-Y. The promotion of Procera involved multiple parties. You’ll want to check the pleadings for the specifics, but the complaint names the businesses that have sold Procera; MedHealth Direct, a company involved in creating the ads; John Arnold, MedHealth Direct’s President; Josh Reynolds, the expert endorser and manager of the company that commissioned and reviewed the study; and a company that owned that company. When faced with compliance choices, prudent businesses are mindful of the breadth of liability under the FTC Act.  

Hat trick? FTC charges violations in auto loan servicing, debt collection, credit reporting wfg-adm109 May 29, 2014 | 1:30PM Hat trick? FTC charges violations in auto loan servicing, debt collection, credit reporting By Lesley Fair Sometimes good things come in threes, like Musketeers, Bronte sisters, and Stooges.  (Shemp doesn’t count.)  But the FTC’s complaint against Consumer Portfolio Services charges the company with three distinct sets of violations – unlawful auto loan servicing, illegal debt collection, and violations of the Fair Credit Reporting Act’s Furnisher Rule – all of which spelled triple trouble for consumers.  But there’s relief on the way in the form of a multimillion dollar settlement with provisions that will change how CPS does business from here on in. Loan servicing.  As a loan servicer, Irvine, California-based CPS collects money people owe on their auto loans – car payments, late fees, NSF charges, and the like.  But servicers aren’t free to charge unauthorized fees or change loan terms on their own, which is what the FTC said CPS did in many cases.  According to the complaint, the company misrepresented how much consumers owed, assessed higher fees than allowed by the contract or state law, changed key payment provisions, and flat-out overcharged people.  In other instances, CPS allegedly increased people’s balances through a combination of human error, poor quality control, and faulty computer programming. Debt collection.  The FTC took issue with CPS’s practices when it was collecting debts consumers owed the company and when it was acting as a debt collector for others. The complaint alleges that the company illegally revealed the existence of consumers’ debts to friends, family, co-workers, employers, and even their references.  One particularly gutsy – and illegal – technique:  directing neighbors to place notes on people’s doors asking them to call CPS.  In addition, the FTC says CPS called people over and over again, sometimes using “Do you kiss your Mother with that mouth?” vocabulary.  But CPS didn’t stop there.  According to the complaint, the company subjected third parties to repeated harassing calls, even after they’d been told to cut it out.  Another favorite trick: overriding Caller ID so consumers couldn’t tell the call was coming from CPS.  Even when people took steps to pay, the FTC says CPS often falsely said they had to use Western Union, Moneygram, or other methods that cost extra. Furnisher Rule.  The FTC also alleges that in many cases, CPS didn’t honor its obligations under the FCRA’s Furnisher Rule.  The Rule requires companies to have procedures in place regarding the accuracy and integrity of information they give to credit bureaus.  What’s more, when a consumer disputes the accuracy of that info, the company has an obligation to conduct a reasonable investigation within a set period of time and notify the consumer about the result.  The FTC says CPS fell short on both counts.  For example, rather than really investigating, CPS often just checked the consumer’s identifying account information and payment history against what was reported to the credit bureau.  That pro forma approach might catch a typo or clerical glitch, but it wasn’t designed to address substantive errors and inaccuracies.  The complaint charges that CPS didn’t even bother to track the disputes it received, meaning it couldn’t accurately update the credit bureaus about challenged information. The stipulated order will make sweeping changes at CPS.  The order bans deceptive loan servicing practices, unlawful collection of fees, and one-sided changes to consumers’ contracts.  It also requires the company to put a far-reaching data integrity program in place to identify risks to the accuracy and integrity of loan servicing information that could lead to errors in consumers’ accounts.  A third-party expert will assess that program periodically and report back to the FTC. To address CPS’s debt collection practices, the order forbids a host of illegal tactics, including disclosing the existence of a person’s debt to someone else.  What about contacting a third party to get the person’s location information?  Under the order, the company can’t “communicat[e] with any third party for the purpose of acquiring location information about the consumer unless CPS possesses a reasonable belief that it does not currently possess the consumer’s location information.”  But here’s an interesting addition:  Under the order, CPS won’t be able to just shrug its shoulders and claim it had to ask because it didn’t know how to find the person.  The order gives detailed illustrations of what CPS will need to establish that “reasonable” belief – for example, mail returned as undeliverable.  It also includes provisions that will take effect when a consumer tells CPS to stop calling. To make sure CPS honors the protections of the Furnisher Rule, the company must implement written policies and beef up its procedures for handling consumer disputes. Read the complaint and order for details, but here are three tips companies can take from the case: Remember to keep the “service” in loan servicing.  Loan servicers have an obligation to get it right when crediting payments, determining interest, assessing fees, etc.  That’s critical because people may not be in a position to double-check complicated calculations or know the maximum fees allowed by state law.  Savvy businesses root out slipshod work by implementing sensible in-house controls.  The alternative could be the kind of bumper-to-bumper data integrity program mandated by the CPS order.   You don’t have to be a “debt collector” to be liable for illegal collection practices.  The CPS complaint is noteworthy in that the company wore two hats.  Sometimes it served as a debt collector for others, but in most cases, it acted as a creditor collecting its own debts.  Why is that distinction important?  Because the Fair Debt Collection Practices Act applies only to companies collecting debts owed to others.  But creditors shouldn’t breathe a sigh of relief just yet.  Even if you’re not covered by the FDCPA, unfair or deceptive practices are still illegal under the FTC Act.  The complaint in this case alleged FDCPA violations when CPS was a debt collector and Section 5 violations when the company was a creditor.   Non-compliance can be costly.  The settlement imposes financial remedies on three fronts.  CPS has agreed to refund or adjust 128,000 consumer accounts to the tune of more than $3.5 million and forebear collections on another 35,000 accounts.  In addition, the company will pony up a $1 million civil penalty for illegal conduct when it acted as a debt collector covered by the Fair Debt Collection Practices Act and an additional $1 million for Furnisher Rule violations.  

Keep FCRA in the foreground when the subject is background screening chundycz April 9, 2014 | 12:13AM Keep FCRA in the foreground when the subject is background screening By Lesley Fair When the talk turns to Big Data, part of the conversation is about all the public information available about people’s lives – and how companies market it to prospective employers, landlords, etc. Two cases just announced by the FTC serve as a cautionary reminder to members of the industry that what they do may be subject to the long-standing consumer protections of the Fair Credit Reporting Act (FCRA).  InfoTrack, an Illinois company, and San Diego-based Instant Checkmate will be paying civil penalties to settle FTC lawsuits that they violated the FCRA.  Is it time for an FCRA refresher at your business? Instant Checkmate marketed its reports as a way for prospective employers and landlords to investigate applicants.  For example, the company advertised that one of the “GOOD REASONS to get instant criminal checks on anyone right now” was to “check out tenants before they rent.”  It also used a Google Ad Words campaign to make sure its site appeared when people searched for background checks on nannies, babysitters, maids, and housekeepers.  What kind of information would buyers get?  Current and previous addresses, birth certificates, arrest histories, and marriage and divorce records, to name just a few examples. InfoTrack offered similar services to employers nationwide, including background screening reports with people’s driving records, education and employment information, criminal histories, and even records from sex offender registries. How does the FCRA come in?  The law defines a “consumer report” as a “communication of any information” by a consumer reporting agency (CRA) that bears on a person’s “credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living” which is used (or expected to be used) as a factor in establishing their eligibility for credit, insurance, employment, or other reasons outlined in the law. According to the FTC, what Instant Checkmate and InfoTrack were doing triggered the FCRA.  For example, companies covered by the law must follow procedures to assure their reports are as accurate as possible, must take steps to see that those using their reports have permissible purposes for accessing them, and must provide required User Notices explaining key protections for consumers.  The law imposes special requirements when CRAs provide reports containing public record information that could have an adverse effect on a person’s ability to get a job.  In that case, the CRA must either: 1) notify the consumer that it’s reporting the information in the public record; or 2) maintain “strict procedures” – that’s the language in the law – designed to ensure the reported public information is complete and up to date. You’ll want to read the complaints for specifics of where the FTC says the companies fell short, but one example cited in the lawsuit against InfoTrack offers an object lesson on why FCRA protections are so important to consumers – and how the consequences can be devastating when companies don’t live up to the law.  According to the FTC, the reports InfoTrack provided to prospective employers included information about whether a job applicant was on the National Sex Offender Registry.  The employer would provide the first and last name and the date of birth to help InfoTrack with its search.  The problem was that before the fall of 2011, no date of birth was available for many names on the Registry.  If InfoTrack’s search found more than one person with the same first and last name, it reported a “possible match” to employers and gave them reports that included several different people with the same name who were convicted sex offenders.  Just imagine the consequences for a law-abiding job applicant with the bad luck to have the same name as someone on the Sex Offender Registry. As part of the settlements, the companies have agreed to change their procedures.  In addition, Instant Checkmate will pay a $525,000 civil penalty.  InfoTrack was hit with a $1 million civil penalty, most of which will be suspended due to its inability to pay.  InfoTrack also will send a notice to each person who was the subject of a report that included mismatched sex offender registry records. What can other companies learn from these cases? The FCRA’s definition of “consumer reporting agency” is broad and many companies that may not think of themselves as CRAs are covered nonetheless.  What about disclaiming your status as a consumer reporting agency?  Not so fast.  Instant Checkmate said on its website that it wasn’t a CRA and yet promoted its reports for classic FCRA purposes – to determine eligibility for employment or housing.  The law is clear:  If you walk like a CRA and quack like a CRA, you’re a CRA, regardless of an attempt to run from that label.  Consult the FTC’s Credit Reports page to stay up on the latest. If you or your clients use reports like this, we have free resources to streamline your compliance efforts. Background Checks: What Employers Need to Know offers tips from the FTC and EEOC. And make sure your real estate clients are familiar with Using Consumer Reports: What Landlords Need to Know. Another key consideration:  Your city or state may have additional laws limiting your use of this kind of information.

Screen regs and spam? wfg-adm109 March 7, 2013 | 11:31AM Screen regs and spam? By Lesley Fair Do you like them on the screen Of your mobile phone machine? I do not like text message spam. I do not like them, Sam I am. Fighting back against text message spam isn’t child’s play, and consumers have sent the strong message they’re not fans of unsolicited texts — especially ones conveying deceptive claims.  A series of law enforcement actions just filed by the FTC drives that point home and represents the latest move against misleading practices in mobile advertising and affiliate marketing. According to the FTC, the defendants sent (or had someone send) bazillions of texts to consumers’ cell phones that deceptively offered “free” merchandise or prizes.  One count in the complaint charges that sending unauthorized or unsolicited commercial texts is an unfair practice, in violation of Section 5 of the FTC Act.  Why unfair?  Many consumers who received the texts have wireless plans that require them to pay for each text they get.  Others have plans that allow a fixed number of texts per month, but charge customers if they go over that amount.  That means that many consumers actually had to pay for the defendants’ messages.  Applying the legal definition of an “unfair practice” under the FTC Act, it’s likely the defendants caused substantial injury that consumers couldn’t reasonably avoid and that wasn’t outweighed by benefits to consumers or competition. But the FTC says the violations don’t stop there.  Many of the more than 180 million texts claimed the person had won a contest or had been specially selected for a prize — for example, “You have won a free $1000 Walmart Gift Card” or similar merchandise from Target, Best Buy, or other major retailers. The next step:  The texts directed people to click on a link and enter a code to claim the “prize.”  After more complicated steps, consumers were sent to other sites operated by third parties.  Those sites reinforced the “prize” message, but required people to participate in numerous other offers — often more than 10 — to qualify for the promised free item.  According to the FTC, in most cases, it wasn’t possible for people to get the “free” merchandise without shelling out cash.  Some of the offers involved complicated negative options or required people to turn over their credit card numbers.  Even if people made it through the exhausting travail, they were finally told that to get the promised gift card, they had to line up three more people to complete the process.  None of that was clearly disclosed in the text messages. Furthermore, at various points in the process, consumers had to input a substantial amount of personal information.  Although the defendants often collected it under the guise of needing to know where to ship the “prize,” the FTC says the info was sold for marketing purposes — something else that wasn’t clearly disclosed to people. The lawsuits name 19 individuals and companies that sent the unwanted texts, as well as 10 operators of the deceptive sites.  According to the FTC, it was an affiliate marketing operation.  The defendants who sent the texts were paid by the operators of the sites based on how many people eventually entered their information.  Then in turn, the operators of the sites were paid by the businesses that gained customers or subscribers through the “offer” process. One defendant worth special mention:  Phillip Flora, who was barred for life in an earlier case from sending spam texts.  The FTC says he’s part of this operation, so the agency is pursuing a contempt action against him. The cases are pending in federal courts in California, Georgia, Illinois, and Texas.  

Track afield: What the FTC’s Google case means for your company wfg-adm109 August 13, 2012 | 12:04PM Track afield: What the FTC’s Google case means for your company By Lesley Fair After two weeks of talk about track, the trending topic is tracking, including the FTC’s $22.5 million settlement with Google for violating an earlier order.  Google told users of the Safari browser it wouldn’t place tracking cookies or serve them targeted ads, but the FTC charged that the company’s tracking practices went far afield of its claims.  Of course, the terms of that settlement apply just to Google, but there’s a lot savvy executives can take from the case and other recent FTC actions that touch on tracking. It’s a decathlon, not a dash.  By now, most companies have (we hope) gotten the message that what they say in their privacy policies has to line up with their day-to-day operations.  But chances are you’re conveying claims not just in your privacy policy, but also where you talk about choice mechanisms, opt-outs, and other ways users can customize their experience.  The FTC’s complaint against Google cites — among other things — alleged misrepresentations on the company’s Advertising Cookie Opt-Out Plug-in page.  The message for businesses?  Like decathletes, prudent companies excel across the board.  They know where they make privacy promises, maintain an inventory of the cookies they use, and don’t launch new ones without thinking through the implications. Members only.  No, not the sporty jackets from the 80s.  We’re talking here about what’s conveyed when companies highlight their affiliation with self-regulatory programs.  To join the Network Advertising Initiative (NAI), a voluntary self-regulatory group for the online ad industry, companies agree to disclose their data collection and use practices.  Although Google touted its NAI membership, the FTC says the company didn’t truthfully disclose what it was doing with Safari users’ data.  Therefore, the FTC charged that Google misrepresented the extent to which it honored NAI’s Code.  Membership in self-regulatory programs is your call, but once you advertise your adherence to an industry code, live up to its terms. Ill-advised disguise.  Marathoners dream of entering the stadium first and running that last stretch in front of a cheering crowd.  But remember American Frank Shorter in the ‘72 Olympics?  He led the pack into the arena, but didn’t know someone had donned a uniform, hidden under the bleachers, and taken a victory lap before officials figured out the ruse.  Of course, the circumstances are different, but our point relates to the FTC’s allegation that Google used code to disguise its cookie to work around Safari’s opt-out default setting.  The take-away for careful companies is that sidestepping users’ preferences can lead to costly legal missteps. Relay race.  Many recent FTC privacy cases suggest a disconnect between what companies say they’re doing and what’s actually happening behind the scenes.  How do businesses overcome that hurdle?  Coaches love to quote the Lombardi-esque chestnut, “There is no I in T-E-A-M.”  But if you’re talking about your company’s data management team, there should be an I-T.  Your information technology staff needs to run a strong lead-off with smooth baton passes to your marketing execs and legal advisors.  But victory depends on a solid anchor leg from top management committed to crossing the finish line in front. (We’ll stop with the sports metaphors for now.)  

The Reebok settlement: What the FTC order means for advertisers and retailers wfg-adm109 September 29, 2011 | 1:11PM The Reebok settlement: What the FTC order means for advertisers and retailers By Lesley Fair The FTC’s settlement with Reebok requires the company to get their ad claims in shape and works out a $25 million refund program for people who bought EasyTone and RunTone shoes and apparel. Of course, the terms of the lawsuit apply only to Reebok, but experienced advertisers understand the benefits of mining FTC orders for compliance nuggets applicable to their business. What if you sell Reebok shoes or apparel or represent companies that do? You’ll definitely want to read the order for provisions relating to retailers. So what’s in the Reebok settlement? Strong injunctive provisions for a starter. Under Part I of the order, the company will need competent and reliable scientific evidence to support future claims that a product will strengthen muscles or result in a quantified percentage or amount of toning or strengthening. The order defines “competent and reliable scientific evidence” in this context to mean “at least one Adequate and Well-Controlled Human Clinical Study of the Covered Product that conforms to acceptable designs and protocols, the results of which, when considered in light of the entire body of relevant and reliable scientific evidence, is sufficient to substantiate that the representation is true.” Another interesting aspect: The order makes it clear that it covers claims made directly or by implication, “including through the use of a product name, endorsement, depiction, or illustration.” What about other health or fitness-related claims for covered products? The order requires Reebok to have competent and reliable evidence to back up those claims, too. For those — covered by Part II of the order and including representations about “muscle tone and/or muscle activation” — that means “tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.” Part III makes it illegal for Reebok to misrepresent “the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research.” What about the refund program? Reebok will be paying $25 million, which will go toward consumer refunds. The order adds that “consumer redress that otherwise would be conducted” by the FTC “may be instead conducted through prompt, court-approved resolution of one or more private class action lawsuits” against Reebok. The order makes it clear that key parts of any class action resolution submitted for court approval — for example, the class action notice, claim form, settlement claim procedures, and privacy and security practice — have to be OKed by the FTC. In addition to reporting and compliance requirements common in FTC law enforcement actions, the order requires Reebok to send a letter to retailers that sell the products in question. The letter — which is attached to the order — directs retailers to: 1)  remove promotional materials on display that include claims about improving or increasing muscle tone, muscle strength, muscle activation, or posture; 2)  cover over those claims on product boxes with stickers Reebok will provide; 3)  remove package inserts with those claims; and 4)  remove hangtags on shoes and remove or sticker over hangtags on apparel if they make those claims. If you have clients that sell Reebok products, they’ll get the letter soon.