FTC, TECH COMPANY SETTLE CHARGES RELATED TO MISLEADING CONSUMERS OVER OPT "OUT CHOICES"

FROM:  U.S. FEDERAL TRADE COMMISSION
Retail Tracking Firm Settles FTC Charges it Misled Consumers About Opt Out Choices
Company Falsely Promised an In-Store Opt Out, Agency Alleges

Nomi Technologies, a company whose technology allows retailers to track consumers’ movements through their stores, has agreed to settle Federal Trade Commission charges that it misled consumers with promises that it would provide an in-store mechanism for consumers to opt out of tracking and that consumers would be informed when locations were using Nomi’s tracking services.

The FTC’s complaint against Nomi states that beginning in late 2012, the company’s privacy policy promised that Nomi would provide an opt-out mechanism at stores using its services.  This promise implied that consumers would be informed when stores were using Nomi’s tracking technology. The complaint alleges that these promises were not true because no in-store opt-out mechanism was available, and consumers were not informed when the tracking was taking place.

The complaint alleges that Nomi collected information on about nine million mobile devices within the first nine months of 2013. The complaint is the FTC’s first against a retail tracking company.

“It’s vital that companies keep their privacy promises to consumers when working with emerging technologies, just as it is in any other context,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “If you tell a consumer that they will have choices about their privacy, you should make sure all of those choices are actually available to them.”

Nomi, according to the complaint, places sensors in its clients’ stores that collect the MAC addresses of consumers’ mobile devices as the devices search for WiFi networks.  MAC addresses are unique 12-digit identifiers that are assigned to individual mobile devices. Although Nomi “hashes” the MAC addresses prior to storing them, the hashing process still results in an identifier that is unique to a consumer’s mobile device and can be tracked over time.

The complaint alleges that Nomi tracked consumers both inside and outside their clients’ stores, tracking the MAC address, device type, date and time the device was observed, and signal strength of consumers’ devices. In reports to clients, Nomi provided aggregated information on how many consumers passed by the store instead of entering, how long consumers stayed in the store, the types of devices used by consumers, how many repeat customers enter a store in a given period and how many customers had visited another location in a particular chain of stores.

The company’s privacy policy said that it “pledged to… always allow consumers to opt out of Nomi’s service on its website, as well as at any retailer using Nomi’s technology.” While the company did provide an opt-out on its website, the complaint alleges that no such option was available at retailers using the service, and that consumers were not informed of the tracking taking place in the stores at all.

Under the terms of the settlement with the FTC, Nomi will be prohibited from misrepresenting consumers’ options for controlling whether information is collected, used, disclosed or shared about them or their computers or other devices, as well as the extent to which consumers will be notified about information practices.

NETWORK SOLUTIONS SETTLES WITH FTC RELATING TO ALLEGED MISLEADING CONSUMERS REGARDING REFUNDS

FROM:  U.S. FEDERAL TRADE COMMISSION
FTC Obtains Settlement From Network Solutions LLC for Misleading Consumers About Refunds

Network Solutions LLC has agreed to settle Federal Trade Commission charges that it misled consumers who bought its web hosting services by promising a full refund if they canceled within 30 days. In reality, the company withheld substantial cancellation fees from most refunds.

In an administrative complaint, the FTC alleged that Network Solutions, a domain name registrar and web hosting provider, offered web hosting packages with a “30 Day Money Back Guarantee,” but did not adequately disclose that it withheld part of the refund – up to 30 percent – from customers who cancelled within 30 days of buying an annual or multi-year package and registering an included domain name.

The proposed settlement order prohibits Network Solutions from failing to clearly disclose, before obtaining a customer’s billing information, the material terms of any money-back guarantee, or failing to refund the full purchase price in response to a request that complies with the terms of a guarantee. The settlement also bars the company from misrepresenting material terms of any refund or cancellation policy or money-back guarantee, or any other material fact about web hosting.

The FTC acknowledges the assistance of the Better Business Bureau serving Metro Washington DC & Eastern Pennsylvania in this case.

The Commission vote to issue an administrative complaint and accept the proposed consent agreement for public comment was 5-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through May 7, 2015, after which the Commission will decide whether to issue the order on a final basis. Interested parties can submit written comments electronically.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

DEALER'S ALLEGED DECEPTIVE AUTO ADS HALTED BY FTC

FROM:  U.S. FEDERAL TRADE COMMISSION 
FTC Halts Texas Auto Dealer’s Deceptive Ads
Misleading Ads Claimed $1 Gets Consumers Out of Current Loan or Lease

An auto dealer in suburban Dallas has agreed to settle Federal Trade Commission charges that it used deceptive ads to promote the sale and lease of its vehicles, including an ad that claimed consumers could get out of their current loan or lease for $1.

According to the complaint, false or deceptive ads from TXVT Limited Partnership, doing business as Trophy Nissan (Trophy), violated the FTC Act as well as the Consumer Leasing Act (CLA) and Regulation M, and the Truth in Lending Act (TILA) and Regulation Z.

The FTC charged that Trophy advertised enticing prices, lease or finance terms, and promotions and then attempted to disclaim its attractive offers using small text in print and video ads. In addition to print and TV advertisements, Trophy also ran ads on its website, Facebook and Twitter. The dealership also ran print ads in a local Spanish-language newspaper, Al Dia.

Among the deceptive ads run by Trophy was one that misled consumers into thinking they could get out of their current loan or lease for only $1. The Commission’s complaint alleges the advertisement was deceptive since consumers could not get out of their loan or lease for that amount. In fact, Trophy would add the balance of any loan or lease obligation to the balance of a new loan.

In another promotion, “Max Your Tax,” Trophy claimed it would match tax refunds to use for a down payment, but the small print at the bottom of the ad disclosed it limited match refunds to no more than $1,000. The FTC alleges that Trophy failed to disclose adequately the additional terms.

As part of the proposed consent order, Trophy is prohibited from:

misrepresenting it will pay off a consumers’ trade-in;
misrepresenting material terms of any promotion or other incentive;
misrepresenting the cost of leasing or purchasing a vehicle; and
failing to clearly and conspicuously disclose material terms of a promotion or other incentive.
The proposed consent order also requires Trophy to comply with CLA and Regulation M and TILA and Regulation Z.

The case is part of the Commission’s continued efforts to protect consumers in the auto marketplace. The FTC provides a variety of resources for consumers buying or leasing a vehicle, including Are Car Ads Taking You For A Ride?

The Commission vote to issue the administrative complaint and accept the proposed consent order was 5-0. The agreement is subject to public comment for 30 days, beginning today and continuing through Jan. 22, 2015, after which the Commission will decide whether to make the proposed consent order final. Submit a comment online or through the mail.

NOTE: The Commission issues administrative complaints when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues consent orders on a final basis, they carry the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000 per day.

FTC TARGETS OVER 60 ADVERTISERS FOR NOT MAKING FULL DISCLOSURES IN TV ADS

FROM:  U.S. FEDERAL TRADE COMMISSION 

Operation ‘Full Disclosure’ Targets More Than 60 National Advertisers

FTC Initiative Aims to Improve Disclosures in Advertising

After reviewing numerous national television and print advertisements, staff of the Federal Trade Commission has sent warning letters to more than 60 companies – including 20 of the 100 largest advertisers in the country – that failed to make adequate disclosures in their television and print ads. The initiative – Operation Full Disclosure – is the FTC’s latest effort to ensure that advertisers comply with federal law and do not mislead consumers.

Operation Full Disclosure focused on disclosures that were in fine print or were otherwise easy to miss or hard to read, yet contained important information needed to avoid misleading consumers. In the warning letters, staff identified problematic ads, recommended that advertisers review all of their advertising to ensure that any necessary disclosures are truly “clear and conspicuous,” and asked them to notify the staff of the actions they intended to take with respect to their advertising. The response to staff’s letters has been extremely positive.

“Consumers depend on information in advertising to make their buying decisions – whether it’s computers or cleaning products, televisions or tools, hotel rooms or hair care,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Through efforts like these, the Federal Trade Commission ensures that consumers can have confidence that the ads they see are not hiding important information.”

The FTC’s longstanding guidance to companies is that disclosures in their ads should be close to the claims to which they relate – not hidden or buried in unrelated details – and they should appear in a font that is easy to read and in a shade that stands out against the background. Disclosures for television ads should be on the screen long enough to be noticed, read, and understood, and other elements in the ads should not obscure or distract from the disclosures.

The staff letters advised advertisers that to meet the “clear and conspicuous” standard, their disclosures should use clear and unambiguous language and should stand out in the advertising – consumers should be able to notice disclosures easily; they should not have to look for them.

FTC staff directed the warning letters to advertisers in a wide range of industries, covering English- and Spanish-language advertising for many different types of products. Staff attempted to identify a representative sample of advertisers making inadequate disclosures; advertisers who did not receive a letter should not assume that their advertisements are fine. Staff is not disclosing the recipients of the letters at this time.

The inadequate disclosures staff identified in the ads it reviewed fell into many different categories. Many ads quoted the price of a product or service, but did not adequately disclose the conditions for obtaining that price, while others did not adequately disclose an automatic billing feature. Other ads claimed a product capability or that an accessory was included, but did not adequately disclose the need to first own or buy an additional product or service.

In some ads, the advertiser claimed that a product was unique or superior in a product category, but did not adequately disclose how narrowly the advertiser defined the category, while other comparative ads did not adequately disclose the basis of their comparisons.  Ads promoting a “risk-free” or “worry free” trial period did not adequately disclose that consumers would need to pay for initial and/or return shipping. Numerous other ads made absolute or otherwise broad statements and had inadequate disclosures explaining exceptions or limitations.

Weight-loss ads featuring testimonials claiming outlier results did not adequately disclose the weight loss that consumers generally could expect to achieve. A handful of ads did not adequately disclose issues related to the safety or legality of a product or service. Several ads included a demonstration that was materially altered and did not adequately disclose the alteration. A couple of ads made false claims that the advertisers attempted to cure with contradictory disclosures, which are not sufficient to prevent ads from being deceptive.

While, Operation Full Disclosure focused on television and print advertisements, it follows a recent FTC effort to address online disclosures in new media.

"JERK.COM" OPERATORS CHARGED BY FTC WITH DECEIVING CONSUMERS, HAVESTING PERSONONAL INFORMATION

FROM:  FEDERAL TRADE COMMISSION 

FTC Charges Operators of “Jerk.com” Website With Deceiving Consumers
Company Took Information from Facebook to Label Millions a “Jerk” or “Not a Jerk”

The Federal Trade Commission charged the operators of the website “Jerk.com” with harvesting personal information from Facebook to create profiles labeling people a “Jerk” or “not a Jerk,” then falsely claiming that consumers could revise their online profiles by paying $30. According to the FTC’s complaint, between 2009 and 2013 the defendants, Jerk, LLC and the operator of the website, John Fanning, created Jerk.com profiles for more than 73 million people, including children.

In its complaint, the FTC charges that the defendants violated the FTC Act by misleading consumers that the content on Jerk.com had been created by other Jerk.com users, when in fact most of it had been harvested from Facebook; and by falsely leading consumers to believe that by paying for a Jerk.com membership, they could access “premium” features that could allow them to change their “Jerk” profile.

The FTC is seeking an order barring the defendants’ deceptive practices, prohibiting them from using the personal information they improperly obtained, and requiring them to delete the information.

 “In today’s interconnected world, people are especially concerned about their reputation online, and this deceptive scheme was a brazen attempt to exploit those concerns,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.

According to the FTC’s complaint, Jerk.com profiles often appeared in search engine results when consumers searched for an individual’s name.  Upon viewing their photos on Jerk.com, many believed that someone they knew had created their Jerk.com profile. Jerk reinforced this view by representing that users created all the content on Jerk.

But in reality, the defendants created the vast majority of the profiles by misusing personal information they improperly obtained through Facebook, the FTC alleged. They registered numerous websites with Facebook and then allegedly used Facebook’s application programming interfaces to download the names and photos of millions of Facebook users, which they in turn used to create nearly all the Jerk.com profiles.

In addition to buttons that allowed users to vote on whether a person was a “Jerk” or not, Jerk profiles included fields in which users could enter personal information about the subject or post comments about them. In some cases, the complaint alleges, the profile comment fields subjected people to derisive and abusive comments, such as, “Omg I hate this kid he\’s such a loser,” and, “Nobody in their right mind would love you … not even your parents love [you].”

The profiles also included millions of photos, including photos of children and photos that consumers claim they had designated on Facebook as private, the FTC complaint alleges. Some of them featured intimate family moments, including children bathing and a mother nursing her child.

The defendants also told consumers they could “use Jerk to manage your reputation and resolve disputes with people who you are in conflict with,” according to the FTC’s complaint. They allegedly charged consumers $25 to email Jerk.com’s customer service department, and also falsely told consumers that if they paid $30 for a website subscription, they could access “premium features,” including the ability to dispute information posted on Jerk.com, and receive fast notifications and special updates. But according to the FTC, in many cases, consumers who paid the customer service or subscription fee often got nothing in return.

The Commission vote to issue the administrative complaint was 4-0. The evidentiary hearing is scheduled to begin before an administrative law judge at the FTC on January 27, 2015.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.

MEDICAL ALERT DEVICE OPERATION GETS COURT ORDERED TEMPORARY ASSET FREEZE

FROM:  FEDERAL TRADE COMMISSION 

At the request of the Federal Trade Commission and the Office of the Florida Attorney General, a U.S. district court has temporarily halted and frozen the assets of an Orlando-based operation that used pre-recorded telephone calls, commonly known as robocalls, to pitch purportedly “free” medical alert devices to senior citizens by false representing that the devices had been purchased for them by a relative or friend. The defendants also allegedly led consumers to believe that the devices were endorsed by various health organizations and that they would not be charged anything before the devices were activated.

The agencies are seeking a court order permanently banning the defendants from engaging in the allegedly fraudulent and illegal conduct, and providing restitution to consumers who were victimized.

“These telemarketers used illegal robocalls to make a sales pitch that was 100 percent false,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “They lied about the product, about whether health organizations had endorsed it, and about its cost.  And all the while, their M.O. was to take advantage of older people's concerns about their health. We're so glad to work with our partners in Florida to stop this fraud.”
“We will not tolerate unscrupulous individuals targeting the elderly. This company received more than $13 million in commissions since March 2012, and we will do everything in our power to compensate consumers who lost money due to the fraudulent medical alert scheme,” said Florida Attorney General Pam Bondi. “I thank the Federal Trade Commission for its partnership in this effort, which involved thousands of affected consumers, and the numerous other agencies who joined in the effort to stop these business practices.”

According to the joint agency complaint, the defendants violated the FTC Act, the Commission’s Telemarketing Sales Rule (TSR), and Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA) by blasting robocalls to senior citizens falsely stating that they were eligible to receive a free medical alert system that was bought for them by a friend, family member, or acquaintance. Many of the consumers who received the defendants’ calls were elderly, live alone, and have limited or fixed incomes.

Consumers who pressed one (1) on their phones for more information were transferred to a live representative who allegedly continued the deception by saying that the medical alert systems are recommended by the American Heart Association (AHA), the American Diabetes Association (ADA), and the National Institute on Aging (NIA). In addition, the telemarketers falsely stated that the monthly monitoring fee for the system will be charged only once the medical alert system has been installed and activated. In reality, the defendants started charging consumers who agreed to receive the system immediately, regardless of whether the system had been activated or not.

Based on this alleged conduct, the joint complaint charges the defendants with misrepresenting a range of facts, including that someone the consumer knows already purchased the system for them, that the defendants’ medical alert system is endorsed by the AHA, ADA, and NIA, and that consumers will not be charged until the system has been activated. The complaint also charges the defendants with violating the TSR by making illegal robocalls, including to consumers on the National Do Not Call Registry, and by failing to disclose the caller’s telephone number or identity.

The Commission vote approving the complaint was 4-0. The complaint was filed in the U.S. District Court for the Middle District of Florida, Orlando Division, on January 6, 2014. The following day, the court entered a temporary restraining order, freezing the defendants’ assets and appointed a temporary receiver over their business. A preliminary injunction hearing in the case is scheduled for January 16, 2014.

The defendants include: 1) Worldwide Info Services, Inc., also doing business as (d/b/a) The Credit Voice; 2) Elite Information Solutions Inc., also d/b/a The Credit Voice; 3) Absolute Solutions Group Inc, also d/b/a The Credit Voice; 4) Global Interactive Technologies, Inc., also d/b/a The Credit Voice Inc.; 5) Global Service Providers, Inc.; 6) The Credit Voice, Inc, also d/b/a TCV; 7) Live Agent Response 1 LLC, also d/b/a LAR; 8) Arcagen, Inc., also d/b/a ARI; 9) American Innovative Concepts, Inc.; 10) Unique Information Services Inc.; 11) Michael Hilgar; 12) Gary Martin; and 13) Joseph Settecase.

The FTC and Florida Attorney General’s Office appreciate the assistance of the following agencies, offices, and organizations in helping to investigate and bring this case: 1) the Indiana Office of the Attorney General; 2) the Minnesota Office of the Attorney General; 3) the Florida Department of Agriculture and Consumer Services; 4) the Better Business Bureau Serving Eastern Missouri and Southern Illinois; 5) the American Heart Association; 6) the American Diabetes Association; 7) the National Institute on Aging;  8) the United States Postal Inspection Service, including its Atlanta, Boston, and Houston divisions; and 9) the Seminole County Sheriff’s Office, Financial Crimes Task Force.