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FTC: Scammers Hit New Low by Sending Fake “Funeral Notices”

Scam artists are forever trying to trick people into clicking on links that will download malware to their computers. But the latest scam takes the trick to a new low. Scammers are sending bogus emails with the subject line “funeral notification.” The message appears to be from a legitimate funeral home, offers condolences, and invites you to click on a link for more information about the upcoming “celebration of your friend’s life service.” But instead of sending you to the funeral home’s website, the link downloads malware to your computer.

In “Fake funeral notice can be deadly – for your computer,” the FTC’s new blog post about this scam, consumers will find tips to reduce the risk of downloading unwanted malware and spyware.

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. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Settles with Children’s Gaming Company For Falsely Claiming To Comply With International Safe Harbor Privacy Framework

A children’s online entertainment company has agreed to settle Federal Trade Commission charges that it falsely claimed it was abiding by an international privacy framework known as the U.S.-EU Safe Harbor that enables U.S. companies to transfer consumer data from the European Union to the U.S. in compliance with EU law.

According to a complaint filed by the FTC, Fantage.com, the maker of a popular multiplayer online role-playing game directed at children ages 6-16, deceptively claimed, through statements in its privacy policy, that it held current certifications under the U.S.-EU Safe Harbor framework. The U.S.-EU Safe Harbor framework is a voluntary program administered by the U.S. Department of Commerce in consultation with the European Commission.

To participate, a company must self-certify annually to the Department of Commerce that it complies with the seven privacy principles required to meet the EU’s adequacy standard: notice, choice, onward transfer, security, data integrity, access, and enforcement. A participant in the U.S.-EU Safe Harbor framework may also highlight for consumers its compliance with the Safe Harbor by displaying the Safe Harbor certification mark on its website.

The FTC complaint charges Fantage.com with representing that it held a current Safe Harbor certification, even though the company had allowed its certification to lapse. The Commission alleged that this conduct violated Section 5 of the FTC Act. However, this does not necessarily mean that the company committed any substantive violations of the privacy principles of the Safe Harbor framework or other privacy laws.

Under the proposed settlement agreement, which is subject to public comment, the company is prohibited from misrepresenting the extent to which it participates in any privacy or data security program sponsored by the government or any other self-regulatory or standard-setting organization.

Consumers who want to know whether a U.S. company is a participant in the U.S-EU Safe Harbor program may visit http://export.gov/safeharbor to see if the company holds a current self-certification.

This case is being brought with the valuable assistance of the U.S. Department of Commerce. The company was also the subject of complaints filed in 2013 by Chris Connolly and Galexia, Inc.

The Commission vote to accept the consent agreement package containing the proposed consent order for public comment were 4-0. 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 March 13, 2014, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section. Comments in electronic form should be submitted online. Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

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.

FTC Approves Final Order Settling Charges Involving Two Auto Dealers’ Deceptive Ads

Following a public comment period, the Federal Trade Commission approved final consent orders settling charges that two automotive dealers deceptively advertised the cost or available discounts for their vehicles.

The FTC charged Don White’s Timonium Chrysler Jeep Dodge of Cockeysville, Md., with advertising “dealer discounts” and “internet prices” not available to a typical consumer. Ganley Ford West, Inc., in Cleveland, was charged with misrepresenting that vehicles were available at a specific dealer discount, when in fact the discounts only applied to specific, and more expensive, models of the advertised vehicles.

Under the settlements, both dealers are prohibited from advertising discounts or prices unless the ads clearly disclose any qualifications or restrictions. The settlements also prohibit the auto dealers from making misrepresentations regarding the existence, price, value coverage, or features of any product or service associated with the motor vehicle purchase, and the number of vehicles available at particular prices.

Both cases are part of the FTC’s ongoing efforts to combat deceptive motor vehicle dealer practices. The FTC announced these cases in September 2013 as well as a nationwide sweep against 10 other dealers in January 2014.

The Commission vote to approve the final orders was 4-0.

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. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into the Consumer Sentinel Network, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC to Host Roundtable on Proposed Changes to its Care Labeling Rule for Clothing

As part of the Federal Trade Commission’s systematic review of all current FTC rules and guides, the FTC will host a public roundtable in Washington, DC, on March 28, 2014, to analyze proposed changes to its Care Labeling Rule. The roundtable was originally scheduled for October 1, 2013, but it was cancelled due to the government shutdown.

The Rule, officially called the Rule on Care Labeling of Textile Wearing Apparel and Certain Piece Goods, requires manufacturers and importers to attach labels with care instructions for drycleaning washing, bleaching, drying and ironing of garments and certain piece goods.

In September 2012, the FTC sought comments on potential updates to the Rule. Based on comments the agency received, the roundtable will focus on a proposal to allow manufacturers and importers to include professional instructions for wetcleaning – an environmentally friendly alternative to drycleaning – on labels if the garment can be professionally wetcleaned and on whether the Commission should require a wetcleaning instruction for such garments. It will also address the cost of substantiating wetcleaning instructions, the availability of wetcleaning, consumer awareness of wetcleaning, and the content of labels providing a wetcleaning instruction.

The roundtable will also discuss the differences between ASTM International (American Society for Testing and Materials) and both the 2005 and 2012 ISO (International Organization for Standardization) care symbols, whether labels should identify ISO symbols as such if used to comply with the Rule, the change in the meaning of the circle P symbol in the ASTM system, and consumer understanding of symbols. In addition, the roundtable will include a discussion about the absence of ASTM and ISO symbols for solvents other than perchloroethylene and petroleum. The roundtable also will address how to clarify what constitutes a reasonable basis for care instructions.

The roundtable will be held on March 28, 2014, from 9:15 a.m. until 3:45 p.m. in the FTC’s Satellite Building Conference Center at 601 New Jersey Avenue, NW, Washington, DC. Requests to participate as a panelist must be received by February 28, 2014. Any written comments regarding the agenda topics, the issues discussed by the panelists at the roundtable, or the issues raised in comments received in response to the Notice of Proposed Rulemaking must be received by April 11, 2014.

The Commission vote to publish a public roundtable announcement was 4-0. It is available on the FTC’s website and as a link to this press release and will be published in the Federal Register soon. Instructions for filing comments appear in the Federal Register Notice. All comments received will be posted online. (FTC File No. R511915; the staff contact is Robert M. Frisby, Bureau of Consumer Protection, 202-326-2098)

FTC Approves Final Order Settling Charges Against TRENDnet, Inc.

Following a public comment period, the Federal Trade Commission has approved a final order settling charges that electronics company TRENDnet, Inc.’s lax security practices led to the exposure of the private lives of hundreds of consumers on the internet for public viewing.

The FTC’s complaint alleged that TRENDnet marketed its SecurView cameras for purposes ranging from home security to baby monitoring, and claimed in numerous product descriptions that they were “secure.” In fact, the cameras had faulty software that left them open to online viewing, and in some instances listening, by anyone with the cameras’ Internet address.

In settling the complaint, TRENDnet is prohibited from misrepresenting the security of its cameras or the security, privacy, confidentiality, or integrity of the information that its cameras or other devices transmit. In addition, the company is barred from misrepresenting the extent to which a consumer can control the security of information the cameras or other devices store, capture, access, or transmit.

TRENDnet also is required to establish a comprehensive information security program designed to address security risks that could result in unauthorized access to or use of the company’s devices, and to protect the security, confidentiality, and integrity of information that is stored, captured, accessed, or transmitted by its devices. The company also is required to obtain third-party assessments of its security programs every two years for the next 20 years.

The settlement requires TRENDnet to notify customers about the security issues with the cameras and the availability of a software update to correct them, and to provide customers with free technical support for the next two years to assist them in updating or uninstalling their cameras.

The Commission vote approving the final order was 4-0.

Paying Agent Notification Requirements

FIL-8-2014
February 07, 2014

Paying Agent Notification Requirements

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FIL-8-2014 – PDF (PDF Help)

Summary:

On January 23, 2013, the Securities and Exchange Commission (SEC) amended Exchange Act Rule 17Ad-17 to implement the requirements of Section 929W of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203. The amendments add to Rule 17Ad-17 a requirement that “paying agents” send a one-time notification to “unresponsive payees” stating that the agent has sent a securityholder a check that has not yet been negotiated. The effective date for the amendments is January 23, 2014. Therefore, the first potential notice to unresponsive payees would be due no later than August 23, 2014.

Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised financial institutions.

Highlights:

Paying agents are:
- Any issuer.
- Transfer agent.
- Broker/Dealer.
- Investment adviser.
- Indenture trustee.
- Custodian.
- Any other person who accepts payments from an issuer of securities and distributes the payments to holders of the security.
“Any issuer” would include banks that have issued equity or debt securities, whether or not the bank is publicly traded. For example, banks that pay dividends by check on their stock, common or preferred, or interest payments on their debt securities would be “issuers” required to comply with this rule.
A securityholder is considered an unresponsive payee when:
- The paying agent sends the securityholder a check and
- The check is not negotiated by the earlier of:

The paying agent’s sending of the next regularly scheduled check, or
Six months or 180 days after the not-yet-negotiated check was sent.

Notification must be sent to the securityholder no later than seven months after the not-yet-negotiated check was sent. For example, a paying agent that mailed a check on January 23, 2014, would be required to notify any unresponsive payee no later than August 23, 2014. No notification is required if the check is for less than $25.
Paying agents must maintain records to demonstrate compliance with the revised rule, including written procedures describing the methodology for complying with the requirements.
State escheatment laws are not affected by the revised rule.

FTC Issues Opinion and Final Order Finding McWane, Inc. Unlawfully Maintained Its Monopoly in Domestic Pipe Fittings by Excluding Competitors

The Federal Trade Commission today issued its Opinion and Final Order against McWane, Inc., the largest U.S. supplier of ductile iron pipe fittings used in municipal and regional water distribution systems. In its Opinion, by Chairwoman Edith Ramirez, the Commission affirmed, in part, a May 2013 Initial Decision by Chief Administrative Law Judge D. Michael Chappell, finding that McWane unlawfully maintained its monopoly in the domestic fittings market.

The Commission dismissed the remaining counts in the seven-count administrative complaint issued by the Commission in January 2012. The Commission dismissed Counts One and Two in the public interest, because no majority position was reached with respect to these counts. While Chairwoman Ramirez and Commissioner Brill found that McWane engaged in a price-fixing conspiracy, Commissioners Ohlhausen and Wright disagreed. Count Three, which the ALJ dismissed, was not appealed by complaint counsel. The Commission reversed the ALJ’s finding of liability on Count Four, and dismissed Counts Five and Seven after determining it was not necessary to address the merits, based on its other findings.

Fittings are used in water distribution systems for the installation of valves, water meters, and hydrants and to change the flow of water. According to the FTC’s complaint, McWane and its two main competitors, Sigma Corporation and Star Pipe Products Ltd., account for the overwhelming majority of fittings sales in the United States.

The administrative complaint charged that McWane illegally conspired with Sigma and Star to raise and stabilize prices in the fittings market. It also charged that McWane violated the antitrust laws by excluding competitors from a separate market limited to domestic fittings. Domestic fittings are a distinct market because certain projects require domestic fittings because of federal, state, or local laws, and, as a consequence, imported fittings are not substitutes.

In its Opinion, the Commission found liability under Count Six of the administrative complaint, which alleged that McWane willfully engaged in anticompetitive conduct that allowed it to maintain its monopoly in the domestic fittings market after Star entered the market in 2009.

The Commission found that while about 80 percent of demand for domestic fittings can be met with 100 or fewer commonly used sizes and configurations of fittings, distributors need access to a full line of domestic fittings to meet all of their customers’ demands. As a new entrant, Star did not sell a full line of domestic fittings. Knowing this, the Opinion states, McWane implemented a “Full Support Program,” which was, in reality, an exclusive dealing policy. Under the program, “McWane made sure distributors received the message that they would no longer be able to buy domestic fittings from McWane if they purchased domestic fittings from Star.”

“As McWane intended,” the Opinion states, “most distributors interpreted the policy as a threat that McWane would terminate their ability to purchase any of McWane’s domestic fittings if they purchased any domestic fittings from Star.” Following implementation of the Full Support Program, numerous distributors withdrew millions of dollars of requests for quotes, cancelled orders, or decided not to purchase domestic fittings from Star.

The Commission found that McWane’s Full Support Program “foreclosed Star and other potential entrants from accessing a substantial share of distributors,” and “created a strong economic incentive for distributors to reject Star’s products, artificially diminishing Star’s competitive prospects in the domestic fittings market.” As a result, Star was unable to achieve the sales necessary to compete effectively and threaten McWane’s monopoly.

Based on its conclusion that “McWane sought to maintain its monopoly power in the domestic fittings market through an unlawful exclusive dealing policy,” the Commission’s Final Order “prohibits McWane from requiring exclusivity from its customers” for domestic fittings.

The Final Order also states that McWane is not prohibited from providing discounts, rebates, or other price or non-price incentives to encourage customers to purchase its domestic fittings, either before or after the Order is entered. It requires McWane to distribute the Order within 60 days of becoming final to its officers, directors, and managers; and to file compliance reports with the Commission for 10 years.

In an Initial Decision announced on May 19, 2013, Judge Chappell found that the evidence did not support complaint counsel’s charges that McWane illegally conspired with Sigma and Star to raise and stabilize fittings prices. Based on these findings, he dismissed the first three counts in the seven-count FTC complaint. But Judge Chappell ruled that the evidence did support the other counts in the administrative complaint, and the Order attached to his Initial Decision would have required McWane to stop engaging in the anticompetitive conduct outlined in those counts.

Both McWane and complaint counsel subsequently appealed the ALJ’s decision, requesting that the case be heard by the full Commission. The Commission heard oral argument in the case on August 23, 2013, and issued its Opinion and Final Order on January 30, 2014.

Sigma and Star both previously settled related FTC charges.

The Commission vote approving the Opinion and Final Order was 4-0, with Commissioner Wright joining the FTC’s Opinion with respect to Counts 1-2 and 4-5, but issuing a separate dissenting statement regarding the Commission’s decision to hold McWane liable for unlawful monopolization in Count 6. In his view, evidence in the record showed only that the Full Support Program harmed McWane’s rival Star, and that complaint counsel failed to prove that the Program harmed the competitive process.

Because mere harm to a rival is insufficient to establish a violation of the antitrust laws, Commissioner Wright determined that complaint counsel failed to establish a necessary element of its case. Key to his decision was his view that there was an absence of evidence demonstrating that the Full Support Program had an impact on price or output in the domestic fittings industry.

McWane can file a petition for review with any U.S. Court of Appeals within 60 days of service of the Final Order.

Testifying Before the House Energy and Commerce Committee, Subcommittee on Commerce, Manufacturing and Trade, FTC Reiterates its Support for Data Security Legislation

The Federal Trade Commission testified before Congress for the third time in as many days today, emphasizing the agency’s ongoing efforts to promote data security, and reiterating its unanimous support for enactment of a strong federal data security and breach notification law.

Testifying on behalf of the Commission before the House Energy and Commerce Committee’s Subcommittee on Commerce, Manufacturing and Trade, FTC Chairwoman Edith Ramirez outlined the agency’s efforts to promote data security through civil law enforcement, education, and policy initiatives. The testimony notes that businesses are collecting more personal information about consumers than ever before, and that rising reports of data breaches show that these systems are susceptible to being compromised.

“Never has the need for legislation been greater. With reports of data breaches on the rise, and with a significant number of Americans suffering from identity theft, Congress needs to act,” the testimony states.

The testimony points out that, according to estimates by the Bureau of Justice Statistics, 16.6 million persons – or 7 percent of all U.S. residents ages 16 and older – were victims of identity theft in 2012.

The testimony explains that, to promote data security, the FTC enforces several statutes and rules that impose obligations upon businesses that collect and maintain consumer data. These include the proscription against unfair or deceptive acts or practices in Section 5 of the FTC Act; the Gramm-Leach-Bliley Act; the Fair Credit Reporting Act; and the Children’s Online Privacy Protection Act.

The testimony stresses the Commission’s bipartisan support for data security legislation that would enhance existing laws and strengthen the agency’s existing authority. The Commission supports legislation, for example, that would give the FTC the ability to seek civil penalties to help ensure FTC enforcement actions have an appropriate deterrent effect. Under current laws, the FTC only has the authority to seek civil penalties for data security violations involving companies that fail to protect children’s information provided online in violation of the COPPA Rule or credit report information in violation of the FCRA. The Commission also recommends data security legislation that would provide the agency with jurisdiction over non-profits, which have been the source of a substantial number of breaches.

The Commission also recommends that Congress enact a federal law that would require companies, in appropriate circumstances, to notify consumers when there is a security breach, the testimony states. This would help consumers mitigate likely harm from the misuse of their data. Although most states have breach notification laws, a strong and consistent, national requirement would ensure that all consumers are protected.

In addition, the Commission promotes better data security practices through consumer education and business guidance, the testimony notes. On the consumer education front, the Commission recently posted information for consumers who may have been affected by the recent Target and other breaches, providing steps they should take to protect themselves. It also widely disseminates a business guide on data security, along with an online tutorial, that are designed to provide diverse businesses – and especially small businesses – with practical, concrete advice as they develop data security programs and plans for their companies.

The Commission vote approving the testimony and its inclusion in the formal record was 4-0.

Marketer Settles FTC Charges He Sent Millions of Deceptive, Unwanted Text Messages

An affiliate marketer has agreed to settle Federal Trade Commission charges that he was responsible for sending millions of unwanted text messages to consumers that deceptively promised “free” gift cards and electronics.

The marketer, Jason Q. Cruz of West Bend, Wisc., was a subject in a series of FTC complaints targeting the senders of deceptive spam text messages. In its complaint against Cruz, the FTC alleged that he sent text messages to consumers around the country offering free merchandise, such as $1,000 gift cards to major retailers or free iPads, to those who clicked on links in the messages. A typical message read, “You have been selected for a $1,000 Walmart GiftCard, Enter code ‘FREE’ at [website address] to claim your prize: 161 left!”

Consumers who clicked on the links did not receive the “free” merchandise. Instead, consumers were taken to websites that requested personal information and required them to sign up for multiple risky trial offers to qualify for the supposedly “free” merchandise. Most of those trial offers were for questionable products and services that cost money and included recurring monthly charges.

“When scammers use unwanted text messages to entice consumers with deceptive offers, that’s a significant problem,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Banning a serial spammer like Mr. Cruz from sending unsolicited text messages helps the FTC take a huge cut out of scammers’ efforts to target consumers in this way.”

Under the terms of the stipulated final order, Cruz is permanently banned from sending or assisting others in sending unsolicited text messages to consumers. The order also bans Cruz from deceptively presenting an offer as “free,” and from misleading consumers about the use of their personal information.

The order also includes a judgment of more than $185,000, which represents all of the money Cruz received in connection with the scam. Under the terms of the order, all but $10,000 of the monetary judgment is suspended based on Cruz’s inability to pay the full amount.

In addition, Cruz is required to destroy all consumer information he may have acquired over the course of the scam and cooperate with any further FTC investigations.

The Commission vote approving the proposed stipulated final judgment was 4-0. The FTC filed the stipulated final judgment in the U.S. District Court for the Northern District of Illinois, Eastern Division. The District Court judge signed and approved the order on Jan. 16, 2014.

NOTE: Stipulated final judgments have the force of law when approved and signed by the District Court judge.

Testifying Before the Senate Judiciary Committee, FTC Reiterates its Support for Data Security Legislation

The Federal Trade Commission testified before Congress today on the agency’s ongoing efforts to promote data security, and reiterated its support for enactment of a strong federal data security and breach notification law.

Testifying on behalf of the Commission before the Senate Judiciary Committee, FTC Chairwoman Edith Ramirez outlined the agency’s efforts to promote data security through civil law enforcement, education, and policy initiatives. The testimony notes that businesses are collecting more personal information about consumers than ever before, and that rising reports of data breaches show that these systems are susceptible to being compromised.

The Commission vote approving the testimony and its inclusion in the formal record was 4-0.

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Paying Agent Notification Requirements

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Summary:

Highlights:

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