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FTC Approves Polypore International’s Application to Sell Microporous to Seven Mile Capital Partners; Sale Will Unwind Illegal 2008 Acquisition

Following a public comment period, the Federal Trade has approved an application by Polypore International, Inc. for approval to divest all stock and assets related to Microporous, which it acquired in February 2008, to Seven Mile Capital Partners. The divestiture is required by a Commission final decision and order that found the acquisition anticompetitive and required Polypore to sell Microporous to an FTC-approved buyer.

The FTC challenged Polypore’s acquisition of Microporous in a September 9, 2008, complaint, charging that the merger had resulted in decreased competition and higher prices in four North American markets for battery separators, a key component in flooded lead-acid batteries. Following an administrative trial, on February 22, 2010, an administrative law judge found that the consummated deal was anticompetitive, and that complete divestiture of the acquired assets was needed to restore competition in the affected markets.

On November 5, 2010, the Commission upheld the ALJ’s Initial Decision, ruling that the acquisition was anticompetitive in three of the four North American markets identified in the complaint but not in the fourth market for separators used to make batteries for backup power supply. The Commission’s order required Polypore to sell Microporous to an FTC-approved buyer within six months after the divestiture provisions became final. Polypore appealed the Commission’s decision to the U.S. Court of Appeals, which on July 11, 2012, affirmed the FTC’s final decision and order. Polypore then appealed the case to the U.S. Supreme Court, which declined to hear it.

The Commission vote approving the proposed divestiture was 3-0-1, with Commissioner Joshua D. Wright not participating. (FTC Docket No. 9327; the staff contact is Elizabeth A. Piotrowski, Bureau of Competition, 202-326-2623; see related press release dated September 10, 2008)

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Proposes Revisions to Energy Labeling Rule To Reflect New Energy Department TV Testing Procedure

The Federal Trade Commission is proposing changes to its Energy Labeling Rule so that its television testing and reporting requirements conform with a new Department of Energy test procedure published in October.

Under the Energy Labeling Rule, manufacturers must attach yellow EnergyGuide labels stating an annual operating cost and an energy consumption rating, and a range for comparing the highest and lowest energy consumption for all similar models. EnergyGuide labels appear on televisions, clothes washers, dishwashers, refrigerators, freezers, water heaters, room air conditioners, central air conditioners, furnaces, boilers, heat pumps, and pool heaters.

The FTC proposes to replace the Rule’s reference to the Environmental Protection Agency’s ENERGY STAR test with the DOE test that was announced in October.

For more information about EnergyGuide labels, read Shopping for Home Appliances? Use the EnergyGuide Label.

The Commission vote approving the Notice amending the Energy Labeling Rule 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. (FTC File No. R611004; the staff contact is Hampton Newsome, Bureau of Consumer Protection, 202-326-2889)

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 Approves Final Order Settling Charges That Mylan, Inc.’s Acquisition of Agila Specialties Global Pte. Ltd and Agila Specialties Pvt. Ltd. Was Anticompetitive

Following a public comment period, the Federal Trade Commission has approved a final order settling charges that Mylan, Inc.’s acquisition of Agila Specialties Global Pte. Ltd and Agila Specialties Pvt. Ltd. (collectively, Agila) from Strides Arcolab Ltd. was anticompetitive in 11 injectable generic drug markets. The FTC’s order, first announced in September, requires Mylan and Agila to remedy the proposed competitive concerns in each of these drug markets, as described in the press release announcing the proposed settlement. No comments were received during the public comment period.

According to the FTC’s complaint, in each of the markets, Mylan and Agila were two of only a limited number of current or likely future competitors. The number of suppliers in generic pharmaceutical markets matters because prices generally decrease as the number of competing generic suppliers increases. In addition, the injectable generic products subject to the final order are highly susceptible to supply disruptions caused by the inherent difficulties of producing sterile liquid drugs. The complaint alleged that by reducing the number of competitors in these markets, the acquisition as originally proposed would eliminate important competition and likely lead to higher prices.

The Commission vote approving the final order was 4-0. (FTC File No. 131-0112; the staff contact is Amy Posner, Bureau of Competition, 202-326-2614)

FTC Testifies on Data Brokers Before Senate Committee on Commerce, Science and Transportation

The Federal Trade Commission provided information to Congress today on the status of its work regarding companies that collect and aggregate consumers’ information and then resell it, known as data brokers.

Testifying on behalf of the Commission before the Senate Committee on Commerce, Science and Transportation, Bureau of Consumer Protection Director Jessica Rich told lawmakers about the FTC’s past and present efforts related to the privacy practices of the data broker industry.

“Because data brokers generally never interact directly with consumers, consumers are typically unaware of their existence, much less the variety of ways they collect, analyze, and sell consumer data,” the testimony states.

The testimony notes that FTC’s work in the data broker industry is not a recent development, pointing to work done by the Commission in the 1990s looking at the privacy practices of data companies not covered under the Fair Credit Reporting Act (FCRA).

In addition, the testimony points to recommendations made by the Commission in its 2012 report on privacy issues about improving the transparency of data brokers’ practices and giving consumers greater control over how their information is used. The recommendations made in the report included giving consumers reasonable access to the data maintained about them by data brokers. The report also noted that the Commission has long supported legislation both to improve consumers’ access rights to data and to improve the transparency of industry practices.

The testimony goes on to address the Commission’s ongoing initiatives regarding data brokers using a three-pronged strategy made up of enforcement actions, research and reports, and education for consumers and businesses.

In describing the FTC’s enforcement efforts in the data broker industry, the testimony notes that the agency has brought nearly 100 cases and obtained more than $30 million in civil penalties for violations of the FCRA. Among the cases highlighted in the testimony are the Commission’s 2012 consent decree with online data broker Spokeo, its case against app developer Filiquarian, and the Commission’s recent consent decree with Certegy Check Services, which resulted in a $3.5 million FCRA fine.

The testimony describes the Commission’s ongoing study of the data broker industry, conducted under its authority in Section 6(b) of the FTC Act. The study is examining the practices of nine companies, and the Commission expects to issue a report outlining the findings in the coming months. In addition, the testimony notes the FTC’s upcoming series of workshops to be held in 2014 on emerging privacy issues, including alternative scoring products sold by data brokers, which are used to predict trends and behaviors of consumers.

Finally, the testimony addresses the Commission’s work in educating businesses and consumers about privacy issues in the data broker industry. The testimony highlights warning letters sent by Commission staff to data brokers that provided tenant-screening services as well as to to marketers of mobile apps that provide employment screening services.

The testimony also mentions a recent undercover effort by Commission staff to determine if data brokers who said they were not covered under FCRA were willing to sell information for FCRA-covered purposes. As a result, ten warning letters were issued to companies.

“These enforcement, policy, and education efforts demonstrate the Commission’s continued commitment to understanding and addressing consumer privacy issues posed by the data broker industry,” the testimony states.

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

FTC Issues Performance and Accountability Report for Fiscal Year 2013

The Federal Trade Commission has issued its Fiscal Year (FY) 2013 Performance and Accountability Report. The report shows American taxpayers how the FTC has managed its resources, highlights major accomplishments in fulfilling the FTC’s two core goals of protecting consumers and promoting competition, and outlines plans for addressing future challenges.

As required by the Reports Consolidation Act of 2000, the Performance and Accountability Report combines the FTC’s performance report and its financial statements and audit opinion. The report compares and evaluates the agency’s performance against the established measures and targets in the FTC’s 2009 to 2014 Strategic Plan (and the FY12 Strategic Plan Addendum) and the annual Performance Plan required under the Government Performance and Results Act of 1993. In FY 2013, the FTC met or exceeded 85 percent of its performance measures (34 out of 40). In addition, the FY 2013 independent financial audit resulted in the FTC’s 17th consecutive unqualified opinion, the highest audit opinion available.

The Commission vote to release the Performance and Agency Mission Challenges sections of the report was 4-0. The report can be found on the FTC’s website and as a link to this press release. (FTC File No. P130500, the staff contact is Valerie Green, Office of the Executive Director, 202-326-2901)

FTC Moves Against Massive Mobile Cramming Operation That Heaped Millions in Unwanted Charges on Consumers’ Bills

The Federal Trade Commission is taking action to stop a mobile phone cramming operation that has placed tens of millions of dollars on consumers’ mobile phone bills without their permission. In its complaint, the FTC seeks to shut down the operation and recover money lost by consumers.

The FTC’s complaint charges that Lin Miao and Andrew Bachman, through a number of companies they owned and controlled, pitched “love tips,” “fun facts,” and celebrity gossip alerts sent by text message to consumers, but placed monthly subscription fees for these “services” on consumers’ mobile phone bills without their authorization. The practice, known as mobile cramming, relies on the fact that consumers often don’t closely examine their monthly statements, or many assume that charges are legitimate.

“This case puts another dent in the armor of scammers who use mobile cramming to take advantage of consumers across the country,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “The FTC will continue working to protect consumers from unwanted third-party charges on their mobile phone bills.”

According to the complaint, consumers allegedly received text messages with random factoids that they dismissed as spam without realizing they had received them through a paid subscription service they did not knowingly buy. The defendants also allegedly used misleading website offers to obtain valid consumer phone numbers that they used to sign up consumers for their services without their knowledge.

In one instance, a website told visitors they had won free Justin Bieber tickets, which they could claim by filling out an online quiz. Part of the process required consumers to enter their phone number, and while consumers didn’t receive the Justin Bieber tickets, their phone numbers were likely signed up for one of the defendants’ paid services.

The charges continued to appear on consumers’ bills until the consumers noticed them and took action to unsubscribe. The charges, typically $9.99 per month, often appeared on consumers’ bills with inscrutable names like “77050IQ12CALL8663611606” and “25184USBFIQMIG” and in many instances, consumers did not notice the variations in the amount of their bills from month to month.

When consumers did notice the charges, the process of getting a refund was often highly cumbersome. In some cases, consumers could reach representatives of the company, who would promise refunds that never arrived. In other cases, consumers were able to get partial refunds from their phone company, but only for a limited number of months – sometimes far less than the length of time they were billed. The number of consumers seeking refunds from their phone companies was as high as 40 percent in some months, and some carriers suspended the defendants from placing charges on consumers’ bills.

The FTC’s complaint alleges that the defendants violated the FTC Act by deceiving consumers, leading them to believe they were obligated to pay for the defendants’ premium text message services. The defendants also violated the FTC Act by unfairly billing consumers for services they did not ask for.

The defendants in the case are Tatto, Inc. (also doing business as WinBigBidLow and Tatto Media); Bullroarer, Inc. (also doing business as Bullroarer Corporation Pty. Ltd.); Shaboom Media, LLC (also doing business as Tatto Media); Bune, LLC; Mobile Media Products, LLC; Chairman Ventures, LLC; Galactic Media, LLC; Virtus Media, LLC; Lin Miao and Andrew Bachman.

The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Central District of California on Dec. 4, 2013, and a temporary restraining order with an asset freeze was granted against the defendants on Dec. 5, 2013.

NOTE: The Commission files a 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 case will be decided by the court.

FTC Ends Rulemaking On Caller ID Falsification Issues

After reviewing the public comments received on a December 2010 Notice of Proposed Rulemaking regarding the caller identification (Caller ID) requirements of the Federal Trade Commission’s Telemarketing Sales Rule (TSR), as well as technical presentations at the FTC’s 2012 Robocall Summit, the Commission has closed the proceeding. The FTC has determined that amendments to the TSR would not reduce the incidence of falsification, or “spoofing,” of Caller ID information in telemarketing calls.

When the FTC amended the TSR in 2003, it added a requirement that telemarketers transmit information to Caller ID services. New technologies, however, allow telemarketers to mask their information by spoofing the number and name that appear on Caller ID displays. The Commission will continue to vigorously enforce the TSR’s prohibition on caller ID spoofing and its ban on the vast majority of commercial robocalls. The FTC, however, has determined that no additions or modifications of the TSR would effectively prevent Caller ID spoofing. As a result, the rulemaking proceeding has been closed.

The Commission vote to approve the Federal Register notice closing the proceeding was 4-0. It will be published in the Federal Register shortly, and is available now on the FTC’s website. (FTC File No. P104405, the staff contact is Craig Tregillus, Bureau of Consumer Protection, 202-326-2970)

Professional Associations Settle FTC Charges by Eliminating Rules That Restricted Competition Among Their Members

Two professional associations, of music teachers and legal support services providers respectively, have agreed to eliminate provisions in their codes of ethics that limited competition among their members, according to the FTC. These settlements are the latest in a long line of antitrust cases addressing restraints on competition that are incorporated into the ethics codes of professional associations.

“Competing for customers, cutting prices, and recruiting employees are hallmarks of vigorous competition. Agreements among competitors not to engage in these activities injure consumers by increasing prices and reducing quality and choice. Absent a procompetitive justification, these types of restrictions on competition are precisely the kind of unreasonable restraints of trade that the Sherman Act was designed to combat,” the Commission wrote in a statement accompanying the settlement.

The FTC’s complaint against the Music Teachers National Association, Inc. (MTNA), which represents over 20,000 music teachers nationwide, alleges that the association and its members restrained competition in violation of the FTC Act through a code of ethics provision that restricted members from soliciting clients from rival music teachers. The provision, which the MTNA added to its code in 2004, stated: “The teacher shall respect the integrity of other teachers’ studios and shall not actively recruit students from another studio.”

The proposed order settling the FTC’s charges requires MTNA to stop restricting or declaring it unethical for its members to solicit teaching work from other music teachers. The order also requires MTNA to maintain an antitrust compliance program.

In addition, MTNA is an umbrella organization for more than 500 state and local music teaching association affiliates throughout the country. Some of these affiliates have codes of ethics that restrain their members from charging fees that are lower than the average in the community, offering free lessons or scholarships, or advertising free scholarships or tuition. The proposed settlement requires MTNA to, among other things, stop affiliating with any association that MTNA knows is restricting solicitation, advertising, or price-related competition by its members.

In a separate complaint, the FTC charged that the California Association of Legal Support Professionals (CALSPro), which represents companies and individuals that provide legal support services in California, violated the FTC Act through code of ethics provisions that restrained its members from competing against each other on price, disparaging each other through advertising, and soliciting legal support professionals for employment. Specifically, its code of ethics stated: 1) “It is unethical to cut the rates you normally and customarily charge when soliciting business from a member firm’s client”; 2) “It is not ethical to . . . speak disparagingly of another member”; and 3) “It is unethical to contact an employee of another member firm to offer him employment with your firm without first advising the member of your intent.”

The proposed order settling the FTC’s complaint against CALSPro requires the association to cease and desist from such practices in the future. The order also requires CALSPro to maintain an antitrust compliance program.

The Commission vote to accept each consent agreement package containing the proposed consent orders for public comment and approving the Commission statement was 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 January 15, 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 paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. Comments can be filed electronically on the MTNA and CALSPRO matters.

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 FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Seeks Public Comment on IVeriFly, Inc., Proposal for Parental Verification Method Under COPPA Rule

The Federal Trade Commission is seeking public comment on a proposed verifiable parental consent method that IVeriFly, Inc., has submitted for Commission approval under the agency’s Children’s Online Privacy Protection Rule.

Under the rule, online sites and services directed at children must obtain permission from a child’s parents before collecting personal information from that child. The rule lays out a number of acceptable methods for gaining parental consent, but also includes a provision allowing interested parties to submit new verifiable parental consent methods to the Commission for approval.

In a Federal Register notice to be published shortly, the FTC is seeking public comment about the proposed IVeriFly verifiable parental consent method; whether the proposed method is already covered by the existing methods included in the rule and whether it meets the rule’s requirement that it be reasonably calculated to ensure that the person providing the consent is actually the child’s parent. The Commission also seeks comment on whether the program poses a risk to consumers’ information and whether that risk is outweighed by the benefits of the program. The comment period will last until Jan. 21, 2014.

NOTE: Publication of this Federal Register notice does not indicate Commission approval of the program. The Commission has 120 days to review proposed verifiable parental consent methods and must set forth its conclusions in writing.

Defendants in Two Financial Services Schemes Banned from Providing Mortgage and Debt Relief Services

The defendants in two separate alleged scams have settled charges with the Federal Trade Commission and will be banned from providing mortgage- and debt-relief services. The cases are part of the FTC’s continuing crackdown on scams targeting consumers in financial distress, including debt relief and credit repair scams, and mortgage relief scams.

American Mortgage Consulting Group; Home Guardian Management Solutions:

Last year, as part of the federal Distressed Homeowner Initiative, the FTC charged Mark Nagy Atalla and his companies, American Mortgage Consulting Group and Home Guardian Management Solutions, with offering false promises of mortgage-rate reductions to consumers trying to hold onto their homes. Under the settlement with the FTC, the defendants will surrender their assets and be banned from providing mortgage relief or debt relief services to consumers.

According to the FTC’s complaint, Atalla and his companies violated the FTC Act and the Mortgage Assistance Relief Services Rule (known as the MARS Rule or Regulation O) when they promised to substantially lower consumers’ monthly mortgage payments in exchange for an up-front fee ranging from $1,495 to $4,495. The FTC’s complaint alleged that in addition to misrepresenting the likelihood that consumers would obtain a mortgage modification, the defendants falsely represented that consumers who did not receive a modification would receive full refunds, falsely represented that they were affiliated with the U.S. government, and falsely claimed to provide legal representation to consumers. Also, in violation of the MARS Rule, the defendants allegedly told consumers to stop communicating with their lenders, and failed to make Rule-mandated disclosures intended to ensure that consumers understand transactions with mortgage-assistance relief service providers and their rights under the Rule. A federal judge granted the FTC’s request for a temporary restraining order and preliminary injunction, froze the defendants’ assets, and appointed a receiver to take over the companies.

Under the terms of the agreed-upon settlement, in addition to being banned from participating in the debt relief and mortgage relief industries, the defendants are prohibited from misrepresenting the features of any product or service, and making claims without competent and reliable evidence.

Also under the settlement, Atalla faces a $514,910 judgment, which will be suspended when he turns over various items of personal property and proceeds from the sale of other assets.

Southeast Trust, LLC:

The defendants in this case – Southeast Trust, LLC (formerly known as The Debt School, LLC, also doing business as Financial Freedom Credit Counseling) and the company’s principal, Paul A. Wexler – allegedly violated both the FTC Act and the agency’s Telemarketing Sales Rule by charging cash-strapped consumers hundreds of dollars based on misrepresentations that they could obtain credit card interest rates as low as zero percent. The operation also routinely called consumers on the Do Not Call Registry, according to the FTC.

Under the agreed-upon settlement, the defendants are banned from providing debt- and mortgage-relief services and from making robocalls and prohibited from calling consumers on the Do Not Call list.

The complaint alleged that the defendants claimed to be a non-profit group that targeted consumers with robocalls, and with ads on websites such as southeasttrust.com and thedebtschool.com. The defendants promised a single monthly payment, an interest rate ranging from zero percent to six percent, and that consumers would be debt free in three to five years.

The defendants are prohibited from collecting money from consumers who used their services, making unauthorized withdrawals from consumers’ bank accounts, misrepresenting the features and characteristics of financial or other types of products and services, and making unsupported claims about products and services. They also are required to keep any consumer information they have confidential, and destroy it promptly.

The order imposes a $2.7 million judgment against Wexler, which is suspended due to his inability to pay. If it is determined that the financial information the defendants gave the FTC was untruthful, the full amount of the judgment will become due.

For more information about how to handle robocalls and debt relief offers, see Robocalls and Settling Your Credit Card Debts. For more information about avoiding mortgage and foreclosure rescue scams see Homes and Mortgages. The Commission vote approving both proposed consent decrees was 4-0. The FTC filed the proposed consent decree for the American Mortgage Consulting Group and Home Guardian Management Solutions case in the U.S. District Court for the Central District of California Southern Division, and the court signed and entered it on September 23, 2013. The FTC filed the proposed consent decree for the Southeast Trust, LLC case in the U.S. District Court for the Southern District of Florida, and the court signed and entered it on September 23, 2013.

NOTE: Consent decrees have the force of law when approved and signed by the District Court judge.

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