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FTC Staff Advises Delaware Public Service Commission on Dynamic Pricing in Retail Electricity Markets

Federal Trade Commission staff submitted a response to a request from the Public Service Commission of the State of Delaware for comments on a proposal to revise its rules for certifying and regulating electricity suppliers.

The FTC staff comment encourages the Public Service Commission to consider the potential costs associated with a proposal to require electricity suppliers to give customers at least five days’ advance notice of price changes. The comment identifies alternatives to a five-day notice period that would provide consumers with the benefits of dynamic pricing via devices such as “smart meters” while assuring they have accurate and timely electricity price information.

The potential benefits of dynamic pricing include more accurate prices, more opportunities for customers to save on electric bills, and an increased ability for power system operators to maintain the reliability of electric service both locally and regionally.

Although price information is critical to the efficient functioning of markets, a five-day notice requirement would preclude some of the most beneficial variable price offers, from the perspectives of both retail electricity customers and power system operators. The comment states that “[o]ne alternative would be to include an exemption to give customers the option to use a device or service that displays the price on an ongoing basis, or issues alerts when the price is outside a range designated by the customer. Another alternative would be simply to replace the five-calendar-day advance notice with a requirement of one day’s notice, which would be a significant improvement over five days’ notice by allowing variable retail pricing based on the PJM Interconnection’s day-ahead market prices. If the PSC chooses to implement either of these alternatives to the five-day notice, it could also require special prominence for disclosures pertaining to price variability and early termination charges in residential retail electricity sales contracts involving variable rates.

The Commission vote approving the comment was 4-0. (FTC File No. V130011; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702.)

FTC Approves Final Consents Settling Charges That Mattress Sellers Lacked Scientific Evidence to Prove Products Were Free From Volatile Organic Compounds

Following a public comment period, the Federal Trade Commission has approved final consent orders in three cases involving allegedly deceptive environmental claims for mattresses. The FTC’s complaints, first announced in July, 2013, against Relief-Mart, Inc.; Esssentia Natural Memory Foam Company, Inc.; and Ecobaby Organics, Inc., charged the companies with making unsupported claims that the mattresses they sell are free of harmful volatile organic compounds (VOCs).

The FTC also charged that two of the companies made unsupported claims that their mattresses were chemical-free and odorless. The FTC also challenged one company’s claim that its mattresses are made from 100 percent natural materials, and another company’s claim that its mattresses were certified by an organic mattress organization.

In settling the Commission’s charges, the companies have agreed not to make similar claims in the future, unless they have competent and reliable scientific evidence to prove they are true. In addition, Ecobaby is barred from making misrepresentations about certifications.

The Commission vote to approve the final orders and, in the cases of Essentia and EcoBaby, to send letters to the public commenters, was 4-0. (FTC File Nos. 122-3128, Relief-Mart; 122-3129, Ecobaby Organics; 122-3130, Essentia Natural Memory Foam Company; the staff contact is Robin Moore, Bureau of Consumer Protection, 202-326-2167; see press release dated July 25, 2013)

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 Warns Consumers: Beware of Typhoon Haiyan Charity Scams

In the wake of the devastating typhoon that struck the Philippines, the Federal Trade Commission, the nation’s consumer protection agency, reminds consumers that scams often follow disasters. If you’re asked to make a charitable donation to help people in disaster-affected areas, before you give, be sure your donations are going to a reputable organization that will use the money as promised.

Unfortunately, legitimate charities face competition from scammers who either collect for a charity that doesn’t exist or aren’t honest about how their “charity” will use the money you give. Like legitimate charities, they might appeal for donations in person, by phone or mail, by e-mail, on websites, or on social networking sites. For more on the questions to ask and for a list of groups that can help you research a charity, go to Charity Scams.

If you’re asked to make a charitable donation to support victims of the typhoon, remember:

Donate to charities you know and trust. Be alert for charities that seem to have sprung up overnight in connection with current events, like a natural disaster.
Ask if a caller is a paid fundraiser, who they work for, and what percentage of your donation goes to the charity and to the fundraiser. If you don’t get a clear answer — or if you don’t like the answer you get — consider donating to a different organization.

Read the FTC’s How to Help Victims of Typhoon Haiyan in the Philippines, also available in Tagalog, Paano Matutulungan ang mga Biktima ng Typhoon Haiyan (Yolanda) sa Pilipinas.

FTC Denies AssertID’s Application for Proposed COPPA Verifiable Parental Consent Method

The Federal Trade Commission has denied an application seeking approval of a proposed verifiable parental consent method submitted by AssertID, Inc., under the agency’s Children’s Online Privacy Protection (COPPA) Rule.

In a letter to AssertID, the Commission noted that the company’s proposal failed to provide sufficient evidence that its method would meet the requirements set out under the rule. Specifically, the Commission noted that there was not yet adequate research or market testing to show the effectiveness of the AssertID “social-graph verification” method.

Under the COPPA rule, covered online sites and services must obtain verifiable parental consent before collecting personal information from children under 13. The rule lays out a number of acceptable methods for gaining parental consent, but also allows interested parties to seek FTC approval of new verifiable parental consent methods.

The Commission vote to deny the application was 4-0.

FTC Announces Agenda, Panelists for Upcoming Internet of Things Workshop

AGENDA 8:30 Opening Remarks
Edith Ramirez, Chairwoman, Federal Trade Commission 8:45 “What Is The Internet of Things?”
Keith Marzullo, Ph.D., Director, Division of Computer and Network Systems, Directorate of Computer & Information Sciences & Engineering, National Science Foundation 9:10 Contextual Privacy
Carolyn Nguyen, Ph.D., Director, Technology Policy Group, Microsoft Corp. 9:30 Panel One: The Smart Home
Moderators: Mark Eichorn, Assistant Director, FTC Division of Privacy and Identity Protection Ruth Yodaiken, Senior Attorney, FTC Division Privacy and Identity Protection

Panelists: Michael Beyerle, Marketing Manager, Innovation, GE Appliances Jeff Hagins, co-Founder and CEO, SmartThings Craig Hefner, Vulnerability Researcher, Tactical Network Solutions Eric Lightner, Director, Federal Smart Grid Task Force, Department of Energy Lee Tien, Senior Staff Attorney, Electronic Frontier Foundation

11:00 Keynote Speaker
Vint Cerf, Vice President and Chief Internet Evangelist, Google 11:45 Lunch 1:00 Remarks
Maureen K. Ohlhausen, Commissioner, Federal Trade Commission 1:15 Panel Two: Connected Health and Fitness
Moderators: Kristen Anderson, Staff Attorney, FTC Division of Privacy and Identity Protection Cora Tung Han, Senior Attorney, FTC Division of Privacy and Identity Protection

Panelists: Stan Crosley, Director, Center for Law, Ethics and Applied Research in Health Information, Indiana University Jospeh Lorenzo Hall, Chief Technologist, Center for Democracy & Technology Anand Iyer, President and COO, WellDoc Communications, Inc. Scott Peppet, Professor, University of Colorado School of Law Jay Radcliffe, Senior Security Specialist, InGuardians, Inc.

2:45 Panel Three: Connected Cars
Moderator: Lerone D. Banks, Technologist, FTC Division of Privacy and Identity Protection Karen Jagielski, Senior Attorney, FTC Division of Privacy and Identity Protection

Panelists: Todayashi Kohno, Associate Professor, Computer Science and Engineering, University of Washington John Nielson, Managing Director, Automotive Engineering and Repair, American Automobile Association Kenneth Wayne Powell, General Manager and Senior Executive Engineer of Electrical Systems, Toyota Technical Center Christopher Wolf, Founder and co-Chair, Future of Privacy Forum

3:45 Panel Four: Privacy and Security in a Connected World
Moderator: Maneesha Mithal, Associate Director, FTC Division of Privacy and Identity Protection Ben Davidson, Staff Attorney, FTC Division of Marketing Practices

Panelists: Ryan Calo, Assistant Professor, University of Washington School of Law Dan Caprio, Senior Strategic Advisor and Independent Consultant, McKenna Long & Aldrige, LLC Michelle Chibba, Director, Policy and Special Projects, Office of the Information and Privacy Commissioner of Ontario T. Drew Hickerson, Assistant General Counsel and Senior Director of Business Development, Happtique Marc Rogers, Principal Security Researcher, Lookout, Inc.

5:15 Closing Remarks
Jessica Rich, Director, FTC Bureau of Consumer Protection

FTC to Host Workshop on the Competitive Impacts of State Regulations and Naming Conventions Concerning Follow-on Biologics

The Federal Trade Commission will host a one-day public workshop on December 10, 2013, at its headquarters in Washington, DC, to examine competition issues surrounding biologic and follow-on biologic medications. As explained in the Commission’s Federal Register notice, the workshop will specifically focus on how state regulations and naming conventions may impact the development of, and competition for, follow-on biologics.

This workshop reflects the Commission’s longstanding interest in promoting competition in the pharmaceutical industry. Competition between “small molecule” branded drugs and lower-priced generic alternatives, facilitated by state automatic substitution laws, has substantially reduced prescription drug prices and expenditures. In 2010, to encourage price competition and innovation in markets for biologics, Congress passed the Biologics Price Competition and Innovation Act (BPCIA), which established an abbreviated regulatory pathway for the approval of follow-on biologics by the U.S. Food and Drug Administration (FDA).

Biologics, which comprise the fastest-growing sector of pharmaceuticals, target such difficult-to-treat diseases as cancer, diabetes, and multiple sclerosis. They include vaccines, antitoxins, blood products, proteins, and monoclonal antibodies. Biologic medicines consist of molecules that typically are larger and more structurally complex than those of traditional small molecule drugs. Biologic medicines are very expensive; one year of treatment can range from $50,000 to $250,000, and access to biologics is often restricted because of cost.

Although to date, the FDA has not approved any follow-on biologic that might compete against a “reference” biologic, some state legislatures have recently considered and passed laws that could affect the substitution of follow-on biologics for reference biologics. Some commenters have raised concerns that state-level regulatory barriers may raise costs and lessen incentives to develop lower cost follow-on biologics, thus deterring the development of competition between reference and follow-on biologics.

The FTC’s workshop will examine how biologic competition could be affected by state regulation, and also by the naming conventions currently under discussion for follow-on biologics. It also will examine ways to structure the regulations and naming conventions so as to facilitate innovation and competition, while protecting patient health and safety. The workshop will explore if and when potential entrants would be willing to invest in developing follow-on biologics using the abbreviated regulatory pathway created by the BCPIA, as well as the experience of other countries with regulatory systems that enable follow-on biologic competition.

Questions the FTC will address include:

How would the new state follow-on biologic substitution laws passed this year, or similar proposals pending in other states, affect the competition expected between or among biosimilar, interchangeable and reference biologic medicines?
What are the rationales behind new state proposals and laws for regulating follow-on biologic substitution?
What are the compliance costs associated with the new state requirements, and how are they likely to affect follow-on biologic competition?
Would it benefit competition if the FDA published an authoritative listing of follow-on biologics that are biosimilar to, or interchangeable with, reference biologics? Would such a publication facilitate substitution?

The workshop is free and open to the public. It will be webcast on the FTC’s site. In the near future, the Commission will publish an agenda and list of speakers on the event’s webpage. The FTC is accepting public comments through March 1, 2014.

Reasonable accommodations for people with disabilities who wish to attend the workshop in person are available upon request. Requests should be submitted via email to [email protected] or by calling Lara Busby at 202-326-3388. Requests should be made in advance. Please include a detailed description of the accommodation needed and provide contact information. Directions to FTC headquarters can be found on the Commission’s website. Pre-registration is not required.

The Commission vote approving the notice announcing the workshop was 4-0. The notice is available as a link to this press release and will be published in the Federal Register shortly.

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 Approves Changes to Vocational Schools Guides

The Federal Trade Commission revised its Vocational School Guides, which advise against deceptive marketing practices by businesses that offer vocational training.

Created in 1972, the Vocational School Guides (formally known as Guides for Private Vocational and Distance Education Schools) address misrepresenting accreditation, the transferability of credit to other schools, government or employment agency affiliation, and testimonials or endorsements. They also warn against misrepresenting teacher or enrollment qualifications, the nature of courses, the availability of financial aid, and the availability of jobs for graduates. In addition, the Guides address the use of deceptive diplomas or certificates, and placing classified ads that appear to be “help wanted” ads.

In 2009, the FTC sought public comment on the Guides as part of its systematic review of all current FTC rules and guides. In response to those comments, the FTC has amended the Guides to address more specifically misrepresentations:

commonly used in recruitment, including those regarding completion/dropout rates and post-graduation job prospects;
about whether completion of a program will qualify students to take a licensing exam;
concerning a student’s score on an admissions test, how long it takes to complete a course or program, or a student’s likelihood of success; and
regarding the likelihood of financial aid or help with language barriers or learning disabilities, or how much credit students will receive for courses completed elsewhere.

Students interested in pursuing training through a vocational school should review the FTC’s advice in Choosing a Vocational School.

The Commission vote approving the Federal Register Notice announcing retention of the Guides with amendments was 4-0.

FTC Finalizes Amendments to the Premerger Notification Rules Related to the Transfer of Exclusive Patent Rights in the Pharmaceutical Industry

The Federal Trade Commission issued final changes to the premerger notification rules that require companies in the pharmaceutical industry to report certain proposed acquisitions of exclusive patent rights to the FTC and the Department of Justice for antitrust review. The revised rules clarify when a transfer of exclusive rights to a patent in the pharmaceutical industry results in a potentially reportable asset acquisition under the Hart Scott Rodino (HSR) Act.

The HSR Act established the federal premerger notification program, which provides the FTC and the Department of Justice with information about certain large mergers and acquisitions before they occur. The FTC administers the premerger notification program and ensures compliance with the HSR Rules, which determine which transactions companies need to report. The revised rules will enhance the effectiveness of the agencies’ premerger program.

The FTC worked closely with the Department of Justice in developing the new requirements, and the Assistant Attorney General of the Antitrust Division of the Department of Justice concurs in the final rules. The FTC received three public comments in response to the Notice of Proposed Rulemaking. The rules will become effective 30 days after publication in the Federal Register.

The Commission vote approving the changes was 4-0. The Federal Register Notice is available now on the FTC’s website and will be published in the Federal Register soon. (FTC File No. P98316, the staff contact is Robert Jones, Bureau of Competition, 202-326-2740.)

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 [email protected], or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20580. 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 Closes Seven-month Investigation of Proposed Office Depot/OfficeMax Merger

The Federal Trade Commission has unanimously voted to close its seven-month investigation into the proposed $1.2 billion merger of office supply superstores Office Depot, Inc. and OfficeMax, Inc. and has issued a Commission statement detailing the basis for its decision.

While the FTC successfully challenged the proposed merger of office supply superstores Staples, Inc., and Office Depot in 1997, the Commission observes in today’s statement that its investigation, “has shown that the market for the sale of consumable office supplies has changed significantly in the intervening years.” As a result, office supply superstores “today face significant competition and . . . the proposed merger is unlikely to substantially lessen competition in the retail sale of consumable office supplies.”

The Commission’s statement describes differences in the competition faced by office supply superstores in 1997 and today. It states that customers now look beyond office supply superstores when buying office supplies. Non-office supply superstores such as Wal-Mart and Target, along with club stores like Costco and Sam’s Club, have expanded their office supply product offerings and now compete with office supply superstores. Additionally, Internet retailers of office supplies, most prominently Amazon, have grown quickly and significantly, and compete with office supply superstores.

The Commission statement also discusses the potential impact of the proposed merger on the sale of consumable office supplies to large businesses and other large customers on a contract basis, a market not at issue in 1997. In particular, staff’s investigation focused on contracts for large multi-regional or national customers, which typically have the most demanding purchasing requirements and, as a result, fewer potential suppliers capable of meeting their needs. Based on the evidence collected, the Commission concluded that the merger was unlikely to substantially lessen competition in the contract channel, and, “there was little concern from contract customers about the proposed merger.”

The vote to close the FTC’s investigation and issue a Commission statement was 4-0.

FTC Poses Eight Questions to Ask When Choosing a College After Military Service

The Federal Trade Commission is advising servicemembers, veterans, and their families that some for-profit schools may be more interested in gaining access to their post 9/11 GI Bill benefits than helping them fulfill their education goals. To help servicemembers identify a school that will meet their needs as they transition to student status, the FTC released a new tip sheet.

The guidance, 8 Questions to Ask When Choosing a College, encourages servicemembers, veterans and their families to carefully assess the schools they’re interested in attending, whether working toward a certificate or a higher degree. Using words such as “veteran” or “military-approved” may not necessarily equate to better education and support.

“We want to help students evaluate their options and spend their education dollars wisely,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Knowing the right questions to ask can help students and their family members avoid some unnecessary pitfalls as they pick the program that’s right for them.”

According to the FTC, some for-profit schools may stretch the truth to encourage enrollment, either by exerting pressure on servicemembers to sign up for unnecessary courses or to take out loans that might be a challenge to pay off. The agency’s tip sheet steers applicants to the Department of Education’s College Navigator to get information about a school’s for-profit or non-profit status.

When looking at educational opportunities, the FTC said students should find out the total cost of attending a school, and plan for expenses that may not be covered by their veterans’ benefits. Of the recent graduates who borrowed money to attend the school, what percentage is delinquent in paying back those loans? Students should specifically ask about how the education and training can lead to job opportunities after graduation, and ask the school to support what it says in writing. Will a degree from this school get the student where they want to go? What percentage of students graduate?

Students also should ask if the school is committed to helping veterans. If so, how? What campus support is available specifically for veterans for academic, career, housing, and medical? Can they get credit for their military training?

Additional questions to ask of a school include: Is the school accredited? Will credits transfer to another school? Is there pressure to enroll?

Anyone who encounters a school that has not lived up to their promises should file a complaint with the FTC.

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