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Statement of FTC Chairman Jon Leibowitz on the U.S. Supreme Court Ruling in Favor of the Commission in the Phoebe Putney/Palmyra Park Hospital Case

Federal Trade Commission Chairman Jon Leibowitz issued the following statement concerning today’s unanimous ruling by the U.S. Supreme Court on Phoebe Putney Health System’s acquisition of Palmyra Park Hospital in Albany, Georgia. The Court decided that the state action doctrine did not immunize the hospital acquisition from the federal antitrust laws.

“Today’s ruling is a big victory for consumers who want to see lower health care costs, and the Court’s opinion will ensure competition in a variety of other industries, as well.”

On April 20, 2011, the FTC filed a complaint in federal district court against Phoebe Putney’s acquisition of Palmyra, seeking to block the proposed combination of the only two hospitals in Albany. The Commission alleged that the deal would reduce competition significantly and allow the combined Phoebe/Palmyra to raise prices for general acute-care hospital services charged to commercial health plans, harming patients and local employers and employees. On June 27, 2011, the U.S. District Court for the Middle District of Georgia, Albany Division, dismissed the FTC’s complaint and denied its motion for a preliminary injunction to stop the deal from going forward.

The FTC appealed the district court decision to the U.S. Court of Appeals for the 11th Circuit, which affirmed the judgment of the district court on December 9, 2011. On March 23, 2012, the Commission authorized the staff to request that the Solicitor General file a petition for certiorari with the Supreme Court, which subsequently agreed to hear the case.

The FTC currently has another case pending before the Supreme Court concerning an alleged anticompetitive pay-for-delay agreement involving the testosterone replacement drug AndroGel.

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 Sends Refunds from Scheme That Allegedly Sold Bogus Plans to Lower Credit Card Interest Rate

The Federal Trade Commission mailed 330 refund checks to consumers who allegedly were duped by marketers using illegal robocalls to deceptively claim they could reduce consumers’ credit card interest rates. Under settlements entered by the court in 2011 as part of the FTC’s ongoing efforts to protect consumers in financial distress, the Dynamic Financial Group defendants were banned from selling debt relief services.

Nearly $350,000 is being returned to consumers; payments will be 100 percent of their loss. Consumers who receive the checks from the FTC’s refund administrator should cash them on or before April 16, 2013. The FTC never requires consumers to pay money or provide information before refund checks can be cashed. Those with questions should call the refund administrator, Gilardi & Co., LLC, at 1-888-211-7714, or visit www.FTC.gov/refunds.

FTC To Host Workshop Examining the Effects of Identity Theft on Older Americans

The Federal Trade Commission will host a one-day workshop on May 7, 2013, exploring how identity theft impacts older Americans. Seniors are particularly vulnerable to identity theft because they tend to have more assets and readily available cash than others. Identity thieves may also view seniors as attractive targets based on their belief that they may be more trusting or easier to exploit.

Given the serious and widespread harm caused by identity theft, the FTC has devoted significant resources towards combating the problem, acting on three main fronts: aggressively enforcing the law, serving as a clearinghouse for identity theft complaints, and educating consumers and businesses about identity theft.

The workshop, coinciding with Older Americans Month, will provide a forum for public-sector, private-sector, and consumer representatives to discuss and examine ways to inform and empower seniors and their caregivers on protecting personal information and resolving identity theft matters. The workshop is free and open to the public.
Topics may include:

A discussion of medical identity theft and why seniors are vulnerable on this front;
An analysis of how seniors might be impacted by tax and government benefits-related identity theft and how to safeguard their identity in light of the movement of government benefits away from paper;
An exploration of how older consumers are susceptible to identity theft in nursing home settings and assisted living situations, and how to minimize their exposure; and
Practical ideas for outreach to older consumers; examine how educational messages can best be conveyed, and who effective messengers might be.

Entities and organizations may submit requests to participate as panelists and may recommend topics for inclusion on the agenda. The requests and recommendations can be submitted electronically to [email protected]. Paper submissions should be mailed or delivered to: 600 Pennsylvania Avenue N.W., Room H-113 (Annex B), Washington, DC 20580. Prospective panelists should submit a statement detailing their expertise on the issues to be addressed and contact information no later than April 5, 2013. Panelists will be selected based on expertise and the need to include a broad range of views.

The workshop will be held at the FTC’s satellite building conference center, 601 New Jersey Avenue, N.W., Washington, D.C.

FTC Staff Advises Oklahoma Physician Hospital Organization That it Will Not Recommend Antitrust Challenge to Proposed Formation of Clinically Integrated Multi-provider Network

The Federal Trade Commission’s Bureau of Competition has advised the Norman Physician Hospital Organization (Norman PHO) that staff has no present intention to recommend that the FTC challenge its proposed formation or operation of a clinically integrated health care network. Based on Norman PHO’s representations, staff concluded that the network’s proposed activities “appear unlikely to unreasonably restrain trade.”

Norman PHO requested the advisory opinion concerning its proposal to offer clinically integrated services as a way to achieve improved quality of care, reduced costs, and increased patient satisfaction. The network includes approximately 280 participating physicians and the hospitals in the Norman Regional Health System.

The proposal contemplates horizontal combinations or pricing agreements only in the provision of physician services. The network’s “operations will not involve horizontal agreements among competing providers of inpatient hospital services, or outpatient hospital and ambulatory care services, because Norman Regional Health System is the only provider of such services that will participate in the network.”

To implement its clinical integration program, Norman PHO has created a new organizational structure under which its participating physicians are actively engaged in a wide array of collaborative clinical activities, including developing clinical practice guidelines and physician performance measures, conducting peer review and corrective action processes, and designing and implementing quality improvement initiatives.

The staff opinion letter was signed by Markus H. Meier, Assistant Director in charge of the Health Care Division of the FTC’s Bureau of Competition. It concludes that the “proposed clinical integration program offers the potential to create a high degree of interdependence and cooperation among its participating physicians and to generate significant efficiencies in the provision of physician services.” The letter also states that “Norman PHO’s proposed joint contracting appears to be subordinate to the network’s effort to improve efficiency and quality through the clinical integration of its participating physicians.” Therefore, FTC staff determined that the proposed joint pricing and contracting activities qualify for rule-of-reason analysis, rather than being subject to a per se bar under the antitrust laws.

Although a market analysis was not performed, the letter notes that Norman PHO appears to have the potential to exercise market power in the sale of its services. Concerns about market power, however, are mitigated by Norman PHO’s representations that it will not attempt to force payers to contract with it, and payers who do not want to contract with the network for any reason may bypass the network and contract individually with the participating providers, either directly or through other networks, and without interference from Norman PHO.

The letter concludes that Norman PHO’s proposed program “appears likely, on balance, to be pro-competitive or competitively neutral” and staff has no present intention to recommend an enforcement action. The letter, however, cautions that “staff’s current enforcement view likely would change to the extent that, for whatever reason, Norman PHO’s actual operations deviate substantially from its proposal . . . or otherwise prove to have anticompetitive effects.”

NOTE: The letter sets out the views of the staff of the FTC’s Bureau of Competition, as authorized by the Commission’s Rules of Practice. It has not been reviewed or approved by the Commission. As the Commission’s Rules explain, the staff’s advice is rendered “without prejudice to the right of the Commission later to rescind the advice and, where appropriate, to commence an enforcement proceeding.”

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 Continues Vigorous Enforcement of Fair Debt Collection Practices Act

Over the last year, the Federal Trade Commission has continued vigorously enforcing the Fair Debt Collection Practices Act by bringing or resolving seven debt collection cases, according to the agency’s annual letter to the Consumer Financial Protection Bureau. The FTC shares federal jurisdiction for enforcing the act with the CFPB.

Besides enforcement, the FTC’s debt collection program includes education and public outreach, as well as research and policy initiatives.

“The FTC remains vigilant in taking action against debt collectors who use illegal methods when collecting from consumers,” said Charles Harwood, Acting Director of the agency’s Bureau of Consumer Protection.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB is required to submit annual reports to Congress on the Fair Debt Collection Practices Act, a task previously assigned to the FTC. The CFPB’s second report is due on March 20, 2013, and to assist the CFPB in preparing its report, the FTC’s letter summarizes its own recent work on debt collection issues.

In the last 12 months, the FTC brought or resolved cases against four operations that allegedly used deceptive or abusive tactics to intimidate consumers, and against three so-called “phantom debt” collectors who allegedly attempted to collect on non-existent debts or debts not owed to them.

Defendants in the Forensic Case Management Services, Inc. case, who did business as Rumson, Bolling & Associates, settled charges with an order banning them from future debt collection activity. They allegedly threatened bodily harm to consumers, desecration of their deceased family members, and death to their pets if they did not pay. They also allegedly retained more fees from their clients than they had agreed to take. The Commission will collect more than $1.1 million.
In the Luebke Baker case, the FTC settled with defendants that allegedly masked their identities using caller ID, falsely told consumers that magazine debts are exempt from statutes of limitations, and illegally threatened to garnish wages, among other violations of federal law.
In the Goldman Schwartz case, the defendants’ allegedly illegal behavior included using insults, lies, false threats of imprisonment, and false claims of affiliations with attorneys and law firms, as well as charging unauthorized late fees and attorneys’ fees. Litigation continues.
In AMG Services, Inc., the FTC alleged that a payday lender collecting on its own behalf charged inflated fees and made false threats that it would have consumers arrested, prosecuted, or imprisoned for failing to pay. Litigation continues.

The FTC’s three “phantom debt” cases included American Credit Crunchers, Pro Credit Group, LLC, and Broadway Global Master. In each case, the defendants allegedly worked closely with overseas call centers; engaged in a scheme to defraud consumers, often for payday loans; and collected money that either wasn’t owed, or was never applied to the consumers’ actual debts. The American Credit Crunchers defendants were required to turn over approximately $170,000. Litigation in the other two cases continues.

In other enforcement activities, the FTC joined the Consumer Financial Protection Bureau and the Department of Justice in filing an amicus brief in the U.S. Supreme Court that argues that consumers who file good-faith lawsuits against debt collectors for alleged violations of the Fair Debt Collection Practices Act are not required to pay prevailing defendants’ litigation costs.

The FTC also closed an investigation of debt collector RJM Acquisitions, which was collecting on debt that was too old to be legally enforceable. The agency closed the investigation after the company began providing a disclosure to its collection letters so consumers would not take away the impression that they could be sued on the debt.

The letter to the CFPB also references the FTC’s consumer education work in debt collection, including launching two consumer-oriented websites in English and Spanish: consumer.ftc.gov and consumer.gov. This work also includes regular meetings with legal service providers such as the National Association for Consumer Advocates.

The FTC’s research and policy activities include the agency’s recently announced debt buyer study, The Structure and Practices of the Debt Buying Industry.

The Commission vote approving the letter was 5-0.

Identity Theft/Tax Fraud Focus of February 20 Town Hall Hosted by FTC and Florida Attorney General in Boca Raton

The Federal Trade Commission and the Florida Attorney General’s Office will host a town hall on identity theft and tax fraud on Wednesday, February 20, 2013, in Boca Raton, Florida.

To help address the growing problem of tax-related fraud, including the use of stolen Social Security numbers to get tax refunds, the Identity Theft/Tax Fraud Town Hall will cover how it occurs, law enforcement efforts, and how consumers can prevent identity theft or respond if it happens.

Participants will include Congressman Ted Deutch, FTC Southeast Region Director Cindy Liebes, and Richard Lawson, Director of the Florida Attorney General Office’s Consumer Protection Division, as well as other state and federal law enforcement officials, and consumer advocates.

The event will be held from 9 a.m. until noon in the Boca Raton Police Department Training Center, 6500 Congress Avenue. It is free and open to the public. No pre-registration is necessary.

To learn more about avoiding and responding to identity theft and tax fraud, visit the FTC’s Identity Theft website (Robo de Identidad), Florida Attorney General’s Office, Internal Revenue Service, U.S. Postal Inspection Service, U.S. Sen. Bill Nelson, U.S. Rep. Ted Deutch, and AARP.

FTC Approves Final Order Settling Charges of Anticompetitive Conduct Against IDEXX Laboratories, Inc.

Following a public comment period, the Federal Trade Commission has approved a final order settling charges that IDEXX Laboratories, Inc., the largest U.S. supplier of diagnostic testing products used by small animal veterinarians, acted anticompetitively by engaging in exclusive dealing arrangements with all three national distributors and two large regional distributors. In settling the FTC’s complaint, IDEXX agreed to an order that prohibits it from entering into concurrent exclusive distribution arrangements with all three national distributors of point-of-care diagnostic testing products. IDEXX now distributes non-exclusively through MWI Veterinary Supply, Inc.

The Commission vote approving the final order and a letter to a member of the public who commented on it was 3-0-2, with Commissioner Maureen K. Ohlhausen abstaining and Commissioner Joshua D. Wright not participating. (FTC File No. 101-0023; the staff contact is Lisa Kopchik, Bureau of Competition, 202-326-3139; see press release dated December 21, 2012.)

FTC Approves Modified Final Order Settling Charges against Marketer of Four Loko Malt Beverage

Following a public comment period, the Federal Trade Commission has finalized a modified Order settling charges against Phusion Projects, LLC, and its principals for falsely claiming that a 23.5-ounce can of Four Loko contains the alcohol equivalent of one or two regular 12-ounce beers, and that a consumer could drink one entire can safely on a single occasion.

Under the modified final Order, Phusion Projects is required to seek approval from the U.S. Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau (“TTB”) to put an Alcohol Facts panel on containers of Four Loko or any other flavored malt beverage containing more than two servings of alcohol, as defined by the U.S. Dietary Guidelines. This Alcohol Facts disclosure is truthful and non-misleading, and together with the other relief provided in the order, corrects the deception alleged in the complaint. The Alcohol Facts panel sets forth the container size, percentage alcohol by volume, number of servings in the container, and serving size in fluid ounces. It also contains the statement, “According to the U.S. Dietary Guidelines, a serving contains 0.6 ounces of pure alcohol.” Upon receipt of TTB approval, Phusion has 90 days to place the Alcohol Facts panel on its products.

The order also requires that all of Phusion’s flavored malt beverages containing more than two and a half servings of alcohol be made resealable within six months.

The original proposed order against Phusion Projects LLC and principals Jaisen Freeman, Christopher Hunter, and Jeffrey Wright was accepted for public comment on October 3, 2011. The FTC received more than 250 public comments about that proposal. The final Order, which was modified in response to comments received, differs from the proposed order in these respects:

The final order requires that all of Phusion’s flavored malt beverages containing more than two servings of alcohol include disclosures, whereas the proposed order required disclosures on products with more than two and a half servings.
The modified final Order requires a back-of-can “Alcohol Facts” panel, subject to TTB approval, whereas the proposed order required a front-of-can disclosure comparing the amount of alcohol in Four Loko to the amount in regular beers.

The agency’s response to the commenters notes that it does not have jurisdiction to ban Four Loko, or force the company to limit its size or alcohol content.

The Commission vote approving the final Order was 3-0-2, with Chairman Jon Leibowitz and Commissioner Joshua D. Wright not participating.

(File No. 1123084; the staff contact is Janet Evans, Bureau of Consumer Protection, 202-326-2125.)

FTC Extends Deadline for Comments on its Review of Fred Meyer Guides

The Federal Trade Commission has reopened and extended the deadline for the public to submit comments to aid in its review of the guidance it gives manufacturers and wholesalers as to how they can provide advertising allowances and other promotional payments and services to retailers without running afoul of the Robinson-Patman Act. At the request of stakeholders, the deadline to submit comments will be extended from January 29 until March 4, 2013.

In November 2012, the FTC announced it was seeking public comments on its review and possible revision of the Guides, which are known as the “Fred Meyer Guides.” The Robinson-Patman Act prohibits anticompetitive price discrimination and certain other kinds of business discrimination. The Guides explain how suppliers can avoid unlawful discrimination under the Act by providing their advertising allowances and other promotional allowances and services to retailers on “proportionally equal terms.”

The Commission vote to reopen and extend the deadline was 4-0-1, with Chairman Jon Leibowitz not participating. Public comments can be submitted online or in paper form. Instructions for submitting comments in paper form can be found in the Federal Register notice. All public comments received will be posted on the FTC’s website.

In FTC Study, Five Percent of Consumers Had Errors on Their Credit Reports That Could Result in Less Favorable Terms for Loans

A Federal Trade Commission study of the U.S. credit reporting industry found that five percent of consumers had errors on one of their three major credit reports that could lead to them paying more for products such as auto loans and insurance.

Overall, the congressionally mandated study on credit report accuracy found that one in five consumers had an error on at least one of their three credit reports.

“These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”

The study, in which participants were encouraged to use the Fair Credit Reporting Act (FCRA) process to resolve any potential credit report errors, also found that:

One in four consumers identified errors on their credit reports that might affect their credit scores;
One in five consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed, on at least one of their three credit reports;
Four out of five consumers who filed disputes experienced some modification to their credit report;
Slightly more than one in 10 consumers saw a change in their credit score after the CRAs modified errors on their credit report; and
Approximately one in 20 consumers had a maximum score change of more than 25 points and only one in 250 consumers had a maximum score change of more than 100 points.

Other study results can be found in the executive summary of the report.

“Your credit report has information about your finances and your bill-paying history, so it’s important to make sure it’s accurate,” said Charles Harwood, Acting Director of the FTC’s Bureau of Consumer Protection. “The good news for consumers is that credit reports are free through annualcreditreport.com, and if you find an error, you can work with the credit reporting company to fix it.”

About the Study

The FTC report is the first major study that looks at all the primary groups that participate in the credit reporting and scoring process: consumers; lenders/data furnishers (which include creditors, lenders, debt collection agencies, and the court system); the Fair Isaac Corporation, which develops FICO credit scores; and the national credit reporting agencies (CRAs). It is based on work with 1,001 participants who reviewed 2,968 credit reports with a study associate who helped them identify and correct possible errors on their credit reports.

Consumers in the study were selected to match the demographic and credit score information of the general public, and participants were encouraged to dispute errors that could affect their credit standing. Credit reports with potential errors identified by study participants were sent to Fair Isaac (FICO) for rescoring.

After completing the FCRA dispute process, study participants were provided with new credit reports and credit scores. The original reports were then compared with the new reports. If any modifications were made as a result of the disputes, the impact of errors on the consumer’s credit score was determined.

Congress directed the FTC to conduct a study of credit report accuracy and provide interim reports every two years, starting in 2004 and continuing through 2012, with a final report in 2014. The reports are being produced under Section 319 of the Fair and Accurate Credit Transactions Act, or FACT Act.

Information for Consumers

The FTC has a wide range of general information for consumers on credit reporting issues, including Free Credit Reports, Disputing Errors on Credit Reports, and Your Source for a Truly Free Credit Report? AnnualCreditReport.com, as well as a new consumer blog posted titled It Pays to Check Your Credit Report.

It also has information available on how credit scores affect the price of credit and insurance and what consumers need to know about their credit reports when looking for a job. Finally, the FTC has a video for consumers on how to get a free credit report.

The Commission vote authorizing the staff to issue the report to Congress was 5-0, with former Commissioner J. Thomas Rosch participating. It is the fifth interim report to Congress describing the progress the agency has made on a national study examining the accuracy of credit reports.

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