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FTC Urges Congress to Reauthorize SAFE WEB Act

The Federal Trade Commission today told a House Energy & Commerce Subcommittee that the U.S. SAFE WEB Act has enhanced the FTC’s ability to protect American consumers from cross-border fraud, and urged lawmakers to reauthorize the Act, which is due to expire in 2013.

Delivering Commission testimony before the Subcommittee on Commerce, Manufacturing, and Trade, Hugh Stevenson, Deputy Director for International Consumer Protection, said the agency has conducted more than 100 investigations with international components, such as foreign targets, evidence, or assets, and has filed more than 50 cases involving cross-border aspects since the Act’s passage. The FTC has used the Act’s provisions in many of these matters, and in related actions brought by other U.S. and foreign enforcement agencies. With these tools, the testimony states, the agency has stopped frauds costing American consumers hundreds of millions of dollars.

“To continue to protect American consumers in a global economy, the FTC believes it is critical that Congress reauthorize the law enforcement tools provided by the U.S. SAFE WEB Act,” the testimony states.

The Act, also known as the Undertaking Spam, Spyware, and Fraud Enforcement with Enforcers Beyond Borders Act of 2006, provided the FTC with cross-border enforcement tools in four key areas: information sharing, investigative assistance, cross-border jurisdictional authority and enforcement relationships, the testimony states. Congress included a seven-year sunset provision in SAFE WEB when it was enacted.

“The FTC has put these tools to good use in its international consumer protection work,” the testimony states. The Act is “key to strengthening a culture of mutual assistance that enables law enforcers to achieve greater results working together than they ever could alone.”

According to the testimony, under the SAFE WEB Act, the FTC also has provided evidence in response to 63 information-sharing requests to 17 foreign law enforcement agencies in nine countries in response to requests for information, as of mid-2012. It has issued 52 civil investigative demands – similar to subpoenas – on behalf of nine agencies in five countries, relying on the Act.

Statistics from Consumer Sentinel, the consumer complaint database maintained by the FTC, suggest the seriousness of the cross-border fraud problem, the testimony states. For example:

Between 2006 and 2011, almost half a million U.S. consumers (471,014) complained about transactions involving over $1.4 billion paid to businesses in other countries.
The number of U.S. consumer complaints against foreign businesses exceeded 100,000 in 2011 alone.
Cross-border complaints have accounted for more than 10% of all Consumer Sentinel fraud complaints every year since 2000, with a high of 22% in 2006 and 13% for each of the last three years. These numbers likely understate the scope of the problem, as this complaint count includes only those instances where consumers report a foreign address.
U.S. consumers complain about foreign businesses from an increasingly broad range of countries. In 2002 over 55% of such complaints were about Canadian businesses; in 2011 over 85% were about businesses in other foreign countries.

The testimony states that the Internet has facilitated scams that often reach across national boundaries, such as pyramid schemes, advance-fee loan scams, bogus foreign lotteries, and sweepstakes schemes. “The challenges for the FTC and other law enforcers have included the global reach and speed of the Internet; the ability of scammers to cloak themselves in anonymity, the ease of moving ill-gotten gains to offshore asset havens, and the roadblocks to information sharing and cooperation created by national laws and borders.”

As a result, the FTC strongly recommended that Congress adopt the SAFE WEB Act of 2006, and now supports the Act’s reauthorization.

The Commission vote authorizing the testimony was 5-0.

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 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 Testimony Expresses Concern that Owners of “Standard-Essential” Patents May Obtain Injunctions Enabling Them to Hold Up Other Firms

The Federal Trade Commission expressed concern to Congress about the prospect that companies that own “standard-essential” patents which are subject to commitments to license on reasonable and non-discriminatory terms may be able to “hold up” other firms by obtaining an injunction or exclusion order blocking those firms’ products from the U.S. market.

In Commission testimony delivered before the Senate Judiciary Committee, Commissioner Edith Ramirez discussed the potential negative impact on competition and innovation if owners of standard-essential patents can threaten to obtain injunctive relief by either a federal court or the U.S. International Trade Commission (ITC). “Simply put, the FTC is concerned that a patent holder may use the threat of an ITC exclusion order, or an injunction issued in district court, to ‘hold-up’ or demand higher royalties or other more costly licensing terms after the standard is implemented than could have been obtained before its [intellectual property] was included in the standard,” the testimony states.

The ITC is an independent federal agency responsible for investigating a wide range of trade-related matters, including cases involving imports that allegedly infringe intellectual property rights. The ITC has the authority to ban a defendant from selling patent-infringing imported articles out of U.S. inventory. The agency also can direct the U.S. Customs Service to bar infringing articles from entry into the United States.

An injunction or exclusion order by the ITC enables a patent holder to block the sale or import of infringing products that rely on these standard-essential patents, even if the patent holder previously agreed to license its patent on reasonable and non-discriminatory terms.
The testimony notes that companies in the information technology and telecommunications industries frequently face the problem that thousands of different patented inventions need to work together in a single device or in multiple devices operating together within a network. To solve this problem, companies work within standard setting organizations to create standards that ensure devices within a system will work together and communicate with each other in standardized, predictable ways. Such standards can create enormous value for consumers by increasing competition, innovation, product quality, and choice, the testimony states.

While standard setting organizations offer significant benefits for consumers, “[i]ncorporating patented technologies into standards has the potential to distort competition by enabling [standard-essential patent] owners to use the leverage they acquire as a result of the standard setting process to negotiate high royalty rates and other favorable terms after a standard is adopted that they could not have credibly demanded beforehand. This is one form of ‘hold-up,'” the testimony states.

“Hold-up and the threat of hold-up can deter innovation by increasing costs and uncertainty for other industry participants, including other patent holders. The threat of hold-up also may reduce the value of standard setting, leading firms to rely less on the standard setting process and depriving consumers of the substantial pro-competitive benefits of standardized technology,” the testimony states.
To mitigate the risk of patent hold-up, companies often enter into commitments to license their patents on “reasonable and non-discriminatory” terms, known as RAND commitments, the testimony states. Under RAND commitments, a company that wants to implement the technology can then negotiate a royalty or, in the event they are unable to agree, may seek judicial determination of a reasonable rate, the testimony states.

Consistent with its Congressionally mandated consultative role, the FTC submitted public comments to the ITC in June in connection with two patent infringement investigations. The FTC expressed concern to the ITC “that a patent holder can make a RAND commitment as part of the standard setting process, and then seek an exclusion order for infringement of the RAND encumbered SEP as a way of securing royalties that may be inconsistent with that RAND commitment,” the testimony states.

“Federal district courts have the tools to address this issue, by balancing equitable factors or awarding money damages, and the FTC believes that the ITC likewise has the authority under its public interest obligations to address this concern and limit the potential for hold-up. If the ITC finds that its public interest authority is not flexible enough to prevent hold-up, then Congress should consider whether legislative remedies are necessary.”

The Commission vote authorizing the testimony was 5-0.

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 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.

(SEP Testimony)

FTC Offers Consumers Tips on How to Respond to Unwanted Robocalls

Illegal pre-recorded “robocalls” are a growing annoyance for millions of American consumers and the target of an enforcement crackdown by the Federal Trade Commission. What should you do when you get one of these calls? Today, the FTC issued tips for consumers, as well as two new consumer education videos explaining robocalls and describing what consumers should do when they receive one. The agency also is hosting a robocall summit later this year to develop new strategies to stop illegal robocalls.

“The FTC hears from American consumers every day about illegal robocalls and how intrusive they are,” said FTC Chairman Jon Leibowitz. “We’re ratcheting up our efforts to stop this invasion of consumers’ privacy.” The agency’s two new consumer videos, “Robocalls Gone Wrong,” and “What To Do if You Get a Robocall,” are located on a new FTC robocalls web page, which has more information about robocalls and what the FTC is doing to protect consumers.

Nearly all telemarketing robocalls have been illegal since September 1, 2009. The only legal sales robocalls are ones that consumers have stated in writing that they want to receive. Certain other types of robocalls, such as political calls, survey calls, and charitable calls remain legal, and are not covered by the 2009 ban. To date, the FTC has brought 12 enforcement cases targeting illegal robocalls, and violators have paid $5.6 million in total penalties. Indeed, since January 2010, the Federal Trade Commission has brought law enforcement actions, shutting down the companies responsible for more than 2.6 billion illegal telemarketing robocalls.

FTC’s Robocall Summit

The FTC also announced it will host a summit on October 18, 2012, in Washington, DC, to examine the issues surrounding the robocall problem. The summit will be open to the public, and will include members of law enforcement, the telemarketing and telecommunications industry, consumer groups, and other stakeholders. It will focus on exploring innovations that could potentially be used to trace robocalls, prevent wrongdoers from faking caller ID data, and stop illegal calls. More information about the summit and a draft agenda will be issued soon.

FTC’s Social Chat

FTC staff answered questions from the public about robocalls on Twitter [transcript] and Facebook [transcript] July 17, 2012. For more information on FTC social chats, see Facebook Chats and Twitter Chats.

FTC Halts Deceptive Prepaid Calling Card Scheme Targeting Immigrants

The Federal Trade Commission halted the deceptive advertising claims of a company that markets prepaid phone cards by allegedly misrepresenting the number of calling minutes its cards provide, and failing to adequately disclose additional fees. The company agreed to temporarily stop making claims the FTC alleges are misleading, pending a trial in which the agency will seek to permanently halt the deceptive claims and force the company to give up its ill-gotten gains.

The case against DR Phone is part of an ongoing FTC effort to address deceptive advertising and marketing practices in the prepaid calling card industry, which sells billions of dollars worth of cards a year, many of them to immigrants who depend on them to call friends and family in other countries.

The FTC charged that DR Phone Communications scheme targeted immigrant communities. Using brand names such as “Beautiful Asia,” “Vietnam Best,” and “Pearls of Africa,” the cards were sold in convenience stores, groceries and kiosks across the country and on DR Phone’s website.

According to the FTC, marketing material – typically point-of-sale posters – displayed brightly colored text bubbles touting calling minutes to a particular destination with a card of specified amount – for example, “Philippines 70 min-per $5.” Large letters at the top of the posters claimed, “No Fees,” “No Connection Fee,” and “No Maintenance Fee.” Small print at the bottom of the posters made vague reference to fees without adequately disclosing what those fees would be. One disclosure simply stated “International calls made to cellular phones and calls via toll free numbers are billed at higher rate.” without adequately disclosing what those higher rates would be.

The FTC bought and tested 169 of the company’s cards. The FTC’s complaint alleged that 100 percent of the tested cards failed to deliver the number of minutes advertised. The worst performing card delivered less than one percent of the advertised minutes. On average, the 169 cards delivered only 40.42 percent of the advertised time.

The FTC charged that the deceptive claims about the calling minutes and the failure to adequately disclose additional fees and charges violate federal law. As part of an agreement between the defendants and the FTC, the court ordered a temporary halt to the illegal practices, pending trial.

Defendants named in the FTC complaint are DR Phone Communications, also doing business as Drphonecom.com, and David Rosenthal.

The Commission vote authorizing the staff to file the complaint was 4-1, with Commissioner J. Thomas Rosch voting no. It was filed in the U.S. District Court for the Northern District of California, San Francisco Division.

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 complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.

FTC Halts Two Operations That Deceived ConsumersLooking for Help with Their Debts

The Federal Trade Commission halted two operations that deceived consumers who were looking for help dealing with their debts, including one firm that tricked people by impersonating federal government agencies. The two firms agreed to settlements with the FTC that ban them from the business of debt relief services.

As part of its continuing crackdown on scams that target consumers in financial distress, the FTC obtained one settlement against a telemarketer who allegedly pretended to be affiliated with federal consumer agencies, and then steered consumers towards debt relief, tax relief, and mortgage assistance relief services by making deceptive claims. The other settlement resolves FTC charges against an operation that allegedly billed consumers hundreds of dollars in up-front fees, based on bogus promises to either provide them with a new low-interest rate credit card, or work with the consumers’ existing credit card issuers to lower the interest rates.

Christopher Mallett

The FTC last year charged Christopher Mallett with multiple violations of the Federal Trade Commission Act, the agency’s Telemarketing Sales Rule, and the Mortgage Assistance Relief Services Rule, for misrepresenting his affiliations with federal agencies, misrepresenting that the services advertised on his websites were government-approved, and making deceptive claims while marketing debt relief, tax relief, and mortgage-assistance relief services.

A San Antonio, Texas-based “lead generator,” Mallett promised that the consumers’ debts would be substantially reduced or eliminated, in some cases citing specific percentages, according to the complaint. Mallett impersonated the FTC by using its official seal and lifting language almost verbatim from its site. He also created a fictitious government agency – the “Department of Consumer Services Protection Commission” – that appeared to combine two real agencies, the FTC and the Consumer Financial Protection Bureau, the complaint stated.

According to the FTC, Mallett created another fictitious government agency on his website FHA-HomeLoan.info, which featured a picture of the U.S. Capitol building. He called the agency the “U.S. Mortgage Relief Counsel.” He also did business using Internet website names such as gov-usdebtreform.net, usdebtcare.net, and worldlawdebt.org.

The settlement with Mallett bans him from engaging in debt relief, tax relief, or mortgage assistance relief services and prohibits him from making any further misleading claims. It also imposes a $129,695 judgment, which will be suspended due to his inability to pay. If it is later determined that the financial information he provided the FTC was false, the full amount of the judgment will become due. The settlement also contains various record keeping provisions to assist the FTC in monitoring Mallett’s compliance.

Premier Nationwide Corporation

In January 2012, the FTC alleged that Eric C. Synstad and the Arizona-based company he controlled, Premier Nationwide Corporation, cold-called consumers, promising to consolidate debts on a new credit card with an interest rate as low as 9 percent, or work with consumers’ existing credit card issuers to lower monthly payments and interest rates – in exchange for an up-front fee that typically ranged from $149 to $599. The defendants claimed the fee would quickly be offset by the savings achieved from services they provided, and promised that if they could not significantly reduce consumers’ debt, they would provide full refunds, minus a 20 percent “processing fee,” according to the complaint.

The FTC charged Synstad and Premier with violating the Federal Trade Commission Act and the Telemarketing Sales Rule. Changes made to the Rule in 2010 prohibit companies that sell debt relief services over the telephone from charging fees before achieving the promised results. In January 2012, at the FTC’s request, a federal district court froze the defendants’ assets and ordered the illegal conduct to stop, pending resolution of the case.

The FTC alleged that in contrast to what the defendants promised, consumers who signed up for the credit card debt consolidation service were merely given a list of banks and told to apply for low-interest credit cards on their own. Those who signed up for the interest rate reduction were told they would have to pay an additional monthly fee to a different company that would work to obtain reduced monthly payments and interest rates, according to the Commission. Also, the complaint alleged that in numerous cases consumers who sought the promised refund were denied.

Synstad agreed to a settlement with the FTC that bans him and his company from marketing debt relief services, and prohibits them from making any further misleading claims. The proposed settlement imposes a $15 million judgment against Synstad and Premier Nationwide Corporation, which will be suspended due to their inability to pay when Synstad surrenders assets, including most of the proceeds from the sale a 2005 Mercedes and another vehicle, and when he and Premier relinquish money held in two payment processor reserve accounts.

If it is later determined that the financial information Synstad or Premier Savings gave the FTC was false, the full amount of their judgment will become due. In addition to being banned from marketing debt relief services, the defendants are prohibited from making false or misleading claims about any good or service, and required to fully disclose any refund policies and provide competent and reliable evidence to support any claims. They also are prohibited from violating the Telemarketing Sales Rule and from collecting payments from existing customers.

The FTC would like to thank the Arizona Attorney General’s Office for its assistance in the Premier Nationwide Corporation case.

Consumers looking for help with credit card debt should be wary of anyone who tells them to stop paying their bills, pay someone other than their creditors, or stop talking to their creditors. Consumers should also be careful about paying for financial assistance before they receive it. For consumer information about debt relief, tax relief, and mortgage assistance relief services, see Money Matters: Debt Relief Services, Mortgage Assistance Relief Scams: Another Potential Stress for Homeowners in Distress, and Tax Relief Companies – More Pain Than Gain?

The ban on advance fees under the Telemarketing Sales Rule protects all consumers who have enrolled in a debt relief service since October 27, 2010. For more information about the advance fee ban see: Debt Relief Companies Prohibited From Collecting Advance Fees Under FTC Rule. For guidance to businesses on how to comply with the new Rule, see Debt Relief Services & the Telemarketing Sales Rule: A Guide for Business.

The Commission vote approving the proposed consent decree with Mallett was 4-0-1, with Commissioner Rosch recorded as not participating. The FTC filed the proposed consent decree in the U.S. District Court for the District of Columbia on June 14, 2012, and it was entered the same day.

The Commission vote approving the proposed consent decree with Synstad and Premier Nationwide Corporation was 4-0-1, with Commissioner Rosch not participating. It is subject to court approval. The FTC filed the proposed consent decree in the U.S. District Court for the District of Arizona on July 2, 2012.

NOTE: These consent decrees are for settlement purposes only and do not constitute an admission by the defendants that the law has been violated. Consent decrees have the force of law when approved and signed by the District Court judge.

FTC Approves Amended Final Order Settling Charges that Teva’s Proposed Acquisition of Cephalon was Anticompetitive in Markets for Several Generic Drugs

Following a public comment period, the Federal Trade Commission has approved an amended final order settling charges that Teva Pharmaceutical Industries, Ltd.’s proposed acquisition of rival Cephalon, Inc. would have been anticompetitive in the markets for several current and future generic drugs. The final amended FTC order resolving the charges requires Teva to sell the rights and assets related to a generic cancer pain drug and a generic muscle relaxant to Par Pharmaceuticals, Inc. It also requires Teva to enter into a supply agreement that will allow Par to sell a generic version of Cephalon’s wakefulness drug Provigil in 2012, and contains additional terms detailed in a statement issued by Bureau of Competition Director Richard Feinstein.

The Commission vote approving the amended final order and letters to members of the public who commented on it was 4-0-1, with Commissioner Maureen K. Ohlhausen not participating. (FTC File No. 111-0166; the staff contact is Kari Wallace, Bureau of Competition, 202-326-3085; see press release dated October 7, 2011.)

(FYI 22.2012.wpd)

FTC Wins $2.6 Million Court Judgment Against Operation That Made Exaggerated Claims for Mortgage and Foreclosure-Relief Services

The Federal Trade Commission won a $2.6 million federal court judgment against three defendants behind a scheme that charged consumers large upfront fees and failed to deliver the mortgage modifications they promised.

The court also banned the three defendants for 10 years from telemarketing financial products or services; from selling mortgage modification, foreclosure rescue, and debt-relief products or services; and from collecting or attempting to collect from consumers who had agreed to purchase a mortgage-assistance product or service. The court ordered the defendants to destroy any consumer information they have collected within 30 days after the order takes effect.

The U.S. District Court for the Middle District of Florida, Tampa Division, entered permanent injunctions against three defendants. It also approved settlements with five more defendants in the case, and entered a default judgment against another defendant.

The FTC filed a complaint against the nine defendants behind the Crowder Law Group in a 2009 law enforcement sweep as part of its continuing effort to keep homeowners from being targeted by mortgage-related scams. The FTC alleged that the defendants behind Crowder Law Group promised relief from burdensome mortgages by falsely claiming they could modify consumers’ mortgages and substantially reduce their monthly payments; exaggerating the role an attorney would play in obtaining a loan modification; and pretending to be affiliated with a government agency.

All nine defendants were charged with violating the Federal Trade Commission Act and the Telemarketing Sales Rule. The operation involved a marketing company that contracted with a direct-mailing company to send oversized postcards to homeowners nationwide whose mortgage payments were at least two months in arrears. Each postcard offered financial relief to the homeowner and displayed a toll-free phone number and the signature of an attorney who was local to the homeowner and was paid $100 to accept the homeowner into the program. When homeowners called the toll-free number, a customer service representative collected financial documents and the $2,000 fee from the consumer.

The court found that the defendants, through the post cards and telephone procedures, assured homeowners that they had qualified for loan modifications. In fact, homeowners still had to go through the modification process with lenders, and it which was usually unsuccessful.

The judgment against defendants Richard Bishop, Brent McDaniel, and Tyna Caldwell, and the judgment against the defunct company Washington Data Resources included permanent injunctions and found them liable for a total of $2.6 million for the harm they caused consumers. After a five-day trial, the court found Bishop, McDaniel, and Washington Data Resources liable jointly for $1.97 million, and Caldwell liable for $665,000. If the defendants do not turn over their assets voluntarily, the Federal Trade Commission will move forward with seizing and selling them.

The court also approved settlements for other defendants in the case:

Bruce Meltzer and Crowder Law Group; Kathleen Lewis and Optimum Business Solutions: These defendants agreed to settlements in which the court entered a $3.1 million judgment against each of them. For the four defendants, the judgment is suspended, due to their inability to pay, upon the surrender of funds in corporate bank accounts that total $69,256. If it is later determined that the financial information the defendants gave the FTC was false, the full amount of their judgment will become due. Under the two settlements, Meltzer and his company, Crowder Law Group, and Lewis and her company, Optimum Business Solutions, are banned from telemarketing and from marketing mortgage loan modification and foreclosure services. The settlements prohibit them from misrepresenting the terms or rates that are available for a loan or line of credit, including closing fees, the payment schedule, and the savings.
Douglas A. Crowder: The court entered a $3.1 million judgment against Crowder that is suspended except for $10,000 due to his inability to pay. If it is later determined that the financial information Crowder gave the FTC was false, the full amount of this judgment will become due. The settlement against Crowder, an attorney, allows him to practice bankruptcy law provided he meets certain conditions. Also under the settlement, Crowder is banned from telemarketing and from marketing mortgage loan modification and foreclosure services. It prohibits him from misrepresenting the terms or rates that are available for a loan or line of credit, including closing fees, the payment schedule, and the savings.

For consumer information about avoiding mortgage and foreclosure rescue scams, see Your Home at the FTC website Money Matters.

The court entered the order for Richard Bishop, Brent McDaniel, and Tyna Caldwell on June 8, 2012, and it entered the order for a default judgment against Washington Data Resources on June 20, 2012.

The Commission vote on August 17, 2011 approving the proposed consent order for Douglas A. Crowder was 5-0. The two Commission votes on November 17, 2010, to approve the proposed consent orders for Bruce Meltzer and Crowder Law Group, and Kathleen Lewis and Optimum Business, were 5-0. The U.S. District Court for the Middle District of Florida Tampa Division entered the orders for Meltzer and Crowder Law Group, and Lewis and Optimum Business, on March 25, 2011, and Douglas A. Crowder on September 28, 2011.

NOTE: The consent orders are for settlement purposes only and do not constitute an admission by the defendant that the law has been violated. Consent orders have the force of law when approved and signed by the District Court judge.

(FTC File No. X100011)

FTC Reminds Job Seekers: Get Your Free Credit Report Before You Apply for a Job

Before you apply for a job, you should know what’s in your credit report, because employers may look at your credit history if they’re considering hiring you. The Federal Trade Commission, the nation’s consumer protection agency, reminds job seekers that they can get a free copy of their credit report at annualcreditreport.com or 1-877-322-8228, so that they can fix any mistakes they find, or explain information that might not look good to an employer.

To learn more your rights as a job applicant, read the FTC’s What to Know When You Look for a Job.

FTC Staff: No Present Intention to Recommend Challenging Voluntary Fee Program in Connecticut Heating Oil Industry to Fund Consumer Education and Retailer Training

The Federal Trade Commission’s Bureau of Competition staff has issued an advisory opinion letter, in response to a request from the Independent Connecticut Petroleum Association (ICPA), stating that it has no present intention to recommend a challenge to the proposed system, which would collect a voluntary assessment from heating oil retailers and use the money to fund consumer education and retailer training programs.

According to the staff letter, the proposed program is similar to one approved by Congress, which ended when its authorizing legislation expired in 2010. The new Connecticut program would collect a small fee of twelve-hundredths of a cent per gallon from willing retailers to fund activities such as consumer education and technical training for retailers. The voluntary program would end when and if Congress renews the statutory program.

The FTC staff concluded that this new program is unlikely to harm competition, for several reasons. First, the education and training programs are likely to create value to consumers, which likely will outweigh any minimal incremental increase in costs. Second, the voluntary nature of the program will allow retailers to withdraw from the program and compete on the basis of lower prices as they see fit. Finally, any data collected through the program will be aggregated before it is transferred and reported, so that industry members will not learn competitively sensitive information about other firms in the market.

The staff advisory opinion is limited to the competition law analysis requested by the ICPA. The advisory opinion can be found on the FTC’s website and as a link to this press release. (The staff contact is Neil Averitt, Bureau of Competition, 202-326-2885.)

FTC Report: Many Consumers Believe “Up To” Claims Promise Maximum Results

The Federal Trade Commission today released an FTC-commissioned study indicating that when marketers use the phrase “up to” in claims about their products, many consumers are likely to believe that they will achieve the maximum “up to” results. The study describes what a test group of consumers thought about ads for replacement home windows that purportedly would provide “up to 47%” savings in energy costs.

The FTC believes the report will help guide advertisers to avoid the use of misleading “up to” claims. It reinforces the FTC’s view that advertisers using these claims should be able to substantiate that consumers are likely to achieve the maximum results promised under normal circumstances.

The report summarizes the results of a test conducted in conjunction with investigations of five companies that, in February, settled FTC charges that they made unsupported claims about their windows’ energy efficiency and how much they would reduce consumers’ heating and cooling bills. The cases are part of the agency’s efforts to ensure that environmental marketing is truthful and based on scientific evidence.

The Commission vote approving release of the report was 5-0. It is available on the FTC’s website and as a link to this press release. (FTC File No. 1023171; the staff contact is Serena Viswanathan, Bureau of Consumer Protection, 202-326-3244)

(Up To Claims)

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