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FTC Action Leads to Court Order Shutting Down Pyramid ScamThousands of Consumers Burned by BurnLounge

At the request of the Federal Trade Commission, a U.S. district court judge has ordered the operators and top promoters of a deceptive pyramid scheme to pay a total of $17 million to refund consumers who were burned by the scam. The court order permanently halts marketing methods used by the operation known as BurnLounge, which lured more than 56,000 consumers from around the country by masquerading as a legitimate multi-level marketing program and making misleading claims about earnings to be made.

The FTC filed a complaint against BurnLounge in 2007 as part of its ongoing efforts to protect consumers from fraud and deception. BurnLounge had touted itself as a cutting-edge way to sell digital music through multi-level marketing, but music sales accounted for only a small percentage of its sales. The agency charged that BurnLounge recruited consumers from across the country by telling them that participants earned huge incomes. Investors could buy into the BurnLounge organization for prices ranging from $29.95 to $429.95, plus monthly fees. While participants were compensated for music and album sales, most compensation came from recruiting others into the plan.

The FTC charged the defendants with operating an illegal pyramid scheme, with making deceptive earnings claims, and with failing to disclose that most consumers who participated in pyramid schemes wouldn’t receive substantial income, but instead would lose money. The agency charged that the practices violate federal law.

The court’s final judgment and order bars the defendants from engaging in pyramid, Ponzi, or chain letter schemes or any schemes in which compensation for recruitment is unrelated to the sale of product to customers who are not participants. The order bars misrepresentations about multi-level marketing operations or business ventures, including misrepresentations about sales, income, profitability, or legality of the operations. If the defendants make claims about earnings, sales, or profits, the order requires them to disclose the number and percentage of participants in the business venture who have earned, sold or profited that much.

Finally, the court ordered the defendants to pay, collectively, close to $17 million for consumer redress. BurnLounge, Inc., and Juan Alexander Arnold were ordered to pay $16,245,799. John Taylor was ordered to pay $620,138 and Rob DeBoer was ordered to pay $150,000. Standard bookkeeping and record keeping requirements in the order will allow the FTC to monitor compliance.

In June 2007, another defendant in the pyramid scheme, Scott Elliott, settled the FTC’s charges against him. The settlement barred him from participating in any pyramid scheme or other prohibited marketing scheme, barred false earning claims, and required him to give up $20,000 in ill-gotten gains.

This case was filed in U.S. District Court for the Central District of California, Western Division.

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 and follow us on Twitter.

(Civil Action No. CV 07-3654 GW FMOx)
(Burnlounge settlement)

FTC Issues Report on the Experiences of Victims Recovering from Identity Theft

The Federal Trade Commission issued a staff report summarizing the results of a survey of identity theft victims who were asked to describe their experiences dealing with consumer reporting agencies and, more generally, exercising their rights under the Fair Credit Reporting Act (FCRA) as amended by the Fair and Accurate Credit Transactions Act (FACTA), to recover from identity theft. The survey showed that most of the respondents were generally satisfied with their experiences, but the report also noted areas for improvement.

Congress has established several rights under the FACTA to help actual or potential identity theft victims protect themselves from, and recover from, identity theft. These rights enable victims to place fraud alerts on their credit report with the consumer reporting agencies, request a free credit report from the three national consumer reporting agencies when placing a fraud alert, block fraudulent information from appearing in their credit report, and receive a notice of these and other rights from the consumer reporting agencies.

According to the report, Using FACTA Remedies: An FTC Staff Report on a Survey of Experience of Identity Theft Victims, the survey showed:

Sixty-eight percent of the survey respondents were somewhat or very satisfied with their overall experiences with the consumer reporting agencies, but many consumers said it was difficult to reach a live person.
Less than half of the respondents were aware of most of their rights under FACTA before they contacted the consumer reporting agencies.
Some respondents complained about feeling pressured to buy additional identity theft monitoring products when they called the consumer reporting agencies.

The report concluded that:

The consumer reporting agencies may need to make it easier for consumers to reach a live person;
The FTC and other enforcement agencies should do more to educate the public about their rights under FACTA; and
The FTC and the Consumer Financial Protection Bureau should use their respective authorities to address the consumer reporting agencies’ practices related to selling identity theft monitoring products or services when they are contacted by identity theft victims.

Consumer education continues to be an important priority for the FTC, which has an extensive program to provide consumers with the knowledge and tools needed to protect themselves from identity theft and to deal with its consequences. For example, the FTC receives thousands of contacts each week through its toll-free hotline and dedicated website. Callers to the hotline receive counseling from trained personnel on steps they can take to prevent or recover from the crime. The FTC also provides a variety of educational materials to help consumers deter, detect, and defend against identity theft. For example, the FTC’s identity theft victim recovery guide, Taking Charge: What To Do If Your Identity is Stolen, explains the immediate steps victims should take to address the crime, how to obtain a credit report and correct fraudulent information in credit reports, how to file a police report, and how to protect personal information.

Based on a recommendation by the President’s Identity Theft Task Force in 2007, the FTC conducted the survey of consumers who had called the FTC’s identity theft hotline (1-877-ID-THEFT). The survey was designed to determine these consumers’ general satisfaction with their rights and to examine the types of problems they encountered.

The Commission vote authorizing staff to issue the report was 4-0.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call
1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into 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 and follow us on Twitter.

(FCRA Dispute Process Report)
(FTC File No. P065405)

FTC Commissioners Send Letter to Leaders of the House Transportation Committee Expressing Concerns with Resolution Directing GSA Administrator to Prepare Plan for Costly Relocation Out of Historic FTC Headquarters Building

The four sitting bipartisan Commissioners of the Federal Trade Commission sent the following letter to the leaders of the House Transportation and Infrastructure Committee expressing concerns with a resolution directing the GSA Administrator to prepare a plan for relocating the agency out of its historic headquarters building.

The Honorable John L. Mica
Chairman
Committee on Transportation and Infrastructure
United States House of Representatives
Washington, D.C. 20515

The Honorable Nick Joe Rahall II
Ranking Member
Committee on Transportation and Infrastructure
United States House of Representatives
Washington, D.C. 20515

The Honorable Jeff Denham
Chairman
Subcommittee on Economic Development, Public Buildings and Emergency
Management
United States House of Representatives
Washington, D.C. 20515

The Honorable Eleanor Holmes Norton
Ranking Member
Subcommittee on Economic Development, Public Buildings and Emergency
Management
United States House of Representatives
Washington, D.C. 20515

Dear Chairmen and Ranking Members:

As Members of the bipartisan Federal Trade Commission, we write to express
our grave concern with the proposed Committee Resolution, to be considered
tomorrow, directing the Administrator of General Services to work on a plan to move the
FTC headquarters and its other Washington, DC operations into Constitution Center, a
privately-owned building at 400 7th Street, SW. To require the agency to move out of its
historic headquarters building at 600 Pennsylvania, NW, which still suits the agency and
its mission, would impose well over $100 million in wholly unnecessary costs. This
unprecedented giveaway would be completely contrary to the interests of American
taxpayers, especially in this time of fiscal austerity.

As you are aware, underlying this proposal is a plan to transfer the FTC’s historic
headquarters building – a valuable federal asset – to provide the space for a major
expansion of the National Gallery of Art. The National Gallery’s two existing buildings
were paid for with private funds, while the FTC Building is owned by the taxpayers. The
building was recently appraised at a value of between $92 and $95 million. We are
aware of no precedent for ousting a federal agency from a federally-owned building that
fully meets its needs into privately-owned space.

Moreover, we have estimated the cost to move the FTC out of its headquarters
building alone at between $60 and $80 million. Because this headquarters move would
be to private, leased space, these considerable moving costs could recur every time the
lease expires.

Finally, while the FTC has worked with GSA to cut its space requirements to
meet new, reduced space standards for federal agencies, it is completely infeasible for
the FTC to shoehorn its entire Washington, DC operation into the available space at
Constitution Center.

We urge you to consider the costs to American taxpayers as you review this
matter.

Sincerely,

Jon Leibowitz
Chairman

J. Thomas Rosch
Commissioner

Edith Ramirez
Commissioner

Julie Brill
Commissioner

FTC Stops Scheme That Falsely Promised Federal Jobs

The Federal Trade Commission and the State of Arizona halted an operation that took consumers’ money by allegedly holding out false claims that it could help them get a job with the federal government. A settlement, reached as part of the FTC’s ongoing efforts to protect consumers in financial distress, permanently bans the defendants from selling employment-related products or services.

According to the complaint against Government Careers Inc., Richard Friedberg, and Rimona Friedberg, the defendants falsely told people they could get federal jobs if they paid $119 for study materials that would help them pass an exam, even though in many cases there were no exams for the jobs or there were no jobs. The defendants also charged consumers $965 for career counseling services, such as resume editing and employment exam preparation, and demanded advance payment, even after stating that consumers would not have to pay the fee until they got a government job.

The complaint further alleged that Government Careers marketed its services by advertising on job search websites such as Careerbuilder.com or Yahoo! Hot Jobs and in local newspapers. Its ads looked like postings for “Postal Jobs,” “Wildlife Jobs,” “Border Patrol [agents],” or “Administrative Support and Clerical” jobs. The court temporarily halted the operation, pending resolution of the case.

The settlement order’s ban on selling employment-related services will take effect six months after all parties have signed it, allowing time for a possible sale of a separate business owned by Richard Friedberg and Rimona Friedberg, Career Systems LLC, also known as Job Search Network LLC. In addition to banning the defendants from marketing employment products or services, the order permanently prohibits them from misrepresenting any goods or services, failing to disclose material facts about any goods or services, and violating the Arizona Consumer Fraud Act. It also bars them from selling or otherwise benefitting from customers’ personal information, and from failing to properly dispose of such information as provided in the order. The order imposes a $363,761 judgment that will be suspended. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The Commission vote approving the proposed settlement order was 4-0. It is subject to court approval. The FTC filed the proposed order in the U.S. District Court for the District of Arizona.

NOTE: This proposed order is for settlement purposes only and does not constitute an admission by the defendants that the law has been violated. Settlement orders have the force of law when approved and signed by the District Court judge.

To learn how to avoid these kinds of scams, read the FTC’s Federal and Postal Job Scams: Tip-offs to Rip-offs.

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 and follow us on Twitter.

(Government Careers)
(FTC File No. X1000013)

FTC Charges That Payday Lender Illegally Sued Debt-Burdened Consumersin South Dakota Tribal Court Without Jurisdiction

The Federal Trade Commission expanded its case against an allegedly deceptive payday lender, charging that it sought to unfairly and deceptively manipulate the legal system and force debt-burdened consumers throughout the country to travel to South Dakota and appear before a tribal court that did not have jurisdiction over their cases.

In an amended complaint, the FTC charged that South Dakota-based payday lender Payday Financial, LLC’s suits against customers are unfair, and that its contract language about the court where such suits would be brought is deceptive. The amended complaint also seeks civil penalties for alleged violations of the Commission’s Credit Practices Rule. The company, its owner, Martin A. Webb, and several others named as defendants pitch short-term, high-fee, unsecured payday loans to consumers on television and the Internet.

When customers fall behind in their payments, Payday Financial, LLC improperly files suits against them in the Cheyenne River Sioux Tribal Court, attempting to obtain a tribal court order to garnish their wages, the amended complaint alleges. The tribal court does not have jurisdiction over claims against people who do not belong to the Cheyenne River Sioux Tribe and who do not reside on the reservation or elsewhere in South Dakota.

In its original complaint filed in September 2011, the agency alleged that the defendants illegally tried to garnish employees’ wages without court orders. Under federal law, the government can directly require employers to garnish wages for debts it is owed without a court order, but private creditors must obtain a court order before garnishing a debtor’s wages. The FTC also alleged that the defendants violated the FTC Act by:

Falsely telling employers that they had the legal authority to garnish an employee’s wages without first obtaining a court order.
Falsely telling employers that they had given employees an opportunity to dispute a debt.
Unfairly disclosing the existence and the amounts of consumers’ supposed debts to their employers and co-workers, without the consumers’ knowledge or consent.

The defendants also allegedly violated the FTC’s Credit Practices Rule by requiring consumers taking out payday loans to consent to have wages taken directly out of their paychecks in the event of a default, and the Electronic Funds Transfer Act and Regulation E by requiring authorization for recurring electronic payments from their bank account as a condition of obtaining payday loans.

The amended complaint adds a civil penalties demand for the alleged Credit Practices Rule violation. Before filing the amended complaint to seek civil penalties, the FTC notified the Department of Justice, as required by statute, giving the department the opportunity to litigate the case. The Department of Justice stated that it would not initiate the proceeding, allowing the FTC to continue the litigation on its own behalf.

For more information regarding payday loans see: Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives.

The Commission votes approving the amendments to the complaint to seek civil damages and to add two new counts related to the improper suits in tribal court were 4-0, with Commissioner Edith Ramirez voting to approve the amendments to add civil penalties and an unfairness count, but dissenting on the addition of a deception count regarding contract language about the court where consumers could be sued. The amended complaint was filed in the U.S. District Court for the District of South Dakota Central Division on March 1, 2012. The amended complaint names as defendants Payday Financial, LLC, Great Sky Finance, LLC, Western Sky Financial, LLC, Red Stone Financial, LLC, Financial Solutions, LLC, Management Systems, LLC, 24-7 Cash Direct, LLC, Red River Ventures, LLC, High Country Ventures, LLC, and Martin A. Webb.

NOTE: The Commission files an amended 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 defendant has actually violated the law.

(FTC File No. X110050)
(Payday Financial NR)

FTC Action Preserves Competition in the Market for Desktop Hard Disk DrivesUsed in Personal Computers

The Federal Trade Commission will require Western Digital Corporation to sell assets used to manufacture and sell desktop hard disk drives to Toshiba Corporation as part of a proposed settlement that resolves charges that Western Digital’s proposed acquisition of rival Hitachi Global Storage Technologies Ltd. would likely have harmed competition in the market for desktop hard disk drives used in personal computers.

The proposed FTC order settles charges that the deal as originally proposed would have left only two companies, Western Digital and Seagate Technology LLC, in control of the entire worldwide market for desktop hard disk drives.

“Protecting competition in the high-tech marketplace is a high priority for the FTC,” said Bureau of Competition Director Richard Feinstein. “This order will ensure that vigorous competition continues in the worldwide market for desktop hard disk drives, and that consumers are not faced with higher prices or reduced innovation as a result of this deal.”

Under an agreement dated March 7, 2011, Western Digital intends to acquire Hitachi Global Storage Technologies (now known as Viviti Technologies Ltd.) from Hitachi, Ltd. for approximately $4.5 billion. Both companies manufacture and sell desktop hard disk drives, key inputs into computers and other electronic devices that are used to store and allow fast access to data.

According to the FTC’s complaint, Western Digital’s proposed acquisition of Hitachi Global Storage Technologies would likely be anticompetitive and would violate Section 5 of the FTC Act and Section 7 of the Clayton Act by reducing competition in the worldwide market for desktop hard disk drives. The FTC contends that the deal would reduce the number of competitors in that market from three to two and would likely allow Western Digital to exercise market power, resulting in higher prices for consumers.

The proposed settlement order remedies these competition concerns by requiring Western Digital to divest selected Hitachi Global Storage Technologies assets related to the manufacture and sale of desktop hard disk drives to Toshiba within 15 days of the acquisition. The time for the divestiture can be extended by 15 days, if necessary, to allow the companies to receive regulatory approval in other jurisdictions.

According to the FTC, Toshiba has the ability to replace Hitachi Global Storage Technologies as an effective competitor in the worldwide market for desktop hard disk drives. While Toshiba currently does not compete against Western Digital or Hitachi Global Storage Technologies in this market, it does make and sell hard disk drives for use in mobile and other end-use applications. Because Toshiba has extensive experience manufacturing these other types of hard disk drives, and has an existing worldwide infrastructure for the research, development, and sale of desktop hard disk drives, Toshiba is well-positioned to replace the competition that will be eliminated as a result of the proposed transaction.

Under the proposed settlement order, Toshiba will receive all of the productive assets needed to replicate Hitachi Global Storage Technologies’ position in the desktop hard disk drive market. In addition, the settlement order requires Western Digital to provide Toshiba with access to its employees involved in research and development and the production of desktop hard disk drives, and also requires Western Digital to license all intellectual property needed to make and supply desktop hard disk drives to Toshiba. The settlement order also requires Western Digital to be available to supply Toshiba with certain components Toshiba will need to run the desktop hard disk drive business it acquires, and to contract manufacture hard disk drives for Toshiba until Toshiba is able to manufacture them on its own. The FTC also has appointed a monitor to oversee the sale of the assets to Toshiba and to keep the Commission informed about the status of the required divestiture.

The proposed transaction was reviewed by antitrust enforcement agencies around the world, as well as by the Commission. Commission staff cooperated with antitrust agencies in Australia, Canada, China, the European Union, Japan, Korea, Mexico, New Zealand, Singapore, and Turkey, often working closely with the staff of these agencies on the analysis of the proposed transaction and potential remedies to reach outcomes that benefit consumers in the United States.

The Commission vote approving the complaint and proposed consent order was 4-0. The proposed order with will be published in the Federal Register shortly, and will be subject to public comment for 30 days, until April 4, 2012, after which the Commission will decide whether to make it final.

The Commission also issued a separate statement explaining the relationship of its analysis of the proposed acquisition by Western Digital of Hitachi Global Storage Technologies to the earlier acquisition by Seagate Technology LLC of Samsung Electronics Co. Ltd.’s hard disk drive assets, a transaction that the Commission cleared without taking action in December 2011. The Commission vote to issue the statement was 4-0.

NOTE: The Commission issues 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 issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent order is for settlement purposes only and does not constitute an admission of a law violation. 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 [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 and follow us on Twitter.

(FTC File No. 111-0122)
(Western Digital.final)

FTC Testimony Outlines Agency’s Work to Protect Consumers, Promote Competition

In testimony before the U.S. House Appropriations Subcommittee on Financial Services and General Government, the Federal Trade Commission summarized the agency’s FY 2013 budget request and described its ongoing work to promote competition and protect American consumers.

The testimony, delivered by FTC Chairman Jon Leibowitz and Commissioner J. Thomas Rosch, outlined steps the agency has taken to carry out its mission efficiently, without putting unnecessary burdens on businesses. It describes FTC initiatives such as the agency’s efforts to stop scammers from taking advantage of financially distressed consumers, protect privacy, and ensure that American consumers benefit from competition in the health care, technology and energy sectors.

The testimony states that the FTC has continued to bring law enforcement actions to stop con artists aiming to take advantage of financially strapped consumers using deceptive practices such as falsely promising that they can help modify consumers’ mortgages or solve their debt problems; and by using threats and deception to collect consumer debts. Overall, the testimony states, the FTC has brought more than 90 cases since 2009 to put a stop to these types of scams. Since 2010, the agency has filed seven actions to combat illegal debt collection practices, and obtained more than $8.1 million in civil penalties.

The testimony also notes that consumer privacy remains a top priority for the FTC. Last year the agency reached settlements with some of the biggest online companies, Facebook and Google, to make sure they live up to the privacy promises that they make to consumers. The FTC recently proposed updating and modifying its Children’s Online Privacy Protection Rule to make sure that it continues to protect the privacy of children, even as online technology evolves.

The testimony also highlighted FTC enforcement actions in the health care industry, noting that health care expenditures make up nearly 18 percent of the nation’s GDP. The agency participated in a law enforcement crackdown against scammers who deceptively marketed “medical discount plans” as insurance. It also took legal action that led to a settlement with Reebok, which required the company to pay $25 million to resolve charges that the company made deceptive claims about its toning shoes. As part of its efforts to promote competition in health care, the agency has taken recent merger enforcement actions involving hospitals, dialysis centers, pharmaceuticals manufacturers, and pharmacies, the testimony states.

In addition, the testimony describes the FTC’s efforts to address evolving technologies, which lead to tremendous benefits for consumers but also pose challenges. The agency has sought to take a balanced approach in investigating potentially anticompetitive conduct by dominant high-tech firms, while continuing to root out deception and fraud on the Internet. In the last year the agency brought its first case involving a mobile app. Also the FTC issued a report this year that called on companies involved in kids apps to provide greater transparency about their data collection practices.

The FTC also has continued to place a major focus on energy prices, in light of the heavy impact they have on the budgets of American consumers, the testimony states. The Commission continues to closely examine proposed mergers in the energy sector, as well as input from the public about potential violations of its Market Manipulation Rule.

In closing, the testimony requested $300 million to support 1,186 “full-time equivalent” employees (FTEs) to meet the challenges of FY 2013.

Commissioner Rosch dissented from the appropriations requested for the FTC, saying, among other things, that in austere times the agency should do more to perform its mission with fewer resources.

The Commission vote authorizing the testimony was 4-0

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call
1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into 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 and follow us on Twitter..

(HouseBudgetTestimonyFY2013)

National Consumer Protection Week 2012 Kicks Off Sunday, March 4

The Federal Trade Commission and more than 30 other federal agencies, consumer groups and national advocacy organizations, in conjunction with state, county, and local government agencies, are participating in National Consumer Protection Week, March 4-10, 2012. National Consumer Protection Week is a coordinated campaign to focus attention on the importance of consumer information and provide people with free resources explaining their rights in the marketplace.

David Vladeck, Director of the FTC’s Bureau of Consumer Protection, noted the campaign’s website, NCPW.gov, available in English and Spanish, hosts a variety of resources on topics that matter to the nation’s consumers.

“The information on NCPW.gov can help consumers understand their rights, protect their privacy online and off, manage credit and debt, avoid identity theft, recognize foreclosure rescue scams, and report fraud,” Vladeck said. “Visitors can download and print materials to share with friends and neighbors, or use the toolkit to plan a larger community event.”

To get materials and view a list of agencies participating in the 14th annual celebration of consumer protection and consumer education, visit the NCPW About Us page.

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 and follow us on Twitter.

FTC Will Host Public Workshop to Explore Advertising Disclosures in Online and Mobile Media on May 30, 2012

The Federal Trade Commission will host a day-long public workshop to consider the need for new guidance for online advertisers about making disclosures required under FTC law. The guidance will address technological advancements and marketing developments that have emerged since the FTC first issued its online advertising disclosure guidelines known as “Dot Com Disclosures” 12 years ago.

The workshop, to be held on May 30, will cover revising the Dot Com Disclosures so they illustrate how to provide clear and conspicuous disclosures in the current online and mobile advertising environment. Any revisions will be consistent with the goals of the original guidelines and will continue to emphasize that consumer protection laws apply equally to online and mobile marketers, and to other media. The FTC began seeking input for revising the Dot Com Disclosures guidelines last year.

Topics may include:

How can effective disclosures be made on social media platforms and mobile devices – including when they are used in commercial texting – that limit the space available for disclosure? For example, when consumers are paid or receive other benefits for providing an endorsement, how can they effectively disclose on platforms that allow only short messages or a simple sign of approval?
When can disclosures provided separately from an initial advertisement be considered adequate? For example, if a consumer receives a location-based ad for a discounted cup of coffee on her mobile device because she is near a particular coffee shop, what terms must be disclosed in the mobile ad and what terms, if any, do not have to be disclosed until the consumer enters the coffee shop to make her purchase?
What are the options when using devices that do not allow downloading or printing the terms of an agreement? For example, is providing consumers a means to send a copy of the agreement to themselves to read later an effective way to provide this information?
How can disclosures that are made in the original advertisement be retained when the advertisement is aggregated (for example, on dashboards) or re-transmitted (through, for example, re-tweeting)?
What are the disclosure opportunities and limitations of hyperlinks, jump links, hashtags, click-throughs, layered disclosures, icons, and other similar options? How should these options be evaluated in terms of placement and proximity?
How can short, effective, and accessible privacy disclosures be made on mobile devices?
What does the research show about how consumers’ use of mobile and other devices can affect the effectiveness of disclosures on particular devices or platforms? And what does it show about the relationship between how consumers use mobile devices and their understanding of disclosures and advertising displayed on mobile devices? What does the research show about how consumers make decisions based on that information? Is there specific research on the effectiveness of disclosures on mobile devices, including layered disclosures and icons, and, if so, what are the implications of that research for disclosures such as offer terms and privacy practices?

The Commission also invites parties to submit suggestions for topics of discussion or original research. In particular, the Commission invites the submission of realistic examples and mock-ups that can be used for illustration and discussion at the workshop. Individuals and organizations may submit requests to participate as panelists and may recommend topics for inclusion on the agenda. The requests and recommendations should be submitted electronically to [email protected]. Prospective panelists should submit a statement detailing their expertise on the issues to be addressed and contact information no later than March 30, 2012. Panelists will be selected based on expertise and the need to include a broad range of views.

Paper submissions should reference the Dot Com Disclosures Workshop both in the text and on the envelope, and should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex P), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC requests that any paper submissions be sent by courier or overnight service, if possible, because postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions. The workshop is free and open to the public. It will be held on Wednesday, May 30, 2012, at the FTC Conference Center at 601 New Jersey Avenue, N.W., Washington, DC. Pre-registration is not required. Members of the public and press who wish to participate but who cannot attend can view a live Webcast at FTC.gov.

Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted via e-mail to [email protected] or by calling Carrie McGlothlin at 202-326-3388. Requests should be made in advance. Please include a detailed description of the accommodation needed, and provide contact information.

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 and follow us on Twitter.

(Dot Com FYI)

FTC Puts Conditions on Carpenter Technology Corporation’s Purchase of Rival Manufacturer Latrobe Specialty Metals, Inc.

The Federal Trade Commission will require specialty metals manufacturer Carpenter Technology Corporation to sell assets involved in producing two metal alloys used in the aerospace industry, under a proposed settlement resolving charges that Carpenter’s proposed $410 million acquisition of Latrobe Specialty Metals, Inc. would harm competition in the U.S. markets for these alloys.

The proposed settlement is part of the FTC’s efforts to preserve competition that benefits consumers by keeping prices low and quality and service high. It requires that, in order to complete the deal, Carpenter divest assets necessary for manufacturing the two alloys – MP159 and Aerospace MP35N – to another metals manufacturer, Eramet S.A.

The FTC’s complaint alleges that Carpenter and Latrobe are the only companies that make these highly specialized alloys, and that the combination of the two companies would be anticompetitive in the U.S. markets for both alloys. The deal – a merger to monopoly – likely would lead to higher prices for consumers of the two alloys, in violation of the FTC Act and Section 7 of the Clayton Act, according to the complaint.

By requiring the two companies to divest assets to Eramet, the FTC’s proposed settlement will preserve competition in the markets for the two alloys, according to the FTC. Eramet is a multi-billion dollar integrated mining and metallurgy company with extensive experience in manufacturing and selling specialty alloys.

To ensure that the divestiture is a success, Carpenter must provide Eramet with the product licenses and manufacturing technology needed to produce the alloys, including technical assistance from current Latrobe employees, as well as certain confidential business information related to manufacturing the alloys. Carpenter is also required to contract-manufacture both alloys for Eramet until the latter is able to produce them on its own. Finally, the FTC has appointed an interim monitor to ensure that the relevant assets are divested successfully, and can appoint a divestiture trustee to complete the sale, if necessary.

The Commission vote approving the complaint and proposed consent order was 4-0. The proposed order with will be published in the Federal Register shortly, and will be subject to public comment for 30 days, until March 29, 2012, after which the Commission will decide whether to make it final.

(FTC File No. 111-0207)
( Carpenter-Latrobe.final)

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