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FTC Corrects Misinformation on Journalism Workshops and “Discussion Draft”: Ideas are Compilation, not Recommendations from Agency

The Federal Trade Commission has hosted a series of workshops on the Future of Journalism: “How Will Journalism Survive the Internet Age?” Panelists have represented a wide range of views from bloggers such as Search Engine Land and BlogHer to online publishers like ProPublica and the New Haven Independent and traditional media companies such as News Corp. and The Milwaukee Journal-Sentinel.

On May 24, the FTC released a staff discussion draft in advance of the next workshop on June 15. The discussion draft collects proposals and public comments articulated during previous panel conversations and in reports and articles about the future of journalism. The staff discussion draft states:

“[T]hrough this document, we seek to prompt discussion of whether to recommend policy changes to support the ongoing reinvention of journalism, and, if so, which specific proposals appear most useful, feasible, platform-neutral, resistant to bias, and unlikely to cause unintended consequences in addressing emerging gaps in news coverage.”

The FTC has not endorsed the idea of making any policy recommendation or recommended any of the proposals in the discussion draft.

Recent press reports have erroneously stated that the FTC is supporting and proposing some of the public comments (for example, taxes on electronic devices, favoring one medium over another).

The discussion draft and workshop info can be found at the FTC website: http://www.ftc.gov/opp/workshops/news/index.shtml.

FTC Investigation of Ad Claims that Rice Krispies Benefits Children’s Immunity Leads to Stronger Order Against Kellogg

Leading cereal maker Kellogg Company has agreed to new advertising restrictions to resolve a Federal Trade Commission investigation into questionable immunity-related claims for Rice Krispies cereal. This is the second time in the last year that the FTC has taken action against the company.

“We expect more from a great American company than making dubious claims – not once, but twice – that its cereals improve children’s health,” said FTC Chairman Jon Leibowitz. “Next time, Kellogg needs to stop and think twice about the claims it’s making before rolling out a new ad campaign, so parents can make the best choices for their children.”

Kellogg has agreed to expand a settlement order that was reached last year after the FTC alleged that the company made false claims that its Frosted Mini-Wheats cereal was “clinically shown to improve kids’ attentiveness by nearly 20%.”

At about the same time that Kellogg agreed to stop making these kinds of false claims in its cereal ads, the company began a new advertising campaign promoting the purported health benefits of Rice Krispies, according to the FTC. On product packaging, Kellogg claimed that Rice Krispies cereal “now helps support your child’s immunity,” with “25 percent Daily Value of Antioxidants and Nutrients – Vitamins A, B, C, and E.” The back of the cereal box stated that “Kellogg’s Rice Krispies has been improved to include antioxidants and nutrients that your family needs to help them stay healthy.”

Under the original settlement order covering Frosted Mini-Wheats, Kellogg was barred from making claims about the benefits to cognitive health, process, or function provided by any cereal or any morning food or snack food unless the claims were true and substantiated.

The expanded order against Kellogg prohibits the company from making claims about any health benefit of any food unless the claims are backed by scientific evidence and not misleading.

The Commission vote to modify the 2009 settlement order was 5-0, with Commissioner Julie Brill and Chairman Jon Leibowitz issuing a separate joint concurring statement. “As a trusted, long-established company with a presence in millions of American homes, Kellogg must not shirk its responsibility to do the right thing when it advertises the food we feed our children,” they wrote in the statement, which can be found on the FTC’s website and as a link to this press release at: http://www.ftc.gov/os/caselist/0823145/100602kelloggstatement.pdf.

Copies of the expanded order and related documents can be found on the FTC’s website and also are available from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

NOTE: A consent agreement 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 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 1,800 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.

(FTC Docket No. C-4262)
(Kellogg.final)

Spyware Seller Settles FTC Charges; Order Bars Marketing of Keylogger Software for Illegal Uses

The Federal Trade Commission has put the brakes on the business practices of an operation that was selling spyware and showing customers how to remotely install it on other people’s computers without their knowledge or consent.

The FTC is announcing a settlement that bars the sellers of the “RemoteSpy” keylogger from advertising that the spyware can be disguised and installed on someone else’s computer without the owner’s knowledge. It requires that the software provide notice that the program has been downloaded and obtain consent from computer owners before the software can be installed.

In 2008, the FTC filed suit against CyberSpy Software, LLC and its owner, Tracer R. Spence, alleging they were violating the law by advertising and selling RemoteSpy, a keylogger software program that the defendants touted as a “100% undetectable” way to “Spy on Anyone. From Anywhere.” According to papers filed with the court, the defendants provided their clients with detailed instructions explaining how to disguise the spyware as an innocuous file, such as a photo, attached to an e-mail. When the e-mail recipient clicked on the attachment, the RemoteSpy program was downloaded and installed without the victim’s knowledge. The spyware recorded every keystroke typed on an infected computer; captured images of the computer screen; obtained passwords, and recorded Web sites visited. To access the information gathered and organized by the spyware, RemoteSpy clients logged into a Web site maintained by the defendants.

The final Order bars the defendants from providing purchasers with the means to disguise the product as an innocent file or e-mail attachment. It also requires that they inform purchasers that improper use of the software may violate state or federal law. The final Order also requires the defendants to take measures to reduce the risk that their spyware is misused, encrypt data transmitted over the Internet, police their affiliates to ensure they comply with the order, and remove legacy versions of the software from computers on which it was previously installed.

The Commission vote to accept the final settlement Order was 5-0. The Order was entered in the U.S. District Court for the Middle District of Florida.

NOTE: Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final orders have the force of law when signed by the judge.

The Federal Trade Commission works for the consumer 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, click http://www.ftccomplaintassistant.gov or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

(FTC File No X090011)

FTC Broadens Case Against Mortgage Relief Scheme; Charges That Forensic Audits Were Unlikely to Help Homeowners

The Federal Trade Commission has named several new defendants and added new charges concerning so-called “forensic audits” to its lawsuit against an operation that allegedly bilked homeowners who were trying to lower their mortgage payments. The action is part of an ongoing crackdown on scams that target consumers who are behind in their mortgage payments or at risk of foreclosure.

The FTC has added as defendants Bradford R. Geisen; Maurice Jackson; Patrick Butler; Credit Services Alliance Inc.; and CreditLawGroup, a law firm run by two of the original defendants, John W. Smith and Glenn E. Gromann. The original defendants also included The Debt Advocacy Center LLC; Smith, Gromann & Davidson P.A.; and Kevin McCormick.

According to the FTC’s amended complaint, the new defendants, along with Smith and Gromann, offered “forensic audits” – checking a homeowner’s loan documents for law violations that would give them leverage in negotiating with lenders to obtain a loan modification or a “short sale” (sale of a house for an amount less than the mortgage balance). Their ads stated, “We have found that between 80-90% of all loans that we have audited have some form of rights violations.” They collected $995 in advance for each audit even though an audit was unlikely to assist in negotiations with lenders, the complaint alleges.

The FTC charged the new defendants, and Smith and Gromann, with falsely claiming that as a result of forensic loan audits consumers would obtain completed short sales or loan modifications that would make their mortgage payments substantially more affordable. They are also charged with telemarketing without paying the required annual fee to access telephone numbers on the National Do Not Call Registry.

The FTC’s original complaint, filed in November 2009, alleged that The Debt Advocacy Center, operated by several individuals, charged customers $1,500 based on the alleged false promise that it would get homeowners’ loans modified to make their mortgage payments more affordable. The FTC alleged that defendants falsely claimed that they had helped more than 90 percent of their clients, and that they would refund consumers’ money or pay a penalty if they failed. They are also charged with debiting consumers’ bank accounts or charging their credit cards without their consent. The court halted the operations and froze the defendants’ assets, pending resolution of the case. (See November 24, 2009 press release http://www.ftc.gov/opa/2009/11/stolenhope.shtm)

The FTC created Forensic Mortgage Loan Audit Scams: A New Twist on Foreclosure Rescue Fraud, to inform consumers about legitimate resources to help save their homes.

The Commission vote to file the amended complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Ohio, Eastern 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. A complaint is not a finding or ruling that the defendants have actually violated the law.

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 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Debt Advocacy Center)
(FTC File No. X100008)

Tips for Tomorrow’s Savvy Consumers

For Your Information

June 1, 2010

With the graduation season in full swing, and students preparing to take on their new role as adults in the marketplace, the FTC has a series of tips to help them become smarter consumers.

In How to Be the Class Value-dictorian, the Federal Trade Commission offers graduates advice on everything from managing their credit to avoiding scams to using social networking sites wisely.

To read the alert, go to: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt153.pdf.

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 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FYI tips for grads)

Contact Information

MEDIA CONTACT:

Office of Public Affairs
202-326-2180

FTC Contributes Report to White House Council on Women and Girls

For Your Information

June 1, 2010

The Federal Trade Commission has contributed a Report to the White House Council on Women and Girls, which can be found as a link to this press release.

By enhancing consumer welfare, the FTC’s mission touches and improves the lives of American women, children, and families in countless ways. The Report focuses on discrete FTC program areas that have a particular impact on women and children. The Report highlights five areas, describing, for each, recent FTC law enforcement actions or policy initiatives as well as available consumer and business education materials: health care for women and children; marketing to children and adolescents; consumer credit; entrepreneurship and business opportunities; and family pocketbook issues.

More information about the White House Council on Women and Girls can be found at the council’s website: http://www.whitehouse.gov/administration/eop/cwg.

(FYI CWG.wpd)

Contact Information

MEDIA CONTACT:

Office of Public Affairs
202-326-2180

Public Roundtable to Review Impact of Technology Changes on FTC’s Children’s Online Privacy Protection Rule

In light of rapidly changing technology such as the increased use of smartphones and other devices to access websites and online services, as well as new methods for collecting and using information online, the Federal Trade Commission will host a public roundtable, “Protecting Kids’ Privacy Online: Reviewing the COPPA Rule,” on Wednesday, June 2, 2010 to explore whether to update its Children’s Online Privacy Protection Rule. The Rule went into effect in 2000 and requires operators of websites and online services to obtain parental consent before collecting, using, or disclosing personal information from children under 13.

WHO:	Federal Trade Commission
WHEN:	Wednesday, June 2, 2010 8:45 AM – 5:30 PM
WHERE:	FTC Conference Center 601 New Jersey Avenue, N.W. Washington, DC

A copy of the agenda is at http://www.ftc.gov/bcp/workshops/coppa/index.shtml. Members of the public and press who wish to participate but who cannot attend can view a live webcast at ftc.gov.

FTC Extends Enforcement Deadline for Identity Theft Red Flags Rule

At the request of several Members of Congress, the Federal Trade Commission is further delaying enforcement of the “Red Flags” Rule through December 31, 2010, while Congress considers legislation that would affect the scope of entities covered by the Rule. Today’s announcement and the release of an Enforcement Policy Statement do not affect other federal agencies’ enforcement of the original November 1, 2008 deadline for institutions subject to their oversight to be in compliance.

“Congress needs to fix the unintended consequences of the legislation establishing the Red Flags Rule – and to fix this problem quickly. We appreciate the efforts of Congressmen Barney Frank and John Adler for getting a clarifying measure passed in the House, and hope action in the Senate will be swift,” FTC Chairman Jon Leibowitz said. “As an agency we’re charged with enforcing the law, and endless extensions delay enforcement.”

The Rule was developed under the Fair and Accurate Credit Transactions Act, in which Congress directed the FTC and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft. The resulting Red Flags Rule requires all such entities that have “covered accounts” to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities – known as “red flags” – that could indicate identity theft.

The Rule became effective on January 1, 2008, with full compliance for all covered entities originally required by November 1, 2008. The Commission has issued several Enforcement Policies delaying enforcement of the Rule. Most recently, the Commission announced in October 2009 that at the request of certain Members of Congress, it was delaying enforcement of the Rule until June 1, 2010, to allow Congress time to finalize legislation that would limit the scope of business covered by the Rule. Since then, the Commission has received another request from Members of Congress for another delay in enforcement of the Rule beyond June 1, 2010.

The Commission urges Congress to act quickly to pass legislation that will resolve any questions as to which entities are covered by the Rule and obviate the need for further enforcement delays. If Congress passes legislation limiting the scope of the Red Flags Rule with an effective date earlier than December 31, 2010, the Commission will begin enforcement as of that effective date.

In the interim, FTC staff has continued to provide guidance, both through materials posted on www.ftc.gov/redflagsrule, and in speeches and participation in seminars, conferences and other training events to numerous groups. The FTC also published a compliance guide for business, and created a template that enables low risk entities to create an identity theft program with an easy-to-use online form. The FTC staff also has published numerous general and industry-specific articles, released a video explaining the Rule, and continues to respond to inquiries from the public. To assist further with compliance, FTC staff has worked with a number of trade associations that have chosen to develop model policies or specialized guidance for their members.

As was the case previously, this enforcement delay is limited to the Red Flags Rule and does not extend to the rule regarding address discrepancies applicable to users of consumer reports (16 C.F.R.§641), or to the rule regarding changes of address applicable to card issuers (16 C.F.R.§681.2).

For questions regarding this Enforcement Policy, please contact Naomi Lefkovitz or Pavneet Singh, Bureau of Consumer Protection, 202-326-2252.

FTC Seeks Comments on Proposed Orders Requiring Food-and-Beverage Industry to Produce Information about Marketing to Kids

For Your Information

May 27, 2010

The Federal Trade Commission is seeking comments on a proposal to compel information from major food and beverage manufacturers, distributors, and marketers, as well as quick-service restaurant companies. The proposed orders are outlined in a Federal Register notice published by the agency. The orders seek data about the companies’ spending and marketing activities targeting children and adolescents, as well as nutritional information for food and beverage products that the companies market to these consumers.

In July 2008, the FTC published a report entitled Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation. The report analyzed 2006 expenditures and marketing activities directed to children. The Commission intends to use 2009 marketing and nutritional data collected to analyze changes in food marketing to children that have occurred over time, and plans to issue a follow-up report.

Comments are due to the Commission on or before June 24, 2010. The Federal Register notice outlining the proposed orders requiring information and detailing how to submit public comments can be found on the FTC’s website and as a link to this press release. (FTC File No. P094511; The staff contacts are Carol Jennings and Sarah Botha, Bureau of Consumer Protection, 202-326-3010 or 202-326-2036; see press release dated September 21, 2009 at http://www.ftc.gov/opa/2009/09/food.shtm.)

MEDIA CONTACT:

Contact Information

Office of Public Affairs
202-326-2180

FTC Submits Statement to Congress on Deceptive Marketing of Dietary Supplements

The Federal Trade Commission submitted a statement today to the U.S. Senate describing the agency’s work to protect consumers from false or misleading claims about dietary supplements. This work includes law enforcement actions, coordination with the Food and Drug Administration, and consumer education.

Submitted to the U.S. Senate Special Committee on Aging, the statement noted that the U.S. dietary supplement industry had $25 billion in sales last year, a 6 percent increase over the previous year. “[M]arket analysts suggest that the downturn in the economy has actually led to increased spending on supplements as consumers attempt to manage their own healthcare and avoid expensive doctor visits and prescription medications. Given this trend, it is more critical than ever that the Commission work to ensure that consumers are getting truthful and accurate information, backed by solid scientific evidence, about dietary supplements.”

The statement also described the FTC’s shared jurisdiction with the FDA over dietary supplements and other health and nutrition products – with the FTC having primary authority over food and dietary supplement advertising, and the FDA having primary responsibility for labeling of these products.

The FTC has brought more than 100 law enforcement actions over the past decade challenging claims about the effectiveness of a wide variety of supplements, including cold and flu products, weight-loss products, and supplements purported to treat serious diseases, including cancer and AIDS. The FTC also collaborates with the FDA and foreign authorities to conduct law enforcement sweeps that tackle broad categories of health fraud – such as “Operation False Cures,” which targeted Internet marketers of fraudulent cancer-cure products, and a recent Internet sweep of marketers of phony H1N1 Flu products. In addition, the FTC recently sent warning letters to companies claiming that Omega-3 fatty acid supplements enhance brain and vision function and development in school-aged children.

According to the statement, the FTC’s consumer education efforts have included the “Cure-ious? Ask” campaign, which alerts consumers to fraudulent cancer cures and encourages them to discuss all treatment options with their doctors. The FTC has also issued consumer education materials warning about deceptive sales pitches for supposed H1N1 treatments, as well as brochures about the safety and effectiveness of dietary supplements.

The FTC vote authorizing the statement 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 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. P064502)
(supplement statement)

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