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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.)

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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)

FTC Files Amicus Brief in Support of Rehearing of Ciprofloxacin “Pay-for-Delay” Case; FTC Approves Final Rule to Inform Consumers About Deposit Institutions That Lack Federal Deposit Insurance

FTC Files Amicus Brief in Support of Rehearing of Ciprofloxacin “Pay-for-Delay” Case

The Federal Trade Commission has filed an amicus brief in the U.S. Court of Appeals for the Second Circuit, recommending that it hold a rehearing before all the judges (“en banc”) of the Ciprofloxacin (Cipro) “pay-for-delay” case.

The case concerns payments made by Bayer AG, the branded manufacturer of Cipro, to potential generic competitors. In 1997, to settle patent litigation, Bayer paid its potential generic competitor a total of $398.1 million in exchange for the generic’s agreement to stay off the market for six years. On April 29, 2010, the Second Circuit ruled in favor of the defendants in this case, bound by an earlier decision. The Court, however, invited the plaintiffs to seek review by the full Court of Appeals, citing the “exceptional importance” of the antitrust implications of “pay-for-delay” settlements.

In its brief, the FTC states that the rehearing is needed so the court can reconsider an earlier ruling regarding “pay-for-delay” which “effectively shields a pernicious practice, which imposes enormous costs on American consumers for pharmaceutical drugs, from antitrust scrutiny.”

The name of the case is Arkansas Carpenters Health Welfare Fund, et al. v. Bayer AG, Bayer Corp., et al. (Civ. Nos. 05-2851-CV(L) and 05-2852-CV(CON)) It is on appeal from the U.S. District Court for the Eastern District of New York.

The FTC vote approving the amicus brief filing was 5-0. It was filed on May 20, 2010. A copy of the filing can be found on the FTC’s Web site and as a link to this press release. (FTC File No. P072104; the staff contact is Imad Dean Abyad, Office of General Counsel, 202-326-2375.)

FTC Approves Final Rule to Inform Consumers About Deposit Institutions That Lack Federal Deposit Insurance

The Federal Trade Commission has approved a final rule requiring depository institutions that lack federal deposit insurance to disclose that information to consumers.

The vast majority of depository institutions, including all federally chartered and most state-chartered banks, thrifts, and credit unions, are required to have federal deposit insurance that currently guarantees all deposits up to $250,000 per depositor. The Federal Deposit Insurance Corporation Improvement Act requires depository institutions without federal deposit insurance to provide disclosures that they lack such insurance, and directs the FTC to develop regulations for these required disclosures.

The FTC is now issuing a final rule in accordance with that law. Among other things, the Rule requires institutions without federal deposit insurance to disclose that they are not federally insured and that the federal government does not guarantee consumers will get their money back if the institution fails. These disclosures must be made on account statements, in advertising, and inside branches at deposit windows.

The Commission vote to publish the final rule in the Federal Register notice was 5-0. (FTC File No. R411014; the staff contact is Hampton Newsome, Bureau of Consumer Protection, 202-326-2889.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 22.2010.wpd)

FTC Announces Third Workshop on the Future of Journalism June 15 at the National Press Club

The Federal Trade Commission will hold its third and final workshop on the future of journalism at the National Press Club in Washington, DC, on June 15, 2010. Information about the series of workshops can be found at http://www.ftc.gov/opp/workshops/news/index.shtml. An agenda for this third workshop will be posted at a later date.

Consumers are increasingly turning to the Internet for news and information. Advertisers are moving ads to online sites and scaling back on ad buys as a result of the recession, and news organizations are struggling with large debts they took on during better times. As a result, some are questioning how journalism can survive and thrive in the future.

At the June 15 workshop, a small group of experienced journalists, publishers, academics, economists, and other policy experts will compare, contrast, and evaluate the ideas for sustaining journalism that have been set forth in two previous FTC workshops and in a wide variety of reports and conferences. This discussion will help inform potential recommendations to be contained in a report the FTC will release later this fall.

A staff discussion draft that briefly summarizes the state of journalism today, and sets forth the various proposals raised to date, has been posted on the FTC’s website. Through this document, the FTC staff seeks to prompt discussion of whether to recommend policy changes, and, if so, which specific proposals would be most useful, feasible, platform-neutral, resistant to bias, and unlikely to cause unintended consequences in addressing emerging gaps in news coverage. FTC staff anticipates that different workshop participants will criticize or improve some or all proposals, and add ideas of their own. The purpose of the staff discussion draft is precisely to encourage such additional analyses and brainstorming.

The list of proposals in this document is not exhaustive, and FTC staff welcomes additional proposals, as well as comments on the currently included proposals. To file comments, visit: http://public.commentworks.com/ftc/newsmediaworkshop.

The workshop is free and open to the public, but space is limited and attendees will be admitted on a first-come basis. The workshop will be held at: The National Press Club, 549 14th Street NW, 13th Floor, Washington, DC. Members of the public and press who wish to participate but who cannot attend can view a live webcast; A link will be available on the day of the workshop at: http://www.ftc.gov/opp/workshops/news/index.shtml.

The National Press Club is hosting a luncheon during the workshop. The speaker at the luncheon will be Paul Steiger, Editor-in-Chief, President, and Chief Executive Officer of ProPublica, and former Managing Editor of The Wall Street Journal. Workshop attendees who wish to attend the luncheon can do so for the admission price of $28.00, and should make reservations directly with the National Press Club at 202-662-7501, [email protected], or www.press.org.

In December 2009, the FTC held its first two-day workshop on the future of journalism, focusing on problems with the advertising-supported business model for journalism revealed in the current news environment. Panelists discussed the economics of journalism in print and online, new business models for journalism, and factors relevant to the new economic realities for news organization.

In March 2010, a second two-day workshop focused on various policy proposals that have been made for new ways to support journalism. For example, panelists discussed changes to copyright, corporate, tax, and other law; public funding mechanisms; and using new technologies to help lower the costs of journalism.

Victims of Bogus Online Pharmacy Scheme Being Sent Reimbursement Checks This Week on Behalf of FTC

This week, an administrator working on behalf of the Federal Trade Commission mailed checks to 19,324 consumers nationwide who were defrauded by marketers accused of running a bogus online pharmacy that sold sham “membership packages” to elderly consumers. Consumers who were victims of this scam will receive a total of $159,000 in redress. These are legitimate checks, and the FTC urges consumers to cash them.

The reimbursement stems from the August 2009 settlement of a case brought as part of “Operation Tele-PHONEY,” an FTC-led law enforcement sweep that included more than 180 actions against fraudulent telemarketers, including 13 brought by the FTC. In this case, known as Med Provisions, the FTC alleged that scammers based in Montreal, Canada, called consumers and told them their online pharmacy could save them 30 to 50 percent on their prescription drug costs. Consumers who paid the up-front fee were misled to believe the program came with a 30-day money-back guarantee if they were not satisfied. According to the FTC, consumers who ordered the “discount package” either received nothing or got a prescription card that turned out to be worthless.

The redress checks must be cashed by July 21, 2010. Consumers should call 1-877-789-9497 with any questions. The FTC never requires the payment of money up front, or the provision of additional information, before consumers cash redress checks issued to them.

(Civ. No. 1:06CV2385)
(EDI Redress.final)

FTC Closes its Investigation of Google AdMob Deal

The Federal Trade Commission has closed its investigation of Google’s proposed acquisition of mobile advertising network company AdMob after thoroughly reviewing the deal and concluding that it is unlikely to harm competition in the emerging market for mobile advertising networks.

In a statement issued today, the Commission said that although the combination of the two leading mobile advertising networks raised serious antitrust issues, the agency’s concerns ultimately were overshadowed by recent developments in the market, most notably a move by Apple Computer Inc. – the maker of the iPhone – to launch its own, competing mobile ad network. In addition, a number of firms appear to be developing or acquiring smartphone platforms to better compete against Apple’s iPhone and Google’s Android, and these firms would have a strong incentive to facilitate competition among mobile advertising networks.

“As a result of Apple’s entry (into the market), AdMob’s success to date on the iPhone platform is unlikely to be an accurate predictor of AdMob’s competitive significance going forward, whether AdMob is owned by Google or not,” the Commission’s statement explains.

The Commission stressed that mergers in fast-growing new markets like mobile advertising should get the same level of antitrust scrutiny as those in other markets. The statement goes on to note that, “Though we have determined not to take action today, the Commission will continue to monitor the mobile marketplace to ensure a competitive environment and to protect the interests of consumers.”

Mobile ad networks, such as those provided by Google and AdMob, sell advertising space for mobile publishers, who create applications and content for websites configured for mobile devices, primarily Apple’s iPhone and devices that run Google’s Android operating system. By “monetizing” mobile publishers’ content through the sale of advertising space, mobile ad networks play a vital role in fueling the rapid expansion of mobile applications and Internet content.

According to the FTC’s statement, evidence gathered by the agency raised important questions about the transaction. Google and AdMob have competed head-to-head for the past few years, with a notable increase in intensity during the past year. This competition has spurred innovation and allowed mobile publishers to keep a large share of the revenue generated from the sale of their ad space. The companies also have economies of scale that give them a major advantage over smaller rivals in the business, the statement says.

These concerns, however, were outweighed by recent evidence that Apple is poised to become a strong competitor in the mobile advertising market, the FTC’s statement says. Apple recently acquired Quattro Wireless and used it to launch its own iAd service. In addition, Apple can leverage its close relationships with application developers and users, its access to a large amount of proprietary user data, and its ownership of iPhone software development tools and control over the iPhone developers’ license agreement.

The Commission vote to close the investigation was 5-0.

Copies of the Commission’s statement can be found at www.ftc.gov. 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, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 101-0031)

Commission Seeks Public Comments on Carilion Clinics Application to Sell Center for Advanced Imaging to InSight Health Corporation; FTC Comment to FERC: Consider Ways to Improve Efficiency of Demand Response Compensation; FTC Approves The Dow Chemical

Commission Seeks Public Comments on Carilion Clinic’s Application to Sell Center for Advanced Imaging to InSight Health Corporation

The Federal Trade Commission is seeking public comments on a proposed sale by Carilion Clinic of Roanoke, Virginia. Under a December 2009 settlement order with the FTC, Carilion must divest an imaging center and an outpatient surgical center in Roanoke to Commission-approved buyers to resolve charges that its acquisition of the two centers was illegal and anticompetitive. The settlement’s goal is to restore the competition lost through Carilion’s acquisition of the two clinics. Carilion has now requested FTC approval to sell one of the clinics – the Center for Advanced Imaging – to InSight Health Corporation to satisfy, in part, its requirements under the settlement Order.

In January, Carilion requested FTC approval to sell The Center for Surgical Excellence to Fairlawn Surgery Center, LLC (see press release at: http://www.ftc.gov/opa/2010/01/carilionrobo.shtm.) The FTC approved that application on March 26, 2010.

The FTC is accepting public comments on the proposed sale through June 21, 2010. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580. (FTC Docket No. C-9338; the staff contact is Roberta S. Baruch, Bureau of Competition, 202-326-2861; see press release dated October 7, 2009, at http://www.ftc.gov/opa/2009/10/carilion.shtm.)

FTC Comment to FERC: Consider Ways to Improve Efficiency of Demand Response Compensation

The Federal Trade Commission has submitted a comment to the Federal Energy Regulatory Commission regarding FERC’s proposal to set compensation levels for retail electricity customers that support demand response. Demand response programs pay customers to reduce their use of electric power below their “normal” level during periods of greater power scarcity. By lowering the peak demand for energy, demand response programs reduce the need to construct new, expensive generation units. FERC proposes to replace a hodgepodge of demand response compensation approaches with a single approach that would pay customers the relevant wholesale price for electricity.

The FTC’s comment, which can be found on the agency’s Web site at http://www.ftc.gov/os/2010/05/100521fercdemand.pdf and as a link on this press release, states that the economically efficient compensation for demand response requires customers initially to pay their usual retail price for power regardless of whether they consume the power or, in essence, resell the power via a demand response program. Without these well-defined property rights, the comment concludes, retail customers could be induced to provide too much demand response. The comment also notes that an efficient level of compensation for demand response requires the adjustment of power prices to internalize all social costs, some of which, like environmental costs, are not currently included.

The vote approving the comment was 5-0. (FTC File No. V100010; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702.)

FTC Approves The Dow Chemical Company’s Application to Divest Hollow Sphere Particle Business to OMNOVA Solutions, Inc., and Modifies Final Order

Following a public comment period, the Federal Trade Commission has approved an application by The Dow Chemical Company to sell its hollow sphere particle business to OMNOVA Solutions Inc., as required by a March 31, 2009 consent order issued by the FTC. The order required Dow to divest a range of assets to FTC-approved buyers, including Dow’s acrylic monomer, hollow sphere particle, and acrylic latex polymer businesses, to resolve competitive concerns raised by Dow’s acquisition of Rohm & Haas. Upon its own motion, the Commission has also modified the order to permit Dow to license back from OMNOVA certain intellectual property used by Dow to make and sell products that the order does not require Dow to divest.

The FTC vote approving Dow’s divestiture application and the modification of the final Commission Decision and Order was 4-0-1, with Commissioner Edith Ramirez not participating. (FTC File No. 081-0214, Docket No. C-4243; the staff contact is Roberta Baruch, Bureau of Competition, 202-326-2681; see press releases dated January 23, 2009, and November 10, 2009, at: http://www.ftc.gov/opa/2009/01/dow.shtm and http://www.ftc.gov/opa/2009/11/dow.shtm.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 21.2010.wpd)

FTC Creates Teaser Website to Help Consumers Spot Advance Fee Loan Scams

The Federal Trade Commission has created a “teaser” website for a fictitious lending company that warns consumers about how easy it is to be fooled by scammers charging up-front fees for bogus loans. The site also explains how to spot and avoid loan scams.

The website is part of a consumer education campaign to help consumers manage their money and learn to recognize scams.

At wemarket4u.net/esteemed/index.html, consumers enter the fictitious world of Esteemed Lending Services, where a loan for every situation is guaranteed. The site claims qualified loan specialists will help you find a loan for any purpose, or consolidate your high-interest debt – regardless of your credit history.

But when consumers click to learn more or apply for a loan, they will discover that Esteemed Lending is not a real company. The website provides information to warn consumers about scammers masquerading as lenders. These scammers start by promising loans, only later revealing a fee that consumers have to pay first. If they pay, it’s unlikely they will see the promised loan, and they run the risk that their personal information will end up in the hands of identity thieves. The site also gives consumers tips to help spot an advance fee scam, and includes links to more information from the FTC.

This website and other FTC “teaser sites” are available at wemarket4u.net.

(FYI advance fee site)

At FTC’s Request, Court Stops Deceptive Telemarketing Calls Pitching Credit Card Interest Rate Reduction

At the request of the Federal Trade Commission, a federal judge has put a stop to three companies’ allegedly deceptive telemarketing calls, including robocalls, that promised to reduce consumers’ credit card interest rates; frozen their assets; and appointed a receiver to take control of the business.

According to the FTC’s complaint, over the past two years, the defendants made or authorized calls to consumers nationwide, claiming that they could negotiate with credit card issuers to substantially lower the interest rates on the consumers’ credit cards. They also allegedly delivered prerecorded “robocalls” that consisted of urgent-sounding messages from “Card Services” or “Financial Services,” stating that consumers needed to “press one” to speak to a representative about their credit card interest rates. Many consumers believed the calls were from their credit card issuers.

Consumers who signed up for the defendants’ services were charged from $499 to $1,590 up-front and promised their money back if the callers failed to deliver at least $2,500 in interest rate savings, the FTC alleged. Instead of arranging reduced interest rates, the complaint states, the defendants sent consumers instructions to pay down their credit card debts early, thus saving money on interest. Consumers who complained and demanded refunds allegedly were denied outright, got the run-around, or had a $199 “nonrefundable fee” deducted from their refund.

“The last thing debt-ridden consumers need is to be deluged by illegal robocalls – especially when all the calls are offering is a scam,” said FTC Chairman Jon Leibowitz.

The FTC’s complaint alleged that AMS, Rapid Reduction, PDMI, and their owners violated the FTC Act and the Do Not Call and other provisions of the Telemarketing Sales Rule by:

deceptively promising consumers they could reduce their credit card interest rates;
misleading consumers about their refund policies;
illegally calling numbers on the National Do Not Call Registry;
failing to honor consumers’ requests not to be called again; and
making pre-recorded telemarketing calls to consumers without their express written consent. Nearly all such calls have been illegal since September 1, 2009 (see press release at: http://www.ftc.gov/opa/2009/08/robocalls.shtm).

U.S. District Judge Lonny Suko has issued an order appointing two receivers to take over the businesses, and freezing the assets of Advanced Management Services NW LLC, doing business as AMS Financial, Rapid Reduction System’s [sic] LLC, and their principals Ryan Bishop and Michael Rohlf, all of Spokane, Washington, and PDM International, Inc., doing business as Priority Direct Marketing International, Inc. (PDMI) of Bedford, Texas, and its principal William Fithian, of Colleyville, Texas.

The FTC vote approving the complaint was 5-0. It was filed under seal in the U.S. District Court for the Eastern District of Washington on May 10, 2010. The court granted an order temporarily barring the alleged conduct on May 10, 2010. The seal was lifted on May 11, 2010, the day the Commission served the temporary restraining order.

The FTC acknowledges the assistance of Better Business Bureau of Eastern Washington, Northern Idaho, and Montana, and the BBB of Fort Worth, Texas, the U.S. Postal Inspection Service; the Bedford, Texas, Police Department; and the attorneys general of Illinois, Minnesota, North Carolina, North Dakota, Washington, and West Virginia. The FTC also acknowledges that the Internal Revenue Service, the Federal Bureau of Investigation, and the U.S. Secret Service are conducting a separate but parallel criminal investigation and that they executed search warrants on one business and one individual’s home when the FTC served the temporary restraining order.

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 defendant has violated the law.

Copies of the stipulated final order are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC 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.ftc.gov/ftc/complaint.shtm 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://ftc.gov/bcp/consumer.shtm.

(FTC File No. 092-3187; Civ. No. CV-10-0148-LRS)
(AMS.Final.wpd)

FTC Budget Testimony Highlights Efforts to Protect Consumers, Promote Competition During the Economic Downturn

In testimony before the U.S. Senate Subcommittee on Financial Services and General Government of the Committee on Appropriations, the Federal Trade Commission today described the agency’s continuing work to promote competition and protect American consumers, including initiatives to stop fraud targeting financially distressed consumers, protect privacy, and prevent anticompetitive practices such as “pay-for-delay” in the pharmaceutical industry, which costs consumers $3.5 billion a year in higher drug costs.

FTC Chairman Jon Leibowitz summarized the FTC’s FY 2011 budget request, noting that strong support from Congress has made the agency more effective in its consumer protection efforts. The testimony stated that, in the past year, the FTC has brought almost 40 law enforcement actions to stop scams that prey on consumers suffering from the financial downturn, and the agency is also engaged in rulemaking and consumer education efforts related to financial services. In the financial services area alone, the FTC has filed more than 100 actions over the past five years, and obtained nearly $500 million in redress for consumers in the past 10 years.

The testimony highlighted FTC efforts to protect financially-strapped consumers, including filing 28 lawsuits since 2008 to stop deceptive claims by mortgage loan modification and foreclosure relief scammers, and proposing rules that would stop them from collecting fees before delivering results. The FTC has also led a federal-state crackdown on employment opportunity scams, bogus government grant offers, debt relief and credit repair scams, and get-rich-quick schemes, and reached an $18 million settlement with MoneyGram, resulting in more than 34,000 checks to consumers who were tricked into wiring money regarding fake lotteries, secret shopper scams, and bogus loans.

The testimony also highlighted the FTC’s efforts to protect consumers’ privacy. The FTC has taken 29 actions against companies that failed to protect consumers’ personal information; obtained $11 million for consumer redress from LifeLock, Inc. as part of a settlement preventing false identity theft prevention claims; shut down a rogue Internet Service Provider that helped distribute illegal spam, child pornography, and other harmful content; and settled a lawsuit against Sears for not fully disclosing the scope of consumers’ personal information the company collected. To help consumers check for inaccurate information on their credit reports, the FTC amended the Free Credit Report Rule to help consumers avoid “free” offers that cost money. The FTC is also examining consumer privacy more broadly, especially in light of emerging technologies and business models, including social networking, cloud computing, online behavior advertising, and mobile marketing.

Noting the FTC’s continuing enforcement of the Do Not Call Registry, which protects almost 200 million telephone numbers, the testimony stated that in the past year the FTC filed nine law enforcement actions against “robocallers” making deceptive telemarketing pitches, including one announced today against AMS. DirecTV and Comcast paid $2.3 million and $900,000, respectively, to settle charges that they called consumers who had asked not to be called. Also, today the FTC announced a $500,000 settlement with Diamond Phone Card, Inc. for overstating the number of calling minutes on its prepaid calling cards.

As stated in the testimony, the FTC has worked to protect children by filing more than 14 lawsuits to enforce the Children’s Online Privacy Protection Act, obtaining more than $3.2 million in civil penalties for law violations. The FTC has also continued its efforts to promote marketing of healthier foods to children, educate children about online safety, and help children think critically about advertising.

The testimony also highlighted FTC efforts to promote competition, including its top priority, to stop pay-for-delay drug patent settlements that cost consumers $3.5 billion per year in higher drug costs. The FTC also challenges anticompetitive health care mergers to help reduce costs, improve quality, and encourage innovation.

The FTC also focuses significant resources on protecting competition in technology, energy, and consumer goods and services. Last year, the agency charged Intel Corporation with illegally using its dominant position to stifle competition, strengthen its monopoly, and raise prices to consumers in the computer microchip market. The FTC has also hosted workshops on the future of news to explore how to enhance media competition to protect consumer welfare.

In closing, the testimony requested $314 million to support 1,207 “full-time equivalent” employees (FTEs) to meet the challenges of FY 2011, which represents an increase of $22.3 million and 40 FTEs from FY 2010. The testimony noted that the FTC’s current staff level is considerably lower than it was at its peak in 1979, when the FTC had about 1,800 FTEs to serve a much smaller population.

The Commission vote authorizing the testimony was 5-0.

(SenateBudgetTestimonyFY2011)
(P072104)

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