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Sony Computer Entertainment America To Provide Consumer Refunds To Settle FTC Charges Over Misleading Ads For PlayStation Vita Gaming Console

Note: A conference call for media with FTC Western Region Director Tom Dahdouh will occur as follows:

Date: November 25, 2014
Time: 1:00 p.m. ET; 10:00 a.m. PT

Call-in lines, which are for media only, will open 15 minutes prior to the start of the call. Director Dahdouh and FTC staff will be available to take questions from the media about the case.

Sony Computer Entertainment America (“Sony”) has agreed to settle Federal Trade Commission charges that it deceived consumers with false advertising claims about the “game changing” technological features of its PlayStation Vita handheld gaming console during its U.S. launch campaign in late 2011 and early 2012.

As part of its settlement with the FTC, Sony is barred from making similarly misleading advertising claims in the future, and will provide consumers who bought a PS Vita gaming console before June 1, 2012, either a $25 cash or credit refund, or a $50 merchandise voucher for select video games, and/or services. Sony will provide notice via email to consumers who are eligible for redress after the settlement is finalized by the Commission.

“As we enter the year’s biggest shopping period, companies need to be reminded that if they make product promises to consumers — as Sony did with the “game changing” features of its PS Vita — they must deliver on those pledges,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The FTC will not hesitate to act on behalf of consumers when companies or advertisers make false product claims.”

As part of its launch campaign for the PS Vita, Sony claimed that the pocket-sized console would revolutionize gaming mobility by enabling consumers to play their PlayStation 3 games via “remote play,” and that they could engage in “cross platform” play by starting a game on a PS3 and then continuing it on the go, right where they left off, on a PS Vita. The FTC alleges that each of these claims was misleading.

In a related action, the Commission charged that Deutsch LA, Sony’s advertising agency for the PS Vita launch, knew or should have known that the advertisements it produced contained misleading claims about the console’s cross platform and 3G capabilities.

The FTC also alleges that Deutsch LA further misled consumers by urging its employees to create awareness and excitement about the PS Vita on Twitter, without instructing employees to disclose their connection to the advertising agency or its then-client Sony. Under a separate settlement order, Deutsch LA is barred from such conduct in the future.

The PS Vita is a handheld gaming console that Sony first sold in the United States in February 2012 for about $250. Unlike the PS3, which allows consumers to play video games on a television, the PS Vita is a portable device that enables gamers to play “on the go,” untethered to a television screen.

FTC Complaint Against Sony Computer Entertainment America

The FTC’s complaint against Sony charges the company with making false claims about the PS Vita’s “cross platform gaming” or “cross-save” feature. Sony claimed, for example, that PS Vita users could pause any PS3 game at any time and continue to play the game on their PS Vita from where they left off. This feature, however, was only available for a few PS3 games, and the pause-and-save capability described in the ads varied significantly from game to game. For example, with respect to “MLB 12: The Show,” consumers could only save the game to the PS Vita after finishing the entire nine-inning game on their PS3. In addition, Sony failed to inform consumers that to use this feature, purchasers had to buy two versions of the same game – one for their PS3 and one for the PS Vita.

The FTC’s complaint also alleges that Sony’s PS Vita ads falsely implied that consumers who owned the 3G version of the device (which cost an extra $50 plus monthly fees) could engage in live, multi-player gaming through a 3G network. In fact, consumers could not engage in live, multiplayer gaming.

The complaint further alleges that Sony also falsely claimed that with the “remote play” feature, PS Vita users could easily access their PS3 games on their handheld consoles. In reality, most PS3 games were not remote playable on the PS Vita. Sony also misled consumers by falsely claiming that PS Vita users could remotely play the popular PS3 game, Killzone 3, on the PS Vita. In fact, Sony never enabled remote play on its Killzone 3 game title, and very few, if any, PS3 games of similar size and complexity were remote playable on the PS Vita.

TV spot for the PlayStation Vita highlighting “remote play” and “cross platform play” features.

FTC Complaint Against Deutsch LA

The FTC’s complaint against Deutsch LA charges the company with similarly misleading consumers through ads that it created touting the PS Vita’s cross-platform gaming and 3G features.

The Commission also alleges that Deutsch LA misled consumers with deceptive product endorsements for the PS Vita. Specifically, the agency used the term “#gamechanger” in its ads to direct consumers to online conversations about Sony’s console on Twitter. About a month before the gaming console was launched, one of Deutsch LA’s assistant account executives sent a company-wide email to staff asking them to help with the ad campaign by posting comments about the PS Vita on Twitter and using the same “#gamechanger” hashtag, according to the complaint.

In response to the company-wide email, various Deutsch LA employees posted positive tweets about the PS Vita to their personal Twitter accounts, without disclosing their connection to Deutsch or Sony, the FTC alleged. The FTC has charged that the tweets were misleading, as they did not reflect the views of actual consumers who had used the PS Vita, and because they did not disclose that they were written by employees of Deutsch LA.

Proposed Settlement Orders

The proposed settlement orders prohibit both Sony and Deutsch LA from making similar misrepresentations in the future when promoting the features or capabilities of handheld gaming consoles. The proposed order against Deutsch LA also bars it from misrepresenting that an endorser of any game console product or video game product is an independent user or ordinary consumer of the product. In addition, the proposed order requires Deutsch LA to disclose a material connection, where one exists, between any endorser of a game console product or video game product and Deutsch LA or other entity involved in the manufacture or marketing of the product. These requirements are in line with the FTC’s Endorsement Guides,

The proposed order against Sony requires it to send email notifications to all consumers it can reasonably identify as having bought a PS Vita before June 1, 2012.

Information for Consumers

The FTC has information for consumers about how to detect and avoid advertisements that may be deceptive or misleading, including a new blog post, Sony Ads Shouldn’t Play Games.

The Commission vote to accept both proposed consent orders for public comment was 5-0. The FTC will publish a description of the consent agreement packages in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through December 29, 2014, after which the Commission will decide whether to make them final. Public comments can be filed on the proposed order regarding Sony. Comments also can be filed on the proposed order regarding Deutsch LA.

NOTE: The Commission issues an administrative 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. 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 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FDIC Announces Upcoming Community Affairs Webinar:

FIL-58-2014
November 25, 2014

FDIC Announces Upcoming Community Affairs Webinar:

Helping Your Customers Save: America Saves Week 2015

Summary:

The FDIC’s Division of Depositor and Consumer Protection (DCP) Community Affairs Branch will host a webinar titled Helping Your Customers Save: America Saves Week 2015 on December 12, 2014, from 3:00 p.m. to 4:00 p.m. (EST). This webinar will help banks prepare for America Saves Week 2015. Guest presenters from the Consumer Federation of America and its partners will discuss ways for banks to encourage customers to set and achieve savings goals through the use of insured bank accounts. Initiatives in rural markets will be a particular focus of discussion. This is part of an ongoing series of webinars highlighting strategies institutions can use to promote community development and expand access to the banking system.

Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised institutions.

Highlights:

During an upcoming webinar, presenters from America Saves and partner organizations will discuss ways for banks to successfully encourage customers to set and achieve savings goals through the use of a bank account.
This webinar will be held Friday, December 12, 2014, from 3:00 p.m. to 4:00 p.m. (EST).
The session is free, but registration is required. Institutions must register by December 11^th. Click here to register.
The FDIC welcomes suggestions for topics to be covered during future webinars. Please submit suggestions to [email protected].

Assessments

FIL-57-2014
November 24, 2014

Assessments

Final Rule

Printable Format:

FIL-57-2014 – PDF (PDF Help)

Summary:

On November 18, 2014, the FDIC Board of Directors adopted the Assessments Final Rule. The Final Rule revises the FDIC’s risk-based deposit insurance assessment system to reflect changes in the regulatory capital rules that go into effect in 2015 and 2018. For deposit insurance assessment purposes, the Final Rule will: (1) revise the ratios and ratio thresholds relating to capital evaluations, (2) revise the assessment base calculation for custodial banks, and (3) require that all highly complex institutions measure counterparty exposure for assessment purposes using the Basel III standardized approach in the regulatory capital rules. There are two effective dates for item (1): January 1, 2015, and January 1, 2018. The effective date for items (2) and (3) is January 1, 2015.

Statement of Applicability to Institutions Under $1 Billion in Total Assets: This Financial Institution Letter applies to FDIC-insured institutions as follows: item (1) applies to all small institutions (generally, those with less than $10 billion in assets), including those institutions under $1 billion in total assets; item (2) applies to all custodial banks, including those institutions under $1 billion in total assets; and item (3) does not apply to institutions under $1 billion in total assets.

Highlights:

The Final Rule follows a Notice of Proposed Rulemaking (NPR) that the FDIC approved for publication on July 15, 2014.
The Final Rule conforms the capital ratios and ratio thresholds in the small institution assessment system to the new prompt corrective action (PCA) capital ratios and ratio thresholds recently adopted by the federal banking agencies.
The Final Rule conforms the assessment base calculation for custodial banks to the new asset risk weights using the standardized approach in the new regulatory capital rules. It differs from the NPR in that the Final Rule allows for the deduction of certain low risk, liquid securitizations.
The Final Rule requires that all highly complex institutions measure counterparty exposure for assessment purposes using the Basel III standardized approach credit equivalent amount for derivatives and the Basel III standardized approach exposure amount for securities financing transactions in the regulatory capital rules. The Final Rule differs from the NPR in that it allows certain cash collateral to reduce derivatives exposure.

FTC Concludes Review of AgeCheq’s Initial Proposed COPPA Verifiable Parental Consent Method

Following a public comment period and review of AgeCheq, Inc.’s initial proposed Children’s Online Privacy Protection (COPPA) Rule verifiable parental consent method, the Federal Trade Commission has denied the company’s application.

In its application, AgeCheq proposed a real-time common consent mechanism, which conducts identity verification in two ways. The first method of verifying parental identity involves a financial transaction. The second method involves the parent printing, signing, and returning a declaration form to AgeCheq. In a letter to AgeCheq, the FTC stated that the company’s proposed mechanism uses methods that have already been recognized as a valid means of obtaining verifiable parental consent in the Rule. The FTC’s letter also states that companies are free to develop common consent mechanisms without Commission approval.

AgeCheq recently proposed a different verifiable parental consent method, which is currently open for public comment.

Under the COPPA Rule, online sites and services directed at children under 13, and general audience sites or services that knowingly collect, use, or disclose personal information from children under 13, must obtain permission from a child’s parents before collecting personal information from that child. The rule lays out a number of acceptable methods for gaining parental consent, but also includes a provision allowing interested parties to submit new verifiable parental consent methods to the Commission for approval. Approved methods may be used by any company, not just the particular applicant requesting approval of the method.

The Commission vote to deny AgeCheq’s application and issue the letter was 5-0.

FTC Halts Advance Fee Recovery Scheme Targeting Victims of Timeshare Resale and Investment Scams

The defendants in a federal court action brought by the FTC have agreed to stop operating an advance fee recovery scheme for the duration of the on-going litigation. The FTC seeks to permanently stop the operation, which in the past year took close to $1.3 million from consumers, many of them elderly people who had lost money to timeshare resale and precious metal investment frauds.

According to the FTC’s complaint, telemarketers for Consumer Collection Advocates, Corp. and Michael Robert Ettus called consumers and falsely guaranteed that, for an up-front fee, typically 20 percent of the amount they lost, the defendants would recover substantial amounts of money for them – 60 percent or more – within 30 to 180 days. For consumers who had lost from several thousand to hundreds of thousands of dollars and could not afford a 20 percent up-front fee, the defendants would often accept a reduced fee of less than 10 percent of their loss. The defendants also charged a back-end fee of 20 percent for any amount recovered.

According to the complaint, consumers were sent a contract and power of attorney to sign and return with an up-front payment ranging from hundreds to as much as $10,000. Consumers who did not agree to buy the service received repeated calls from defendants pressuring them to sign up. Once consumers paid for the recovery service, they stopped hearing from the defendants. Those who called to ask about their recovery were told their case was being worked on, but few, if any, consumers received any money, according to the complaint.

The defendants are charged with violating the FTC Act and the FTC’s Telemarketing Sales Rule, which prohibits seeking or accepting payment from a person for recovery of money paid for previous telemarketing transactions until seven business days after that person receives the money.

Under a court order announced today, the defendants are prohibited from misrepresenting that consumers who buy their services will recover, or are highly likely to recover, a substantial portion of money they have lost to telemarketers, typically within 30 to 180 days. They are also barred from violating the TSR, and from selling or otherwise benefitting from customers’ personal information.

The Commission vote authorizing the staff to file the complaint was 5-0. It was filed in the U.S. District Court for the Southern District of Florida. On November 4, 2014, the court entered a temporary restraining order [link to TRO] halting the defendants’ deceptive scheme and freezing their assets. The defendants agreed to a preliminary injunction, which the court entered on November 17, 2014. The preliminary injunction continues the conduct prohibitions and asset freeze.

As part of a joint investigation between the FTC and the State of Florida, the Florida Attorney General’s Office filed an action against the defendants in state court on November 5, 2014, alleging the same deceptive practices.

The FTC appreciates the assistance of the Better Business Bureau Serving Southeast Florida and the Caribbean in bringing this case.

NOTE: The Commission authorizes the filing of 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.

FTC Seeks Comments on Additional Proposed Changes to Used Car Rule

The Federal Trade Commission is seeking supplemental public comments on proposed changes to the agency’s Used Car Rule and the Used Car Buyers Guide that the Rule requires dealers to display. The Commission is not adopting any final amendments to the Rule at this time.

The Used Motor Vehicle Trade Regulation Rule, in effect since 1985, requires car dealers to display a window sticker, called a Buyers Guide, on used cars they offer for sale. The Buyers Guide discloses whether the dealer is offering to sell a used car “as is” (without a warranty), or with a warranty. If the sale is with a warranty, the Buyers Guide discloses the warranty’s terms and conditions, including the duration of coverage, the percentage of total repair costs the dealer will pay, and the vehicle systems that the warranty covers. In states that do not permit “as is” used car sales, dealers must use an alternative Buyers Guide that discloses whether the sale is with a warranty or with implied warranties only.

In December 2012, the FTC sought public comments on proposed changes to the Buyers Guide as part of its systematic review of all of the agency’s rules and guides. In response to the comments the Commission received, the agency now seeks comments on additional proposed changes to the Used Car Rule, including:

requiring dealers who have obtained a vehicle history report to indicate that fact in a box on the Buyers Guide, and to provide a copy to consumers upon request;
modifying the Buyers Guide description of an “As Is” sale to clarify that it means the sale of a used car without a warranty; and
placing boxes on the front of the Buyers Guide for dealers to disclose “non-dealer” warranties.

The proposed changes announced today incorporate certain previously proposed amendments, including:

adding a statement to the Buyers Guide encouraging consumers to obtain vehicle history reports, to check for safety recalls, and to visit a proposed FTC website for more information; and
adding a statement, in Spanish, on the front of the English language Buyers Guide, advising Spanish-speaking consumers to ask for the Guide in Spanish if they cannot read it in English.

The Commission also invites comments on alternative approaches that public commenters proposed for the vehicle history disclosure and the “As Is” statement.

For more information about the Used Car Rule, read Buying a Used Car. For used car dealers, the FTC offers A Dealer’s Guide to the Used Car Rule. “Fillable” versions of the Buyers Guide in English and Spanish are available at FTC.gov.

The Commission vote to publish the Proposed Supplemental Notice of Proposed Rulemaking in the Federal Register was 5-0. To comment by mail, write “Used Car Rule Regulatory Review, 16 CFR Part 455, Project No. P087604” on comments and send them to Federal Trade Commission, Office of the Secretary, Room H-113 (Annex A), 600 Pennsylvania Avenue, N.W., Washington, DC 20580, or file them online. Comments must be received on or before January 30, 2015. All comments received will be posted on the agency’s website.

Guidance Related to the FDIC Statement of Policy on Applications for Deposit Insurance

FIL-56-2014
November 20, 2014

Guidance Related to the FDIC Statement of Policy on Applications for Deposit Insurance

Printable Format:

FIL-56-2014 – PDF (PDF Help)

Summary:

The FDIC is issuing guidance in the form of “Questions and Answers” or “Q&As” to aid applicants in developing proposals for deposit insurance and to provide transparency to the application process.

Statement of Applicability to Institutions With Total Assets Under $1 Billion: This Financial Institution Letter applies to all insured depository institutions.

Highlights:

Part 303 (Subpart B) of the FDIC Rules and Regulations (12 U.S.C. § 1815) sets forth the administrative procedures to apply for deposit insurance.

The FDIC Statement of Policy on Applications for Deposit Insurance (SOP), which was effective October 1, 1998, provides additional guidance to proposed depository institutions applying for deposit insurance.

The FDIC strives to provide transparency in the application process and periodically receives questions regarding the SOP from applicants and other related parties.

To aid potential applicants, the FDIC is issuing Q&As related to the SOP. As circumstances warrant, the FDIC may post additional Q&As to the FDIC’s Web site.

The Q&As cover topics such as pre-filing meetings, processing timelines, initial capitalization, and initial business plans of de novo institutions.

Continuation of FIL-56-2014

Financial Institution Letters
FIL-56-2014
November 20, 2014

Guidance Related to the FDIC Statement of Policy on Applications for Deposit Insurance

This Financial Institution Letter (FIL) provides guidance related to the FDIC Statement of Policy of Applications for Deposit Insurance (SOP). Part 303 (Subpart B) of the FDIC Rules and Regulations (12 U.S.C. § 1815) sets forth the administrative procedures for applying for deposit insurance.

The SOP was effective October 1, 1998, and provides additional guidance to proposed depository institutions applying for federal deposit insurance.

In order to aid applicants in developing proposals for deposit insurance, and to provide transparency to the application process, the FDIC has developed an initial set of questions and answers (Q&As) regarding the SOP. The Q&As (attached to this FIL) address pre-filing meetings, processing timelines, initial capitalization, and initial business plans of de novo institutions.

As circumstances warrant, the FDIC will consider additional Q&As to aid applicants in the development and submission of applications for deposit insurance and the application process. It is the FDIC’s intent that the Q&As will be a valuable resource for applicants and other interested parties.

Questions regarding the SOP or the Q&As may be directed to Associate Director Lisa D. Arquette at [email protected] or Donald R. Hamm at [email protected].

Doreen R. Eberley
Director
Division of Risk Management Supervision

FTC, Illinois, and Ohio Stop Scheme That Offered ‘Free’ Credit Scores, Then Charged Consumers for Credit Monitoring Programs They Never Ordered

The Federal Trade Commission has stopped an online scheme that allegedly lured consumers with “free” access to their credit scores and then billed them a recurring fee of $29.95 per month for a credit monitoring program they never ordered. The three companies have agreed to pay $22 million for consumer refunds under a settlement with the FTC and the state attorneys general in Illinois and Ohio.

The defendants marketed their credit monitoring programs, MyCreditHealth and ScoreSense, through at least 50 websites, including FreeScore360.com, FreeScoreOnline.com and ScoreSense.com. According to the FTC, they bought advertising on search engines such as Google and Bing so that ads for their websites appeared near the top of search results when consumers looked for terms such as “free credit report.” The most prominent ad stated, “View your latest Credit Scores from All 3 Bureaus in 60 seconds for $0!”

According to a complaint filed by the FTC, Illinois, and Ohio, the defendants failed to clearly disclose that consumers who accessed their credit score through their websites would be enrolled in a credit monitoring program and incur monthly charges until they called the defendants to cancel. At least 210,000 consumers contacted banks, credit card companies, law enforcement agencies, and the Better Business Bureau to complain about the scheme.

The only way consumers could cancel their membership and request refunds was to call a toll-free number. Consumers often had to make repeated calls to secure their cancellation or refund. The defendants often denied refunds to those who claimed they did not knowingly enroll.

The FTC alleged that the defendants violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits charging consumers for goods or services sold online via a negative option unless the seller clearly discloses all material terms before obtaining the consumer’s billing information, obtains the consumer’s express informed consent before making the charge, and provides a simple way to stop recurring charges. They were also charged with violating the Illinois Consumer Fraud Act and the Ohio Consumer Sales Practices Act.

Under the proposed settlement order announced today, the defendants are permanently prohibited from violating ROSCA, misrepresenting material facts about any product or service marketed with a negative option, misrepresenting material terms of any refund or cancellation policy, and failing to clearly disclose, before a consumer consents to pay via a negative option, all materials terms of any such policy. They are also barred from failing to honor a refund or cancellation request that complies with such a policy, and failing to provide a simple mechanism for consumers to stop recurring charges – at least as simple as the mechanism consumers used to initiate the services.

In addition, the defendants are prohibited from failing to disclose, before a consumer agrees to pay for something via a negative option, the name of the seller or provider or the name of the product or service as it appears in billing statements, a product description and its cost, the length of any trial period, and the mechanism to stop any recurring charges. The defendants are also barred from using billing information to obtain payment for any product or service marketed with a negative option without the consumer’s prior express informed consent, as prescribed in the court order.

The defendants are One Technologies LP, also doing business as ScoreSense, One Technologies Inc., and MyCreditHealth; One Technologies Management LLC; and One Technologies Capital LLP.

The Commission vote authorizing the staff to file the complaint and proposed stipulated order was 5-0. The proposed order was filed in the U.S. District Court for the Northern District of California, San Francisco Division, on November 18, 2014.

The FTC would like to thank the attorneys general of Illinois, Ohio, and Texas for their invaluable assistance during this investigation.

FTC Obtains Court Orders Temporarily Shutting Down Massive Tech Support Scams

At the request of the Federal Trade Commission and the State of Florida, a federal court has temporarily shut down two massive telemarketing operations that conned tens of thousands of consumers out of more than $120 million by deceptively marketing computer software and tech support services. The orders also temporarily freeze the defendants’ assets and place the businesses under the control of a court-appointed receiver.

According to complaints filed by the FTC, since at least 2012, the defendants have used software designed to trick consumers into thinking there are problems with their computers, then subjected those consumers to high-pressure deceptive sales pitches for tech support products and services to fix their non-existent computer problems.

“These operations prey on consumers’ lack of technical knowledge with deceptive pitches and high-pressure tactics to sell useless software and services to the tune of millions of dollars,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “There’s no excuse for it, and we are pleased the court has taken steps to temporarily shut down these scams while our lawsuit proceeds.”

These cases mark the third in a series of actions by the FTC against the operators of computer repair scams, including an enforcement sweep of cases in 2011 and an action brought by the FTC earlier this year against a New York-based scammer.

In this latest action, the FTC and the State of Florida have filed two separate cases against companies who allegedly sold the bogus software and the deceptive telemarketing operators who allegedly sold needless tech support services:

In the first case, the defendants selling software include PC Cleaner Inc.; Netcom3 Global Inc.; Netcom3 Inc., also doing business as Netcom3 Software Inc.; and Cashier Myricks, Jr. The telemarketing defendants include Inbound Call Experts LLC; Advanced Tech Supportco. LLC; PC Vitalware LLC; Super PC Support LLC; Robert D. Deignan, Paul M. Herdsman, and Justin M. Wright.
In the second case, the defendants selling software include Boost Software Inc. and Amit Mehta, and the telemarketing defendants include Vast Tech Support LLC, also doing business as OMG Tech Help, OMG Total Protection, OMG Back Up, downloadsoftware.com, and softwaresupport.com; OMG Tech Help LLC; Success Capital LLC; Jon Paul Holdings LLC; Elliot Loewenstern; Jon-Paul Vasta; and Mark Donahue.

According to the FTC’s complaints, each scam starts with computer software that purports to enhance the security or performance of consumers’ computers. Typically, consumers download a free trial version of software that runs a computer system scan. The defendants’ software scan always identifies numerous errors on consumers’ computers, regardless of whether the computer has any performance problems.

The software then tells consumers that, in order to fix the identified errors, they will have to purchase the paid version of the software. In reality, the FTC alleges, the defendants pitching the software designed these highly deceptive scans to identify hundreds or even thousands of “errors” that have nothing to do with a computer’s performance or security. After consumers purchase the “full” version of the software at a cost of $29 to $49, the software directs them to call a toll-free number to “activate” the software.

When consumers call the activation number, however, they are connected to telemarketers who try to sell computer repair services and computer software using deceptive scare tactics to deceive consumers into paying for unneeded computer support services.

According to the FTC, the telemarketers tell consumers that, in order to activate the software they have just purchased, they must provide the telemarketers with remote access to their computers. The telemarketers then launch into a scripted sales pitch that includes showing consumers various screens on their computers, such as the Windows Event Viewer, and falsely claiming that these screens show signs that consumers’ computers have significant damage. After convincing consumers that their computers need immediate help, the telemarketers then pitch security software and tech support services that cost as much as $500.

The two complaints allege that the defendants violated Section 5 of the FTC Act, the Telemarketing Sales Rule and the Florida Deceptive and Unfair Trade Practices Act.

The Commission thanks the Palm Beach County Sheriff’s Department and the Delray Beach Police Department for their assistance in this matter.

The Commission vote authorizing the staff to file each of the complaints was 5-0. The actions were both filed in the U.S. District Court for the Southern District of Florida. The court signed the temporary restraining orders on Nov. 12. 2014.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The cases will be decided by the court.

FTC Seeks Public Comment on Second AgeCheq, Inc., Proposal for Parental Verification Method Under COPPA Rule

CORRECTED: The deadline for comment related to this matter is Dec. 29, 2014. The release previously listed an earlier date.

The Federal Trade Commission is seeking public comment on a proposed verifiable parental consent method that AgeCheq, Inc., has submitted for Commission approval under the agency’s Children’s Online Privacy Protection Rule.

Under the rule, online sites and services directed at children under 13, and general audience sites or services that knowingly collect, use, or disclose personal information from children under 13, must obtain permission from a child’s parents before collecting personal information from that child. The rule lays out a number of acceptable methods for gaining parental consent, but also includes a provision allowing interested parties to submit new verifiable parental consent methods to the FTC for approval.

In a Federal Register notice to be published shortly, the FTC is seeking public comment about the proposed AgeCheq verifiable parental consent method. Specifically, the Commission seeks comments on: whether the proposed method is already covered by the existing methods included in the rule; whether it meets the rule’s requirement that it be reasonably calculated to ensure that the person providing the consent is actually the child’s parent; and whether the program poses a risk to consumers’ information and, if so, whether that risk is outweighed by the benefits of the program. The comment period will last until Dec. 29, 2014.

This is AgeCheq’s second proposed verifiable parental consent method submitted to the Commission. The first is currently under review by the Commission.

NOTE: Publication of this Federal Register notice does not indicate Commission approval of the program. The Commission has 120 days to review proposed verifiable parental consent methods and must set forth its conclusions in writing.

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FDIC Announces Upcoming Community Affairs Webinar:

Helping Your Customers Save: America Saves Week 2015

Summary:

Highlights:

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Assessments

Final Rule

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Guidance Related to the FDIC Statement of Policy on Applications for Deposit Insurance

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Guidance Related to the FDIC Statement of Policy on Applications for Deposit Insurance

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