Jonathan Kanter, Assistant Attorney General with the U.S. Department of Justice; Sarah Cardell, Chief Executive Officer of the U.K. Competition and Markets Authority; and Margrethe Vestager, Executive Vice-President and Competition Commissioner for the European Commission, joined Chair Khan in the joint statement outlining AI competition risks, as well as principles that can help protect competition in the AI ecosystem.

The joint statement notes that while AI has the potential to become one of the most significant technological developments of the past couple of decades, it also raises competition risks that may prevent the full benefits of AI from being realized. All four antitrust enforcers pledged in the joint statement to remain vigilant for potential competition issues and expressed their determination to use available powers to safeguard against tactics that would undermine fair competition or lead to unfair or deceptive practices in the AI ecosystem.

To assess competition risks to AI, the joint statement stressed the importance of focusing on how emerging AI business models drive incentives, and ultimately behavior. Competition questions in AI will be fact-specific but several common principles—fair dealing, interoperability, and choice—will generally help enable competition and foster innovation, as outlined in the joint statement. While potential harms may be felt across borders, the joint statement makes it clear that U.S. decision-making will always remain independent and sovereign. The FTC along with DOJ and CMA also have a consumer protection mission and noted the need to continue to monitor potential harms to consumers that may stem from the use and application of AI.

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NEW YORK: The FTC charged Simple Health with misleading people into thinking they were buying comprehensive health insurance that would cover preexisting medical conditions, prescription drugs, primary and specialty care treatment, inpatient and emergency hospital care, surgical procedures, and medical and laboratory testing. However, most enrolled consumers reported paying as much as $500 per month for a medical discount program or minimal benefit program that did not deliver the promised benefits and often left consumers with thousands of dollars in uncovered medical bills.

In a complaint filed in 2018, the FTC said that Florida-based Simple Health misled people into thinking they were buying comprehensive health insurance that would cover preexisting medical conditions, prescription drugs, primary and specialty care treatment, inpatient and emergency hospital care, surgical procedures, and medical and laboratory testing. In reality, most consumers who enrolled reported paying as much as $500 per month for what was actually a medical discount program or minimal benefit program that did not deliver the promised benefits and often left consumers with thousands of dollars in uncovered medical bills, or worse yet, unable to get necessary healthcare.

The court found that Dorfman and Simple Health, along with Health Benefits One LLC, Health Center Management LLC, Innovative Customer Care LLC, Simple Insurance Leads LLC, and Senior Benefits One LLC violated the FTC Act and the agency’s Telemarketing Sales Rule. 

In granting the FTC’s motion for summary judgment, the Federal District Court in the Southern District of Florida found that Simple Health, along with Health Benefits One LLC, Health Center Management LLC, Innovative Customer Care LLC, Simple Insurance Leads LLC, and Senior Benefits One LLC violated the FTC Act and the agency’s Telemarketing Sales Rule. The court ordered that all of their assets, which have been frozen since November 2018, be liquidated and all the proceeds be turned over to the FTC, which is expected to use the money to refund consumers.

The court also prohibited any misrepresentations in the sale of any good or service and required the defendants to destroy any personal information they collected about their customers. Simple Health’s Chief Compliance Officer Candida Girouard agreed in February 2021 to settle the FTC’s charges and is banned from marketing, promoting, or selling any healthcare-related products, from making misrepresentations in connection with the sale of any good or service, and from violating the FTC’s Telemarketing Sales Rule.

Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said, “Simple Health preyed on consumers by selling them bogus health care insurance that cost them thousands of dollars for ‘benefits’ that left consumers unprotected. We are pleased the court recognized this blatant bait and switch and ordered the company and its CEO to turn over the money they bilked from consumers.“

The litigation was handled by Elizabeth Scott, Joannie Wei, Purba Mukerjee, and Jim Davis from the FTC’s Midwest Regional office.

The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov.

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NEW YORK, NY: The Federal Trade Commission’s Office of Technology is hosting a virtual tech summit on January 25, 2024, that will bring together a diverse group of stakeholders to discuss key developments in the rapidly evolving field of artificial intelligence (AI), looking across the layers of technology related to AI.

The summit will bring together representatives from academia, industry, civil society organizations, and government to discuss the state of technology, emerging market trends, and real-world impacts of AI. The discussions will also explore how to cultivate a marketplace that allows both consumers and businesses, including startups and small businesses, to thrive.

FTC Chair Lina M. Khan and Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya will provide remarks at the summit. The event will also feature three-panel discussions. These include discussions on the hardware and other key infrastructure that will be needed for AI development; issues related to the data and models used in AI; and AI-powered consumer applications.

The summit will begin at noon and take place online. The tentative agenda is available on the event website. Information on how to participate will also be posted to the event page soon.

The Federal Trade Commission works to promote competition and protect and educate consumers. You can learn more about consumer topics and report scams, fraud, and bad business practices online at ReportFraud.ftc.gov.

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NEW YORK: Voice over Internet Protocol (VoIP) provider XCast Labs, Inc., agreed to settle Federal Trade Commission charges that it funneled hundreds of millions of illegal robocalls through its network, even after receiving multiple warnings about the unlawful conduct.

Under the proposed court order, XCast Labs will be required to implement a screening process and end its relationships with firms that are not complying with telemarketing-related laws. The Department of Justice litigated the case and filed the proposed order on the FTC’s behalf.

“XCast was warned several times that illegal robocalls were using its services and did nothing,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Companies that turn a blind eye to illegal robocalling should expect to hear from the FTC.”

“Today’s order is another example of the Justice Department’s efforts to protect American consumers from illegal robocalls and to stop telecommunications providers from enabling those calls,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to work with the Federal Trade Commission to enforce the Telemarketing Sales Rule.”

XCast Labs, headquartered in Los Angeles, is a nationwide provider of VoIP technology, providing services that allow its customers to send and receive phone calls, including robocalls, over the internet. Telemarketers who blast illegal robocalls typically use VoIP service providers like XCast Labs to transmit their calls.

According to the May 2023 complaint, the FTC sent letters to several VoIP providers, including XCast Labs, in early 2020 warning them that assisting and facilitating illegal telemarketing or robocalling is against the law. XCast Labs received dozens of “traceback” inquiries from US Telecom’s Industry Traceback Group regarding suspected illegal calls that originated on XCast Labs’ network, as well as inquiries from law enforcement agencies about the transmission of suspected illegal traffic on the XCast Labs network.

Even after receiving these direct warnings, XCast Labs transmitted illegal robocalls to consumers. The FTC also discovered that many of these suspect robocalls were part of organized campaigns to generate telemarketing leads by impersonating officials from the Social Security Administration.

The proposed order, to which XCast Labs has agreed, prohibits the company from violating the Telemarketing Sales Rule in the future. It also bans XCast Labs from assisting and facilitating any high-risk customer, including those that are engaged in initiating, causing, or transmitting telemarketing robocalls or calling numbers on the DNC Registry and any telephone call using Caller ID spoofing to display a phone number that the calling party does not have the legal authority to use.

Next, the order permanently bars XCast Labs from providing VoIP services to any company with which it does not have an automated procedure to block calls that display invalid Caller ID phone numbers or that are not authenticated through the FCC’s STIR/SHAKEN Authentication Framework. Further, the order requires XCast Labs to screen current and prospective VoIP customers to ensure they are not violating telemarking-related laws and terminate relationships with any customer that does not pass the screening process.

Additionally, the order requires XCast Labs to pay a $10 million civil penalty, which will be suspended based on its inability to pay. If the company is later found to have misrepresented its financial condition, the full amount will immediately become due.

The Department of Justice filed the proposed order in the U.S. District Court for the Central District of California.

Thomas Biesty and Frances Kern of the Bureau of Consumer Protection were the primary FTC staff on this matter.

NOTE: Consent order the force of law when approved and signed by the District Court judge.

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NEW YORK: California-based lead generator Response Tree LLC and its president, Derek Thomas Doherty, will be banned from making or assisting anyone else in making robocalls or calls to phone numbers on the FTC’s Do Not Call (DNC) Registry under a proposed order settling Federal Trade Commission charges that they operated more than 50 websites designed to trick consumers into providing their personal information for supposed mortgage refinancing loans and other services.

The defendants allegedly sold the personal information of hundreds of thousands of consumers as leads to telemarketers who used them to make millions of illegal telemarketing calls, including robocalls, to consumers nationwide.

Telemarketing campaigns allegedly assisted and facilitated by the defendants’ illegal lead generation operations were used to sell a multitude of products and services, including solar panels, hearing aids, and extended auto warranties. These campaigns, which made robocalls and calls to numbers on the DNC Registry, were illegal, as the telemarketers did not have consumers’ consent to be called, according to a complaint filed by the Department of Justice on referral from the FTC.

“Response Tree fueled millions of illegal telemarketing calls by tricking consumers into turning over their personal information and selling that information to telemarketers,” said Samuel Levine, Director of the Bureau of Consumer Protection. “The FTC will continue to target every corner of the illegal telemarketing ecosystem to protect consumers and hold wrongdoers accountable.” 

The complaint alleges that the defendants’ websites—including PatriotRefi.com, AbodeDefense.com, and TheRetailRewards.com—were actually “consent farms” that used deceptive and manipulative “dark patterns” to induce consumers to provide their personal information, obscuring hard-to-find and inadequate disclosures about how the information would be used. The defendants claimed that, in providing this information, the consumers consented to receive telemarketing calls. Third parties then bought the defendants’ leads and used the personal information to conduct illegal telemarketing campaigns, according to the complaint.

Through their PatriotRefi.com website, for example, the defendants allegedly duped consumers into providing their personal information under the guise of requesting a quote for a home mortgage refinance loan. After consumers input their personal information and click a button labeled “GET YOUR FAST FREE QUOTE,” the defendants captured the information and stored it in a database to sell to telemarketers and others.

Many or all consumers who provided their personal information to PatriotRefi.com never received home refinance quotes, according to the complaint. Instead, PatriotRefi.com was designed to compile lead lists by harvesting and selling consumers’ personal information without consumers’ informed consent. The complaint further alleges the defendants sold the leads they obtained, knowing that they did not obtain the requisite consent to receive telemarketing calls, including robocalls.

According to the complaint, at their peak, the defendants’ consent farm operations offered an average of 10,000 “real-time” leads for sale every day, and on some days had up to 50,000 illegally farmed leads for sale. In all, between 2019 and 2022, Response Tree and Doherty sold millions of deceptively collected leads.

The proposed order settling the complaint, which must be approved by the court before it can go into effect, bans the defendants from initiating or helping anyone else initiate telemarketing robocalls. It also bans them from calling, or assisting anyone else in calling, phone numbers on the DNC Registry and from selling, transferring, or disclosing consumer information in connection with lead generation activities.

The order also imposes a $7 million judgment against the defendants, which will be suspended based on their inability to pay. If they are later found to have misrepresented their financial condition, however, the full amount will immediately become due.

The Commission vote approving the complaint and stipulated final order and referring it to the U.S. Department of Justice (DOJ) for filing was 3-0. The DOJ filed the complaint and proposed a final order in the U.S. District Court for the District of Central District of California.

The staff attorneys on this matter are Karina A. Layugan, Matthew H. Fine, and Jeffrey Tang of the FTC’s Western Region Los Angeles office.

The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov.

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This will be the fifth challenge the FTC has sponsored under the America Competes Act, which allows agencies to create challenges to promote technology development and innovation. Other challenges spurred the creation of new tools to reduce illegal robocalls and address security vulnerabilities related to Internet of Things devices.

The Voice Cloning Challenge will accept submissions starting on January 2, 2024. The challenge aims to find the best approach to protect people from the harms caused by the misuse of AI-enabled voice cloning, including prevention or authentication, detection and monitoring, and evaluation resources, systems, or tools that help consumers or businesses check if audio clips contain cloned voices.

The FTC is encouraging participants to consider potential solutions at various intervention points, including limiting the use of voice cloning software to authorized users, alerting consumers if their voice has been cloned without their knowledge, and evaluating resources that help consumers or businesses check if audio clips contain cloned voices.

In conclusion, the FTC’s Voice Cloning Challenge aims to promote technology development and innovation to prevent the misuse of AI-enabled voice cloning technology, which presents serious consumer protection concerns. The challenge will accept submissions starting on January 2, 2024, and the top prize is $25,000. The FTC is encouraging participants to consider potential solutions at various intervention points to protect people from the harms caused by the misuse of AI-enabled voice cloning.

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The trade associations in question are the American Beverage Association (AmeriBev) and The Canadian Sugar Institute. The FTC expressed concerns that the organizations may have violated the FTC Act by failing to ensure that the influencers were adequately disclosing their relationship with the industry.

The warning letters follow the FTC’s recent revision of the Commission’s Guides for Endorsements and Testimonials and are part of the agency’s continued monitoring of influencer marketing. The FTC’s Bureau of Consumer Protection Director, Samuel Levine, stated that it is irresponsible for any trade group to hire influencers to promote its members’ products without ensuring that the influencers disclose their relationship with the industry.

The warning letters identified paid posts that either did not disclose a material connection or contained inadequate disclosures. The letters explained the staff’s concerns regarding particular disclosures, including inconspicuous placement, ambiguous language, or the failure to identify the sponsor of the posts.

The warning letters also included the FTC’s notice of penalty offenses concerning misleading endorsements and noted that the recipients could face civil penalties of up to $50,120 per violation for future failures to disclose unexpected material connections. The recipients were asked to contact agency staff within 15 days and detail any actions taken or that will be taken to address staff’s concerns.

The FTC’s primary staff attorney on this matter is Cassandra Rasmussen in the FTC’s Bureau of Consumer Protection. The FTC works to promote competition and protect and educate consumers. Consumers can learn more about consumer topics at consumer.ftc.gov or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.

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Despite Brigit’s promises that advances would be available with “free instant transfers,” the complaint notes that the company began charging consumers a 99-cent fee for an instant transfer. Consumers who did not pay the fee had to wait up to three business days for their advances. In addition, the complaint charges that while Brigit claimed to offer “non-recourse” advances with no fees or interest, the company prevented consumers who had an open advance from canceling their subscription and continued to withdraw $9.99 monthly from their bank account until the advance was paid off.

The proposed settlement order, which must be approved by a federal judge before it can go into effect, would require Brigit to pay $18 million to the FTC to be used to provide refunds to consumers. In addition, the order would prohibit Brigit from misleading consumers about how much money is available through their advances, how fast the money would be available, any fees associated with delivery, and consumers’ ability to cancel their service. The order would also require the company to make clear disclosures about its subscription products and provide a simple mechanism for consumers to cancel.

“Brigit trapped those consumers least able to afford it into monthly membership plans they struggled to escape from,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection. “Companies that offer cash advances and other alternative financial products have to play by the same rules as other businesses or face potential action by the FTC.”

The Commission voted to authorize the staff to file the complaint and the stipulated final order was 3-0. The FTC filed the complaint and final order in the U.S. District Court for the Southern District of New York.

Overall, the FTC’s action against Brigit serves as a reminder to companies offering alternative financial products to be transparent and truthful in their marketing promises and to provide clear mechanisms for consumers to cancel their services.

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The case, Suluki v. Credit One Bank, NA, involves a consumer who disputed information on her credit report that she claimed resulted from multiple credit card accounts that her mother opened in her name without her permission or knowledge. The credit reporting agencies (CRAs) sent the dispute to the credit card companies for investigation. After Credit One refused to remove the information and purportedly verified the consumer as the accountholder, she sued the company under the FCRA.

The FCRA requires that, upon being notified of a dispute by a CRA, furnishers investigate whether the disputed information can be verified. If such an investigation is inconclusive, the FCRA requires the furnisher to delete from the data that the furnisher submits to CRAs the information that cannot be verified.

The consumer appealed after the district court granted Credit One’s request for summary judgment and held that she could not show harm from any failure by Credit One to conduct a reasonable investigation.

In their brief, the FTC and CFPB disputed the district court’s interpretation of the FCRA. They noted that under the FCRA, if a furnisher of credit information cannot determine whether the disputed consumer information is accurate, it must tell the CRAs that the information could not be verified and must delete it from the data that it reports to the CRAs.

The FTC and CFPB maintain that the lower court’s decision could impact consumers’ rights under the FCRA to dispute the completeness or accuracy of information and have it removed if a furnisher cannot verify that it is accurate.

Inaccurate information on a consumer report can hamper people’s ability to get housing, employment, and credit. The FTC and CFPB’s amicus brief aims to protect consumers’ rights under the FCRA and ensure that furnishers of credit information comply with the law.

The Commission voted 3-0 to join the CFPB amicus brief.

The post FTC and CFPB Urge Reversal of Decision Misinterpreting FCRA’s Requirement to Remove Disputed Credit Information appeared first on NRI News.

The MMOU offers a blueprint for extending cooperation even further through the region by providing a mechanism for others to join this MOU, which will bolster efforts to fight fraud wherever it might occur. Low-cost online communications allow scammers to target consumers regardless of where they live. The increasingly global nature of commerce and fraud poses an enforcement challenge for consumer protection authorities around the world.

From 2019 to 2022, fraud reports against companies in these Latin American countries more than doubled, from 6,103 to 12,869. At the same time, total losses reported by consumers skyrocketed from $39.4 million in 2019 to $237.9 million in 2022. Reports about online shopping were the top complaint during this same period, with losses increasing from $3.8 million in 2019 to $49.5 million in 2022. Social media was the top contact method consumers cited at 41 percent of reports in 2022.

The MMOU encourages participants to share complaints submitted by consumers, provide investigative assistance, coordinate enforcement actions against cross-border violations of law, provide other practical case assistance, participate in econsumer.gov, and cooperate on non-investigatory matters such as exchanging approaches to consumer protection policy issues and participating in staff exchanges, joint training programs, and workshops.

The FTC and consumer protection authorities in these countries agreed to cooperate in investigations related to violations of consumer protection laws. Notably, the MMOU includes a mechanism for allowing other consumer protection authorities to join in the future.

The FTC’s Office of International Affairs lead staffer on this matter is Michael Panzera. The Commission voted 4-0 to authorize the FTC Chair to sign the MOU. The Commission vote closed on a date prior to Commissioner Christine S. Wilson’s departure from the agency.

In conclusion, the FTC’s partnership with consumer protection authorities from Chile, Colombia, Mexico, and Peru is a significant step towards protecting consumers from cross-border fraud. The MMOU promotes cooperation across Latin America, including information-sharing to further investigations and policy development, as well as other types of assistance on cross-border enforcement matters.

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