The FTC's activity in the leadup to Thanksgiving and Black Friday involved, appropriately enough, numerous consumer protection updates. The agency called funeral homes, investigated smart device manufacturers' websites, and expanded a telemarketing rule to target tech support scammers. The Commission also announced an online workshop about predatory pricing, and reached a settlement related to an AI-powered security screening system. More information on these stories after the jump.
Monday, November 18, 2024
Bureau of Competition: Predatory Pricing
- The FTC announced a virtual public workshop on the topic of predatory pricing and its potential impact on consumers, competition, and innovation. The workshop is scheduled for December 18, 2024 at 9:30am ET, and speakers will include economists, academics, antitrust litigators, and FTC Chair Lina Khan. The announcement mentions the landmark 1993 antitrust case Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., in which the Supreme Court rejected a predatory pricing claim as economically irrational, and notes that digital markets have enabled new pricing strategies that should be examined as a new economic reality.
Wednesday, November 20, 2024
Bureau of Consumer Protection: Funerals
- The Commission released a report with findings from its inaugural Funeral Rule phone sweep. The Funeral Rule (16 C.F.R. § 453.2), enacted in 1982, requires funeral providers to provide pricing information via telephone when asked, with the goal of providing consumers facing an unexpected loss the ability to obtain accurate pricing information quickly. In the sweep, FTC staffers posing as consumers made 278 calls to randomly selected funeral providers. While over 70% of providers gave out pricing information, the report explains that it sometimes took multiple calls to obtain pricing information, and the amount and quality of information varied. Of note, 37 providers quoted different prices for the same services on different calls. For the 39 providers who failed to provide pricing information, the FTC sent warning letters in January. The report's introduction notes that the Commission is considering whether to propose amendments to the Funeral Rule, and this report will help inform that decision.
Tuesday, November 26, 2024
Bureau of Consumer Protection: Artificial Intelligence
- The FTC entered into a stipulated settlement order with Evolv Technologies Holdings, Inc. over alleged violations of Section 13(b) of the FTC Act. In the related complaint, the Commission alleged that Evolv falsely claimed that its AI-powered security screening system could detect weapons while ignoring harmless personal items, in a manner that was more accurate, efficient, and cost-effective than traditional metal detectors. The FTC alleges that the scanners, which are used in over 800 schools in 40 states, had failed to alarm on dangerous items while alarming on harmless items. In response to failed detections, schools raised the sensitivity settings, which increased the false alarm rate and undermined Evolv's claims that its system was better than lower-cost metal detectors. Under the proposed settlement order, Evolv must notify certain K-12 schools that they can opt to cancel contracts signed in certain timeframes, and Evolv cannot make any misrepresentations about its product's accuracy, speed of use, labor costs, testing results, and any other material aspects of performance.
Bureau of Consumer Protection: Smart Devices
- The Commission issued a new Staff Perspective paper entitled "Smart Device Makers' Failure to Provide Updates May Leave You Smarting." The paper reports how FTC staffers investigated information about 184 smart products ranging from air conditioners to wireless routers. The investigators found that nearly 89% of the manufacturers' websites for these products failed to disclose how long the products would continue to receive software updates. These updates are essential to protect against security threats and ensure continued connectivity, and failure to provide information about them, per the report, makes it more difficult for consumer to comparison shop. The paper concludes by noting that these missing disclosures raised concerns about required warranty disclosures, deceptive marketing, and unfair practices, which could potentially violate the Magnuson Moss Warranty Act or the FTC Act.
Wednesday, November 27, 2024
Bureau of Consumer Protection: Tech Support Scam Calls
- The FTC has approved final amendments to the Telemarketing Sales Rule ("TSR"). These amendments expand the TSR to include inbound telemarketing calls, where a consumer makes a call in response to an advertisement. This expansion is specifically designed to target tech support scams, where a consumer sees a false pop-up message or receives a call that their computer has a problem, and they must call a number to fix the issue. These scams are generating increasing numbers of consumer complaints; in 2023 alone, consumers filed over 90,000 complaints reporting losses of $242 million to scammers. The report describes comments received from consumers, the Electronic Privacy and Information Center, and the National Consumer Law Center, and outlines minor changes made to the final rule. The Commission explains that the rule is drafted broadly because these scams evolve with changes in consumer behavior and technology, and the rule should be flexible to "evolving schemes."
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