May 2023

The Federal Trade Commission is sending 11,446 checks and 66 PayPal payments, totaling more than $176,000, to consumers who bought clothing and accessories from Lions Not Sheep. The company was charged with using deceptive ‘Made in USA’ labels and advertising on clothing and accessories imported from other countries. Each of the payments is $15.30.

Consumers who receive checks should cash them within 90 days, as indicated on the check. Recipients who have questions about their refund should call the refund administrator, Analytics, at 1-855-620-9529, or visit the FTC website to view frequently asked questions about the refund process. The Commission never requires people to pay money or provide account information to get a refund.

According to the FTC’s May 2022 complaint, Lions Not Sheep Products, LLC, and its owner Sean Whalen deceptively advertised clothing and accessories as Made in USA. In most cases, the products advertised using these claims consisted of wholly imported shirts and hats with limited finishing work performed in the United States. An administrative order settling the Commission’s complaint barred the company and its owner from advertising and labeling its clothes and accessories as made in the United States when they are not. It also required the defendants to pay money to provide refunds to defrauded consumers.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of Commission refunds. In 2022, Commission actions led to more than $392 million in refunds to consumers across the country.

The Federal Trade Commission will hold a virtual panel discussion on May 11, 2023 with a diverse set of experts to discuss the business practices of cloud computing providers including issues related to security, competition, and emerging technology issues associated with cloud computing. 

Cloud computing is used by a wide range of industries for on-demand access to data storage, servers, networks and more, and is increasingly central to the economy.

FTC staff is currently seeking public comment on these and other cloud-related issues outlined in its Request for Information, as well as the impact of cloud computing on specific industries including healthcare, finance, transportation, e-commerce, and defense. The staff announced that the deadline to submit comments has been extended by 30 days until June 21.

FTC Chair Lina M. Khan will provide opening remarks before the panel discussion begins. A full list of panelists will be posted on the event page  prior to the event.

The event will begin at 1 p.m. ET and will be webcast at www.ftc.gov.

The event is free and open to the public. Registration is not required to watch the webcast. More information about the discussion can be found on the event page.

The Federal Trade Commission proposed changes to the agency’s 2020 privacy order with Facebook after alleging that the company has failed to fully comply with the order, misled parents about their ability to control with whom their children communicated through its Messenger Kids app, and misrepresented the access it provided some app developers to private user data.

“Facebook has repeatedly violated its privacy promises,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The company’s recklessness has put young users at risk, and Facebook needs to answer for its failures.”

As part of the proposed changes, Meta, which changed its name from Facebook in October 2021, would be prohibited from profiting from data it collects, including through its virtual reality products, from users under the age of 18. It would also be subject to other expanded limitations, including in its use of facial recognition technology, and required to provide additional protections for users.

This is the third time the FTC has taken action against Facebook for allegedly failing to protect users’ privacy. The Commission first filed a complaint against Facebook in 2011, and secured an order in 2012 barring the company from misrepresenting its privacy practices. But according to a subsequent complaint filed by the Commission, Facebook violated the first FTC order within months of it being finalized – engaging in misrepresentations that helped fuel the Cambridge Analytica scandal. In 2019, Facebook agreed to a second order—which took effect in 2020—resolving claims that it violated the FTC’s first order. Today’s action alleges that Facebook has violated the 2020 order, as well as the Children’s Online Privacy Protection Act Rule (COPPA Rule).

The 2020 privacy order required Facebook to pay a $5 billion civil penalty. The 2020 order also expanded the required privacy program, as well as the independent third-party assessor’s role in evaluating the effectiveness of Facebook’s program. For example, the 2020 order required Facebook to conduct a privacy review of every new or modified product, service, or practice before implementation and document its risk mitigation determinations. The order also required Facebook to implement greater security for personal information, and imposed restrictions on the use of facial recognition and telephone numbers obtained for account security.

The independent assessor, tasked with reviewing whether the company’s privacy program satisfied the 2020 order’s requirements, identified several gaps and weaknesses in Facebook’s privacy program, according to the Order to Show Cause, in which the Commission notes that the breadth and significance of these deficiencies pose substantial risks to the public.

The Order to Show Cause also alleges that Facebook violated both the 2012 and 2020 orders by continuing to give app developers access to users’ private information after promising in 2018 to cut off such access if users had not used those apps in the previous 90 days. In certain circumstances, Facebook continued to allow third-party app developers to access that user data until mid-2020.

In addition, the FTC has asked the company to respond to allegations that, from late 2017 until mid-2019, Facebook misrepresented that parents could control whom their children communicated with through its Messenger Kids product. Despite the company’s promises that children using Messenger Kids would only be able to communicate with contacts approved by their parents, children in certain circumstances were able to communicate with unapproved contacts in group text chats and group video calls. The FTC says these misrepresentations violated the 2012 order, the FTC Act and the COPPA Rule. Under the COPPA Rule, operators of websites or online services that are directed to children under 13 must notify parents and obtain their verifiable parental consent before collecting personal information from children.

The proposed changes to the 2020 order, which would apply to Facebook and Meta’s other services such as Instagram, WhatsApp, and Oculus, include:

• Blanket prohibition against monetizing data of children and teens under 18: Meta and all its related entities would be restricted in how they use the data they collect from children and teens. The company could only collect and use such data to provide the services or for security purposes, and would be prohibited from monetizing this data or otherwise using it for commercial gain even after those users turn 18.

• Pause on the launch of new products, services: The company would be prohibited from releasing new or modified products, services, or features without written confirmation from the assessor that its privacy program is in full compliance with the order’s requirements and presents no material gaps or weaknesses.

• Extension of compliance to merged companies: Meta would be required to ensure compliance with the FTC order for any companies it acquires or merges with, and to honor those companies’ prior privacy commitments.

• Limits on future uses of facial recognition technology: Meta would be required to disclose and obtain users’ affirmative consent for any future uses of facial recognition technology. The change would expand the limits on the use of facial recognition technology included in the 2020 order.

• Strengthening existing requirements: Some privacy program provisions in the 2020 order would be strengthened, such as those related to privacy review, third-party monitoring, data inventory and access controls, and employee training. Meta’s reporting obligations also would be expanded to include its own violations of its commitments.

Today’s action is the first step in the process. In seeking modifications to the 2020 order, the FTC has formally asked Meta to respond in 30 days to the proposed findings from the agency’s investigation. The proposed order modifications are based on the agency’s authority under Section 5(b) of the FTC Act and Commission Rule 3.72, which allow the Commission to reopen an administrative case and modify a final order when the Commission finds “changed conditions of fact or law or [when the] public interest” may require such action.

The Commission voted 3-0 to issue the Order to Show Cause. Commissioner Alvaro Bedoya released a statement.

NOTE: The Commission’s issuance of its Order to Show Cause marks the beginning of a proceeding in which Meta will have an opportunity to respond. After carefully considering the facts and any arguments by the parties, the Commission will ultimately determine whether modification of the 2020 order is in the public interest or justified by changed conditions of fact or law.

The lead staff attorneys on this matter are Reenah Kim, Evan Mendelson, and Olivia Jerjian from the FTC’s Bureau of Consumer Protection.

As a result of a Federal Trade Commission lawsuit, the operators of an alleged credit card debt relief scheme based in Tennessee have agreed to court orders that would permanently ban them from telemarketing and selling debt relief products or services.

Sean Austin, John Steven Huffman, John Preston Thompson, and their affiliated companies were charged by the FTC in November 2022 with taking tens of millions of dollars from people by falsely promising to eliminate or substantially reduce their credit card debt. At the time, a federal court agreed to the FTC’s request to temporarily freeze the defendants’ assets and appoint a receiver over the businesses while the case took place.

“These scammers ripped off consumers trying to get out of debt, and we’re pleased with these court orders banning them from the industry,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “With credit card delinquencies surging, the FTC will continue to take aggressive action against those who prey on struggling consumers.”

The FTC’s complaint alleges that Austin, Huffman, and Thompson operated a network of companies incorporated in Tennessee, Nevada, New Mexico, and Wyoming that worked together as a common enterprise to support the defendants’ deceptive debt relief scheme. Their companies operated under multiple names such as ACRO Services, American Consumer Rights Organization, Consumer Protection Resources, Reliance Solutions, Thacker & Associates, and Tri Star Consumer Group.

The court orders, which were agreed to by Austin, Huffman, and Thompson to settle the case, include a number of requirements:

• Ban on debt relief: The defendants are permanently banned from advertising, selling, or assisting in any debt relief product or service.
• Ban on telemarketing: The defendants are permanently banned from participating in telemarketing.
• Prohibition against deceiving consumers: The orders broadly enjoin the defendants from deceiving consumers about any other product or service they sell or market.
• Surrender assets: The orders require the defendants to surrender certain property interests and assets contained in multiple bank accounts that will be used to provide any possible refunds to affected consumers.

The orders contain a total monetary judgment of $17,486,080, which is partially suspended upon the defendants’ surrender of assets and also based on their inability to pay the full amount. If the defendants are found to have lied to the FTC about their financial status, the full judgment would be immediately payable.

The Commission vote approving the stipulated final orders was 3-0. The U.S. District Court for the Middle District of Tennessee, Nashville Division, entered the final orders on April 28, 2023.

NOTE: Stipulated final orders or injunctions have the force of law when approved and signed by the District Court judge.

The staff attorneys on this matter are Margaret Burgess, Alan Bakowski, and Natalya Rice of the FTC’s Southeast Region.