June 2023

The Federal Trade Commission took action under the FTC Act and the Opioid Addiction Recovery Fraud Prevention Act (OARFPA), suing Michael J. Connors and companies he controls for deceptively marketing their Smoke Away products as able to eliminate consumers’ nicotine addiction and enable them to quit smoking quickly, easily, and permanently. The case is the FTC’s first smoking cessation product challenge under OARFPA, and its first alleging the deceptive use of testimonials to sell a supposed addition-treatment product.

The proposed stipulated order settling the Commission’s complaint permanently bans Connors – who settled a 2005 FTC complaint regarding Smoke Away – and his companies from marketing or selling any substance use disorder treatment product or service, including any smoking cessation product or service. The order also prohibits the defendants from making health-related advertising claims for other products unless they are substantiated by competent and reliable scientific evidence, prohibits them from using deceptive consumer testimonials, and imposes both a $7.1 million monetary judgment and a $500,000 civil penalty.

“Congress gave us strong tools to fight fraud targeting people suffering from addiction, and that is exactly what we are doing with this record-setting monetary judgment and industry ban,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Those struggling with alcohol, tobacco, or drugs deserve help and support, not phony promises, and we will continue to hold accountable those who prey on addiction sufferers.” 

Smoke Away is the brand name for a line of supposed smoking cessation products, including Smoke Away Formula 1, Smoke Away Maintenance, Spray Away by Smoke Away, and Smoke Away Homeopathic Pellets. The complaint states that Connors has marketed Smoke Away through various corporate entities under his control, selling the product to consumers via the defendants’ own websites and online retailers, including Amazon, Walmart, and eBay. The products were sold individually and as “kits,” ranging from a “Basic Kit” for $69.95, up to “Premium Kit” that included homeopathic pellets for $89.95.

The defendants advertised their products as, “The Safe Way, The Smart Way, Smoke Away.” Their Amazon page said, “Attention all smokers. If you’re serious about kicking the habit, if you want to quickly and safely tackle your cravings for cigarettes, here is great news from the makers of Smoke Away. For less than the cost of gum, patches, or prescriptions that often don’t work, we’ll rush to you the all‑natural Smoke Away system that’s sweeping the country. … Don’t be a slave to cigarettes anymore. Quit Smoking for good. The safe way. The natural way. With the help of Smoke Away.”

The defendants advertised that Smoke Away Formula 1 would allow users to “[f]ight withdrawal symptoms naturally,” using “all-natural herbs … to help you stay calm and comfortable in spite of the nasty withdrawal symptoms your body throws at you.” Ads for Smoke Away Spray Away claimed that it “provides the convenience of a spray and the strength of the homeopathic medicine to help combat urges that arise. Whenever you feel one come on, simply spray 2 or 3 times under your tongue and the fast acting formula goes to work immediately.” According to the complaint, these and other claims regarding the efficacy for Smoke Away products were either false or not substantiated by competent and reliable scientific evidence.

Further, the complaint states that the company used consumer testimonials in which purported Smoke Away users, such as “Deborah from Conway, South Carolina,” said things like, “I just want to say I am so grateful for Smoke Away. It saved my life; it saved my friendships; it saved my wallet. … I decided when I saw it on the Internet, it looked very easy, it was guaranteed, and I thought what did I have to lose? … I, after a few days, did not even look for cigarettes or crave them. It’s been a month now, and since I’ve stopped smoking, my friends say my energy level is incredible. I look like a different person.”

According to the complaint, while the Smoke Away testimonialists claimed to be bona fide users of the product, some of them were actors whom the defendants hired and paid, and who had not used Smoke Away to quit smoking.

The FTC staff attorneys on this matter are Rafael Reyneri and Shira Modell.

The Commission voted 3-0 to refer the complaint and proposed stipulated federal order to the Department of Justice, with Chair Lina M. Khan issuing a separate statement. The DOJ filed the complaint and proposed order in the U.S. District Court for the Middle District of Florida.

The Federal Trade Commission filed an amended complaint bolstering the agency’s case that Walmart allowed its money transfer services to be used by scammers, who fleeced consumers out of hundreds of millions of dollars.

The FTC filed the amended complaint in the U.S. District Court for the Northern District of Illinois, following the court’s March 27, 2023 ruling on the FTC’s initial complaint. The amended complaint adds further details on Walmart’s alleged violations of the Telemarketing Sales Rule, including the Rule’s ban on the use of cash-to-cash money transfers in any telemarketing transaction.

According to the amended complaint, Walmart for years turned a blind eye while scammers took advantage of its failure to properly secure the money transfer services offered at Walmart stores. Walmart did not properly train its employees, failed to warn customers, and used procedures that allowed scammers to cash out at its stores, according to the FTC’s complaint.

Money transfers are frequently used by fraudsters across a wide variety of scams because they are nearly impossible to retrieve after the money has been picked up. The amended complaint cites numerous instances in which scammers relied on Walmart money transfers as a primary way to receive payments, including in telemarketing schemes such as sweepstakes scams, advance-fee loan scams, IRS impersonation schemes, relative-in-need “grandparent” scams, and others.

The FTC’s investigation of Walmart’s money transfer practices showed, according to the complaint, that Walmart knew about the role money transfer services play in frauds and telemarketing schemes. Despite that, the company’s money transfer services harmed consumers in numerous ways, including:

• Allowing the payout of transfers with characteristics of fraud;

• Having no anti-fraud policy or an ineffective, poorly enforced policy; 
• Allowing cash pickups for large payments;

• Not providing warnings to prevent consumers from sending payments related to scams;

• Failing to effectively train or retrain staff;

• Allowing money transfers to be used for telemarketing purchases that violate the Telemarketing Sales Rule.

The Commission vote to authorize staff to file the amended complaint in the U.S. District Court for the Northern District of Illinois was 3-0.

The Federal Trade Commission proposed a new rule to stop marketers from using illicit review and endorsement practices such as using fake reviews, suppressing honest negative reviews, and paying for positive reviews, which deceive consumers looking for real feedback on a product or service and undercut honest businesses.

“Our proposed rule on fake reviews shows that we’re using all available means to attack deceptive advertising in the digital age,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.  “The rule would trigger civil penalties for violators and should help level the playing field for honest companies.”

 In its notice of proposed rulemaking, the Commission cited examples of clearly deceptive practices involving consumer reviews and testimonials from its past cases, and noted the widespread emergence of generative AI, which is likely to make it easier for bad actors to write fake reviews.

The Commission is seeking comments on proposed measures that would fight these clearly deceptive practices. For example, the proposed rule would prohibit:

• Selling or Obtaining Fake Consumer Reviews and Testimonials: The proposed rule would prohibit businesses from writing or selling consumer reviews or testimonials by someone who does not exist, who did not have experience with the product or service, or who misrepresented their experiences. It also would prohibit businesses from procuring such reviews or disseminating such testimonials if the businesses knew or should have known that they were fake or false.

• Review Hijacking: Businesses would be prohibited from using or repurposing a consumer review written for one product so that it appears to have been written for a substantially different product. The FTC recently brought its first review hijacking enforcement action.

• Buying Positive or Negative Reviews: Businesses would be prohibited from providing compensation or other incentives conditioned on the writing of consumer reviews expressing a particular sentiment, either positive or negative.

• Insider Reviews and Consumer Testimonials: The proposed rule would prohibit a company’s officers and managers from writing reviews or testimonials of its products or services, without clearly disclosing their relationships. It also would prohibit businesses from disseminating testimonials by insiders without clear disclosures of their relationships, and it would prohibit certain solicitations by officers or managers of reviews from company employees or their relatives, depending on whether the businesses knew or should have known of these relationships.

• Company Controlled Review Websites: Businesses would be prohibited from creating or controlling a website that claims to provide independent opinions about a category of products or services that includes its own products or services.

• Illegal Review Suppression: Businesses would be prohibited from using unjustified legal threats, other intimidation, or false accusations to prevent or remove a negative consumer review. The proposed rule also would bar a business from misrepresenting that the reviews on its website represent all reviews submitted when negative reviews have been suppressed.

• Selling Fake Social Media Indicators: Businesses would be prohibited from selling false indicators of social media influence, like fake followers or views. The proposed rule also would bar anyone from buying such indicators to misrepresent their importance for a commercial purpose.

The proposed rule follows an advance notice of proposed rulemaking the Commission announced last November. The FTC received comments from individual consumers, trade associations, review platform operators, small businesses, consumer advocacy organizations, entities dedicated to fighting fake reviews, and academic researchers.

Although the FTC has taken strong enforcement action in this area recently, case-by-case enforcement without civil penalty authority might not be enough to deter clearly deceptive review and testimonial practices. The Supreme Court’s decision in AMG Capital Management LLC v. FTC has hindered the FTC’s ability to seek monetary relief for consumers under the FTC Act. A rule clearly spelling out prohibited practices and allowing for the judicial imposition of civil penalties could strengthen deterrence and FTC enforcement actions.

The notice includes questions for public comment to inform the Commission’s decision-making on the proposal. These questions focus on provisions in the proposed rule and whether other provisions should or should not be included in the rule. After the Commission reviews the comments received, it will decide whether to take the necessary next steps toward issuing a final rule.

The Commission vote to approve the NPRM was 3-0. The NPRM will be published in the Federal Register soon. Instructions for filing comments appear in the notice. Comments must be received within 60 days of the publication of the notice. The primary staff member on these matters is Michael Ostheimer in the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission today announced it has finalized an updated version of its Endorsement Guides, which provide agency guidance to businesses and others to ensure that advertising using reviews or endorsements is truthful.

The Endorsement Guides advise businesses on what practices may be unfair or deceptive in violation of the FTC Act, and they were last revised in 2009. In May 2022, the FTC announced it was seeking public comments on proposed updates to the Guides to reflect the ways advertisers now reach consumers to promote products and services, including through social media and reviews.

The final revised guides announced today take the public comments received into consideration and make a number of revisions including: 1) articulating a new principle regarding procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, or editing consumer reviews so as to distort what consumers think of a product; 2) addressing incentivized reviews, reviews by employees, and fake negative reviews of a competitor; 3) adding a definition of “clear and conspicuous” and saying that a platform’s built-in disclosure tool might not be an adequate disclosure; 4) changing the definition of “endorsements” to clarify the extent to which it includes fake reviews, virtual influencers, and tags in social media; 5) better explaining the potential liability of advertisers, endorsers, and intermediaries; and 6) highlighting that child-directed advertising is of special concern.

The FTC also issued an updated version of a guidance document that answers frequently asked questions about the Endorsement Guides. Primarily addressing when and how to disclose material connections, the document is entitled, FTC’s Endorsement Guides: What People are Asking. Last revised in 2017, the new version includes 40 additional questions and updates dozens of other answers. It adds specific guidance for influencers on when and how to disclose material connections across different kinds of platforms, and it gives FTC staff’s views about brand monitoring of influencers and platform disclosure tools. The new version also includes more guidance relating to online reviews, addressing issues such as incentives and treatment of negative feedback.

The Commission vote approving publication of the final revised Endorsement Guides was 3-0. The primary staff member on this matter is Michael Ostheimer in the FTC’s Bureau of Consumer Protection.

As a result of a Federal Trade Commission lawsuit, Publishers Clearing House (PCH) has agreed to a proposed court order that will require it to pay $18.5 million to consumers who spent money and wasted their time, and make substantial changes to how it conducts business online.

In a complaint against PCH, the FTC charges that the company uses “dark patterns” to mislead consumers about how to enter the company’s well-known sweepstakes drawings and made them believe that a purchase is necessary to win or would increase their chances of winning, and that their sweepstakes entries are incomplete even when they are not. The FTC also charges that the company has added surprise shipping and handling fees to the costs of products, misrepresented that ordering is “risk free,” used deceptive emails as part of its marketing campaign, and misrepresented its policies on selling users’ personal data to third parties prior to January 2019.  Many consumers affected by these practices are older and lower-income.

“Today’s action requiring PCH to overhaul its user interface, compensate consumers for lost time, and stop surprise fees should send a clear message that manipulative design techniques are a no-go under our laws,” said Samuel Levine. “This is our second dark pattern lawsuit over the last week. Firms that continue to deploy deceptive design techniques are on notice.”

The FTC charges that PCH used dark patterns—manipulative phrasing and website design—to  convince consumers that they needed to buy a product of some kind to enter the company’s sweepstakes or increase their chances of winning.

According to the complaint, the deception starts from the company’s homepage, where consumers complete an “Official Entry Form” with a large button with phrasing like “WIN IT!” or “Win for Life!” This form, however, does not enter them in the sweepstakes.

Instead, the complaint charges, consumers enter an arduous journey through pages of advertisements and sales pitches before they can actually enter the sweepstakes. The advertisements allegedly use tricky wording that conflates ordering and entering to lead consumers to believe they must make a purchase to enter, or that purchasing will increase their chances of winning a sweepstakes, neither of which is true.

Once consumers have navigated through the pages to reach the actual entry form and complete their entry, though, the complaint charges that PCH begins sending emails making them believe that they must complete a “final” or “last” step to complete their entry.

The FTC alleges that while the emails often make it seem as though consumers must immediately click to ensure they can enter the sweepstakes, when consumers click on the links in these emails to finalize their entry, they instead re-enter the cycle of pages and pages of dark patterns and deceptive sales pitches. The pages they land on have all-caps messages like “$1,000 per week for life AT STAKE!” and “JUST ONE ORDER IS ALL IT TAKES.”

The FTC’s complaint charges that where PCH included disclaimers or clarifying information on shopping pages, it was in small, light font, below the “call to action” buttons, and overlooked by consumers.

Beyond the company’s deceptive cycle of emails and webpages, though, the FTC’s complaint charges that PCH employed other unlawful practices, including:

• Failing to disclose the true price of goods: The complaint charges that PCH hid from consumers who made purchases on their websites shipping and handling costs – which averaged over 40% of the product costs – until well after the purchase was complete and it was too late for consumers to stop a shipment.
• Deceiving consumers about “no risk” purchases: The complaint charges that PCH promised consumers that purchases from their site were “risk free,” but failed to inform consumers that they would be responsible for paying the return shipping on unwanted products.
• Using misleading email subjects: The complaint charges that PCH used email subject lines that were deceptive, with subject lines like “High Priority Doc. W-34 Issued” or “W-19 Notice – Step 3 of 3 INCOMPLETE,” leading consumers to believe the email was related to a tax form or official requirement. But the documents referred to in these subject lines were complete fictions and nothing in the emails themselves even referred to these forms.  Numerous consumers clicked on these emails and purchased products or lost valuable time clicking through website pages.
• Having misleading statements in its Privacy Policy: The complaint charges that PCH had a statement in the middle of its privacy policy prior to January 2019, which stated that it did “not rent, license, or sell” consumer data to third parties. The complaint charges that, in fact, PCH has shared consumer data with other marketers, advertisers, and publishing companies to target consumers with third-party ads.

PCH agreed to settle the FTC’s charges that it violated the FTC Act and CAN-SPAM Act, and a proposed court order would require the company to turn over $18.5 million to the FTC to be used to refund consumers and make a number of key changes to its email and internet operations:

• Stop deceiving consumers about purchases and sweepstakes: PCH would be prohibited from implying that that a purchase is required to enter a sweepstakes or that a purchase will increase the chances of winning.
• Separate sweepstakes from sales: PCH would be required to clearly distinguish on its entry and order forms information related to entering and ordering.
• Make clear disclosures: PCH would be required to make clear, conspicuous, and unavoidable disclosures on every shopping page that a purchase is not required to enter a sweepstakes and that purchasing will not help a consumer win, and include a link that will take consumers directly to a page where they can enter the sweepstakes without any sales messaging.  And in many cases, the company would be required to obtain a consumer’s express acknowledgement using a checkbox or similar means that ordering will not help them win and will not improve their chances of winning.
• Stopping Surprise Fees: PCH would be required to clearly disclose the full price of any item it lists for sale, along with any additional fees for shipping and handling before a consumer commits to purchasing the item. PCH must also clearly disclose cancellation and return policies.
• Stop deceptive emails: PCH would be prohibited from sending emails with deceptive subject lines and other conduct that violates the CAN-SPAM Act.
• Destroy consumer data: PCH would be required to delete all consumer data that was collected prior to January 1, 2019. PCH would also be prohibited from misrepresenting the extent to which PCH collects and shares consumer data.
• Preserve records: To help prevent further use of dark patterns, the order requires PCH to preserve records of any market, behavioral, or psychological research, or user, customer, or usability testing, including any A/B or multivariate testing, copy testing, surveys, focus groups, interviews, clickstream analysis, eye or mouse tracking studies, or analyses regarding consumers’ impressions of any ads, marketing, or promotions of sweepstakes or products.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 3-0. Chair Khan and Commissioners Slaughter and Bedoya issued a separate statement. The FTC filed the complaint and final order/injunction in the U.S. District Court for the Eastern District of New York.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final injunctions/orders have the force of law when approved and signed by the District Court judge.

The staff attorneys on this matter were Miry Kim, Elsie Kappler and Josh Doan of the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission is taking action against a group of Massachusetts- and New Hampshire-based clothing accessories companies, along with their owner, Thomas Bates, for falsely claiming that certain company products were manufactured in the U.S. The FTC’s proposed order would stop the companies and Bates from making deceptive claims about products being “Made in USA” and require them to pay a monetary judgment.

“‘Made in USA’ means what it says,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Falsely labeling products as ‘Made in USA’ hurts consumers and competition, and the FTC will continue to aggressively enforce the law to stop deceptive claims and hold violators accountable.”

According to the FTC’s complaint, the companies—Chaucer Accessories, Bates Accessories, and Bates Retail Group—have frequently advertised their products as being “Made in USA” or “Hand Crafted in USA” in their marketing and sales materials. Additionally, the complaint alleges, the companies sold certain belts labeled as “Made in USA from Global Materials.”

In spite of those claims, the complaint charges that the companies sold certain products that were wholly imported or incorporated significant imported components. The complaint also charges that belts labeled “Made in USA from Global Materials” consisted of belt straps imported from Taiwan with buckles attached in the U.S.

The FTC’s order against the companies and Bates, which the respondents have agreed to, includes a number of requirements about the claims they make:

• Restriction on unqualified claims: the companies and Bates will be prohibited from making unqualified U.S.-origin claims for any product, unless it can show that the product’s final assembly or processing—and all significant processing—takes place in the U.S., and that all or virtually all ingredients or components of the product are made and sourced in the U.S.
• Requirement for qualified claims: the companies and Bates are required to include in any qualified Made in USA claims a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing.
• Requirement for assembly claims: the companies and Bates must also ensure, when claiming a product is assembled in the U.S., that it is last substantially transformed in the U.S., its principal assembly takes place in the U.S., and U.S. assembly operations are substantial.
• Monetary judgment: The order includes a monetary judgment of $191,481, which the companies and Bates will be required to surrender to the FTC.

The FTC is committed to ensuring that “Made in USA” claims are truthful. The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides guidance on making non-deceptive “Made in USA” claims. In addition, the FTC’s Made in USA Labeling Rule went into effect on Aug. 13, 2021. Companies that violate the Rule from that date forward may be subject to civil penalties.

The Commission vote to issue the administrative complaint and to accept the consent agreement was 3-0. The lead staff attorney on this matter was Julia Solomon Ensor in the Bureau of Consumer Protection.

The Federal Trade Commission filed a friend-of-the-court (amicus) brief in the U.S. Court of Appeals for the Seventh Circuit challenging a district court ruling that invalidated a key anti-discrimination rule in the Equal Credit Opportunity Act (ECOA).

The case, CFPB v. Townstone Financial and Barry Sturner, relates to a Chicago-based mortgage lender and its owner, which the CFPB alleged violated Regulation B, the rule that implements ECOA. The CFPB alleged that the defendants took steps to discourage Black consumers from applying for loans, violating Regulation B’s anti-discouragement rule. The district court ruled that the anti-discouragement provision was invalid and that ECOA protects only those consumers who have already applied for credit.

In its brief, the FTC argues that the district court’s ruling was incorrect. The Commission’s brief notes that the anti-discouragement rule—which has stood for nearly 50 years—is authorized by the plain language of ECOA, which mandates that regulators further ECOA’s “purpose” and prevent its “evasion.”

The FTC also argues that the district court’s ruling would have “profoundly negative consequences” for consumers, emboldening discriminatory lenders to openly discourage consumers from applying for loans. For example, the brief points to the possibility that a lender could display a “Whites Only” sign or turn away Black consumers as they walk in the door. The brief notes that the FTC receives thousands of complaints from consumers each year related to discriminatory lending practices.

The Commission vote approving the filing of the amicus brief was 3-0.

The Federal Trade Commission is taking action against Amazon.com, Inc. for its years-long effort to enroll consumers into its Prime program without their consent while knowingly making it difficult for consumers to cancel their subscriptions to Prime.

In a complaint filed today, the FTC charges that Amazon has knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime. Specifically, Amazon used manipulative, coercive, or deceptive user-interface designs known as “dark patterns” to trick consumers into enrolling in automatically-renewing Prime subscriptions.

Amazon also knowingly complicated the cancellation process for Prime subscribers who sought to end their membership. The primary purpose of its Prime cancellation process was not to enable subscribers to cancel, but to stop them. Amazon leadership slowed or rejected changes that would’ve made it easier for users to cancel Prime because those changes adversely affected Amazon’s bottom line. 

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” said FTC Chair Lina M. Khan. “These manipulative tactics harm consumers and law-abiding businesses alike. The FTC will continue to vigorously protect Americans from “dark patterns” and other unfair or deceptive practices in digital markets.”

For now, the FTC’s complaint is significantly redacted, though the FTC has told the Court it does not find the need for ongoing secrecy compelling. Nevertheless, the complaint contains a number of allegations related to the company’s decision not to make changes to prevent nonconsensual enrollment in Prime and the difficulties consumers faced in attempting to unsubscribe from the service. Specifically, the complaint charges that Amazon used so-called “dark patterns” to cause consumers to enroll in Prime without their consent, in violation of the FTC Act, and the Restore Online Shoppers’ Confidence Act.

During Amazon’s online checkout process, consumers were faced with numerous opportunities to subscribe to Amazon Prime at $14.99/month. In many cases, the option to purchase items on Amazon without subscribing to Prime was more difficult for consumers to locate. In some cases, the button presented to consumers to complete their transaction did not clearly state that in choosing that option they were also agreeing to join Prime for a recurring subscription.

The FTC charges that Amazon put in place a cancellation process designed to deter consumers from successfully unsubscribing from Prime. Previous reporting about the process in the media has noted that Amazon used the term “Iliad” to describe the process, which the reporting cites as an allusion to Homer’s epic poem set over twenty-four books and nearly 16,000 lines about the decade-long Trojan War.

Consumers who attempted to cancel Prime were faced with multiple steps to actually accomplish the task of cancelling, according to the complaint. Consumers had to first locate the cancellation flow, which Amazon made difficult. Once they located the cancellation flow, they were redirected to multiple pages that presented several offers to continue the subscription at a discounted price, to simply turn off the auto-renew feature, or to decide not to cancel. Only after clicking through these pages could consumers finally cancel the service.

The complaint notes that Amazon was aware of consumers being nonconsensually enrolled and the complex and confusing process to cancel Prime that the company’s executives failed to take any meaningful steps to address the issues until they were aware of the FTC investigation. In the complaint, the FTC also alleges that Amazon attempted to delay and hinder the Commission’s investigation in multiple instances.

The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the Western District of Washington.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The staff attorneys on this matter are Jonathan Cohen, Olivia Jerjian, Max Nardini, and Evan Mendelson of the FTC’s Bureau of Consumer Protection.

The staff of the Federal Trade Commission’s Bureau of Consumer Protection filed a comment today with the U.S. Department of Education regarding the U.S. Department of Education’s proposed regulations to protect postsecondary students in the education marketplace.

In the comment FTC staff stresses its support of the Education Department’s proposed regulations, noting that prohibiting misrepresentations and deceptive recruitment practices would help curb the very type of harm that the FTC has encountered in its cases.

“Cracking down on predatory schools requires a whole-of-government approach, and we welcome the Department of Education’s renewed efforts to protect students,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We will continue to work closely with our partners across the government to ensure fairness for student borrowers and accountability for those who cheat them.”

Staff’s comment also notes that, given the importance and expense of education, the FTC has prioritized protecting consumers from unfair and deceptive practices in this space. It highlights the Commission’s history of enforcement, including cases involving deceptive claims by for-profit schools, deceptive lead generation practices, and bogus student loan debt relief services. The comment endorses the Education Department’s effort to protect consumers from the harms caused by such practices in the education marketplace.

The Commission vote authorizing staff to file the comment was 3-0.

The Federal Trade Commission has sent letters to 50 online marketplaces nationwide notifying them about their obligation to comply with the new Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act – or the INFORM Consumers Act – as soon as it takes effect on June 27.

“The INFORM Consumers Act requires online marketplaces to protect consumers from counterfeit, unsafe, and stolen goods by verifying their high-volume third-party sellers’ identities, and making it easier for consumers to report suspicious marketplace activity,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The Commission will enforce the Act to the fullest extent possible and will collaborate with our state partners to hold online marketplaces accountable.”

The letters announced today enclose a copy of the act, highlight the responsibilities the act places on online marketplaces, and urge that businesses carefully review the statute and take all steps necessary to fully comply by June 27. In the letters, FTC staff also urge online marketplaces to communicate with their third-party sellers about the information the act requires to be collected, verified, and disclosed.

Finally, the letters emphasize that a violation of the act may be treated as a violation of an FTC rule, and thus noncompliant online marketplaces may face enforcement that could result in civil penalties of $50,120 per violation. The letters are informational and the FTC is not publicly releasing the names of the recipients.

Understanding Compliance Obligations

As part of the FTC’s effort to fully inform the public about the provisions of the INFORM Consumers Act and to put businesses on notice of their obligations as of June 27, it has developed business education materials that are available on the agency’s website. “Informing Businesses About the INFORM Consumers Act,” summarizes how online marketplaces can comply with the act when it goes into effect at the end of the month with links to the act itself.

The lead staff attorneys on this matter are Carl Settlemyer and Tiffany Woo in the FTC’s Bureau of Consumer Protection.