October 2023

The Federal Trade Commission announced today that its enforcement action against the University of Phoenix continues to help students deceived by the for-profit university, as the U.S. Department of Education will forgive nearly $37 million in federal loans  for more than 1,200 students affected by the school’s deceptive practices, based in part on the FTC’s 2019 case.

“Students deceived by the University of Phoenix deserve strong relief, and today’s action is an important step forward,” said Samuel Levine, Director of FTC’s Bureau of Consumer Protection. “We will continue to work with our state and federal partners to protect students.”

“The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” said Federal Student Aid Chief Operating Officer Richard Cordray. “Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees. Today’s announcement builds on the FTC’s work to provide relief to those affected by Phoenix’s misconduct and delivers on the Biden-Harris Administration’s mission to support student loan borrowers.”

According to the 2019 FTC complaint, University of Phoenix, and its parent company, Apollo Education Group, Inc., falsely claimed that their relationships with top companies created job opportunities specifically for University of Phoenix students and that they worked with these companies to develop their curriculum. The FTC charged that the companies used a multimedia ad campaign to attract students, including ads specifically targeted to military and Latino consumers. The companies’ “Let’s Get to Work” campaign featured several high-profile employers, including Microsoft, Twitter, Adobe, and Yahoo!, giving the false impression that University of Phoenix worked with those companies to create job opportunities for its students.

Today’s announcement by the U.S. Department of Education builds on the FTC’s prior federal court order against the University of Phoenix. As part of the record $191 million action, the school was ordered to pay $50 million to the FTC to make payments to former students and cancel $141 million in private student debt owed directly to the school. The order also prohibits the companies from further deceptive business practices.  In March 2021, the FTC sent payments to eligible University of Phoenix students, which resulted in more than $45.6 million in relief. The FTC sent additional payments totaling more than $3.6 million to 130,652 people who cashed their first payment.

The U.S. Department of Education announced that it will approve federal student loan forgiveness for people who attended the University of Phoenix, were deceived by the school’s job placement claims, and submitted a valid application for borrower defense. The agency is continuing to process new and existing applications. All borrowers with approved claims will receive full loan forgiveness. People interested in submitting a claim for loan forgiveness, should visit the Department of Education’s Borrower Defense Loan Discharge informational page.

The Federal Trade Commission and the U.S. Department of Labor (DOL) signed a new agreement that will bolster the FTC’s efforts to protect workers by promoting competitive U.S. labor markets and putting an end to unfair, deceptive, and other unlawful acts and practices, as well as unfair methods of competition, that harm workers. The new memorandum of understanding (MOU) between the two agencies outlines ways in which the FTC and DOL will work together on key issues such as labor market concentration, one-sided contract terms, and labor developments in the “gig economy.”

The MOU builds on the FTC’s recent efforts to increase collaboration on issues facing workers, including the FTC’s recent MOU with the National Labor Relations Board as well as the FTC’s enforcement policy statement related to gig work.

“This agreement with the Department of Labor is part of our whole-of-government effort to protect workers from unlawful business practices,” said FTC Chair Lina M. Khan. “Deepening our partnership with DOL will ensure that we can work collectively to tackle illegal conduct that suppresses wages, reduces access to good benefits and working conditions, and stifles economic liberty for workers across the economy.”

“Protecting workers on the job and promoting fair markets requires a level playing field,” said Solicitor of Labor Seema Nanda. “What’s unfair for workers is also unfair for law-abiding employers, and this partnership will help both of our agencies combat unlawful behavior, such as misclassification and contract provisions that restrict accessible opportunities to our growing workforce. The Department of Labor is committed to ensuring equity and improving job quality for all workers, and we will not hesitate to enforce the laws that protect workers’ rights. We look forward to working with the Federal Trade Commission to hold employers accountable and empower workers.”

The new agreement enables the FTC and DOL to closely collaborate by sharing information, conducting cross-training for staff at each agency, and partnering on investigative efforts within each agency’s authority. This MOU is in line with the President’s Executive Order on Competition, which affirms the importance of enforcing antitrust laws to combat abuses of market power, including in labor markets.

The MOU identifies areas of mutual interest for the two agencies: collusive behavior; the use of business models designed to evade legal accountability, such as the misclassification of employees; illegal claims and disclosures about earnings and costs associated with work; the imposition of one-sided and restrictive contract provisions, such as non-compete and training repayment agreement provisions; the extent and impact of labor market concentration; and the impact of algorithmic decision-making on workers.

The agreement is part of a broader FTC initiative to use the agency’s full authority, including enforcement actions and Commission rulemaking, to protect workers. The FTC has made it a priority to scrutinize mergers that may harm competition in U.S. labor markets. Research shows that these markets are already highly concentrated, and less competitive labor markets can enable firms to harm workers by lowering wages, reducing benefits, and perpetuating precarious or exploitative working conditions.

The FTC has also prioritized cracking down on anticompetitive contract terms that put workers at a disadvantage. The Commission is considering a proposed rule that would ban noncompete clauses in employment contracts, and has taken action to protect workers in several Commission orders. These include actions against Anchor Glass, Ardagh Group, Prudential Security, I-O Glass, 7-Eleven, and DaVita.

In addition, the agency will continue to take action to stop deceptive and unfair acts and practices aimed at workers, particularly those in the “gig economy” who often don’t enjoy the full protections of traditional employment relationships. The FTC’s actions in this area include: cases against Amazon, Uber, HomeAdvisor, and Burgerim; an ongoing rulemaking to challenge bogus money-making claims; and a notice of penalty offenses sent to more than 1,100 businesses that pitch money-making ventures.

The memorandum of understanding was signed by FTC Chair Lina M. Khan and Acting Secretary of Labor Julie A. Su.

The Federal Trade Commission has joined the Federal Communications Commission (FCC) in signing a renewed memorandum of understanding (MOU) between public authorities who are members of the Unsolicited Communications Enforcement Network (UCENet). The MOU aims to promote cross-border collaboration to combat unsolicited communications, including email and text spam, scams, and illegal telemarketing.

“The FTC is committed to using all of its tools to fight robocalls and other unsolicited communications that try to prey on consumers,” said FTC Chair Lina M. Khan. “This scourge does not respect borders, and our recommitment to this MOU underscores the importance of international communication and cooperation to combat this problem.”

Given the success of the collaboration under the original document, UCENet members agreed to renew and make evergreen the MOU, a non-binding instrument which the FTC and its partners signed in 2016. The 2016 MOU was aimed at facilitating information sharing, capacity building, and enforcement assistance among the partners. For the past seven years, it also has facilitated communication about emerging threats and complaint trends related to spam, scams, and illegal telemarketing.

The UCENET MOU is part of the FTC’s continuing to work to fight harms that can arise from unwanted messages. Unsolicited communications in the form of illegal and spoofed robocalls, text messages, and emails are often the source of scams that harm millions of consumers in the United States each year. The revised MOU also has been signed by UCENet partners in Canada, Australia, South Korea, New Zealand, and the United Kingdom.

The FTC’s work in this area includes its recent Operation Stop Scam Calls initiative, which united federal and state law enforcement partners from across the United States in their fight against illegal telemarketing operations and the companies that facilitate their scams via lead generation and telecommunications services.

The effort also targeted Voice over Internet Protocol (VoIP) service providers who facilitate illegal robocalls every year, which often originate overseas. The collaboration, information-sharing, and intelligence-sharing by UCENet MOU signatories serves to strengthen, enhance, and complement the work of the FTC and other domestic agencies fighting the scourge of unwanted and illegal telemarketing calls.

The lead staffer on this matter was Kristina Mulligan in the Commission’s Office of International Affairs.

The Federal Trade Commission staff will be hosting a virtual roundtable discussion on October 4, 2023 to better understand the impact of the use of generative artificial intelligence on music, filmmaking, and other creative fields.

FTC staff are seeking to better understand how the development and deployment of AI tools that can generate text, images, and audio—often referred to as generative artificial intelligence—may impact open and fair competition or enable unlawful business practices across markets, including in creative industries. The listening session will focus on different issues posed by generative AI, including concerns raised by musicians, actors, and other content creators about the use of AI to create entertainment and other content.

FTC Chair Lina M. Khan will provide opening remarks to kick off the event and will then hear from representatives from a variety of creative fields. They will explore the ways emerging AI tools are reshaping each of the participants’ respective industries and how they are responding to these changes. The listening session, which is being led by the FTC’s Office of Technology, is part of the agency’s efforts to keep up with the latest developments in emerging technologies such as AI.

The event will begin at 3 p.m. ET and be webcast on the FTC’s website at FTC.gov. Additional information, including a list of panelists will be posted in the coming days to the event page.

The lead staffer on this matter is Madeleine Varner from the FTC’s Office of Technology.

The Federal Trade Commission has extended by 120 days the deadline for it to consider whether to approve an application from the Entertainment Software Rating Board (ESRB) and others for a new mechanism for obtaining parental consent under the Children’s Online Privacy Protection Act Rule.

The ESRB along with two companies, Yoti and SuperAwesome, submitted the application in June 2023 for approval for the use of “Privacy-Protective Facial Age Estimation” technology, which analyzes the geometry of a user’s face to confirm that they are an adult. ESRB currently operates a COPPA safe harbor program.

As required by the COPPA Rule, the FTC in July sought comment on the application. The rule requires the Commission to respond to such applications within 120 days. After receiving more than 350 comments, the Commission has extended the deadline, which was October 2, 2023, by 120 days to ensure it can adequately review the comments it received on the proposal.

The Commission voted 3-0 to extend the deadline to review the ESRB application.

The Federal Trade Commission is seeking research for its annual PrivacyCon event, which will take place virtually on March 6, 2024, on such privacy and data security topics as artificial intelligence and health-related privacy.

The annual event brings together a diverse group of stakeholders to discuss the latest research and trends related to consumer privacy and data security. As part of this event, the FTC is seeking empirical research and demonstrations, including rigorous economic analyses. PrivacyCon 2024 is particularly focused on such topics as:

• Automated Systems/artificial intelligence,
• Health-Related surveillance,
• Children’s and teens’ privacy,
• Deepfakes and voice clones,
• Worker surveillance, and
• Advertising ecosystem and surveillance advertising.

More details on other topics and information on how to submit presentations can be found in the Call for Presentations.  The deadline for submitting a presentation for PrivacyCon is December 6, 2023.

The event is free, open to the public, and will be webcast on the FTC’s website at www.ftc.gov. The agenda will be posted to the event page  prior to the event.

The lead staffer on this matter is Jamie Hine from the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission is taking action to stop Lurn, a Maryland-based online business coaching seller, from making unfounded claims that consumers can make significant income by starting an array of online businesses. The company, its CEO Anik Singal, and spokespeople Tyrone Cohen and David Kettner have agreed to court orders that will require them to stop their unlawful practices, and require Lurn and Singal to turn over $2.5 million to the FTC to be used to refund money to consumers they harmed.

“Even after receiving a Notice of Penalty Offenses, Lurn used bogus earnings claims to convince people it would teach them to make large sums of money online,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The Commission will continue to pursue aggressively those who prey on people seeking to provide for themselves and their families.”

The FTC’s complaint charges that Lurn sold various money-making programs with outlandish claims about the kinds of money consumers could make, including that they could become a “Stay-At-Home Millionaire” with one program. For another program, Lurn told consumers they could “Fail 98% of the Time & Still Be Able to Make $11,453 Per Month.” According to the complaint, the company had no information to back up these claims. The FTC alleges that defendants’ marketing claims violated the FTC Act and the agency’s Telemarketing Sales Rule.

One Lurn program, “Kindle Cashflow University,” claimed to show consumers how to make money by finding popular electronic books on Amazon’s Kindle platform and then creating near-copies of those books to sell to consumers who might be searching for the popular titles. Another program, “Email Startup Incubator,” promised consumers passive income through affiliate and email marketing.

The complaint notes that while the programs cost thousands of dollars, very few, if any consumers actually made money with the programs, despite the company’s numerous claims and supposed endorsements touting huge profits.

In addition, the FTC charges that Lurn would reach out to consumers who paid for the programs sold by the company to pitch them on additional “coaching” services that could cost as much as $10,000. Telemarketers for Lurn used a script that asked consumers about their income goals, and no matter how large of an income goal consumers said they had, the telemarketers were told to reply, “I’m 100% confident we can help you.”

The complaint charges that Lurn and Singal were aware that their actions violated the law. In October 2021, they received a Notice of Penalty Offenses from the FTC about earnings claims that listed specific acts and practices that violate the FTC Act, but even after receiving that Notice Lurn continued deceptively selling its programs. According to the complaint, thousands of consumers purchased tens of millions of dollars in programs from Lurn.

The proposed settlement orders, which were agreed to by the defendants in the case, contain several requirements, including:

• Prohibition on deceptive earnings claims: Each of the defendants will be prohibited from making earnings claims that are misleading or unsubstantiated.
• Prohibition on deceiving consumers: The defendants would also be prohibited from any misrepresentation in selling of any goods or services.

In addition, the orders against Lurn and Singal include provisions requiring them to:

• Turn over funds: Lurn and Singal will be required to turn over $2.5 million to the FTC to be used to provide refunds to consumers.
• Inform customers: Lurn and Singal will also be required to provide notice to all of the consumers who have made a purchase from the company since May 1, 2019, informing those purchasers of the FTC’s case against Lurn.

The order against Lurn and Singal contains a total monetary judgment of $14,077,121, which is partially suspended based on their inability to pay the full amount. If they are found to have lied to the FTC about their financial status, the full judgment would be immediately payable.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 3-0. The FTC filed the complaint and final order in the U.S. District Court for the District of Maryland.

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 orders have the force of law when approved and signed by the District Court judge.

The staff attorneys on this matter were Ben Davidson, Josh Doan, and Ryan McAuliffe of the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission signed a cooperation agreement with the consumer protection authorities of the four Latin American countries —Chile, Colombia, Mexico and Peru – to combat fraud both inside and outside the United States.

The Multilateral Memorandum of Understanding (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.

“This multilateral MOU with our partners from Chile, Colombia, Mexico and Peru sends a message of our shared commitment to protect consumers from cross-border fraud, deception, and other illegal practices,” said Maria Coppola, Director of the FTC’s Office of International Affairs. The MOU also offers a blueprint for extending cooperation even further through the region by providing a mechanism for others to join this MOU, which will bolster our 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.

These four countries represent about 225 million people and combined make up the eighth biggest economy in the world.

In signing the MMOU, the FTC and consumer protection authorities in these countries agreed to cooperate in investigations related to violations of consumer protection laws. Specifically, the MMOU encourages participants to:

• Share complaints submitted by consumers;
• Provide investigative assistance, with appropriate safeguards, including sharing of information relating to defendants, their assets and/or their deceptive conduct;
• Coordinate enforcement actions against cross-border violations of law;
• Provide other practical case assistance, where appropriate, in the enforcement of consumer protection laws, such as gathering evidence;
• Participate in econsumer.gov, which allows consumers from around the world to report fraud and provides consumer protection agencies around the world with access to important data about potential violations; 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.

Notably, the MMOU includes a mechanism for allowing other consumer protection authorities to join in the future.

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.

The lead staffer on this matter is Michael Panzera from the FTC’s Office of International Affairs.

The Federal Trade Commission has joined the Consumer Financial Protection Bureau (CFPB) in filing an amicus brief in the U.S. Court of Appeals for the Second Circuit urging reversal of a district court decision that the agencies say overlooked the Fair Credit Reporting Act’s requirement to delete information disputed by a consumer that cannot be verified by a furnisher of that information.

The case, Suluki v. Credit One Bank, NA, involves a consumer who allegedly disputed with the credit reporting agencies (CRAs) information on her credit report that she said resulted from multiple credit card accounts that her mother opened in her name without her permission or knowledge. The 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 Fair Credit Reporting Act, which 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, according to the FTC-CFPB brief.

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.

Inaccurate information on a consumer report can hamper people’s ability to get housing, employment, and credit. 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.

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

Staff in the Federal Trade Commission’s Bureau of Consumer Protection have submitted a comment to the U.S. Department of the Treasury, U.S. Department of Labor, and U.S. Department of Health and Human Services supporting proposed amendments to regulations implementing the Mental Health Parity and Addiction Equity Act.

In the comment, the staff share concerns with other federal agencies regarding the devastating toll of substance abuse disorders (SUDs) on individuals, families, and communities, as well as the ways in which consumers seeking treatment may be preyed upon by unscrupulous actors.

The comment further details how the FTC has used additional enforcement tools included in the 2018 Opioid Addiction Recovery Fraud Prevention Act (OARFPA) to combat SUD treatment scams. In the past two years, the Commission has brought four enforcement actions under OARFPA, resulting in significant civil penalties and redress against companies and individuals charged with deceptively marketing products and services they falsely claimed could help consumers treat addiction. According to the comment, “Consumers faced with financial impediments, such as lack of insurance coverage, may be particularly susceptible to scams, which may in turn further impede their access to treatment or even derail treatment entirely.”

The comment, however, also points out that insurance coverage does not fully insulate consumers from scammers. Accordingly, local, state, and federal enforcement agencies must have the resources to combat all illegal practices in the addiction space, including insurance fraud. The comment noted that the proposed amendments strike the right balance between leaving intact previous enforcement systems while promoting better insurance coverage for SUD treatment.

The Commission voted 3-0 to approve filing of the staff comment. The lead attorney on the matter is Cassandra Rasmussen in the FTC’s Bureau of Consumer Protection.