The Federal Trade Commission is taking action against motorcycle manufacturer Harley-Davidson Motor Company Group, LLC and Westinghouse outdoor generator maker MWE Investments, LLC for illegally restricting customers’ right to repair their purchased products. The FTC’s complaints charge that the companies’ warranties included terms that conveyed that the warranty is void if customers use independent dealers for parts or repairs. The FTC is ordering Harley-Davidson and Westinghouse to fix warranties by removing illegal terms and recognizing the right to repair, come clean with customers, and ensure that dealers compete fairly with independent third-parties.

“Consumers deserve choices when it comes to repairing their products, and independent dealers deserve a chance to compete,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “These orders require Harley and Westinghouse to fix their warranties, come clean with consumers, and ensure fair competition with independent providers. Other companies that squelch consumers’ right to repair should take notice.”

Wisconsin-based Harley-Davidson sells motorcycles worldwide, and Ohio-based MWE Investments sells Westinghouse-brand outdoor power generators and related equipment. Each company offers limited warranties to consumers who buy their products that provide for no-cost repair or replacement, should the products have defects or other issues.

The FTC has made it a priority to protect consumers’ right to repair their products. The Magnuson Moss Warranty Act is one of the FTC’s tools to address repair restrictions. It prohibits a company from conditioning a consumer product warranty on the consumer’s using any article or service which is identified by brand name unless it is provided for free. Following the FTC’s right to repair report Nixing the Fix, the Commission issued a Policy Statement on Repair Restrictions Imposed by Manufacturers pledging to ramp up investigations into illegal repair restrictions.

According to the FTC’s complaints, both companies were imposing illegal warranty terms that voided customers’ warranties if they used anyone other than the companies and their authorized dealers to get parts or repairs for their products. The FTC also alleged that Harley-Davidson failed to fully disclose all of the terms of its warranty in a single document, requiring consumers to contact an authorized dealership for full details. The FTC alleges that these terms harm consumers and competition in multiple ways, including:

• Restricting consumers’ choices: Consumers who buy a product covered by a warranty do so to protect their own interests, not the manufacturer’s. The companies’ warranties improperly implied that as a condition of maintaining warranty coverage, consumers had to use the company’s part or services for any repairs.

• Costing consumers more money: By telling consumers their warranties will be voided  if they choose third-party parts or repair services, the companies force consumers to use potentially more expensive options provided by the manufacturer. This violates the Warranty Act, which prohibits these clauses unless a manufacturer provides the required parts or services for free under the warranty or is granted an exception from the FTC.

• Undercutting independent dealers: The Warranty Act’s tying prohibition protects not just consumers, but also independent repairers and the manufacturers of aftermarket parts. By conditioning their warranties on the use of authorized service providers and branded parts, the companies infringed the right of independent repairers and manufacturers to compete on a level playing field. 

• Reducing resiliency: Consumers rely on the companies’ products for emergency power and transportation. Robust competition from aftermarket part manufacturers is critical to ensuring that consumers get the replacement parts they need when they need them and are not at the mercy of branded part supply chains. More resilient and repairable products also lead to less waste in the form of products that could otherwise be fixed. 

Enforcement Actions

Under the FTC Act and the Warranty Act, the FTC has the authority to take action against companies violating consumer protection laws, including those engaging in unfair or deceptive acts or practices. The FTC’s orders in these cases:

• Prohibit further violations: The companies will be prohibited from further violations of the Warranty Act, and in Harley-Davidson’s case, the Disclosure Rule. They will also be prohibited from telling consumers that their warranties will be void if they use third-party services or parts, or that they should only use branded parts or authorized service providers. If the companies violate these terms, the FTC will be able to seek civil penalties of up to $46,517 per violation in federal court.

• Recognize consumers’ right to repair: Both companies will be required to add specific language to their warranties saying, “Taking your product to be serviced by a repair shop that is not affiliated with or an authorized dealer of [Company] will not void this warranty. Also, using third-party parts will not void this warranty.”

• Come clean with consumers: Both companies must send and post notices informing customers that their warranties will remain in effect even if they buy aftermarket parts or patronize independent repairers.

• Alert dealers to compete fairly: Both companies are being required to direct authorized dealers to remove deceptive display materials, train and monitor employees, and not promote branded parts and dealers over third parties.

The Commission vote to issue the administrative complaints and to accept the consent agreement was 5-0. Chair Lina M. Khan and Commissioner Rebecca Kelly Slaughter issued a statement. The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days, beginning today and continuing through July 22, 2022, after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments appear in the published notice. Once processed, comments will be posted on Regulations.gov.

The Federal Trade Commission has finalized an order against Resident Home LLC and owner Ran Reske for allegedly making false, misleading, or unsupported advertising claims that their imported DreamCloud mattresses were made from 100% USA-made materials. Resident Home LLC and Reske will pay $753,000.

In the company’s promotional material, Resident Home LLC and Reske claimed that their DreamCloud mattresses were “proudly made with 100 percent USA-made premium quality materials.” But, according to the complaint, these claims were false or misleading, and violated the FTC Act. The FTC says all DreamCloud mattresses are finished overseas and, in some cases, are wholly imported or use significant imported materials.

Under the terms of the final order, in addition to paying $753,000, Resident Home LLC and Reske are prohibited from making several claims that deceive consumers and harm law-abiding businesses whose sales were siphoned because of this behavior. The order specifically covers unqualified U.S.-origin claims (claims made with no limitations) for any product, unless they can show that:

• the product’s final assembly, final processing, and all significant processing takes place in the United States; and
• all or virtually all ingredients or components of the product are made and sourced in the United States.

The order also governs any qualified Made in USA claims (claims that include explanatory information). For qualified claims, Resident Home LLC and Reske must include a clear disclosure about the extent to which the product contains foreign parts, ingredients, components, or processing.

The FTC’s Enforcement Policy Statement on U.S. Origin Claims offers guidance on making Made in USA claims. The Made in USA Labeling Rule went into effect on August 13, 2021. Companies that violate the Rule from that date forward may be subject to civil penalties.

The Commission voted 3-2 to approve the complaint and settlement order, with Commissioners Noah Joshua Phillips and Christine S. Wilson voting no. The majority issued a statement, and Commissioners Phillips and Wilson issued a joint dissenting statement.  

In response to legal action by the Federal Trade Commission, the U.S. District Court for the Middle District of Florida ordered SPM Thermo-Shield, Inc. to permanently halt deceptive energy-efficiency claims it has been making about wall coating products that it sells for houses and other buildings. The court issued a permanent injunction prohibiting SPM Thermo-Shield and its officers from misrepresenting the coatings’ insulating or energy-saving capabilities.

“We know consumers are concerned about rising energy costs,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “In this environment, it’s more critical than ever that sellers be honest about energy efficiency claims—and we are poised to hold them accountable when they are not.”

In July 2020, the FTC sued four companies, including Florida-based SPM Thermo-Shield, that sell paint products used to coat buildings and homes, alleging they deceived consumers about their products’ insulation and energy-savings capabilities. The FTC charged the companies with falsely overstating the R-value ratings of the coatings, and making deceptive statements about heat flow and insulating power.

A product’s R-value is a measure of its resistance to heat flow: the higher the R-value, the greater the insulating power. Using R-value and other product information, consumers can make purchasing decisions that improve the energy efficiency of their homes. The R-value depends on the type of insulation, its thickness, and its density. The R-value of most insulations also depends on temperature, aging, and moisture accumulation.

The complaint against SPM Thermo-Shield and its officers, Peter and George Spiska, alleged they falsely claimed their Thermo-Shield Roof Coat, Thermo-Shield Exterior Wall Coat, and Thermo-Shield Interior Wall Coat have R-values of R-22 or R-21 and provide significant energy savings for consumers.

Enforcement Action

In issuing the opinion and order the court found that although SPM Thermo-Shield and its officers admitted that the R-value claims the FTC challenged were false, and stated that they had removed them from their marketing materials, the claims did, in fact, reappear after the lawsuit was filed. It permanently prohibits the defendants from:

• Misrepresenting the R-value of any architectural coating product;
• Making unsubstantiated claims that any architectural coating product is equivalent to, or substantially similar to, the R-value of any other product or system or provide the equivalent of adding insulation with a specific R-value; and
• Claiming that any architectural coating product will provide energy savings without disclosing that such savings vary according to several factors, such as location, climate, building type, and level of construction.

The order also prohibits them from providing the “means and instrumentalities” that would allow anyone else to make such misleading R-value or energy-savings claims.

The opinion and order and permanent injunction were filed in the U.S. District Court for the Middle District of Florida, Fort Myers Division. They have now been signed and entered by the Court.

The Federal Trade Commission is sending 22,817 checks totaling more than $2 million to borrowers who lost money to a student loan debt-relief scam that operated under the names Student Debt Doctor.

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 844-916-3240. The Commission never requires people to pay money or provide account information to get a refund.

In late 2017, the FTC sued Student Debt Doctor and its owner, Gary B. White Jr. alleging that the company tricked consumers into believing they could receive immediate relief from monthly loan payments and complete loan forgiveness in return for a large, upfront fee. The defendants also told students that their loans were in forbearance when they were not, causing consumers to neglect required payments and to suffer diminished credit scores. In reality, the FTC alleged that the vast majority of consumers lost their hard-earned money but received little or no relief—and some borrowers ended up owing more.

In December 2018, the FTC announced a stipulated final order that bans White and his company from the debt-relief industry and from making misrepresentations related to financial products or services.

The U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward. The money being returned to consumers today comes from settlements that were entered before the Supreme Court’s decision. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of Commission refunds. In 2020, Commission actions led to more than $483 million in refunds to consumers across the country.

The Federal Trade Commission is sending 7,731 checks totaling more than $9.7 million to small businesses who were harmed by Yellowstone Capital, a merchant cash advance company that withdrew money from their bank accounts without permission.

Eligible businesses are getting 51% of their money back, averaging more than $1,200 for each check. Recipients should cash their checks within 90 days, as indicated on the check. Businesses who have questions about their refund should call the refund administrator, Epiq, at 855-604-1861. The Commission never requires people to pay money or provide account information to get a refund.

The FTC sued Yellowstone and its owners in 2020, alleging that they unlawfully withdrew millions of dollars in excess payments from their customers’ accounts. The complaint alleged that Yellowstone continued to withdraw hundreds or thousands of dollars from businesses after they had repaid the full amounts owed in their contracts. In some cases, Yellowstone would only refund this money when businesses complained, and even then the refunds could take weeks or months, leaving small businesses without needed cash on hand.

In 2021, Yellowstone agreed to a court order that required them to surrender funds to the FTC, which the FTC is using to provide refunds. The order also prohibits the defendants from misleading consumers or withdrawing money without authorization and requires them to monitor companies working on their behalf.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of Commission refunds. In 2020, Commission actions led to more than $483 million in refunds to consumers across the country, but the U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.

Today the Federal Trade Commission issued a report to Congress warning about using artificial intelligence (AI) to combat online problems and urging policymakers to exercise “great caution” about relying on it as a policy solution. The use of AI, particularly by big tech platforms and other companies, comes with limitations and problems of its own. The report outlines significant concerns that AI tools can be inaccurate, biased, and discriminatory by design and incentivize relying on increasingly invasive forms of commercial surveillance.

“Our report emphasizes that nobody should treat AI as the solution to the spread of harmful online content,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Combatting online harm requires a broad societal effort, not an overly optimistic belief that new technology—which can be both helpful and dangerous—will take these problems off our hands.”

In legislation enacted in 2021, Congress directed the Commission to examine ways that AI “may be used to identify, remove, or take any other appropriate action necessary to address” several specified “online harms.” The harms that are of particular concern to Congress include online fraud, impersonation scams, fake reviews and accounts, bots, media manipulation, illegal drug sales and other illegal activities, sexual exploitation, hate crimes, online harassment and cyberstalking, and misinformation campaigns aimed at influencing elections.

The report warns against using AI as a policy solution for these online problems and notes that its adoption could also introduce a range of additional harms. Indeed, the report outlines several problems related to the use of AI tools, including:

• Inherent design flaws and inaccuracy: AI detection tools are blunt instruments with built in imprecision and inaccuracy. Their detection capabilities regarding online harms are significantly limited by inherent flaws in their design such as unrepresentative datasets, faulty classifications, failure to identify new phenomena, and lack of context and meaning.

• Bias and discrimination: In addition to inherent design flaws, AI tools can reflect biases of its developers that lead to faulty and potentially illegal outcomes. The report provides analysis as to why AI tools produce unfair or biased results. It also includes examples of instances in which AI tools resulted in discrimination against protected classes of people or overblocked content in ways that can serve to reduce freedom of expression.

• Commercial surveillance incentives: AI tools can incentivize and enable invasive commercial surveillance and data extraction practices because these technologies require vast amounts of data to be developed, trained, and used. Moreover, improving AI tools accuracy and performance can lead to more invasive forms of surveillance.

Congress instructed the Commission to recommend laws that could advance the use of AI to address online harms. The report, however, finds that, given that major tech platforms and others are already using AI tools to address online harms, lawmakers should consider focusing on developing legal frameworks that would ensure that AI tools do not cause additional harm.

The Commission voted 4-1 at an open meeting to send the report to Congress. Statements will be posted shortly.

The Federal Trade Commission is seeking public comment on a petition by Gilbarco, Inc a fuel dispenser pump manufacturer. The company is requesting a partial exemption from the FTC’s Fuel Rating Rule, which, among other things, requires retailers of automotive fuel to post the automotive fuel rating of all automotive fuel sold to consumers.

The partial exemption would allow Gilbarco to make small reductions in the type and size of fuel labels to allow room for an additional fuel grade button on its pumps. The FTC has published a Federal Register notice seeking public comment. Information about how to submit a comment can be found in the notice.

The FTC implemented the Fuel Rating Rule under the Petroleum Marketing Practices Act in 1979. The law establishes uniform automotive fuel ratings and labeling standards, including octane content information, which provide consumers with the information they need to make informed choices at the gas pump. The rule also defines how ethanol content should be displayed on fuel rating labels.

Gilbarco is one of the largest manufacturers of fuel dispensers in the United States, and three times since 1988, the FTC has approved similar petitions by the company related to proposed fuel label changes. In its current petition, the company is requesting permission to make small reductions to:

• The type of “XX% Ethanol” and “Flex-Fuel Vehicles” ethanol labels;

• The type and letter spacing for the words “Minimum Octane Rating” on octane labels; and

• The width of labels for gasoline and five other types of fuels.

The Commission vote approving publication of the Federal Register notice was 5-0 with Commissioner Christine S. Wilson issuing a separate statement. The FTC will consider all public comments submitted by the deadline in the notice before voting on whether to approve Gilbarco’s petition.

The Federal Trade Commission is sending 26,698 checks totaling more than $970,000 to consumers who were harmed by a deceptive payday lending scheme that operated under the names Harvest Moon Financial, Gentle Breeze Online, and Green Stream Lending.

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, Epiq, at 855-662-0075. The Commission never requires people to pay money or provide account information to get a refund.

The FTC sued the payday loan enterprise and its owners in 2020, alleging that the defendants deceptively marketed their payday loans when they told borrowers that the loans would be repaid after a fixed number of payments. Yet, according to the FTC, long after the promised number of payments had been made, borrowers learned that the payments had been applied to finance charges only and that the defendants were continuing to make regular withdrawals from their checking accounts.

In 2021, the defendants in the case agreed to a court order that permanently banned them from the debt collection industry and required them to deem nearly all outstanding debts owed by consumers as being paid in full.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of Commission refunds. In 2020, Commission actions led to more than $483 million in refunds to consumers across the country, but the U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.

The Federal Trade Commission is cracking down on the Warrior Trading day trading investment scheme for making misleading and unrealistic claims of big investment gains to consumers. The FTC alleges that Warrior Trading and its CEO, Ross Cameron, used those claims to convince consumers to pay hundreds or thousands of dollars for a trading system that ultimately failed to pay off for most customers.

As a result of the FTC’s case, Warrior Trading will be required to pay $3 million to refund consumers and will be prohibited from making baseless claims about the potential for consumers to earn money using their trading strategies.

“Warrior Trading is paying a heavy price for misleading consumers with bogus money-making claims,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue its crackdown on false earnings claims and phony opportunities.”

Warrior Trading, based in Great Barrington, Mass., promotes day-trading investments online, claiming to sell a trading strategy that will show consumers “how to make a profit in the markets.” From 2018 to 2021, the company made tens of millions of dollars selling its programs online. Day trading is a form of investing where consumers buy and sell stocks over very short intervals throughout the day, hoping to make profit during the very short times in which they may own shares in a particular firm.

The FTC’s complaint alleges that Warrior Trading’s advertising showcased the trading results of its CEO and founder, Ross Cameron, claiming that his strategies were both “profitable” and “scalable.” Warrior Trading deployed deceptive earnings claims throughout its sales pitch in violation of the FTC Act, and the Telemarketing Sales Rule (TSR).

According to the complaint, the vast majority of customer accounts actually lost money, with numerous consumers losing thousands of dollars trading on top of the thousands they paid Warrior Trading.

In its online advertisements, Warrior Trading exhorted consumers:

• “Learn to Trade With Certainty Towards The Financial Freedom You’ve Always Wanted” 
• “Learn How I Made over $101,280.47 in Verified Profits Day Trading Part Time in Under 45 Days Using 3 Simple Strategies that You Can Use Immediately to Increase profits and Reduce Losses NOW!”
• “Start trading over my shoulder side-by-side with me because I guarantee you that next week, the week after, the week after that, I’ll be trading the one or two stocks each day that move up 20 to 30 percent.”

Enforcement Action:

Under the FTC Act, and the TSR, the FTC has the authority to take action against companies violating consumer protection laws, including engaging in unfair or deceptive acts or practices. Under the court order agreed to by the FTC and Warrior Trading, the defendants must:

• Pay consumer redress. Warrior Trading must pay $3 million to consumers harmed by its false earnings claims and phony opportunities
• Shut down bogus earnings claims. The order prohibits the company from making unsubstantiated earnings claims and misrepresenting that purchasers of their products can be successful in trade regardless of their educational background, the amount of capital they have to invest, or the amount of time they spend trading; and
• Prohibit TSR violations. The company is prohibited from further violations of the TSR, including making any misrepresentations through telemarketing about investment opportunities, including the earnings potential or amount of risk a consumer might face.

The Commission vote approving the stipulated final order was 4-0. The FTC filed the proposed order in the U.S. District Court for the Western District of Massachusetts. The Commission thanks the U.S. Securities and Exchange Commission, Division of Economic and Risk Analysis, Office of Litigation Economics for its invaluable assistance and analysis of the relevant trading data in connection with the Warrior Trading matter.

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

Today, Federal Trade Commission Chair Lina M. Khan announced that an open meeting of the Commission will be held virtually on Thursday, April 28, 2022. The open meeting will commence at 1pm ET and will begin with time for members of the public to address the Commission.

The following items will be on the tentative agenda for the April 28 Commission meeting:

Business Before the Commission

• Notice of Proposed Rulemaking and an Advance Notice of Proposed Rulemaking regarding the Telemarketing Sales Rule: FTC staff will provide a presentation and the Commission will vote on the Notice and the Advanced Notice. The proposed changes to the Rule reflect input from the public. They would allow the rule to better address fraudulent business-to-business telemarketing and would introduce requirements for easy cancellation methods for telemarketing sales, among other improvements.

• Presentation on Section 13(b) of the Federal Trade Commission Act: Ahead of the one-year anniversary of the U.S. Supreme Court’s AMG Capital Management v. FTC decision, which overturned the longstanding 13(b) authority to collect monetary redress for consumers, staff will provide a presentation on the decision’s impact on the agency’s enforcement work.

At the start of the meeting, Chair Khan will offer brief remarks and will then invite members of the public to share feedback on the Commission’s work generally and bring relevant matters to the Commission’s attention. Members of the public must sign up for an opportunity to address the Commission virtually at the April 28 event.

Each commenter will be given two minutes to share their comments. Those who cannot participate during the event may submit written comments or a link to a prerecorded video through a webform. Speaker registration and comment submission will be available through Tuesday, April 26, 2022 at 8 pm ET.

The FTC’s public meeting agendas will be posted on the Commission’s website at least seven days prior to the Commission’s next monthly meeting. A link to the event will be available in advance of the meeting via FTC.gov. The event will be recorded, and the webcast and any related comments will be available on the Commission’s website after the meeting. The Commission retains discretion to make public comments available following the event on ftc.gov. Due to challenges related to the ongoing COVID-19 public health crisis, open meetings will be held virtually until further notice.