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.

WHAT: 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. WHEN: Wednesday, October 4, 2023, 3 p.m. ET-4:30 p.m. ET WHERE: The event will be held online. A link to view the event can be found on the event page and will be posted to FTC.gov the morning of the event. WHO: The event will feature remarks by FTC Chair Lina M. Khan and FTC Commissioner Rebecca Kelly Slaughter and will be followed by a round table discussion with members from a variety of creative fields. A full list of participants can be found on the event page. TWITTER:

Join the discussion on Twitter using the hashtag #GenAIchat.

New data from the Federal Trade Commission shows that scams originating on social media have accounted for $2.7 billion in reported losses since 2021, more than any other contact method.

In a new data spotlight, the FTC also takes a deep dive into social media scam trends in the first half of 2023. Reports during the first half of the year show that the most frequently reported scams on social media are related to online shopping, with 44 percent of reports pointing to fraud related to buying or selling products online. Most of these reports come from people who never received the items they ordered after responding to an ad on Facebook or Instagram.

While online shopping scams are the most commonly reported scam on social media, the spotlight notes that scams using social media to promote bogus investment schemes account for larger overall losses, accounting for 53 percent of all the money reported lost to scams on social media in the first half of the year. Cryptocurrency played a significant role in the investment scams consumers reported; more than half of the reports showed that consumers paid the scammers using cryptocurrency.

After investment scams, the spotlight noted that romance scams accounted for the second-most reported scam losses on social media.

The FTC recommends that consumers take steps to limit who can see their posts or contact them on social media, and to reach out directly by phone if someone claiming to be a friend or relative messages on social media asking for money. A full list of tips for consumers is included in the spotlight.

Two groups of student loan debt relief scammers will be permanently banned from the debt relief industry and are required to turn over their assets as part of a settlement with the Federal Trade Commission.

In the FTC’s May 2023 complaints against SL Finance LLC and its owners Michael Castillo and Christian Castillo, and BCO Consulting Services Inc. and SLA Consulting Services Inc. and their owners Gianni Olilang, Brandon Clores, Kishan Bhakta, and Allan Radam, the agency said that the defendants pretended to be affiliated with the U.S. Department of Education, charged illegal junk fees, and lured students with repayment programs and loan forgiveness that did not exist.

The SL Finance defendants also falsely claimed that their program was part of the CARES Act or a similar COVID-19 relief program, according to the complaint. The agency charged that these operations bilked students out of millions of dollars.

Under the proposed orders with SL Finance, its owners, and BCO Consulting and its owners, the defendants will be permanently banned from debt relief of any kind. They will also be banned from making any misrepresentations about financial products or services and from using false statements to collect consumers’ financial information. The SL Finance order also imposes a partially suspended monetary judgment of $5.8 million which is largely suspended based on defendants’ inability to pay. The Castillo brothers will be required to surrender assets worth approximately $312,685. The BCO Consulting orders imposes a partially suspended monetary judgment of $5.8 million, which is also largely suspended based on the defendants’ inability to pay. Individual defendants Olilang, Clores, Bhakta, and Radam will be required to relinquish assets worth approximately $565,594.

If any of the defendants are found to have materially misrepresented their finances, the full amount of the monetary judgment would become immediately due from that defendant.

The Commission votes approving the stipulated final orders were 3-0. The FTC filed the proposed orders in the U.S. District Court for the Central District of California.

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

The lead staff attorneys on this matter are Katherine Aizpuru and Samuel Jacobson of the FTC’s Bureau of Consumer Protection.

As a result of a Federal Trade Commission lawsuit, the owner of a series of companies that charged consumers millions of dollars in undisclosed and recurring subscription fees for skin creams has agreed to a lifetime ban on negative option marketing and will turn over his funds and assets to the FTC.

The FTC sued Gopalkrishna Pai and eight companies he owned in 2019, charging that he marketed a number of skin creams online, selling them for a nominal “shipping and handling” fee, usually $4.99. Consumers who bought the products were not aware that they would later be charged the full price for the products and a recurring monthly charge.

“Our proposed order banning defendants from the subscription marketing business and ordering the return of assets is a big win for consumers, and it should send a strong message to other unscrupulous marketers,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue its crackdown on junk fees and subscription traps.”

In its complaint, the FTC alleged that Pai and his companies charged consumers tens of millions of dollars in fees they didn’t consent to, noting that the supposed disclosure of these fees was hidden behind a small link on the sales websites, and that consumers’ attempts to cancel were often unsuccessful, even when they returned the products unopened. The FTC also alleged that Pai created hundreds of shell companies to facilitate payment processing for the scam.

In 2022, Pai pled guilty to separate charges brought by the U.S. Attorney’s Office for the District of Puerto Rico related to his actions.

The proposed settlement order in the FTC case, includes a number of requirements:

• Permanent ban on negative option marketing: Pai and his companies are permanently banned from participating in any negative option marketing.
• Prohibition on deceiving consumers: The order would also prohibit Pai and his companies from deceiving consumers about any other good or service they sell or market.
• Turn over funds and assets: The order would require the settling defendants to turn over the contents of numerous bank accounts and a retirement account. It also requires Pai to assign his interest in a promissory note secured by real property to an FTC-appointed liquidator. The order also notes that Pai has already surrendered more than $500,000 to the United States as part of the federal criminal suit against him. The relinquished assets will be used by the FTC to provide refunds to consumers harmed by the scam.

The order contains a total monetary judgment of $34,081,6073, which is partially suspended based on the settling defendants’ inability to pay the full amount. If the settling 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 order was 3-0. The FTC filed the proposed order in the U.S. District Court for the District of Puerto Rico.

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

The lead staff attorney on this matter was Michelle Schaefer of the FTC’s Bureau of Consumer Protection.