FOR THE CONSUMER
The FTC's monthly newsletter for the Congressional community
It's the news you - and your constituents - can use.
Volume 8- Number 1
IN THIS ISSUE
$114 MILLION BACK TO CONSUMERS. CompuCredit Corporation has settled FTC charges that it deceptively marketed Visa and MasterCard card to consumers in the subprime market. CompuCredit will credit the accounts of eligible consumers with more than $114 million. Eligible consumers whose current balances are less than the amount of credits to be applied will get an estimated $3.7 million in cash refunds. Press release: www.ftc.gov/opa/2008/12/compucredit.shtm.
$1 MILLION COPPA PENALTY. Sony BMG Music Entertainment will pay $1 million to settle FTC charges that it violated the Children s Online Privacy Protection Act (COPPA). According to the FTC complaint, Sony’s fan websites improperly collected, maintained, and disclosed personal information from thousands of children under the age of 13, without their parents consent. Press release: www.ftc.gov/opa/2008/12/sonymusic.shtm.
MORTGAGE PRICING DISCRIMINATION. A home mortgage lender has agreed to settle FTC charges that it violated federal law by charging African-American and Hispanic consumers higher prices than non-Hispanic white consumers for mortgages --- price disparities that couldn’t be explained by the applicants’ credit characteristics or underwriting risk. Gateway Funding Diversified Mortgage Services, L.P., and its general partner allegedly gave loan officers nearly complete discretion to charge — and keep a percentage of — "overages" that included higher interest rates and higher up-front charges. The settlement imposes a judgment of $2.9 million, all but $200,000 of which is suspended based on the defendants’ inability to pay. Press release: www.ftc.gov/opa/2008/12/gateway.shtm.
NOT A MYSTERY. An operation that lured consumers with promises that they could earn big money as trained and certified "mystery shoppers" has agreed to pay $850,000 to settle charges of deceptive marketing and contempt. Mystery shoppers are paid to shop or dine out and then provide reports about the experience. According to the FTC, Mystery Shop Link, LLC and its partners claimed to have many such positions available and that, in exchange for a fee, consumers could earn a steady income as mystery shoppers. Most consumers never got the jobs or earned any money. Press release: www.ftc.gov/opa/2008/12/mysteryshop.shtm.
DRUG MONOPOLY. The FTC sued Ovation Pharmaceuticals for illegally obtaining a monopoly on drugs used to treat premature babies with a life-threatening heart condition and then raising prices nearly 1,300 percent. Ovation bought the only other drug approved by the FDA to treat patent ductus arteriosus, and then raised the price of both drugs to nearly $500. The FTC and the Minnesota Attorney General filed suit in Minneapolis asking the federal court to force Ovation to divest one drug and forfeit its unlawful profits. Press release: www.ftc.gov/opa/2008/12/ovation.shtm.
TESTING, TESTING. The FTC has required Inverness Medical Innovations, Inc., to sell assets that could create more competition in a new generation of pregnancy test products. According to the FTC, market-leader Inverness, maker of Clearblue, Accu-Clear, and FactPlus, bought, but didn’t use, technology that would lead to products that could compete with its own, and interfered with the development of digital tests as a way to maintain its dominant position. Press release: www.ftc.gov/opa/2008/12/inverness.shtm.
DRIVING THE MARKET. The FTC moved to block the merger of CCC Information Services, Inc. and Mitchell International, Inc., two key providers of electronic systems used to estimate repair costs and value totaled vehicles. The $1.4 billion merger would make CCC/Mitchell the larger of only two competitors providing these services. According to the FTC, current competition between CCC and Mitchell holds down estimating costs paid by insurers and repair shops, and has lead to product improvements. Press release: www.ftc.gov/opa/2008/11/cccmitchell.shtm.
SSNs. This report to Congress recommends five measures to help prevent Social Security numbers from being used for identity theft: adopt nationwide standards to verify the identity of new and existing customers, reduce the unnecessary display and transmission of SSNs, improve data security, increase outreach to consumers and businesses on the protection of SSNs, and enhance coordination and information-sharing among organizations that routinely use SSNs. Press release: www.ftc.gov/opa/2008/12/ssnreport.shtm.
CREDIT “RETORTS.” The FTC has released two reports on disputing credit reports. One addresses methodological improvements to a previous pilot study where randomly selected consumers, with the help of an expert, identified and disputed potential errors in their credit reports. Press release: www.ftc.gov/opa/2008/12/factareport.shtm. The other discusses the process where the FTC refers certain consumer complaints about disputing errors on credit reports to the three nationwide consumer companies – TransUnion, Equifax, and Experian. Press release: www.ftc.gov/opa/2008/12/fcrafyi.shtm.
AT THE FTC
The following events at the FTC’s conference center at 601 New Jersey Avenue, N.W are free and open to the public. A government-issued photo ID is required for entry. Pre-registration is not required. Live webcasts of these workshops will be available at www.ftc.gov.
FRAUD FORUM. The FTC will host a Fraud Forum February 25 – 26. On the first day, law enforcement, consumer advocates, business representatives, and academics will examine the extent of fraud in the economy; how scammers learn the tools of their trade; who is at greatest risk of fraud; and what opportunities exist for improved self-regulatory efforts. The second day is open to domestic and international law enforcement officials only. Send comments to email@example.com. Press release: www.ftc.gov/opa/2008/10/fraud.shtm.
GLOBAL DATA SECURITY. The FTC and two international organizations will host a conference March 16-17 for policymakers, consumer advocates, industry representatives, technology experts, and academics from around the globe to address how companies can manage personal data-security issues internationally. Press release: www.ftc.gov/opa/2008/12/datasec.shtm.
ON THE ROAD
DRM BEAT. The FTC and the Technology Law and Public Policy Clinic at the University of Washington School of Law will host a free conference on the use of digital rights management technologies (“DRM”) which hardware manufacturers, publishers, and copyright holders typically use to control how consumers access and use content. The workshop, which is open to the public, will be held March 25 from 9 am to 4:30 pm at the University of Washington Law School in Seattle. Comments and research may be submitted electronically at https://secure.commentworks.com/ftc-DRMtechnologies. Pre-registration is not required. A live webcast will be available at www.ftc.gov. Press release: www.ftc.gov/opa/2008/12/drm.shtm.
FREE SECURITY SCAN" COULD COST TIME AND MONEY. Warns consumers that scammers are using fake "security alerts" to sell useless software. www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt121.shtm.
A SCAM BASED ON RELATIVE-ITY: WOULD-BE GRANDCHILDREN BILKING HONEST GRANDPARENTS. Cautions that scammers may be impersonating family members to convince consumers to wire them money. www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt111.shtm.
Kids under 12 are reported to spend billions of dollars on goods and services every year. The FTC’s new website, www.ftc.gov/YouAreHere, teaches kids how to be more savvy consumers by demonstrating the benefits of competition, the influence of advertising on buying decisions, and the rules and regulations that many business people need to follow. It’s a great tool for parents and teachers who are trying to help kids understand their role --- and the FTC’s --- in the marketplace. Kids can design and print advertisements, uncover suspicious claims in an ad, and guess the retail price of various candies based on their supply, demand, and production costs. One game that has players match the features of various cell phones with certain audiences illustrates the principles of target marketing; another allows visitors to compare sales pitches from three pizza joints as it explains competition. A short film playing at the cinema illustrates the history of the nation’s antitrust laws. Teach a kid about commerce --- visit www.ftc.gov/YouAreHere.
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