Information broker ChoicePoint will pay a $275,000 fine and has agreed to strengthened data security requirements as part of an FTC settlement announced Monday. The agency charged that the company failed to implement a comprehensive information security program to protect consumers' sensitive information, as required by a previous court order. The failure left the door open to a 2008 data breach that compromised the personal information of 13,750 people and put them at risk of ID theft, the Commission said.
ChoicePoint, now a subsidiary of Reed Elsevier, switched off a key electronic security tool used to monitor access to one of its databases in April 2008, and for four months failed to detect that the security tool was off, the FTC said. During that time, an unknown person conducted unauthorized searches of a ChoicePoint database containing sensitive consumer information, including Social Security numbers. After discovering the breach, the firm brought the matter to the FTC's attention.
The FTC's prior action against ChoicePoint involved a data breach in 2005, which compromised information of more than 163,000 consumers and resulted in at least 800 cases of ID theft. The settlement and resulting 2006 court order required the company to pay $10 million in penalties and $5 million in consumer redress. ChoicePoint also agreed to beef up its security operations and obtain independent assessments every other year until 2026. The new court order extends those record-keeping and monitoring requirements.
FTC Chairman Jon Leibowitz on Monday lauded former Genentech CEO Arthur Levinson -- a member of the corporate boards of both Google and Apple -- for stepping down from Google's board. The news follows an announcement earlier this summer that Google CEO Eric Schmidt, who had also been a director of both firms, was stepping down from the Apple board. Federal antitrust law prohibits, with certain exceptions, one person from serving as a director or officer of two competing corporations. Levinson's resignation takes effect immediately. He had been on the Google board since April 2004.
"Google, Apple, and Mr. Levinson should be commended for recognizing that overlapping board members between competing companies raise serious antitrust issues and for their willingness to resolve our concerns without the need for litigation," Leibowitz said in a statement. "Beyond this matter, we will continue to monitor companies that share board members and take enforcement actions where appropriate."
In a press release, Schmidt said Levinson has contributed to Google's success by "offering unvarnished advice and vital counsel on every big issue and opportunity." "Though he leaves as a member of our board, Art will always have a special place at Google," Schmidt said. Levinson, who left Genentech's day-to-day operations upon the biotech firm's $47 billion merger with Swiss drug maker Roche, called his time with Google "a remarkable experience" and said the company has "a terrific future."
Starting Dec. 1, bloggers, online marketers and others will have to inform consumers when they are paid or given free products to write positive reviews, the FTC said Monday in updated guidance for advertisers on how to keep their endorsements and testimonials in line with federal law. Under a 1980 rule, advertisers were allowed to describe unusual results in a testimonial as long as they included a disclaimer such as "results not typical." The revised version no longer contains that safe harbor.
The FTC also added new examples to illustrate the long standing principle that "material connections" between advertisers and endorsers - connections that consumers would not expect - must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other "word-of-mouth" marketers. While decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement, the agency said.
Celebrity endorsers also are addressed. While previous guidance did not explicitly state that endorsers as well as advertisers could be liable under the FTC Act for statements they make in an endorsement, the revised language reflects Commission clearly states that both advertisers and endorsers may be liable for false or unsubstantiated claims made in an endorsement. Celebrities also have a duty to disclose their relationships with advertisers when making endorsements on talk shows or in social media.
Read more from the FTC press release here.
As Congress contemplates Internet privacy and data security legislation, the FTC will host the first in a series of public roundtable discussions on Dec. 7 to explore challenges posed by the array of 21st century technology and business practices that collect and use consumer information. Such practices include social networking, cloud computing, behavioral advertising, mobile marketing, and the collection and use of information by retailers, data brokers and third parties, the FTC said in a Tuesday notice. The events will help the Commission determine how best to protect consumer privacy while supporting beneficial uses of the information and technological innovation.
The roundtables will consider the risks and benefits of information collection and use in online and offline contexts, consumer expectations surrounding various information management practices, and the adequacy of existing legal and self-regulatory regimes to address privacy interests, officials said. Invited participants will include stakeholders representing a range of views and experiences, such as academics, privacy experts, consumer advocates, industry participants and associations, technology experts, legislators, international representatives, and others.
Individuals and organizations may submit requests to participate as panelists and may recommend topics for inclusion on the agenda. Those should be submitted electronically to privacyroundtable@ftc.gov no later than Oct. 30. Interested parties can also submit written comments or original research. For more details click here.
The FTC urged the FCC on Friday to take into consideration the consumer protection agency's primary missions of promoting competition and safeguarding consumers in the marketplace as the FCC develops its national broadband plan. "The FCC deserves tremendous credit for its leadership in creating a national broadband policy that will help bring high-speed Internet access and services to Americans across the nation," FTC Chairman Jon Leibowitz said in a press release. "As the agency that shares jurisdiction over broadband and the Internet, we look forward to working with the FCC in fulfilling this historic mission."
The FTC's response to an FCC notice of inquiry points out that competition and consumer protection work together to benefit individuals. Competition pressures producers and service providers to offer customers the most attractive array of choices with respect to price, quality, and other options, the agency said. At the same time, consumer protection policy promotes informed decision-making by customers and requires sellers to provide meaningful, timely information. The FTC's comments also question whether there is significant broadband competition and recommends using analytical tools embraced by the FTC and Justice Department in antitrust cases.
Consumer protections also are essential to help foster greater adoption of broadband, the FTC said. Those include meaningful and timely disclosures of service terms by broadband providers and strong data security policies that will safeguard consumer information and ease potential consumer concerns about online privacy. Privacy protections are particularly important, given new technologies that allow broadband providers to track consumers' online activities, to identify the source and content of much of the data they handle, and to manage that data in increasingly sophisticated ways, such as delivering targeted advertising online, officials said.
FTC Chairman Jon Leibowitz on Thursday expressed concern about Google's plan to digitize mass quantities of books, saying it "raises serious privacy challenges because of the vast amount of user information that could be collected." He said he was pleased that Google is taking steps to protect the privacy of Google Books users and noted that the Commission will have an ongoing dialogue with Google and others to ensure consumer privacy is protected when new technologies emerge. "As Google Books evolves we'll work to ensure that the privacy of online readers is fact, not fiction," he said in a statement.
Google recently told the FTC that users of Google Books are not and will not be required to have a Google account or register with Google to use most features although an account will be required to access books that a user has purchased. The application will also adhere to Google's existing privacy policy governing how it handles consumer data. Under that policy, Google only shares "personal information" when the consumer tells Google to do so or in certain other narrow circumstances. Google is also in the process of creating a specialized privacy policy specific to Google Books.
The House Judiciary Committee will hold a hearing to examine "competition and commerce in digital books" next Thursday and a New York federal court has scheduled a fairness hearing for Oct. 7 on the $125 million settlement Google reached in a feud with authors and publishers. The Open Book Alliance says Google's response to the FTC "essentially boils down to this - trust us." "We think it's too important to leave to blind faith that Google would do the right thing for consumers if the settlement is approved," said the group, whose members include Amazon.com, Microsoft, the Internet Archive, Yahoo and others.
The FTC and Justice Department have given their blessings for Sprint-Nextel's planned $483 million merger with Virgin Mobile USA, officials confirmed Monday. Because Virgin, and its recent acquisition Helio are both MVNOs (mobile virtual network operators), analysts did not expect the deal to raise serious antitrust issues and thus believed regulators would approve the pairing. The deal could still be subject to review by the FCC, which has yet to issue a public notice on the matter. Virgin Mobile holds a small number of international licenses, which need to be transferred and require approval by the FCC, analysts at Stifel Nicolaus said in an e-mail. In its orders approving Verizon's combination with Alltel and Sprint's purchase of Clearwire last November, the FCC reaffirmed its view that MVNOs and resellers should be excluded from its analysis of the competitive impact of a wireless merger, they wrote.
FTC Competition Bureau Director Richard Feinstein said Monday the Commission will continue to investigate remaining interlocking directorates between Apple and Google despite the fact that Google CEO Eric Schmidt has stepped down from the computer manufacturer's board. The FTC has been examining the Google-Apple connection for some time and Feinstein commended the companies for recognizing that sharing directors raises competitive issues as Google and Apple increasingly compete with each other. Schmidt has served on Apple's board since 2006 and since that time has entered the Web browser and operating system business with Google's Android and Chrome products.
"Eric has been an excellent board member for Apple, investing his valuable time, talent, passion and wisdom to help make Apple successful," Apple CEO Steve Jobs said in a press release. "Unfortunately, as Google enters more of Apple's core businesses... Eric's effectiveness as an Apple board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest," Jobs said. Arthur Levinson, the former CEO of Genentech also sits on the boards of both companies. Read more here and here.
The FTC will likely recommend in an upcoming report that virtual worlds like Second Life incorporate some sort of age-verification technology to keep youngsters away from inappropriate content, Progress and Freedom Foundation senior fellow Berin Szoka said at a Monday briefing on online child safety. Requiring a small fee paid by credit card to access areas of Internet communities intended for adults could do the trick, he and DLA Piper attorney Jim Halpert said. But WiredSafety.org Executive Director Parry Aftab, who also spoke at the event, argued such a mandate could disadvantage those who do not have credit cards. Others pointed out there are ways to circumvent age verification tools and they may not keep minors out of restricted areas.
Report language from the fiscal year 2009 omnibus appropriations bill required the FTC to study the availability of explicit content in virtual worlds and report to Congress by December. An agency spokeswoman said the FTC was on target to meet that deadline. Appropriators asked for the report and for the agency to issue "a consumer alert to educate parents on the content that is available to children on virtual reality Web programs," according to the omnibus language. The Commission's last major action in this arena was a September 2000 report that was highly critical of the entertainment industry. As a result, companies promised to impose tougher standards and voluntarily comply with the paper's recommendations.
Cable television, the Internet, cellular phones and other handheld electronic devices have provided new opportunities for techniques like viral and word-of-mouth marketing that add new complexities to the government's job of monitoring deceptive advertising, FTC Consumer Protection Bureau Director David Vladeck told the Senate Consumer Protection, Product Safety, and Insurance Subcommittee on Tuesday. "We are continually learning about new and creative methods to get promotional messages out to consumers," he said at a hearing that covered issues ranging from false claims in weight loss promotions to bloggers who are paid by advertisers to endorse certain products.
National Consumers League Executive Director Sally Greenberg said blogging, by its nature, has encouraged an explosion of discourse about practically every product available -- but the FTC needs to crack down on those who are cash in by writing favorably about a product. Marketers frequently fabricate "spontaneous" Internet "buzz" around products and services by paying for endorsements by influential bloggers and celebrities, she said. "As with any emerging means of communication, 'rules of the road' must govern to protect against deceptive advertising," she added. The FTC has proposed requiring consumer-generated media outlets to disclose a financial relationship with a product. Read more about this topic in CongressDaily's PM Edition (subscription required).
Trade groups representing high-tech, manufacturing, retail, and financial services firms wrote to House Energy and Commerce Committee leaders Wednesday urging them to "use extreme caution" when crafting Internet privacy legislation and refrain from imposing duplicative, inconsistent and ineffective regulations that could hurt consumers and businesses. The letter, sent to leaders of the House Energy and Commerce Communications and Consumer Protection subcommittees on the eve of a high-profile hearing on the topic, acknowledges there are "important issues around online privacy that Congress is looking into, issues that industry takes seriously as well." But during deliberations, lawmakers should take into account the range of industries, companies, and jobs that could be impacted by potential legislative or regulatory action, they said.
"The vast majority of companies of all shapes and sizes are online in some capacity and use the Internet to communicate with consumers, employees, existing customers, potential customers, and business partners around the world," added the letter signed by the U.S. Chamber of Commerce, Computer & Communications Industry Association, Financial Services Roundtable, National Association of Manufacturers, National Retail Federation and others. The FTC also weighed in, sending lawmakers its recent staff report on behavioral advertising. An accompanying letter states the Commission "has actively encouraged industry to embrace new measures relating to behavioral advertising to inform and empower consumers and is monitoring developments" so privacy is protected.
Jessica Rich, who has served since 1998 as an assistant director in the FTC's Bureau of Consumer Protection, has been promoted to acting associate director for the division of privacy and identity protection. She previously worked in the division of financial practices. During her tenure at the agency, she has worked on a variety of matters related to consumer privacy and data security, including investigations, enforcement, rulemakings, workshops, reports, and testimony to Congress. Prior to her appointment as assistant director, Rich served as a legal advisor in the bureau and before that was an attorney in private practice in New York City.
The Center for Digital Democracy's Jeff Chester said Rich is "deeply interested" in privacy and her promotion is a sign that new Consumer Protection Bureau Director David Vladeck, who started this week, "takes privacy and online marketing issues seriously." Chester said the appointment of both officials "means this issue is awakened after a long digital Rip Van Winkle-like slumber." CDD has repeatedly urged the FTC to bolster its activity in the privacy arena. Online and mobile commerce represents a new and expanding marketplace for which the ground rules of competition and marketing are still being formulated, Chester and other watchdogs said in a recent letter to President Obama.
The FTC has dismissed its case against computer memory manufacturer Rambus, which the Commission argued had engaged in unlawful market monopolization. The end to the high-profile litigation follows a recent denial of the FTC's request that the Supreme Court review the case. "We are pleased to have finally put this matter behind us," Rambus General Counsel Thomas Lavelle said in a statement, noting that his firm prevailed on related claims at the Court of Appeals for the Federal Circuit, in front of a jury, and before a district court. The FTC first brought charges against Rambus in 2002.
"While we remain disappointed by the decision of the Court of Appeals, we of course respect the Court's opinion and will move forward," FTC Competition Bureau Director Richard Feinstein said. "The standard-setting issues that were at the heart of this case remain important, both as a matter of antitrust policy, and in order to protect consumers, and we will remain vigilant in this area." The FTC brought charges against Rambus relating to the firm's participation in an industry standard setting committee for dynamic random access memory. In 2008, Appeals Court Judge Stephen Williams said the commission "failed to sustain its allegation" that Rambus deceptively hid the fact that four of its technologies were incorporated into the standard.
Representatives from consumer, privacy and other public interest organizations urged President Obama on Monday to fill a vacant commissioner post at the FTC with someone who will uphold the agency's mandate of protecting American consumers. The Center for Digital Democracy, Electronic Frontier Foundation, Electronic Privacy Information Center, the World Privacy Forum and others signed a letter arguing that charge has "too often been ignored in the recent past." "The new commissioner should have a distinguished record of achievement in consumer affairs, with a demonstrated commitment to protecting the public from all manner of unfair, deceptive, fraudulent, and non-competitive monopolistic/oligopolistic business practices," the letter stated.
Given the key role the FTC plays in protecting the public in sectors like finance, health, privacy, and marketing, as well as competition, it is essential that the nominee have "an unassailable record of supporting the interests of the public," they said. They urged Obama to name someone who is committed to protect both consumer privacy and welfare with new media as online and mobile platforms grow in popularity. "Appointing a Commissioner with recent consulting or employment ties to the corporate sector would undermine consumer confidence in the agency." The FTC is "off to a promising start" under Chairman Jon Leibowitz and through the recent appointment of a highly regarded chief of the agency's consumer protection bureau, the watchdogs said.
Currently, the FTC consists of Leibowitz, a Democrat; Republicans William Kovacic and J. Thomas Rosch; and Pamela Jones Harbour, an independent.
The FTC on Thursday approved a Federal Register notice seeking public comment on a proposed rule that would require entities to notify consumers when the security of their electronic health information is breached. The economic stimulus package included provisions to advance the use of health IT and, at the same time, strengthen privacy and security protections for medical data. Among other things, the law recognizes there are new types of Web-based entities that collect or handle consumers' sensitive health information and some offer personal health records, which consumers can use as an electronic, individually controlled repository for their medical information, the FTC said. Others provide online applications through which consumers can track and manage different kinds of information in their personal health records.
"These innovations have the potential to provide numerous benefits for consumers, which can only be realized if they have confidence that the security and confidentiality of their health information will be maintained," according the FTC press release. To address this, the stimulus bill requires the Department of Health and Human Services to conduct a study and report by February 2010, in consultation with the FTC, on potential privacy, security, and breach notification requirements for vendors of personal health records and related entities. In the interim, the statute requires the FTC to issue a temporary rule requiring entities to notify consumers if the security of their health information is breached. The proposed rule the Commission announced Thursday is the first step in implementing this requirement. Read more about the FTC announcement here.
Satellite television provider DirecTV and Comcast Corp., one of the nation's largest providers of cable and Internet services, have agreed to pay a total of $3.21 million to settle separate FTC charges that they violated the "do not call" provisions of the Telemarketing Sales Rule, according to an agency press release. Among the charges were that the companies or their telemarketers called consumers who specifically had told the companies not to call them again. In addition, a DirecTV telemarketer and its principals have agreed to pay a $115,000 penalty for making prerecorded sales calls to consumers who had asked not to be called.
"In both of these cases, DirecTV and Comcast violated consumers' privacy by calling people who specifically had asked these companies not to call them again," FTC Chairman Jon Leibowitz said in a statement. "What makes DirecTV's actions especially troubling is that it is a two-time offender: DirecTV violated not only the FTC's do not call rules, but also a previous federal court order barring it from exactly this type of conduct." Liebowitz said his agency "won't tolerate firms that disregard consumers' specific requests not to be called, and we will be especially tough on companies that ignore their obligations under prior court orders."
A DirecTV spokesman said the cases pertained to a brief 2007 calling campaign to determine whether the firm had correctly recorded customers' do not call status. He said DirecTV believed the pre-recorded messages were permitted at the time because they were not attempting to sell anything -- but the FTC disagreed. "We're happy to have this behind us," he said. A Comcast spokeswoman pointed out the FTC found her firm's compliance with the national registry to be 99.85 percent and chose not to pursue any claim against them in that area. Their settlement was limited to alleged calls made to those identified on Comcast's internal do-not-call list, where its compliance rate was 99.74 percent.
Georgetown University law professor David Vladeck has been named director of the FTC's Bureau of Consumer Protection, the agency announced Tuesday. Vladeck has taught federal courts, government processes, civil procedure, and First Amendment litigation and co-directed Georgetown Law Center's Institute for Public Representation, a clinical law program for civil rights, civil liberties, First Amendment, open government, and regulatory litigation. He previously spent almost 30 years with Public Citizen Litigation Group, including 10 years as director. In that role, he has argued a number of First Amendment and civil rights cases before the Supreme Court, and more than 60 cases before the federal courts of appeal and state courts of last resort, the FTC said.
The announcement came a month after a handful of watchdog groups asked FTC Chairman Jon Leibowitz to appoint a new consumer protection chief post haste. They wanted someone who had "a track record as a genuine champion of consumer rights" and someone whose experience reflects not simply a broad familiarity with industry procedures, but a deep commitment to proactively protecting the public from all manner of unfair, deceptive, and fraudulent practices. Lydia Parnes, who had the job for four years, left the agency recently to join law firm Wilson Sonsini Goodrich & Rosati. Her deputy, Eileen Harrington, took over as acting director. Center for Digital Democracy's Jeff Chester called Vladeck's appointment "great news for the public interest" and those interested in privacy, online advertising, and marketing regulation.
Other new senior FTC appointments include:
• Richard Feinstein, who rejoined the agency as director of the Bureau of Competition, after serving as a partner at Boies, Schiller & Flexner.
• Former University of California-Berkeley professor Joseph Farrell, who was named director of the Bureau of Economics.
• Susan DeSanti, who will be director of policy planning, after focusing on antitrust and litigation at Sonnenschein Nath & Rosenthal.
• Jeanne Bumpus, who was re-appointed as director of the Office of Congressional Relations after serving in that position since June 2006.
• Joni Lupovitz, who will serve as chief of staff to Leibowitz.
The Electronic Privacy Information Center asked the FTC on Tuesday to open an investigation into Google's cloud computing services -- including Gmail, Google Docs, and Picasa -- to determine "the adequacy of the privacy and security safeguards." The petition follows the recent report of a breach of Google Docs. The high-tech watchdog group cited the growing dependence of American consumers, businesses, and federal agencies on cloud computing services, and urged the Commission to take "such measures as are necessary" to ensure the safety and security of information submitted to Google.
A Google spokesman said the company had not yet reviewed the complaint in detail but many cloud computing providers, including Google, "have extensive policies, procedures and technologies in place to ensure the highest levels of data protection." "We are highly aware of how important our users' data is to them and take our responsibility very seriously," the Google spokesman said. Previous EPIC complaints have led the FTC to order Microsoft to revise the security standards for one of its programs and to require Choicepoint to change its business practices and pay $15 million in fines.
For more Google/privacy coverage, read NationalJournal.com's story, "Google Stands To Gain From Cookie Trail" by Neil Munro.
FTC Chairman Jon Leibowitz told a data security workshop on Monday that the United States and other countries must "move beyond the 'we agree to disagree' approach" to securing consumers' sensitive information in the global marketplace. Such harmony among nations, which have varying privacy rules and regulations, is "not beyond our reach," Leibowitz said, pointing to the Organization for Economic Cooperation and Development's 1980 privacy guidelines and a set of security guidelines adopted by the group in 2002. "Without adequate data security there really is no privacy," he said.
Corporations must protect their back doors from hackers, malware, spyware and other high-tech intrusion mechanisms and protect their front door by properly storing and disposing of consumers' data, Leibowitz said, noting that the FTC is "not shy about knocking on anyone's door." Since 1999, the agency has brought a number of cases alleging that companies failed to protect data, including a settlement this month with a consumer reporting agency that failed to properly screen prospective customers and, as a result, sold at least 318 credit reports to identity thieves.
The conference runs through Tuesday. Speakers include: Martin Abrams of the Centre for Information Policy Leadership; Oracle Chief Privacy Officer Joseph Alhadeff; Accenture Data Privacy Director Bojana Bellamy; TRUSTe Chief Privacy Officer Maureen Cooney; Intel Global E-Business Counsel David Hoffman and others. Click here to view the agenda for "Securing Personal Data in the Global Economy."
The FTC is taking aim at what it believes is a potentially deceptive TV commercial for FreeCreditReport.com, a financial Web site owned by credit bureau Experian, by publicizing a spoof advertisement for AnnualCreditReport.com -- the only authorized source to get a free annual credit report under federal law. The FTC's video, which was posted on YouTube earlier this week, highlights the differences between AnnualCreditReport.com and other sites that require users to pay hidden fees or agree to additional services. The FTC's video has been viewed 8,252 on YouTube, which is roughly equivalent to the number of times the ad for FreeCreditReport.com airs over the course of an afternoon on MSNBC, or so it seems.
Recently appointed FTC Chairman Jon Leibowitz wants to work with Congress on reauthorization legislation this year that he believes will make his agency more effective. He told a Center for Democracy and Technology gala Tuesday night that the quality of the FTC's work is being strained as the quantity increases. The agency currently has 1,100 employees -- several hundred less than it needs, he said. Former Senate Commerce Chairman Daniel Inouye and Sen. Byron Dorgan, D-N.D., introduced a bill in the 110th Congress that would have given the FTC a budget boost over seven years as well as independent regulatory authority and the ability to start civil actions in district courts. The bill would have also repealed an exemption that precludes FTC action against common carriers for anticompetitive practices.
Leibowitz, who shared CDT's stage with House Energy and Commerce Communications Subcommittee Chairman Rick Boucher, D-Va., said one of his top priorities for the agency in the coming months is curbing predatory financial practices, which he believes will only worsen during the recession. He also wants to stop brand pharmaceutical companies from paying off generic drugmakers to delay the availability of their low-cost versions to consumers. Another concern, which he shares with Boucher, is making sure Internet advertising firms respect consumer privacy. Thus far, self-regulatory efforts by industry in this arena are not working, Leibowitz said. Boucher noted that consumer confidence will benefit electronic commerce. He plans to introduce a Web privacy bill with Communications Subcommittee ranking member Cliff Stearns, R-Fla.
On broadband, Boucher said the United States does "not have an enviable position in the world today" and the $7.2 billion in the economic stimulus package helped move the ball forward. However, the stimulus bill "is not our national broadband policy," he said, noting that the legislation directs the FCC to develop such a roadmap. During his remarks, Boucher also predicted that legislation he introduced last month with Rep. Mike Pence, R-Ind., to create a federal reporter's privilege would pass the House and Senate this Congress. An identical bill passed the House by a wide margin in the 110th Congress.
From CongressDaily's AM Edition (subscription required)...
Senate Homeland Security and Governmental Affairs Chairman Joseph Lieberman on Wednesday resumed a perennial attempt by some lawmakers and open government advocates to make reports produced by the Congressional Research Service more easily accessible to the public. In a letter to Senate Rules Committee Chairman Charles Schumer, he called for an automatically updated clearinghouse for the documents so "those with power and those without have equal access to this important resource."
Over the past decade, a series of bills requiring public access to CRS reports has made little progress, including a 2007 measure introduced by former Rep. Christopher Shays, R-Conn. Under the chairmanship of Sen. Dianne Feinstein, D-Calif., last Congress, the Rules Committee authorized CRS to create software to let senators place individual reports on their Web sites. That did not go far enough, Lieberman wrote. Read the full story here.
Also: The FTC and members of Congress Wednesday expressed outrage over the surge in Internet con artists trying to cash in on the $787 billion economic stimulus bill President Barack Obama signed into law two weeks ago. FTC Consumer Protection Bureau Acting Director Eileen Harrington said complaints about scams "mushroomed overnight" and the agency is working with popular Web services like Facebook and Google to crack down on crooks. Read the full story here.
From Tuesday's CongressDaily AM Edition:
FTC Commissioner and onetime Hollywood lobbyist Jon Leibowitz is a top contender to lead the agency charged with consumer protection and preventing unfair business practices, sources told CongressDaily Monday. Leibowitz, who served as vice president for congressional affairs at the Motion Picture Association of America and worked as Democratic counsel for the Senate Judiciary Antitrust Subcommittee, was appointed by President George W. Bush in 2004. He serves alongside Republicans J. Thomas Rosch and William Kovacic, the acting chairman, and Pamela Jones Harbour, an independent. Christine Varney, a former FTC commissioner and a partner at Hogan & Hartson, was in the mix to lead FTC but was nominated last month by President Barack Obama to head the Justice Department's antitrust division. Another former FTC commissioner whose name is being floated is Mozelle Thompson, a policy adviser to social-networking site Facebook.
Read the full story here.
Congress should consider taking legislative steps to strengthen procedures that private-sector organizations use to authenticate their customers' identities, the FTC recommended in a Wednesday report on Social Security numbers and identity theft. Currently, the only private-sector entities subject to nationwide authentication standards are financial institutions regulated by the federal banking agencies and the FTC said lawmakers should ponder imposing similar rules to cover other industries that maintain consumer accounts.
"Such standards would require organizations to adopt reasonable procedures for authenticating customers, but also would allow them to adopt a program that is compatible with their size and the nature of their business," the report states. The FTC report also recommended that steps be taken to reduce the unnecessary display and transmission of SSNs, but noted such restrictions must be approached carefully. A number of important functions in the U.S. economy depend on use of and access to SSNs, and the report concluded that overly restrictive attempts to limit the availability could unintentionally curtail those functions.
Various bills were introduced in the House and Senate in the 110th Congress that were intended to address problems associated with SSNs as well as larger ID theft issues. Read more about the FTC report here.
New federal rules requiring an automated voice or so-called key-press opt-out for recorded message telemarketing calls took effect Monday. Under the change, any telemarketing call that delivers a prerecorded message must include a quick and easy way to opt-out of receiving future calls. The opt-out must work both for consumers who answer the calls in person and for those whose answering machines or voicemail services receive the calls. The amendment to the National Do-Not-Call Registry was adopted by the FTC in August.
A consumer must be able to opt out at any time while the message is playing by pressing a particular number or speaking a particular word, the FTC said in a press release. Once the consumer has opted out, his or her phone number must be automatically added to the in-house Do Not Call list of the calling seller or fundraiser. Then the call immediately must be disconnected so that the consumer’s line is cleared. If the message is left on an answering service, it must include a toll-free opt-out number that consumers can call at any hour of the day or night when they retrieve the message.
Calls to solicit sales of goods or services and calls placed by telemarketers to solicit charitable donations are covered by the change but political calls, bona fide market survey calls, and calls made in-house by banks or telephone companies are not because the Commission lacks the legal authority to regulate them. In addition, prerecorded healthcare messages covered by the Health Insurance Portability and Accountability Act are exempt from the new requirement.
The FTC and 24 state agencies on Thursday announced a crackdown on 33 operations that deceptively claim they can remove negative information from consumers' credit reports, even if that data is accurate and timely. In the seven FTC actions unveiled at a press briefing, the Commission seeks to halt defendants' allegedly unlawful business practices, ban further violations, and make them pay consumer redress and give up ill-gotten gains. A number of the schemes flagged operated online.
Some of the sites named include: Clean Credit Report Services, operating at ccrstoday.com; Successful Credit Service Corporation operating at successcreditservices.com and successfulcreditservices.org; Advantage Credit Repair operating at myadvantagecredit.com; RCA Credit Services operating at RCACredit.com; Latrese & Kevin Enterprises operating at hargraveandassociates.com and helpmycreditnow.com; and ACE Group operating at aceintake.com, foryourcredit.com, helpformycredit.com, and helpmycredit.com.
"Companies that promise they are able to scrub your credit reports of accurate, negative information for a fee are lying - plain and simple," FTC Consumer Protection Bureau Director Lydia Parnes said. "Under federal law, accurate, negative information can be reported for up to seven years, and some bankruptcies can be reported for up to 10 years."
Over the weekend, C-SPAN aired its most recent installment of "The Communicators," which featured a half-hour discussion about Internet and privacy policy between FTC Chairman William Kovacic, C-SPAN host Pedro Echevarria and yours truly. Specifically, we chatted about how search engines use information to target advertising to users; mobile marketing; electronic health records privacy; and the future of enforcement with respect to spam and harmful Web enterprises. Kovacic also gave us a status report on the President's Task Force on Identity Theft, a multiagency panel created in 2006 to coordinate data breach policies across the federal government. The group is expected to release a major report this week that will lay out roughly 30 recommendations for sustaining government-wide momentum on the problem in the new administration and beyond. Click here to watch.
The FTC on Monday released a staff report on an April roundtable discussion on "phishing," the use of fraudulent e-mail addresses or fake Web sites to obtain personal or financial information. About 60 experts from business, government, the technology sector, the consumer advocacy community, and academia met at the FTC to discuss strategies for outreach to consumers about avoiding phishing.
The report summarizes key themes that emerged from the talks and outlines next steps for increasing anti-phishing education. The report also includes a description of workshop participants’ efforts to fight phishing attacks and educate consumers, as well as ideas for increasing effective consumer education. The roundtable discussion revealed that phishers' practices are dynamic and evolving and educating consumers requires collaboration among members of the anti-phishing community.
The issue has also gotten attention on Capitol Hill. Senate Commerce ranking member Ted Stevens, R-Alaska, joined Sens. Olympia Snowe, R-Maine, and Bill Nelson, D-Fla., in introducing a bill earlier this year aimed at curbing the enterprise. The proposal would set penalties ranging from $250 to $2 million per violation for state-initiated civil actions, and fines could be tripled if the violations were committed willfully and knowingly.
The FTC has clamped down on an operation that allegedly obtained consumers’ confidential phone records without their knowledge or consent and sold them to third parties, according to a Wednesday press release. The defendants are barred from obtaining consumers’ telephone records without consent and are being fined more than $600,000 -- the estimated amount of their ill-gotten gains.
The case is the latest in a series targeting telephone "pretexters," which are individuals who use false pretenses to obtain consumers’ confidential information. Since 2006 the FTC has charged 16 individuals and their corporations with violating federal law by pretexting. All have been banned from the practice and have been ordered to forfeit their profits.
The FTC alleged that Action Research Group and its principals, Joseph and Matthew DePantes, sold confidential customer phone records, including lists of calls made and the dates, times, and duration of the calls, to third parties. To get the records, they relied on the other defendants, Eye in the Sky Investigations, Cassandra Selvage and Bryan Wagner, who obtained them from phone companies through pretexting. The DePantes and ARG agreed to settle the FTC charges and ESI, Selvage, and Wagner are subject to default judgments entered by the court.
The FTC on Monday approved four new rule provisions under the CAN-SPAM Act, a 2004 mandate that set requirements for those who send commercial e-mail and spelled out penalties for inbox outlaws. The changes are intended to clarify the statute's requirements in an age of sophisticated cyber-scams.
Four topics are addressed in the new rule provisions:
(1) An e-mail recipient cannot be required to pay a fee, provide information other than his or her e-mail address and opt-out preferences, or take any steps other than sending a reply e-mail message or visiting a single Internet Web page to opt out of receiving future e-mail from a sender.
(2) The definition of “sender” was modified to make it easier to determine which of multiple parties advertising in a single e-mail message is responsible for complying with the act’s opt-out requirements.
(3) A “sender” of commercial e-mail can include an accurately-registered post office box or private mailbox established under U.S. Postal Service regulations to satisfy the act’s requirement that a commercial e-mail display a “valid physical postal address.”
(4) A definition of the term “person” was added to clarify that CAN-SPAM’s obligations are not limited to natural persons.
In addition, the FTC's statement of basis and purpose accompanying the final rule addresses a number of topics that are not the subject of any new rule provisions. Click here to read the full press release with more details.
(Spam Photo Credit: Benny Yap via Flickr)
The FTC released the results of a nationwide undercover sting on Thursday showing the extent to which movie theaters and movie, music, and video game retailers prevent unaccompanied minors from buying tickets to R-rated movies, R-rated DVDs, unrated DVDs of movies that were R-rated in theaters, M-rated video games, and CDs with a parental advisory warning.
The survey found that 20 percent of underage teenage secret shoppers were able to buy M-rated video games, a major improvement from all prior surveys, and down from 42 percent in 2006. While CD and DVD retailers demonstrated some improvement since the earlier survey, roughly half of the 13- to 16-year-olds involved were able to purchase R-rated and unrated movie DVDs and flagged CDs. This shows that retailers need to redouble their efforts, the FTC said.
Although movie theaters have improved since the FTC's 2000 effort, they still sold R-rated movie tickets to unaccompanied children 35 percent of the time, demonstrating no statistically significant improvement in ratings enforcement since 2003, the FTC said. Click here for details.
Recently anointed FTC Chairman William Kovacic is obviously a sports fan. His breakfast speech to members of the Computer and Communications Industry Association on Wednesday was packed with athletic imagery. On succeeding Deborah Platt Majoras he said: "I feel a bit like the back-up quarterback who has held the clipboard on the sideline, knows the plays… and all of a sudden the starting quarterback is gone and I'm noticing how much faster the game moves when you're out there." He also quoted Hall of Fame Major League Baseball manager Earl Weaver: "It's what you learn after you know it all that counts." Read more about his remarks in CongressDaily's PM edition.
The FTC will host a town hall meeting this week to explore the mobile marketplace and its implications for consumer protection policy. Industry experts, academics, consumer advocates, privacy professionals and government analysts will discuss the use of text messaging and related services as instruments of commerce and consumers' ability to control mobile applications at the two-day event, which begins Tuesday.
Other topics include the adaptation of advertising to mobile devices (including challenges presented by small screen disclosures); applications targeting children and teens; industry best practices in preventing fraud, disclosing costs, and resolving billing disputes; security threats and solutions; and next-generation products and services.
Officials from Google, Nokia, Sprint-Nextel, Verizon, Yahoo, wireless association CTIA, and others will take part in the forum. The full agenda can be found here.
(Photo Credit: KB35 via Flickr)
At the request of the Federal Trade Commission, a federal court in Illinois has entered a final order and default judgment against a group of individual and corporate defendants based in Ontario, Canada, for their role in a cross-border telemarketing scheme involving credit card offers and free cellular telephone offers. The defendants, collectively known as Pacific Liberty, are liable for about $5 million -- the total net sales they made.
The case was brought with the help of the U.S. Postal Inspection Service and the Toronto Strategic Partnership, which consists of the FTC, Competition Bureau Canada and various law enforcement agencies. Canadian regulators filed criminal charges against two of the defendants in September 2007. One got a year in jail and another received a six-month conditional sentence. Both were barred from telemarketing for 10 years. Read more about the case here.
Rep. Edward Markey, D-Mass., who heads the House telecommunications subcommittee, commended the FTC on Friday for appropriately recognizing "the pressing need for updated online privacy protections for children that reflect the sophisticated data collection and behavioral targeting practices now used widely across the Internet." Public comments on guidelines proposed by the agency were due at the end of the week.
"Without stronger protections, including a prohibition on collecting data on children’s and teens’ online activities, young Internet users may become unwitting targets of the ‘hidden persuaders’ of the digital age," Markey said. "The evolution of online behavioral advertising since the enactment of the Children’s Online Privacy Protection Act requires a commensurate rejuvenation of privacy safeguards."
Read CongressDaily's preview story about the FTC's proposal here.
FTC Chairman Deborah Platt Majoras, who is leaving her post this spring to join consumer products giant Procter & Gamble, issued the agency's 2008 report that describes competition and consumer protection missions and accomplishments. She unveiled the report at an American Bar Association antitrust meeting in Washington.
In the past year, the FTC has "rooted out economic 'villains' by actively pursuing the latest generation of fraudsters working to deceive the public… and those that mock the competitive marketplace by engaging in anticompetitive conduct that raises the specter of increased prices or decreased consumer choice," the report states.
The document highlights the Commission's work in the technology area against spyware and adware programs that are installed on consumers' computers without their knowledge or consent. It also mentions the major crackdown on federal Do Not Call list violators, including six settlements against telemarketers. Read the full report here.
Online advertiser ValueClick will fork over a record $2.9 million to settle FTC charges that its product claims and e-mails were deceptive and violated federal law. The agency also charged that ValueClick and its subsidiaries, Hi-Speed Media and E-Babylon failed to secure consumers’ sensitive financial information, despite their claims to do so, officials said Monday.
The settlement, filed by the Justice Department on behalf of the FTC, requires ValueClick to clearly and conspicuously disclose the costs and obligations consumers must incur to receive the products it touts as “free” and bars future violations of the CAN-SPAM Act. The settlement also bars deceptive claims about the security of the consumer information collected at its e-commerce Web sites.
This is the FTC’s third case targeting the use of deceptive promises of free merchandise by Internet-based “lead generation” operations, and the commission’s 18th case challenging data security practices by a company handling sensitive consumer information. Read more here.
Online marketing firm ValueClick has agreed to a $2.9 million settlement with the FTC but did not concede that it broke any laws, according to the company's fourth quarter earnings report. The FTC alleged that ValueClick employed deceptive marketing practices and as part of its deal, the company and commission agreed on a new set of standards to govern its business going forward.
The FTC had been examining ValueClick's lead-generation practices, including its use of advertisements that reportedly falsely promise free gifts to consumers for participating in an activity. "We ended 2007 on a strong note and we are pleased to announce a settlement with the FTC," ValueClick CEO Tom Vadnais said in a press release.
After covering high-tech policy issues for some time now, one thing I have realized is that when FTC Commissioner Jonathan Leibowitz gives a speech, you can always plan getting some useful information -- and a laugh or two.
During a luncheon keynote on Wednesday at the Congressional Internet Caucus' annual "State of the Net" summit, the former Senate staffer and Motion Picture Association of America executive, made some colorful observations about social networking sites.
"I'm embarrassed to admit that I'm new to social networking," he started off. "When I signed up for Facbeook, I wanted to understand the phenomenon better, but I'm having a lot of fun with it."
So far, Leibowitz said he has reconnected with an old high school friend and has received a "cyber heart" from his wife. He also discovered that his father is a member of the online community and when the younger Leibowitz tried to "friend" the elder, it took him two weeks to respond.
"Lots of it is interesting from a sociological perspective," said the Democrat, who has been a commissioner since 2004. "A Republican who never spoke to me in real life friended me on Facebook and has been trying to get me to be a supporter of [House Minority Leader] John Boehner," he chuckled.
Later in his riff, Leibowitz mentioned that he befriended venture capitalist and Barack Obama campaign adviser Julius Genachowski (who was featured on a panel earlier in the day). "That's not a candidate endorsement," he said, explaining that both are sports enthusiasts and Genachowski "tends to school me on the basketball court."
I just "friended" Leibowitz. Let's see how long it takes him to respond.
Update: Six hours after my post, he "friended" me back. Nice work!
The FTC's former policy director, David Balto, told Technology Daily on Thursday that the agency's decision not to block Google's $3.1 billion merger with online advertising firm DoubleClick "is sound and shows a really careful evaluation of the potential competitive effects of the merger."
The commission's 4-1 vote, with Pamela Jones Harbour dissenting, was "very well reasoned," despite cries form critics who called for the recusal of Chairwoman Deborah Platt Majoras and voiced anti-competitive and privacy concerns, he said.
"People might advocate that the FTC become the super-regulator of the Internet but that would stifle the kind of innovation that is critical to the growth of these industries," Balto said. The agency took the privacy fears seriously and decided that "the marketplace is going to be the best discipline to make sure Google protects users' privacy."
The European Union's ongoing review of the pairing might be a different story because regulators there have "much broader concerns," Balto said. EU officials have scheduled a January hearing where privacy officials, consumer groups and Web firms will testify.
The Electronic Privacy Information Center plans to take its complaints about the FTC's approval of Google's multi-billion dollar merger with DoubleClick to Capitol Hill. The agency gave the controversial pairing its blessing on Thursday [see Technology Daily's PM Edition for more].
EPIC's director Marc Rotenberg said he will "bring this matter to the appropriate congressional oversight committees that are responsible for the agency’s funding and statutory authority." His group has also submitted a series of expedited Freedom of Information Act requests to the FTC regarding the commission's review of the merger.
The FTC "had an opportunity to establish the necessary safeguards for personal data and competition that could have allowed a global framework to emerge," Rotenberg said in a statement. "Instead, the commission's failure to act leaves the question of how best to address the privacy and competition implications of this deal to others."
The agency, which he notes, is "funded by taxpayer dollars," has the sole purpose of protecting the public interest. "It failed to do so today in a case that will have far-reaching implications for the Internet economy and the privacy rights of American consumers," he said.
Meanwhile, Sen. Orrin Hatch, R-Utah, told us he still has concerns with the merger "especially as it relates to competition and privacy." "Given the relative youth of the Internet, a merger of this kind is unprecedented and no one can predict how it will affect the industry," he said.
The FTC's antitrust review of Google's plan to buy online advertiser DoubleClick could conclude this week, the Center for Digital Democracy's Jeff Chester told us Tuesday afternoon. His group and the Electronic Privacy Information Center have repeatedly urged commissioners to take privacy concerns into consideration as they deliberate.
Chester, who also unsuccessfully asked Chairwoman Deborah Platt Majoras to recuse herself from the review of the $3.1 billion deal because of her ties to the law firm handling the case in Europe, said a decision "is imminent." [See related Technology Daily story here].
"They need to act responsibly here but I feel that the commission is trying to duck the issue," he said. CDD and EPIC have claimed that if Google and DoubleClick pool their Web resources, the company would be able to construct intimate portraits of its users' behavior.
Meanwhile, the European consumer group known as BEUC wrote to regulators there following up on concerns expressed in June. The Tuesday letter raised "additional risks to consumer welfare ... in particular with respect to the price, degree of innovation, quality, and selection of online products and services" available to consumers post-merger.
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