Performance marketing is the latest buzzword because it’s a must when it comes to optimising your brands’ digital marketing strategy. But with all the pressure to perform, reaching your goals can be overwhelming; and this is where micro-moments save the day!

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PartnerMatrix CEO Levon Nikoghosyan explains how the company’s affiliate marketing software platform can help affiliates and operators steer clear of fraud.

The industry (and company) I work in connects stakeholders from two different business sides: casino operators with iGaming affiliates. And in the six years since we’ve been providing a successful affiliate software solution, I’ve gained the expertise to pinpoint the three things that make or break a business in this industry.

First and foremost, getting a high ROI on affiliate marketing for your casino is guaranteed only by a solid strategy. Then comes the overall brand awareness and good reputation that affiliate channels can nurture. And last but not least, you need to keep the inherent risks in check and steer clear of affiliate marketing frauds.

Unfortunately, frauds and scams in iGaming are more common than one would like. Sometimes, the loss caused by a single scammer can reach stinging amounts of $100,000 or more. It’s easy to check this by taking a look at the casino complaints section of the affiliate portal AskGamblers, which is just one example of the many forums and anti-fraud communities around the internet.

Fortunately, advanced technologies and smart marketing strategies can come to the rescue. They help you minimise the risks and prevent affiliate scams. So does your own knowledge. So, before diving into the tools and strategies that can help you prevent fraud and create a more secure infrastructure for your casino players and affiliates, you need to be aware of the tactics employed in iGaming affiliate scams.

For example, there are various ways in which affiliates can swindle operators. The Cost per Acquisition (CPA) affiliate marketing model is particularly exposed to this. However, some affiliates manage to scam operators even with safer commission models, such as Revenue Share. I’ll get into more details further on.

On the other side, a widespread method through which operators scam affiliates involves decreasing the affiliates’ NGR (net gaming revenue) and depriving them of their well-deserved rewards. The “decrease” can be fabricated in numerous ways: unmapping the player from the affiliate account, adding fake costs over revenues sent to the affiliate system, declining affiliate commission withdrawals invoking false terms and condition, etc.

ANTI-FRAUD TOOLS AND MECHANISMS

To counter the various scamming mechanisms in affiliate marketing, PartnerMatrix has developed an anti-fraud tool able to detect multiple levels of fraud, thus helping operators effectively fight unfair practices.

The levels operate independently from one another, and each is designed to detect a specific type of behaviour. Such behaviours range from simple IP checks (players v affiliate, registered country of the affiliate v actual location, match of different affiliates by IPS) to complex analytics that detect “sure bets”, CPA draining by fake registrations, or traffic from unauthorised resources.

Each level has a certain priority assigned based on the risks it can comprise. And, of course, we’re always updating our anti-fraud tool with the freshest data. The purpose is simple: making sure our system can always catch fraudsters by surprise, no matter how their methods evolve.

LIVE DATA STATS AGAINST SCAMMERS

Live data and statistics are also powerful tools to fight scams of affiliate marketers or prevent casinos from manipulating traffic. Affiliate managers can instantly notice any suspicious affiliate traffic and nip any fraudulent activities in the bud.

And I can think of at least one recent example when PartnerMatrix’s real-time data made it possible to detect and act instantly on fraudulent activity. One of our operators noticed a suspicious trend in their traffic: a new player who placed an unusually large bet after a series of smaller ones. After an in-depth behavioural analysis, it came out that the affiliate was trying to place a so-called “safe bet” and get commissions via fraud.

OTHER TOOLS AND APPROACHES TO SECURITY

Live data and anti-fraud tools take you a long way, but you should spare no security efforts if you seek to maintain healthy partnerships. There are a few tested ways to do so: search for new partners via authorised and secure platforms, communicate clearly in order not to mislead partners, provide a transparent workflow and reports accessible for all sides.

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The Federal Trade Commission recently testified before the House Energy and Commerce Subcommittee on Consumer Protection and Commerce on legislation to modify the FTC’s authority and address other current issues facing the agency.

Testifying on behalf of the Commission, FTC Chair Lina M. Khan and Commissioners Noah Joshua Phillips, Rohit Chopra, Rebecca Kelly Slaughter, and Christine S. Wilson expressed the need for a much-needed boost in critical areas, including enforcement tools.

The testimony notes that the agency currently faces many challenges after its enforcement authority was substantially diminished following the Supreme Court’s recent AMG decision that barred the agency from seeking monetary relief under Section 13(b) of the FTC Act.  The  Commission believes that additional resources are necessary to help it effectively achieve its mission in the face of key challenges such as COVID fraud and other pandemic-related marketplace abuses.

The testimony also states that since the beginning of the pandemic – thanks in part to the civil penalty authority provided by this Subcommittee in the COVID-19 Consumer Protection Act – the Commission has successfully halted dozens of COVID-related scams, and reached out to  communities most affected by fraud, alerting the public to the threats posed by scams and those who facilitate them.

Of particular importance is the Committee’s work to restore the Commission’s ability to secure monetary relief from those that violate the law.  Until the Supreme Court’s recent decision in AMG¸ the Commission relied on its 13(b) authority to return billions of dollars to defrauded Americans, and to ensure that lawbreaking companies could not pocket their ill-gotten gains.  

The Commission also now faces challenges in obtaining injunctive relief, the testimony notes.

In FTC v. Shire ViroPharma, Inc., the Third Circuit held that the language in Section 13(b) of the FTC Act describing a company that “is engaged in, or is about to engage in” illegal conduct means the FTC can initiate enforcement actions only when a violation is either ongoing or “impending” at the time the suit is filed.  This decision limits the Commission’s ability to hold accountable entities who engaged in illegal conduct that occurred entirely in the past.

A district court’s recent dismissal of the FTC’s antitrust complaint against Facebook cited the ViroPharma opinion in concluding that the Commission could not use Section 13(b) to address Facebook’s alleged past anticompetitive conduct.  

Importantly, direct marketers must not let their guard down.  The FTC possesses several ways to pursue wrongdoers, including, but not limited to, the creation of new rules that come with harsh civil penalties, cease and desist orders the violation of which come with civil penalties, post-cease and desist order and promulgation of a formal rule civil lawsuit, administrative proceedings, civil investigative demands (CIDs) and warning letters.

This article should be of interest to digital marketers.  Contact an experienced FTC defense lawyer if you have received a CID from the Federal Trade Commission or have been named as a defendant in an enforcement or administrative action. 

Richard B. Newman is an FTC compliance lawyer at Hinch Newman LLP.  Follow FTC defense lawyer on National Law Review.

Informational purposes only. Not legal advice. May be considered attorney

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A study conducted by the School of Information at the University of Michigan found that hundreds of fake news websites were dependent on prominent ad firms, including Google Doubleclick, for ad revenue.

The study, titled “Market Forces: Quantifying the Role of Top Credible Ad Servers in the Fake News Ecosystem”, by researchers Lia Bozarth and Ceren Budak, found that Google provided nearly 48% of all ad traffic on fake news websites.

They further found that the top-10 most credible ad firms accounted for 66.7% of ad traffic on fake news websites, and another 55.6%% ad traffic on low-quality websites.

The study also showed that while credible ad firms accounted for more than half of ad traffic on fake news websites, the rest of the ads were usually served by risky ad servers. The study provides a market-based solution to fighting fake news.

The researchers argue that while the fake and low-quality news publishers are heavily reliant on top credible ad servers like Google Doubleclick for ad traffic and revenue, in return they provide very little revenue share to the ad firms running these servers.

Considering the findings of the study, getting the ad servers to blacklist these websites would go a long way in cutting down their operation, while costing very less to the ad firms. Methodology To conduct the study, the researchers used a list of misleading websites, compiled in 2018 by Merrimack College media scholar Melissa Zimdars, and analysed the advertisements on these websites. Click here to view the list. While Zimdars had compiled 765 websites in her list, Bozarth and Budak removed the defunct websites, leaving them with 545 active sites to analyse.

The researchers also took into consideration a list of fake news publishers compiled by fact checking website PolitiFact, and removed 60% of the websites that were found to be defunct. These sites were further classified into three subtypes – traditional, fake or low-quality.

The duo then aggregated a list of known ad servers on the web using EasyList and EasyList Privacy, which lists most known ad servers for ad-blocking platforms. Using the Selenium Web-Driver API – a tool that simulates the browsing behaviour of humans, they identified the subset of ad servers on traditional, low-quality and fake news sites, along with the ads that were served. The researchers then determined the credibility of the ad servers using VirusTotal – a tool that aggregates antivirus softwares and online scan engines to look for viruses, along with a few publicly available malware domain lists. The ad servers were then classified as either credible or risky.

Out of the 565 ad servers analysed, approximately 78.8% were found to be credible, while the rest were deemed as risky.

 On a surprising note, the results indicated that traditional and low-quality news websites far surpassed fake news publishers in terms of number of ad servers on their respective websites. They also found that a larger percent of fake news websites are ad free, as compared to traditional news websites.


The second part of the study aimed to answer the question, “How concentrated is fake and other low-quality news publishers’ ad reliance on a small number of top credible ad servers?”

Some of the top ad servers featuring in their list were Google Doubleclick, Google Syndication, Earnify, Lockerdome, AddThis, GumGum, Outbrain, and Zemanta.

The study then ranked the top-10 credible ad servers for traditional, fake and low-quality publishers according to (i) weighted domain share, and (ii) weighted ad traffic share. The results of the weighted domain share analysis indicated that these credible ad servers played a substantial role in serving ad revenue to a large portion of the fake news sites.

6.7% of all fake domains were found to be entirely dependent on these ad servers, and were sure to perish if they were blacklisted by the servers.

The analysis of weighted ad traffic confirmed that these top ad servers played a critical role in providing revenue streams to shady news publishers. 66.7% of the ad traffic on fake news websites were provided by the top 10 ad credible servers.

The study also revealed that fake and low-quality publishers were significantly more likely to partner with dubious and risky ad servers, thus exposing visitors to potential security and privacy risks.

The last part of the study looked at how much it would cost the ad servers to blacklist fake and low-quality news sites, to assess the feasibility of blacklisting these sites by the ad servers. In order to answer this question, the researchers matched each ad server to its company using the portal Whois.

Furthermore, each company’s aggregated weighted ad traffic for fake, traditional and low-quality news sites was determined, and their ad revenue was estimated using a back-of-the-envelope calculation.

The researchers obtained the 2018 ad revenue information for the advertising firms from press releases, financial statements, market research firms or company profilers, and computed the respective annual ad revenue from each group of news publishers – traditional, fake and low-quality. The study revealed that most of the revenue generated were through traditional news publishers, and that fake and low-quality news websites contributed little to the firms’ overall ad revenue. Solutions Taking into consideration the findings from the study, the researchers provide a market-based solution to fighting fake news.

They make a compelling case – while fake and low-quality publishers are heavily reliant on the credible ad firms for ad traffic and revenue, in turn they provide very little revenue share to the ad firms.

Considering the implications of the study, blacklisting these websites would thus go a long way in shutting them down, or greatly cutting down their operation, while costing very less to the ad firms. The researchers argue that pushing these shady websites to low-quality ad servers would provide additional visual cues to visitors that the site and ads are not trustworthy.

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Good news: Instagram has upped its game once again from a creators point of view. In the rush to make the platform viable for creators (and keep them off other platforms) the company announced some new monetization options for creators including a new affiliate marketing scheme.

The most exciting news is the ‘native affiliate tool’ it is talking about. This will allow creators to discover products they like in the app itself, and then share them with followers. If followers purchase any of the items that have been shared, the affiliate will earn a commission.

It kind of adds even more value to the work an Influencer does, for example. And it is actually less work for Influencers, because they don’t have to make deals with brands. Instead, they simply sign up to the program, choose products they want to endorse, and then wait for Followers to purchase to gain commissions.

With eCommerce pushing social media more and more down the line towards becoming highly monetized, this kind of thing makes sense for Instagram. The platform needs to have plenty of incentives for its creators, who have the option of moving elsewhere.

Not much detail

Instagram hasn’t gone into a lot of detail around the new direction, which of course means that it is easy for people to have concerns. The biggest issue is the position of brands. If an Instagram creator chooses one of their products to endorse, the brand, so far at least, will not have much of a say in things. This could of course lead to unfortunate situations where brands find that their products are being endorsed by creators who are not in sync with their values.

As it happens, Instagram has said that it will test the plan with some brands in the US first, a small group of them. That makes sense, because this will allow creators to monetise, and also allow Instagram to see how the new method works with a small, tightly-controlled group of brands.

Stars

Perhaps even more excitingly for creators, Instagram is building on it’s Stars donation system:

“Starting this week, creators on Instagram are eligible to earn an extra payout when they meet certain milestones while using badges in Live, such as going Live with another account, while Facebook is also launching Stars Challenges. Creators in the program can earn payouts from Facebook in the form of free Stars if they meet certain milestones, such as broadcasting a certain number of hours or earning a set number of Stars within a designated time period.”

This is a trend that has grown across all kinds of platforms, and not just social media. Making it more like a ‘game’ means that monetisation is more fun, attractive, and more likely to keep creators coming back for more.

Having a gaming element to live steaming means that more content will be produced on the platform as creators try to earn more. This means more money for Instagram in the end, and for Facebook, it’s owner.

That’s what it all comes down to. Facebook has been trying to crush TikTok for a while now, and it hasn’t succeeded. TikTok only threatens Facebook in one way, by taking its creators. Right now, Facebook and Instagram have quality monetisation options, but all it will take is for TikTok to find a new way to make defecting to it’s platform attractive.

TikTok still doesn’t have a truly robust monetisation idea, one that beats all the others. When it does, if Instagram is caught out, expect to see a small exodus from Facebook’s baby to TikTok.

Right now, all we can do is watch. As TikTok scrambles to find its footing in monetisation, Instagram has some pretty good incentives coming up.

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On May 27, 2021, the House Energy and Commerce Committee’s Subcommittee on Consumer Protection and Commerce sought to advance H.R. 2668, a bill intended to clarify the Federal Trade Commission’s authority under Section 13(b) of the Federal Trade Act.  Just weeks earlier, the U.S. Supreme Court dealt a serious blow to the FTC’s authority to seek and obtain monetary relief in federal court pursuant to Section 13(b) in the matter of AMG Capital Management, LLC v. FTC.

Dubbed the Consumer Protection and Recovery Act, the proposed legislation explicitly authorize the FTC lawyers to seek permanent injunctions and other equitable relief, such as restitution and disgorgement, to remedy consumer injury.

Two Republican amendments to the proposed legislation were rejected by Democrats, one of which was an effort by Republicans to preclude the FTC from obtaining disgorgement unless and until it conducted an economic analysis.  Importantly, Republicans also offered and withdrew an amendment to reduce the bill’s proposed statute of limitations from ten to five years.

Various Republicans also expressed an intend to address the FTC’s Section 13(b) authority as part of a more comprehensive FTC enforcement policy overhaul, one that includes the establishment of national privacy framework.

The proposed legislation must be approved by the full Energy and Commerce Committee before being voted upon by the House of Representatives.  FTC lawyer and Acting Chair Rebecca Slaughter continues to stress the urgency of reinstating Section 13(b) monetary enforcement authority.  In fact, Chairwoman Slaughter recently re-affirmed the agency’s position regarding the restoration of the FTC’s ability to return money unlawfully taken from consumers in a letter responding to arguments made by the U.S. Chamber of Commerce relating to the Commission’s ability to use Section 13(b) of the FTC Act to seek consumer compensation in antitrust and consumer protection cases.

Until matters regarding the restoration of the FTC’s Section 13(b) authority are resolved, the FTC generally may obtain monetary relief only after first invoking its administrative procedures under FTC Act section 5 and, then, under section 19’s qualified redress provisions.  In such a suit, which lies under Section 19 of the FTC Act, the FTC must demonstrate that a “reasonable man” would have known under the circumstances that the conduct was “dishonest or fraudulent.”  It is anticipated that the FTC will seek to use its current 13(b) authority to freeze assets indefinitely while a Section 19 action is pending.

It is also anticipated that the FTC may partner more frequently with state attorneys general when seeking information during investigations, as well as consumer redress for unfair and deceptive trade practices.  Additionally, state attorneys general can freeze assets without the assistance of the FTC.

This article should be of interest to digital marketers.  Contact an experienced FTC defense lawyer if you have received a CID from the Federal Trade Commission or have been named as a defendant in an enforcement or administrative action. 

Richard B. Newman is one of the leading FTC defense attorneys in the digital marketing industry and defends digital marketers in regulatory claim substantiation proceedings.  Follow FTC defense attorneys on Twitter.

Informational purposes only. Not legal advice. May be considered attorney advertising.

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A St. Louis-based chiropractor became the first person charged under a new federal law aimed at protecting Americans from fraudulent COVID-19 claims.

Eric Nepute was charged by the Federal Trade Commission (FTC) under the COVID-19 Consumer Protection Act for making false marketing claims. The complaint was filed in the U.S. District Court for the Eastern District of Missouri.

In April 2020, Nepute’s business, Quickwork LLC, began advertising and selling products under the trade name “Wellness Warrior.” Wellness Warrior operates and maintains a Facebook page along with at least 11 websites. Soon, Nepute was using these platforms to advertise, market, distribute, and sell vitamin D and zinc products as drugs that could treat or prevent COVID-19.

According to the FTC, there is no reliable scientific evidence that Vitamin D protects against, treats, or prevents COVID-19.1 Despite having no valid evidence for such claims, Nepute advertised and marketed his Vitamin D and zinc products in this way, violating Section 5(a) of the Federal Trade Commission Act.2

“The laws under which Eric Nepute is being charged really are aimed at protecting consumers,” Margaret J. Finerty, JD, partner at Getnick & Getnick LLP, tells Verywell. Under the COVID-19 Consumer Protection Act, for the duration of the public health emergency, it is unlawful for any person, partnership, or corporation to engage in deceptive acts or practices affecting commerce associated with the treatment, cure, prevention, and diagnosis of COVID-19.2

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On April 1, 2021, the U.S. Supreme Court issued a unanimous decision in the matter of Facebook, Inc. v. Duguid that is a big win for telemarketers and TCPA defense lawyers.  The ruling settles expansive interpretations of what constitutes an “automated telephone dialing system” by TCPA plaintiffs’ attorneys and various courts throughout the country.

The Court held that devices that just store numbers from a pre-made list do not qualify as an ATDS under the TCPA.  Only devices that have the capacity to store or dial using a random or sequential number generator are covered by the TCPA statute, the Court held.

It is also worth keeping in mind that human intervention is not necessarily determinative when it comes to assessing whether a particular technology constitutes an ATDS.  In fact, in its opinion, the Court states that “[A]ll devices require some human intervention, whether it takes the form of programming a cell phone to respond automatically to texts received while in “do not disturb” mode or commanding a computer program to produce and dial phone numbers at random.  We decline to interpret the TCPA as requiring such a difficult line-drawing exercise around how much automation is too much.”

The issue is now simply whether a technology has the “capacity” to store or dial using a random or sequential number generator.  However, while it mentioned it, the Court did not analyze the meaning of “capacity.”  Query how courts will address this issue, to wit, whether a telemarketer must actually use the technology.

Of course, this ruling does not abrogate the TCPA’s restrictions on numbers on the national Do-Not-Call registry, or pre-recorded and artificial voice telephone calls.  With respect to the former, there is an every-increasing wave of TCPA cases alleging Do-Not-Call violations.

The Court’s ruling limits the reach of the Telephone Consumer Protection Act by narrowing what technology qualifies as an automatic telephone dialing system.  However, it merely illustrates a shift regarding the ever-expanding interpretation of what constitutes an ATDS definition.  TCPA compliance remains extremely important, including, but not limited to, ensuring that prior express written consent is still obtained for those subject to the TCPA and assessing whether your company uses technology that has the capacity to store or dial using a random or sequential number generator.  Contact experience telemarketing compliance counsel with question about this important ruling, remaining limitations and practical impacts upon telemarketing.

Richard B. Newman is an FTC lawyer and advertising practices attorney at Hinch Newman LLP. Follow FTC defense lawyer on National Law Review.   

Attorney advertising. Informational purposes only. Not legal advice.

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On March 25, 2021, the Federal Trade Commission released its 2020 Annual Highlights, emphasizing the agency’s ongoing efforts to protect consumers.

“Despite the challenges of the pandemic, the FTC remained dedicated to protecting consumers and promoting competition,” Acting FTC Chairwoman Rebecca Kelly Slaughter said.  “The FTC acted quickly to take down a number of illegal COVID-related scams, sued to block or unwind an unprecedented number of mergers, and took a number of other strong enforcement actions across its missions.” 

The Highlights capture the Commission’s prompt response to the pandemic and purported bad actors who try to exploit it to take advantage of consumers.   The FTC has taken action to halt alleged false and deceptive claims related to supposed treatments for COVID-19.  The agency has sued companies that allegedly failed to deliver on promises to quickly ship critical personal protective equipment, and companies that purportedly lured consumers into income scams. 

The agency has also sent out hundreds of blog posts to educate consumers about COVID-19 scams and remind businesses about their responsibilities regarding honest advertising.

The FTC’s Highlights report promotes some of the agency’s most significant enforcement actions, policy and advocacy initiatives, and education and outreach programs in the past year.

With regard to enforcement, for example, the FTC demonstrated a commitment to addressing purported false treatment claims regarding COVID-19.  In doing so, the agency pursued a rigorous warning letter program.  The FTC, on its own, and with FDA, issued over 350 warning letters to marketers making prevention, cure, and treatment claims, and the vast majority of recipients took quick steps to correct problematic claims.

When warning letter recipients do not correct their problematic claims, however, the FTC can — and does — follow up with law enforcement suits.  In fact, the agency charged Golden Sunrise Nutraceutical, Inc. — a warning letter recipient that did not correct its claims — with deceptively advertising a $23,000 treatment plan as a scientifically proven way to treat COVID-19.  Going forward, under a new federal law, the COVID-19 Consumer Protection Act, the FTC has the authority to obtain first-time civil penalties for scams related to COVID-19.  This new law provides another tool in the FTC’s fight against operators engaged in such deception.

In other health-related matters, the Commission approved a Part 3 administrative complaint against Health Research Laboratories, LLC for purported unsubstantiated claims that their dietary supplements can treat cardiovascular and other diseases.  The complaint is scheduled to be heard before an administrative law judge in July 2021.

In its first law enforcement crackdown on deceptive claims in the growing market for cannabidiol (CBD) products, the FTC sued six sellers of CBD-containing products for allegedly making a wide range of scientifically unsupported claims about their ability to treat serious health conditions like, cancer, heart disease, hypertension, and Alzheimer’s disease.  Under an administrative settlement, the marketer behind Whole Leaf Organics is barred from making baseless claims that his CBD-based product can treat or prevent the risk of COVID-19.

Teami, LLC, a marketer of teas and skincare products, paid $1 million to settle FTC charges that it promoted its products using deceptive health claims and endorsements by well-known social media influencers who did not adequately disclose they were being paid to do so.

Last year the FTC brought a number of cases against the marketers of health-related products, including actions against supposed cures for joint pain and inflammation, for cancer and diabetes, for ailments and physical damage related to aging, and for growing new bone to alleviate pain, as well as an action against an app that allegedly failed to keep users’ health information private.

On the technology front, while millions of users have flocked to video communications platforms. Zoom Video Communications, Inc. agreed to settle FTC charges that the company misrepresented the level of encryption it offered and the time it took to store meetings in Zoom’s secure cloud storage in an encrypted format, and allegedly installed software on certain users’ computers that circumvented a privacy and security safeguards for certain users offered by their browser.  The settlement prohibits Zoom from making a wide variety of privacy- and security-related misrepresentations, requires Zoom to implement an information security program (including a security review for all new software before release and restrictions on circumventing third-party security safeguards), and independent program assessments by a qualified third party.

The FTC also took action to halt the alleged use of technology to promote deception and fraud related to COVID-19.  The Commission sent warning letters to Voice over Internet Protocol (VoIP) service providers and other companies for their activities purportedly “assisting and facilitating” illegal Coronavirus-related telemarketing calls.  And, last year, the Commission also brought its first consumer protection case against a VoIP provider, Globex Telecom, Inc., which agreed to pay $1.9 million to settle charges from the FTC and the State of Ohio that they allegedly facilitated an illegal bogus credit card interest rate relief scheme.  In addition, Alcazar Networks Inc. settled the FTC’s charges that they facilitated tens of millions of illegal telemarketing phone calls.

In other deceptive and unfair marketing, the FTC brought its first cases enforcing the Better Online Ticket Sales (BOTS) Act.  Three ticket brokers will pay $3.7 million to settle allegations they used automated software to illegally buy tens of thousands of event tickets, then resold the tickets at higher prices.

In terms of deceptive and unfair marketing, the FTC brought several cases against companies that allegedly failed to deliver on their promises to get consumers goods in high-demand as a result of the pandemic.  A federal court in Ohio issued a temporary restraining order against 25 alleged counterfeit websites that purportedly tricked consumers into paying for Clorox and Lysol products that the defendants never delivered.  The Commission also brought actions against three online merchandisers and SuperGoodDeals.com, Inc., based, in part, on violations of the Mail, Internet, or Telephone Order Merchandise Rule (Mail Order Rule) and promises they would quickly ship facemasks, sanitizer, and other personal protective equipment.

The FTC took also action against Traffic Jam Events, LLC to stop a scheme that allegedly deceived consumers with mailers that promised to get them federal COVID-19 stimulus benefits but was actually luring them to a used car sale.

The FTC also took action to protect workers.

The FTC alleged that Amazon failed to pay Amazon Flex drivers the full amount of tips they received from Amazon customers over a two and a half year period.  As part of a settlement, Amazon will pay more than $61.7 million, representing the full amount the company allegedly withheld from drivers, which will be used by the FTC to compensate drivers.

The impact of income opportunity scams has intensified as scammers take advantage of the COVID-19 pandemic and financial crisis. The Commission, along with 19 federal, state, and local partners, led Operation Income Illusion, a nationwide crackdown of more than 50 law enforcement actions against scams that target consumers with fake promises of income and financial independence that have no basis in reality.

The FTC also continued its efforts on behalf of small businesses.  The FTC and the Small Business Administration (SBA) sent warning letters to eight companies that targeted small businesses seeking SBA loans as a result of the Coronavirus pandemic.

The Commission also continued its work in other areas.

The FTC won a $120.2 million judgment against the primary Sanctuary Belize defendants, successfully putting an end to what is allegedly the largest land fraud in FTC history.

Other cases included actions against the operator of an allegedly deceptive crowdfunding scheme and a rent-to-own company that paid $175 million for allegedly misleading buyers.

The Commission also brought cases stopping allegedly deceptive negative option practices, including Age of Learning, Inc.; Nutraclick; and AH Media Group, LLC.

In other cases, the FTC took action against two companies (Williams-Sonoma, Inc. and Gennex Media, LLC) for allegedly making unsubstantiated Made in USA claims; a mobile banking app for alleged false promises about interest rates and access; a company selling phone plans that ripped off the families of incarcerated love ones; an alleged pyramid scheme that lured consumers with false promises of financial independence; operators of an allegedly  deceptive business coaching scheme; companies allegedly selling misleading ad listings to small businesses, and an operation that allegedly tricked consumers by lying about being affiliated with the SBA.

The FTC continues its vigorous enforcement against operations that assist companies defrauding consumers.

In 2020, the FTC brought six cases involving payment processors — RevenueWire, Inc., Apex Capital Group, LLC, Qualpay, Inc., Complete Merchant Solutions, LLC (CMS), Madera Merchant Services, LLC, and First Data Merchant Services LLC — for allegedly enabling deceptive practices or scams.  In four of the cases, the defendants were banned from payment processing, either completely or for certain types of businesses.

The FTC, with more than 50 federal and state law enforcement partners, brought Operation Corrupt Collector, a nationwide law enforcement and outreach initiative to protect consumers from deceptive and abusive debt collection practices.  In one case, the FTC alleged Critical Resolution Mediation LLC threatened consumers with arrest and imprisonment and tried to collect debts that consumers did not actually owe.  A federal court shut down the operation.

Another case was against a seller of alleged get rich quick “training programs” that purportedly promised buyers they would make significant income but allegedly had data showing most buyers of the training made little to no money.

The FTC also brought actions against companies that hurt people looking for housing, looking to borrow money, reduce their credit card rates, pay down their debt, or fix their credit.  The FTC charged pay day lender Lead Express, Inc. (Harvest Moon Financial) with deceptively overcharging consumers millions of dollars and withdrawing money repeatedly from consumers’ bank accounts without their permission.  A federal court has entered a temporary restraining order halting the operation and freezing the defendants’ assets.

Credit repair company BoostMyScore LLC agreed to settle FTC charges they misled consumers with promises to improve credit scores and increase access to lower mortgage rates.  AppFolio, Inc., a provider of background reports to property management companies, paid $4.25 million to settle the FTC’s charges the firm did not follow reasonable procedures to ensure the accuracy of its reports about potential tenants.

This year, the FTC also brought actions against several companies that allegedly falsely promised struggling student loan borrowers that — in return for paying an illegal upfront fee — the defendants could lower or eliminate their debt.  SLAC, Inc., CD Capital Investments, LLC, Elegant Solutions, Inc. (Mission Hills Federal), and American Financial Benefits Center were banned from the debt relief business, and courts entered combined judgments of nearly $40 million against CD Capital Investments and Elegant Solutions.

In 2020 the FTC continued its initiatives to protect the privacy of consumers.  Recently, the FTC began to seek more comprehensive remedies against technology companies that failed to live up to consumer privacy promises.

The FTC settled allegations that the developer of the photo app Everalbum deceived consumers about its use of facial recognition technology and its retention of user photos and videos by requiring the deletion of models and algorithms developed from user data.  The Commission also turned its attention to the growing area of health apps, settling allegations that the developer of a period and fertility-tracking app, Flo, shared user health information with outside data analytics providers after promising that such information would be kept private.  As part of the settlement, Flo must notify affected users about the disclosure of their personal information and instruct any third party that received users’ health information to destroy that data.

The FTC continued its actions protecting children’s online privacy through enforcement of the Children’s Online Privacy Protection Act Rule (COPPA Rule).  App developer HyperBeard, Inc. agreed to pay $150,000 and to delete personal information it illegally collected from children under 13.  Miniclip, S.A., a digital game maker, settled the FTC’s allegations that it misled consumers into thinking it was a current member of the Children’s Advertising Review Unit’s (CARU) COPPA safe harbor program.

The Department of Justice (DOJ), on behalf of the FTC, sued MyLife.com, Inc., alleging that the company deceived consumers with “teaser background reports” that often falsely claimed to include information about arrest, criminal, and sex offender records.

Two recent cases required the defendants to put in place comprehensive data security programs to settle the FTC’s allegations:  Ascension Data & Analytics, LLC (which allegedly failed to ensure that its vendor was adequately securing personal data, leaving the sensitive information of more than 60,000 consumers exposed on the internet for a year); and SkyMed International, Inc. (which allegedly left unsecured a cloud database of approximately 130,000 membership records so they were in plain text and easily accessible).

The agency entered a modified administrative order against Facebook, formally adding approved amendments to its 2012 privacy order to include provisions that were incorporated into the FTC’s 2019 settlement with the company.

The FTC also brought charges against eight companies that allegedly misrepresented their participation in the EU-U.S. Privacy Shield framework (Privacy Shield), which enables companies to transfer consumer data legally from EU countries to the U.S.  The orders settling the FTC’s charges were released in January, March, July, and October.

Certain statistics are available in the Stats & Data 2020 infographic.  Archives of past FTC Annual Highlights and Reports and a printable version of the 2020 report are also available.

Richard B. Newman is an FTC defense lawyer at Hinch Newman LLP. Follow FTC defense lawyer on National Law Review. 

Informational purposes only. Not legal advice. May be considered attorney advertising.

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