# HOUSE COMMITTEE ON APPROPRIATIONS

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3Af4c7d4b358103443

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

TESTIMONY OF
CHAIR LINA M. KHAN
Before the
HOUSE COMMITTEE ON APPROPRIATIONS
SUBCOMMITTEE ON FINANCIAL SERVICES
AND GENERAL GOVERNMENT

UNITED STATES HOUSE OF REPRESENTATIVES
WASHINGTON, D.C
MAY 15, 2024

I.

INTRODUCTION

Chairman Joyce, Ranking Member Hoyer, and members of the Subcommittee, thank you
for inviting me to testify today. 1 This testimony will address the Federal Trade Commission’s
Fiscal Year 2025 budget request; highlight the important work underway to promote open,
competitive markets and protect American consumers and businesses from fraud and corporate
abuse; and address challenges we face.
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The FTC’s statutory mandate places it on the front lines of some of the most significant
hardships confronting American consumers, workers, and small businesses. I am endlessly
impressed by the commitment and ingenuity of the agency’s staff, whose hard work and fidelity
to that mandate protect Americans’ pocketbooks and their economic liberty. Since I last
testified before this Subcommittee in April 2023, the agency has:
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Finalized a rule to ban noncompete clauses, which would raise workers’ wages by
$524, create over 8,500 new businesses, and lead to between 17,000 and 29,000
more patents annually;

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Proposed a rule to ban junk fees that conservatively cost consumers $90 billion a
year;

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Prompted pharmaceutical companies to take down junk patent listings on inhalers
and slash costs for millions of Americans from hundreds of dollars down to $35;

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Challenged the largest supermarket merger in U.S. history, alleging that it would
raise grocery prices and reduce wages for hundreds of thousands of workers;

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Uncovered evidence of an oil executive attempting to collude to reduce output,
which would result in Americans paying higher prices at the pump;

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Ordered data brokers to stop selling consumers’ sensitive geolocation data that can
reveal which doctors they visit, where they worship, and where they live;

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And continued to hold companies accountable—including through record-setting
penalties—when they deceive the public about their products being “made in the
USA”.

Funding increases in recent years have contributed meaningfully to our ability to
achieve these accomplishments, and they represent only a small slice of the good work of this
small-but-mighty agency, which has notched these wins for everyday Americans in spite of
opponents who often have near-infinite resources to deploy against us.
The full scope of that work reflects Congress’s decision to charge the FTC with
enforcing or administering the provisions of more than 80 statutes. 2 I am deeply committed to
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This written testimony reflects my own views. The oral statement and responses to questions are also my own and
do not necessarily reflect the views of the Commission or any other Commissioner.
2
FTC, Legal Library: Statutes, https://www.ftc.gov/legal-library/browse/statutes (last visited May 1, 2024).
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ensuring that the FTC’s efforts to carry out the tasks Congress assigned us makes best use of the
resources Congress has granted us, which is why the agency prioritizes addressing dominant
actors and upstream facilitators of widespread harm, rather than playing whack-a-mole; seeks to
deter unlawful activity from the start; and strives to be forward-looking in anticipating problems,
especially as it relates to emerging technologies and nascent markets across sectors.
II.

BUDGET AND RESOURCES

More than most agencies, the FTC invests the resources Congress grants us in its people.
Today, the agency has roughly 1,320 employees on board, the cost of which comprises
approximately 70 percent of our total budget. This is nonetheless nearly 400 fewer full-time
employees (“FTE”) than in 1980, when the agency had over 1,700 FTE, even though the nation’s
GDP has increased six-fold since that time.
The Commission’s FY 2025 request is $535 million and 1,443 FTE, an increase of $109
million and 55 FTE. Critically, this adjustment would fund mandatory FY 2024 and anticipated
FY 2025 pay increases and other inflationary non-pay expenses, as well as critical IT
investments needed for the Commission to continue its enforcement work in an era of big data
and a possible move. IT investments are necessary to address the large amounts of data we
receive in certain cases, which far exceed the FTC’s hardware, software, and personnel capacity.
Unfortunately, the FTC’s enacted budget for FY 2024 of $425.7 million represented a 1%
reduction from the previous year. The effect of this reduction, alongside a 5.2% pay raise and
higher non-compensation costs resulting from inflation, means significantly less to support the
FTC’s critical mission. We are deeply committed to long-term fiscal responsibility, which means
we are making difficult choices now to ensure the agency maintains a strong position in the years
to come.
As a result, the FTC, through reduced hiring actions and attrition, will decrease its current
workforce as well as a variety of nonpayroll expenditures. We are also exploring ways to reduce
facility costs, although savings from these efforts will likely not be realized before the end of FY
2025.
These are difficult choices to make, especially at a moment when there is incredible
public demand for so much of the agency’s work, and when the work we already do substantially
benefits millions of Americans. The FTC provides remarkable value to the American public for a
relatively low cost. For FY 2023, every $1 of the FTC’s costs returned an estimated $14 in
benefits to American consumers through its consumer protection and competition law
enforcement efforts. In total, the hard work of the roughly 1,320 FTC staff saved consumers
nearly $3 billion last fiscal year. 3
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These estimates were calculated based on performance measures 1.1.1 (money returned to consumers and
treasury), 1.1.2 (consumer savings from consumer protection law enforcement), and 2.1.2 (consumer savings from
antitrust enforcement). For more details on measurement and data quality, see FTC, FTC Data Quality Appendix,
https://www.ftc.gov/system/files/ftc_gov/pdf/DQA-FY22-26%2C-3-1-2023.pdf (last visited Apr. 23, 2023). These
figures have been updated from previously reported consumer savings estimates, originally provided in the FY 2023
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The FY 2025 budget request would help ensure the agency can absorb rising personnel
and non-payroll costs, while supporting an FTE level that positions us to continue delivering
material returns to the American people. Our request would enable modernizations necessary to
maintain applications that directly support our mission, such as the comprehensive complaint
database known as the Consumer Sentinel Network, which is accessible to law enforcement
agencies across the country and internationally. It would also fund growing expert witness costs
necessary to support litigation, particularly in cases against large, well-financed defendants, as
well as to partially fund critical IT infrastructure upgrades to address big-data challenges
encountered when litigating increasingly complex cases.
The FTC’s budget request would be partially offset by fees collected from Hart-ScottRodino filings and pursuant to the Telemarketing and Consumer Fraud and Abuse Prevention
Act. When possible, the agency collects money to return to harmed consumers. During FY 2023,
the FTC returned $616 million 4 to consumers and the U.S. Treasury General Fund. Of this
amount, judgments resulting in redress disbursements to harmed consumers totaled $285
million, 5 and an additional $4 million in disgorgements was returned to Treasury. Civil penalty
collections returned to Treasury totaled $327 million. These sums are particularly remarkable in
the wake of the AMG decision, which disabled what had become the FTC’s core authority for
winning back money for harmed consumers.
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III.

CONSUMER PROTECTION MISSION

As the nation’s primary consumer protection agency, the FTC has a broad mandate to
protect the public from unfair or deceptive practices throughout the economy. Among other
issues, the FTC works to fight fraud, junk fees, and related harms affecting consumers; combat
opioid recovery fraud and other health fraud; stand up for all consumers, including older adults,
servicemembers, and historically underserved communities; protect privacy and data security;
and ensure that domestic manufacturers, independent repairers, and other small businesses have a
chance to compete fairly.
A.

Protecting Every Community from Fraud and Deceptive Business Practices

The FTC is undertaking comprehensive enforcement action to root out fraud and
deceptive business practices.

Agency Financial Report as $3.6 billion of consumer savings and $17 per $1 spent. FED. TRADE COMM’N, FISCAL
YEAR 2023 AGENCY FINANCIAL REPORT 44 (2023),
https://www.ftc.gov/system/files/ftc_gov/pdf/508FY2023FTCAgencyFinancialReport11292023.pdf.
4
In the FY 2023 Agency Financial Report, the FY 2023 Actual for Metric 1.1.1 reported a civil penalty amount for
the Epic case as $275 thousand instead of $275 million. The results were adjusted accordingly.
5
Most of the redress disbursements were from cases that were resolved prior to the Supreme Court’s April 2021
decision in AMG Capital Management, LLC v. FTC, 141 S. Ct. 1341 (2021), which invalidated the Commission’s
ability to obtain refunds for consumers under Section 13(b) of the FTC Act. Once the Commission completes
distribution of funds obtained in cases resolved prior to AMG, future Commission distributions will likely decrease
due to the loss of the ability to obtain monetary relief under Section 13(b).

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1.

Reducing the Scourge of Unwanted Calls

In FY 2023, the FTC received more than 2 million complaints about unwanted calls,
including 1.1 million reports about robocalls. 6 The Commission uses every tool at its disposal
to combat these calls. Over the years, the FTC has filed 170 enforcement actions against 563
companies and 446 individuals alleged to be responsible for placing billions of unwanted
telemarketing calls to consumers. We have also collected nearly $400 million in civil
penalties and equitable monetary relief from these violators. In cases where perpetrators ran
telemarketing scams, the FTC has obtained court orders shutting down these businesses and
securing monetary relief so monies could be returned to consumers. 7
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The FTC is also disrupting foreign-based scammers that bring illegal robocalls into
the United States. The Commission continues to send warning letters as part of Project Point of
No Entry (“PoNE”). PoNE targets “point of entry” or “gateway” Voice over Internet Protocol
(“VoIP”) service providers. 8 In collaboration with the Federal Communications Commission,
the Industry Traceback Group, and state attorneys general, the FTC identifies point of entry
VoIP service providers that are routing or transmitting illegal robocall traffic. The FTC then
demands that they stop, warns that their conduct may violate the Telemarketing Sales Rule
(“TSR”), monitors their pursuit of recalcitrant providers, and conducts law enforcement
investigations and files lawsuits when appropriate. Through PoNE, the FTC has sent 31
warning letters to providers that were responsible for more than 450 robocall campaigns.
Twenty-two of the 24 providers targeted in earlier rounds significantly curbed or altogether
stopped the flow of illegal calls.
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On July 18, 2023, the FTC announced Operation Stop Scam Calls, the largest crackdown
on illegal telemarking in our history. The Operation consisted of more than 180 actions targeting
those responsible for billions of illegal calls to U.S. consumers. 9 More than 100 state and federal
law enforcement partners participated in the sweep. The FTC’s cases targeted robocalls at every
level, including telemarketers that make robocalls, VoIP providers that provide telemarketers
access to telephone networks, and the lead generators that obtain and sell the leads robocallers
use to call consumers.
8F

The FTC is determined to go after not only individual bad actors but also the platforms
that enable these practices on a massive scale. In March, the Commission announced an
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FTC, Do Not Call Registry Data Book 2023: Complaint Figures for FY 2023 (2022),
https://www.ftc.gov/system/files/ftc_gov/pdf/Do-Not-Call-Data-Book-2023.pdf.
7
Temporary Restraining Order, FTC v. Smith, No. 2:23-cv-04848 (E.D. Pa. Dec. 8, 2023),
https://www.ftc.gov/system/files/ftc_gov/pdf/Weblio-TRO.pdf (freezing the defendants’ assets and prohibiting their
deceptive practices); Order, FTC v. Green Equitable Solutions, No. 2:22-cv-6499 (C.D. Cal. Feb 2, 2024) (banning
defendants from telemarketing and ordering them to pay a $15,891,536 monetary judgment).
8
Press Release, Fed Trade Comm’n, FTC Ramps Up Fight to Close the Door on Illegal Robocalls Originating from
Overseas Scammers and Imposters (Apr. 11, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/04/ftc-ramps-fight-close-door-illegal-robocalls-originating-overseas-scammers-imposters.
9
Press Release, Fed. Trade Comm’n, FTC, Law Enforcers Nationwide Announce Enforcement Sweep to Stem the
Tide of Illegal Telemarketing Calls to U.S. Consumers (July 18, 2023), https://www.ftc.gov/newsevents/news/press-releases/2023/07/ftc-law-enforcers-nationwide-announce-enforcement-sweep-stem-tide-illegaltelemarketing-calls-us.
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amendment to the TSR that will protect businesses against telemarketing fraud and updates the
rule’s recordkeeping requirements in light of developments in technology and the marketplace.
The Commission also has an ongoing rulemaking that would apply the TSR’s protections to
inbound technical support calls. 10
9F

Although robocalls remain a scourge, our strategy of targeting upstream facilitators of
illegal telemarketing is paying dividends for the American people. In recent months, the number
of complaints coming into the FTC around unwanted calls is down more than 60% from the
monthly complaint average in the first quarter of 2021.
2.

Combatting Fraud Targeting Older Americans

Protecting older consumers continues to be one of the FTC’s top priorities, which the
agency pursues through aggressive law enforcement actions, innovative education and outreach
campaigns, extensive research, and collaboration with partners and stakeholders. The FTC has
brought a number of actions against companies for allegedly engaging in illegal practices that
disproportionately impact older adults, such as tech support scams, 11 sham health plans, 12 and
deceptive sweepstakes. 13 In addition, as with its work on unwanted calls, the FTC is going after
entities that allegedly facilitate scams (like the grandparent and lottery or sweepstakes scams) at
scale. 14 Reports to the FTC suggest that older adults lose more money to investment scams than
any other category of fraud. 15 The FTC has aggressively gone after companies for making
allegedly deceptive earnings claims, including actions against investment advisors, 16 crypto and
other bogus business scams, 17 and moneymaking schemes that capitalized on false claims about
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Final Rule 89 Fed. Reg. 26760 (Apr.16, 2024); Notice of Proposed Rulemaking, 89 Fed. Reg. 26798 (Apr. 16,
2024).
11
Press Release, Fed. Trade Comm’n, Tech Support Firms Will Pay $26 Million to Settle FTC Charges That They
Deceived Consumers Into Buying Repair Services (Mar. 14, 2024), https://www.ftc.gov/news-events/news/pressreleases/2024/03/tech-support-firms-will-pay-26-million-settle-ftc-charges-they-deceived-consumers-buying-repair.
12
Press Release, Fed. Trade Comm’n, FTC Obtains $195 Million Judgment, Permanent Ban on Telemarketing and
Selling Healthcare Products Against Simple Health Over Charges It Sold Sham Health Insurance (Feb. 9, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-obtains-195-million-judgment-permanent-bantelemarketing-selling-healthcare-products-against.
13
Press Release, Fed. Trade Comm’n, FTC Takes Action Against Publishers Clearing House for Misleading
Consumers About Sweepstakes Entries (June 27, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/06/ftc-takes-action-against-publishers-clearing-house-misleading-consumers-about-sweepstakes-entries.
14
Complaint, FTC v. Walmart, Inc., No: 1:22-cv-03372 (N.D. Ill. June 28, 2022),
https://www.ftc.gov/legal- library/browse/cases-proceedings/182-3012-walmart-ftc-v.
15
FTC, Protecting Older Consumers 2022-2023: A Report of the Fed. Trade Comm’n, at 26 (Oct. 2023), available
at https://www.ftc.gov/system/files/ftc_gov/pdf/p144400olderadultsreportoct2023.pdf (last visited Apr. 29, 2024).
16
Press Release, Fed. Trade Comm’n, FTC Sends $1.2 Million in Refunds to Consumers Harmed by Deceptive
Investment Claims (Apr. 9, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-sends-12million-refunds-consumers-harmed-deceptive-investment-claims.
17
Press Release, Fed. Trade Comm’n, FTC Sends $2.8 Million in Refunds to Consumers Harmed by DK
Automation’s Phony Online Business and Crypto Moneymaking Schemes (Mar. 28, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/03/ftc-sends-28-million-refunds-consumers-harmed-dkautomations-phony-online-business-crypto.
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using AI to boost earnings. 18
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The agency’s education and outreach work complement this vigorous enforcement with
its most popular education campaign, Pass It On (“Pásalo” in Spanish). 19 Since its original
launch in 2014, more than 20 million Pass It On materials have been distributed nationwide in
English and Spanish. During 2022, the FTC released updated Pass It On content and promoted
it through a series of webinars presented to thousands of representatives from congressional
offices, aging services providers, and military support groups, among others. The FTC also
created the Senior Fraud Advisory Office, pursuant to the Seniors Fraud Prevention Act of
2022, to advise the Commission on strategies to protect older Americans.
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The Commission coordinates with various stakeholders across government, industry,
and consumer advocacy organizations in its efforts to protect older adults from scams. Pursuant
to the Stop Senior Scams Act of 2022, the Commission formalized its collaborations by
establishing the Scams Against Older Adults Advisory Group. In April 2024, the Advisory
Group issued guidance on effective consumer education and outreach, best practices on training
industry employees to spot and stop scams, and a report that highlights existing research on
effective scam prevention messaging and outlines where additional research is necessary. 20 The
Advisory Group made these resources publicly available to assist industry and others to stop scams
from impacting older adults. 21 The Commission’s annual report to Congress describes in detail
our work for older adults. 22
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3.

Protecting Servicemembers and Veterans

Combatting fraud aimed at servicemembers remains a top priority. In July 2022, in its
first case enforcing the Military Lending Act, 23 the FTC and a group of 18 states took action
against Harris Jewelry, a national jewelry retailer, to stop the company from allegedly targeting
military families with illegal financing and sales practices, ultimately requiring the company to
pay $10.9 million in refunds and engage in other affirmative assistance to its victims. 24 The
Commission’s efforts to protect military and veteran communities include a vigorous, longstanding educational campaign and close coordination with servicemember and veteran
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Press Release, Fed. Trade Comm’n, FTC Action Leads to Ban for Owners of Automators AI E-Commerce
Money-Making Scheme (Feb. 27, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-actionleads-ban-owners-automators-ai-e-commerce-money-making-scheme.
19
See http://www.ftc.gov/PassItOn and http://www.ftc.gov/Pasalo.
20
See FTC, Second Scams Against Older Adults Advisory Group Meeting (Apr. 2, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/03/ftc-convenes-advisory-group-fight-scams-against-olderadults.
21
FTC, Addressing Scams Affecting Older Adults, available at https://consumer.ftc.gov/features/addressing-scamsaffecting-older-adults.
22
FTC, Protecting Older Consumers 2022-2023: A Report of the Fed. Trade Comm’n (Oct. 2023),
https://www.ftc.gov/reports/protecting-older-consumers-2022-2023-report-federal-trade-commission.
23
10 U.S.C. § 987.
24
Press Release, Fed. Trade Comm’n, FTC and 18 States Sue to Stop Harris Jewelry from Cheating Military
Families with Illegal Financing and Sales Tactics (July 20, 2022), https://www.ftc.gov/news-events/news/pressreleases/2022/07/ftc-18-states-sue-stop-harris-jewelry-cheating-military-families-illegal-financing-sales-tactics; see
also infra note 75 (discussing action against BurgerIM for deceiving veterans).
18

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agencies. 25 This collaborative outreach is the cornerstone of the annual Military Consumer
Month, 26 which the FTC created and manages with its partners, including AARP’s Veterans &
Military Families Initiative. 27 The agency also participates in an ongoing working group led by
the Department of Veterans Affairs (“VA”) to inform veterans how to avoid scams and recently
joined the VSAFE, an initiative organized by the Executive Office of the President and the VA
to collaborate on outreach resources and activities to alert veterans and their families of
evolving scams.
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4.

Preventing Financial Exploitation

The FTC brought 18 federal court actions in recent years against companies that
allegedly targeted financially insecure consumers and made false credit repair, mortgage, or
other debt relief promises, 28 as well as one action against a debt relief payment processor. 29
For example, in February of this year, the FTC and the California Department of Financial
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See, e.g., militaryconsumer.gov (launched by FTC and operated in cooperation with Department of Defense Office
of Financial Readiness (DoD FinRed) and the Consumer Financial Protection Bureau’s Office of Servicemember
Affairs (CFPB OSA)).
26
See Consumer Alert, Fed. Trade Comm’n, Time to help your buddies (June 30, 2023),
https://www.militaryconsumer.gov/blog/time-help-your-buddies (military consumer alert celebrating Military
Consumer Month and launching a blog series tackling topics including romance scams, veteran benefits, identity
theft, and investment scams).
27
See AARP, Veterans and Military Families, https://www.aarp.org/volunteer/causes/veterans-military-families/.
28
Complaint, FTC v. Intercont’l Sols. LLC, No. 8:23-cv-01495-SB-JDE (C.D. Cal. 2023),
https://www.ftc.gov/system/files/ftc_gov/pdf/Complaint_0.pdf; Complaint, FTC v. BCO Consulting Servs.,
Inc., No. 8:23-cv-00699-JWH-ADS (C.D. Cal. 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/FTC-vBCO-Consulting-Services-Inc-et-al-23-cv-0699-Complaint.pdf; Complaint, FTC v. SL Fin. LLC, No. 8:23-cv00698-JWH-ADS (C.D. Cal. 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/01-Complaint-FTC-v-SLFinance-LLC.pdf; Complaint, FTC v. Michael Rando, No. 3:22-cv-00487-TJC-MCR (M.D. Fla. 2022),
https://www.ftc.gov/system/files/ftc_gov/pdf/01%20-%20Complaint.pdf; Complaint, FTC v. ACRO Servs.
LLC, No. 3:22-cv-00895 (M.D. Tenn. 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/ComplaintUnsealed.pdf; Complaint, FTC v. Fin. Educ. Servs. Inc., 2:22-cv-11120-BAF-APP (E.D. Mich. 2022),
https://www.ftc.gov/system/files/ftc_gov/pdf/DE%201%20%20Complaint.pdf; Complaint, FTC & Cal. Dep’t of Fin. Prot. & Innovation v. Green Equitable Sols., No. 2:22cv-06499-FLA (C.D. Cal. 2022), https://www.ftc.gov/system/files/ftc_gov/pdf/Home%20Matters%20%20Complaint.pdf; FTC & Fla. Att’y Gen. v. GDP Network LLC, No. 6:20-cv-01192-WWB-DCI (M.D. Fla.
2022), https://www.ftc.gov/system/files/documents/
cases/1923137yfsolutioncomplaint_0.pdf; Complaint, FTC v. SLAC, Inc., No. 5:20-cv-00470 (C.D. Cal. 2020),
https://www.ftc.gov/system/files/documents/cases/doc_1_complaint.pdf; Complaint, FTC v. Am. Fin. Support
Servs., Inc., No. 8:19-cv-02109-JWH (C.D. Cal. 2019),
https://www.ftc.gov/system/files/documents/cases/192_3040_arete_financial_group_complaint_for_permanent_inju
ction_and_other_equitable_relief_11-12-19.pdf; Complaint, FTC & Minn. v. Manhattan Beach Venture LLC, No.
2:19-cv- 7849 (C.D. Cal. 2019),
https://www.ftc.gov/system/files/documents/cases/172_3041_mbv_complaint_0.pdf; Complaint, FTC v. Student
Advocates Team, LLC, No. 8:19-cv-01728-JVS (C.D. Cal. 2019),
https://www.ftc.gov/system/files/documents/cases/172_3036_pag_complaint_1.pdf; Complaint, FTC v. Elegant
Sols., Inc., No. 8:19-cv-01333-JVS (C.D. Cal. 2019),
https://www.ftc.gov/system/files/documents/cases/192_3105_elegant_solutions_-_first_amended_complaint.pdf.
29
Complaint, FTC v. Automatic Funds Transfer Servs., Inc., No. 1:21-cv-02932 (D.D.C. 2021),
https://www.ftc.gov/system/files/documents/cases/complaint_7.pdf.
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Protection and Innovation were awarded $19 million for consumer refunds and civil penalties
in their law enforcement action against several corporate and individual defendants doing
business as Home Matters USA, for operating what the federal district court found to be sham
mortgage relief services that misled consumers and cost them millions. 30 The court barred the
defendants from engaging in telemarketing and debt relief services and from deploying further
misrepresentations. The Commission also is working closely with the Department of Education
to prevent fraud around recent changes to the student loan program 31 and to ensure relief for
those affected by deceptive practices of for-profit colleges. 32
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5. Fighting Opioid Recovery Fraud and Other Health-Related Misconduct
The FTC has activated the authority Congress gave us in the Opioid Addiction
Recovery Fraud Prevention Act (“OARFPA”) to stop companies from exploiting Americans
struggling with substance use disorders. In April 2024, we announced two OARFPA actions
against Monument 33 and Cerebral 34 for allegedly deceptive practices in disclosing to third
parties for advertising purposes the personal health data of users seeking substance use disorder
treatment. In Monument, we obtained a suspended $2.5 million civil penalty, and in Cerebral,
we partnered with the Department of Justice to obtain a partially suspended civil penalty
judgment of $10 million. In 2023, we brought three additional OARFPA actions challenging
deceptive claims for products and services purporting to treat or cure substance use disorders.
In Smoke Away, the FTC obtained a $7.6 million judgment for consumer redress and civil
penalties in a settlement against the company for allegedly deceptive advertising that its
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Press Release, Fed. Trade Comm’n, FTC, California DFPI Case Leads to Ban Against Operators of Mortgage
Relief Scam Home Matters USA (Feb. 16, 2024), https://www.ftc.gov/news-events/news/pressreleases/2024/02/ftc-california-dfpi-case-leads-ban-against-operators-mortgage-relief-scam-home-matters-usa.
31
See Terri Miller, Scammers follow the news about student loan forgiveness, FTC (Apr. 16, 2024),
https://consumer.ftc.gov/consumer-alerts/2024/04/scammers-follow-news-about-student-loan-forgiveness; Ari
Lazarus, Pay your student loans – not scammers, FTC (Sept. 14, 2023), https://consumer.ftc.gov/consumeralerts/2023/09/pay-your-student-loans-not-scammers; Ari Lazarus, Did you hear the SCOTUS decision on student
loan debt relief? So did scammers., FTC (July 1, 2023), https://consumer.ftc.gov/consumer-alerts/2023/07/did-youhear-scotus-decision-student-loan-debt-relief-so-did-scammers.
32
See Press Release, Fed. Trade Comm’n, FTC Action Leads U.S. Dept. of Education to Forgive Nearly $37 Million in
Loans for Students Deceived by University of Phoenix (Sept. 20, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/09/ftc-action-leads-us-dept-education-forgive-nearly-37-million-loans-students-deceived-university;
Press Release, Fed. Trade Comm’n, FTC Enforcement Action Leads U.S. Dept. of Education to Forgive $71.7
Million in Loans for Students Deceived by DeVry University (Feb. 16, 2022), https://www.ftc.gov/newsevents/news/press-releases/2022/02/ftc-enforcement-action-leads-us-dept-education-forgive-717-million-loansstudents-deceived-devry; see also Press Release, Fed. Trade Comm’n, FTC Sues Grand Canyon University for
Deceptive Advertising and Illegal Telemarketing (Dec. 23, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/12/ftc-sues-grand-canyon-university-deceptive-advertising-illegal-telemarketing.
33
Press Release, Fed. Trade Comm’n, Alcohol Addiction Treatment Firm will be Banned from Disclosing Health
Data for Advertising to Settle FTC Charges that It Shared Data Without Consent (April 11, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/04/alcohol-addiction-treatment-firm-will-be-banneddisclosing-health-data-advertising-settle-ftc.
34
Press Release, Fed. Trade Comm’n, Proposed FTC Order will Prohibit Telehealth Firm Cerebral from Using or
Disclosing Sensitive Data for Advertising Purposes, and Require it to Pay $7 Million (April 15, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/04/proposed-ftc-order-will-prohibit-telehealth-firmcerebral-using-or-disclosing-sensitive-data.
30

8

products eliminate nicotine addiction. 35 In Rejuvica, we obtained a partially suspended $3.2
million judgment against the company for allegedly deceptive claims that its products reduced
alcohol cravings. 36 Finally, in AWAREmed, we obtained a $100,000 civil penalty against a
treatment clinic for allegedly deceptive claims about addiction and cancer treatment. 37 All three
of these cases additionally involved alleged deceptive endorsements or testimonials.
34F

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36F

The FTC also has used its authorities to put an end to a variety of other deceptive claims
about health products or services. In January 2023, the FTC stopped allegedly deceptive baitand-switch advertising for vision correction services, which waste consumers’ time and put
honest businesses at a disadvantage. 38 In November 2023, the FTC and the California Attorney
General jointly obtained an order against CRI Genetics, a company that allegedly deceived
consumers about the accuracy of its test reports compared with those of other DNA testing
companies; falsely claimed to have patented an algorithm for its genetic matching process; and
used fake reviews. CRI also allegedly used “dark patterns” to trick consumers into paying for
products they did not agree to buy. To settle these allegations, the company paid a $700,000
civil penalty to California. 39 Finally, to ensure businesses avoid running afoul of the FTC Act,
in 2022 FTC staff issued the Health Products Compliance Guidance, the first update the FTC
has made to its health-product business guidance in nearly 25 years. 40
16F

37F

17F

18F

38F

39F

6.

Combatting Junk Fees and Unwanted Charges

The FTC is taking bold action to make sure companies honestly compete on price,
rather than by cheating consumers with hidden, deceptive junk fees. Consumers can get hit
with junk fees at any stage of the purchase process, and companies may use digital dark
patterns and other tricks to hide or mask them. These fees both undercut honest businesses by
making it harder to compete on price and frustrate consumers by hitting them with unexpected
Press Release, Fed. Trade Comm’n, FTC Acts to Stop Owner, Marketers of ‘Smoke Away’ from Deceptively
Claiming Products Enable Users to Quit Smoking (June 30, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/06/ftc-acts-stop-owner-marketers-smoke-away-deceptively-claiming-products-enable-users-quitsmoking.
36
Press Release, Fed. Trade Comm’n, FTC Takes Action Against Makers of Sobrenix Supplement That Deceptively
Claimed to Reduce Alcohol Cravings, Relied on Fake Endorsements July 19, 2023), https://www.ftc.gov/newsevents/news/press-releases/2023/07/ftc-takes-action-against-makers-sobrenix-supplement-deceptively-claimedreduce-alcohol-cravings.
37
Press Release, Fed. Trade Comm’n, FTC Sues Medical Clinic and Its Owner for False or Unsubstantiated Claims
Its Treatment Center Could Cure Addiction and Other Diseases (Mar. 16, 2023), https://www.ftc.gov/newsevents/news/press-releases/2023/03/ftc-sues-medical-clinic-its-owner-false-or-unsubstantiated-claims-its-treatmentcould-cure-addiction.
38
Press Release, Fed. Trade Comm’n, FTC Approves Final Order Against LCA-Vision, Halting Alleged Bait-andSwitch Advertising for LASIK Laser Eye Surgery (Mar. 15, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/03/ftc-approves-final-order-against-lca-vision-halting-alleged-bait-switch-advertising-lasik-laser-eye.
39
Press Release, Fed. Trade Comm’n, FTC, California Obtain Order Against DNA Testing Firm over Charges it
Made a Myriad of Misrepresentations to Consumers to Entice Them to Buy Ancestry Reports (Nov. 21, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/11/ftc-california-obtain-order-against-dna-testing-firmover-charges-it-made-myriad-misrepresentations.
40
Press Release, Fed. Trade Comm’n, FTC Announces New Business Guidance for Marketers and Sellers of Health
Products (Dec. 20, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/12/ftc-announces-newbusiness-guidance-marketers-sellers-health-products.
35

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9

charges. The FTC initiated two new rulemakings to address this problematic conduct. In
December 2023, the FTC announced a final CARS Rule, which bans certain junk fees and baitand-switch advertising tactics that can plague consumers throughout the car-buying
experience. The rule requires dealers to make key disclosures to consumers, including
providing a true “offering price” for a vehicle that is the full price a consumer would pay,
excluding only required government charges. The Commission estimates that the rule will save
car-buying consumers an estimated $3.4 billion dollars and 72 million hours each year. 41 In
October 2023, we announced a separate rulemaking to crack down on deceptive or unfair junk
fees across multiple industries. The proposal would prohibit companies from advertising prices
that do not include all mandatory fees and prevent companies from misrepresenting the amount
and purpose of fees and whether they are refundable. We are reviewing and analyzing
thousands of comments from the public on the proposal, and in April 2024, we held an
informal hearing on the proposed rule to provide interested organizations an opportunity to
provide oral statements. 42
40F

41F

The Commission also has proposed to amend the Negative Option Rule to better address
deceptive or unfair practices around negative marketing, including perpetual subscriptions,
difficulty in cancellation, and failure to obtain consumers’ express, affirmative consent. 43 The
proposed rule amendment covers a broad range of recurring subscriptions to ensure that sellers
provide important information about these contracts up front, obtain consumers’ express
informed consent, and provide simple cancellation mechanisms to allow consumers to easily
cancel unwanted subscriptions.
42F

7.

Expanding Consumer and Business Education

The FTC’s Every Community Initiative represents the agency’s coordinated effort to
ensure that the FTC is responsive to the needs of all consumers, including veterans and
servicemembers, rural communities, older adults, historically underserved and lower-income
communities, among others. Through this approach, the agency has provided these
communities with practical, language-appropriate, and user-friendly educational resources and
information to help them spot, avoid, and report scams. The FTC continues to translate all its
consumer education materials into Spanish and has expanded its reach to speakers of other
languages. By translating key materials for consumers and small businesses into 12 languages,
44F

Press Release, Fed. Trade Comm’n, FTC Announces CARS Rule to Fight Scams in Vehicle Shopping (Dec. 12,
2023),https://www.ftc.gov/news-events/news/press-releases/2023/12/ftc-announces-cars-rule-fight-scams-vehicle-shopping.
The rule has been challenged in federal court, and the Commission has stayed the effective date of the rule pending judicial
review. Press Release, Fed. Trade Comm’n, FTC Pauses CARS Rule Effective Date (Jan. 18, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/01/ftc-pauses-cars-rule-effective-date.
42
Press Release, Fed. Trade Comm’n, FTC Proposes Rule to Ban Junk Fees (Oct. 11, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/10/ftc-proposes-rule-ban-junk-fees; Press Release, Fed.
Trade Comm’n, FTC to Hold Virtual Informal Hearing on April 24, 2024 As Part of its Review of the Proposed
Rule Prohibiting Junk Fees (Mar. 21, 2024) https://www.ftc.gov/news-events/news/press-releases/2024/03/ftc-holdvirtual-informal-hearing-april-24-2024-part-its-review-proposed-rule-prohibiting-junk-fees.
43
Press Release, Fed. Trade Comm’n, Federal Trade Commission Proposes Rule Provision Making It Easier for
Consumers to ‘Click to Cancel’ Recurring Subscriptions and Memberships (Mar. 23, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/03/federal-trade-commission-proposes-rule-provisionmaking-it-easier-consumers-click-cancel-recurring.
41

45F

10

the FTC is paralleling its effort to expand in-language reporting capabilities of the Consumer
Sentinel Network. 44 FTC resources in other languages include information on spotting and
avoiding common scams, online safety for parents and children, identity theft, information for
immigrants and refugees, as well as resources for small business owners. 45 To advance the
agency’s goal of reaching all consumers, the FTC engages in ethnic and community media
telebriefings, in-person roundtables, and paid media campaigns that have led to millions of
impressions through print, radio, and digital media.
43F

44F

B.

Safeguarding Consumer Privacy and Strengthening Data Security

The FTC is taking bold steps to move away from the flawed “notice and choice”
privacy framework and establish substantive protections for consumers’ personal data. We are
particularly focused on sensitive data, children and teens, data security, and market-wide
initiatives to strengthen privacy and data security.
1.

Protecting Consumers’ Sensitive Data

At the FTC, we are working to secure real limits on the handling of people’s data,
particularly when it comes to sensitive information, including health, biometric, Internet
browsing, and location information.
First, the FTC has now brought half a dozen groundbreaking actions to protect consumers
as they use new technology to access health care and to bar consumer-facing health providers
from sharing consumers’ sensitive health data for advertising purposes. In GoodRx (prescription
drug discount provider), 46 BetterHelp (online counseling service), 47 Premom 48 (period-tracking
app), Cerebral (online mental health provider), 49 and Monument (online alcohol treatment
service), 50 the Commission alleged that companies broke their privacy promises by disclosing
users’ personal health information to advertising platforms such as Facebook and Google without
consent. The settlements in these actions included important first-time provisions banning the
45F

46F

47F

48F

49F

See www.ftc.gov/languages for consumer and business education in multiple languages, and
www.ReportFraud.ftc.gov and www.IdentityTheft.gov for how to submit in-language reports through the FTC’s
Call Center.
45
See FTC, Consumer Education in Multiple Languages, https://consumer.ftc.gov/features/languages. The 12
languages include: Amharic, Arabic, Chinese (Simplified and Traditional), French, Hmong, Korean, Russian,
Somali, Spanish, Tagalog, Ukrainian, and Vietnamese.
46
Press Release, Fed. Trade Comm’n, FTC Enforcement Action to Bar GoodRx from Sharing Consumers’ Sensitive
Health Info for Advertising (Feb. 1, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/02/ftcenforcement-action-bar-goodrx-sharing-consumers-sensitive-health-info-advertising.
47
Press Release, Fed. Trade Comm’n, FTC to Ban BetterHelp from Revealing Consumers’ Data, Including
Sensitive Mental Health Information, to Facebook and Others for Targeted Advertising (Mar. 2, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/03/ftc-ban-betterhelp-revealing-consumers-dataincluding-sensitive-mental-health-information-facebook.
48
Order, United States v. Easy Healthcare Corp., No. 23-cv-03107 (N.D. Ill. 2023), available at
https://www.ftc.gov/system/files/ftc_gov/pdf/2023.06.22_easy_healthcare_signed_order_2023.pdf.
49
Proposed Order, United States v. Cerebral, Inc., No. 1:24-cv-21376 (S.D. Fla. Apr. 15, 2024), available at
https://www.ftc.gov/system/files/ftc_gov/pdf/cerebral_joint_stipulation_order_permanent_injunction.pdf.
50
Proposed Order, United States v. Monument, No. 12:24-cv-01034 (D.D.C. Apr. 11, 2024), available at
https://www.ftc.gov/system/files/ftc_gov/pdf/MonumentOrderFiled.pdf.
44

11

transfer of data to third parties for advertising purposes, as well as other strong injunctive
provisions, including requirements for consent for certain information sharing, data retention
limitations, and deletion requirements. The GoodRx and Premom settlements included civil
penalties resulting from the Commission’s first enforcements of the Health Breach Notification
Rule. The BetterHelp order includes $7.8 million in monetary relief which will go back to
consumers as partial refunds, another first in a health privacy case. Finally, last month, the
Commission finalized amendments to its Health Breach Notification Rule. The amendments
underscore that health apps and similar technologies are covered by the rule and that companies
must notify consumers and the FTC when breaches occur, which include unauthorized
disclosures of health information. 51
50F

Second, the FTC is taking action when biometric technologies, like facial recognition,
harm consumers. In its case against Rite Aid, the FTC alleged the company deployed its facial
recognition technology without reasonable safeguards, and falsely tagged consumers,
particularly women and people of color, as shoplifters and other bad actors. 52 The Commission
secured a five-year ban on Rite Aid’s use of facial recognition technology for security or
surveillance purposes. 53
51F

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46F

Third, the Commission brought a recent case against Avast for collecting and selling
consumers’ browsing information, which can reveal where consumers live and work, the health
care they seek, their political and religious affiliations, and other online interests and activities.
The order in this matter requires Avast to delete and not sell the web browsing information it
collected without consumers’ affirmative express consent, as well as any products or
algorithms derived from that data. 54
53F

Finally, the FTC has followed through on its promise to ensure that geolocation data
that reveals sensitive information is not indiscriminately sold to the highest bidder. The
Commission is engaged in ongoing litigation against Kochava, Inc., alleging that the data
broker compiled massive amounts of consumers’ geolocation data and then sold it to customers
in a format that makes it easy to track consumers’ visits to sensitive locations, such as doctors’
47F

Business Blog, Fed. Trade Comm’n, Updated FTC Health Breach Notification Rule puts new provisions in place
to protect users of health apps and devices (Apr. 26, 2024), Updated FTC Health Breach Notification Rule puts new
provisions in place to protect users of health apps and devices | Federal Trade Commission.
52
Press Release, Fed. Trade Comm’n, Rite Aid Banned from Using AI Facial Recognition After FTC Says Retailer
Deployed Technology without Reasonable Safeguards (Dec. 19, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/12/rite-aid-banned-using-ai-facial-recognition-after-ftcsays-retailer-deployed-technology-without.
53
FTC v. Rite Aid Corp., 2:23-cv-05023-KBH (E.D. Pa. Feb. 26, 2024), https://www.ftc.gov/legallibrary/browse/cases-proceedings/2023190-rite-aid-corporation-ftc-v.
54
Press Release, Fed. Trade Comm’n, FTC Order Will Ban Avast from Selling Browsing Data for Advertising
Purposes, Require It to Pay $16.5 Million Over Charges the Firm Sold Browsing Data After Claiming Its Products
Would Block Online Tracking (Feb. 22, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/02/ftcorder-will-ban-avast-selling-browsing-data-advertising-purposes-require-it-pay-165-million-over.
51

12

offices, houses of worship, and temporary shelters for domestic violence survivors. 55 And,
earlier this year, the Commission secured settlements with location data aggregators, X-Mode
Social and InMarket Media, to resolve allegations that these companies collected and sold
precise geolocation information about consumers. 56 Both settlement orders contained
groundbreaking provisions protecting consumers from unwanted surveillance, including bans
on the use and disclosure of precise geolocation data.
54F

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2.

Protecting Children and Teens

Children must be able to play and learn online without being endlessly tracked by
companies looking to hoard and monetize their personal data. Because online services can pose
unique risks to children and teens, the FTC is taking an expansive look at how to protect minors
from digital harms, both through the Children’s Online Privacy Protection Act Rule 57
(“COPPA”), which protects children under 13, as well as through Section 5 of the FTC Act. In
December, the FTC proposed changes to COPPA for the first time in over a decade. The
changes would place new restrictions on the use and disclosure of children’s personal
information, including requiring opt-in parental consent for behavioral advertising, and would
further limit the ability of companies to condition access to services on monetizing children’s
data. The proposal aims to shift the burden from parents to providers to ensure that digital
services are safe and secure for children. 58 Staff is currently reviewing the comments received
from stakeholders on the proposed changes.
56F

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In the meantime, the Commission continues to use our existing authorities to protect
children and teens. For example, we brought a law enforcement action against Epic Games,
Inc. (“Epic”)—creator of the popular video game “Fortnite”—alleging that Epic violated
COPPA 59 and engaged in an unfair practice by employing default settings that connected
52F

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58F

Press Release, Fed. Trade Comm’n, FTC Sues Kochava for Selling Data that Tracks People at Reproductive
Health Clinics, Places of Worship, and Other Sensitive Locations (Aug. 29, 2022), https://www.ftc.gov/newsevents/news/press-releases/2022/08/ftc-sues-kochava-selling-data-tracks-people-reproductive-health-clinics-placesworship-other.
56
Press Release, Fed. Trade Comm’n, FTC Finalizes Order with X-Mode and Successor Outlogic Prohibiting it
from Sharing or Selling Sensitive Location Data (Apr. 12, 2024), https://www.ftc.gov/news-events/news/pressreleases/2024/04/ftc-finalizes-order-x-mode-successor-outlogic-prohibiting-it-sharing-or-selling-sensitive-location;
Press Release, Fed. Trade Comm’n, FTC Order Will Ban InMarket from Selling Precise Consumer Location Data
(Jan. 18, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/01/ftc-order-will-ban-inmarket-sellingprecise-consumer-location-data.
57
16 C.F.R. § 312.
58
Press Release, Fed. Trade Comm’n, Press Release, FTC Proposes Strengthening Children’s Privacy Rule to
Further Limit Companies’ Ability to Monetize Children’s Data (Dec. 20, 2023), https://www.ftc.gov/newsevents/news/press-releases/2023/12/ftc-proposes-strengthening-childrens-privacy-rule-further-limit-companiesability-monetize-childrens.
59
Press Release, Fed. Trade Comm’n, Fortnite Video Game Maker Epic Games to Pay More Than Half a Billion
Dollars Over FTC Allegations of Privacy Violations and Unwanted Charges (Dec. 19, 2022),
https://www.ftc.gov/news-events/news/press-releases/2022/12/fortnite-video-game-maker-epic-games-pay-more- halfbillion-dollars-over-ftc-allegations.
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13

children and teens via voice and text chat to strangers, exposing them to psychological harm. 60
This action ultimately resulted in a federal court order securing strong and novel relief for
consumers, requiring Epic to adopt strong default privacy settings for children and teens,
implement a privacy program subject to outside assessments, and pay a $275 million civil
penalty, the largest ever under COPPA.
59F

We are also being forward-looking to prevent companies from using children’s data to
train AI models without parental consent. In the Amazon Alexa matter, the FTC alleged that
Amazon violated COPPA and the FTC Act by indefinitely retaining children’s voice
recordings, which it used to train its speech recognition algorithm. The FTC also alleged that
Amazon failed to honor users’, including parents’, requests to delete voice and geolocation
data, which remained available to Amazon to use for machine learning. Under the FTC’s
settlement with Amazon, the company is required to delete inactive accounts and certain voice
recordings and geolocation information from children and will be prohibited from using such
data to train its algorithms. 61
60F

The Commission is also committed to preventing data abuses around educational
technology services and issued a Policy Statement in 2022 making clear that we would use our
full set of authorities to hold firms accountable. Following the Policy Statement, we have
obtained settlements under COPPA and Section 5 that lay down the rules of the road.
Educational technology company Edmodo entered a federal court order to resolve FTC
allegations that Edmodo violated COPPA by failing to obtain verifiable parental consent before
collecting children’s personal information, and that it unlawfully outsourced its COPPA
compliance responsibilities to schools. Our order against Edmodo banned the company from
requiring children to disclose more personal data than is reasonably necessary to participate in
online learning. 62
61F

The FTC also brought a data security enforcement action against online learning
platform Chegg, Inc., whose customers are high school students. We alleged that Chegg
collected sensitive information about its users and employees but failed to properly protect this
data, leading to several data breaches that exposed the personal data of millions of customers.
The FTC is considering steps to deepen this work, including retaining psychologists and youth development
experts to allow the agency to analyze conduct, assess harms and remedies, and pursue studies with an
interdisciplinary approach, including conduct affecting children. FTC, Federal Trade Comm’n Annual Performance
Report for Fiscal Year 2021 and Annual Performance Plan for Fiscal Years 2022 to 2023 [hereinafter “FTC FY2223 Annual Performance Report”] at 79, https://www.ftc.gov/system/files/ftc_gov/pdf/21apr_22-23app.pdf; FTC,
Federal Trade Comm’n Strategic Plan for Fiscal Years 2022-2026 [hereinafter “FTC FY22-26 Strategic Plan”] at
24, https://www.ftc.gov/system/files/ftc_gov/pdf/fy-2022-2026-ftc-strategic-plan.pdf.
61
Press Release, Fed. Trade Comm’n, FTC and DOJ Charge Amazon with Violating Children’s Privacy Law by
Keeping Kids’ Alexa Voice Recordings Forever and Undermining Parents’ Deletion Requests (May 31, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/05/ftc-doj-charge-amazon-violating-childrens-privacylaw-keeping-kids-alexa-voice-recordings-forever.
62
Press Release, Fed. Trade Comm’n, FTC Says Ed Tech Provider Edmodo Unlawfully Used Children’s Personal
Information for Advertising and Outsourced Compliance to School Districts (May 22, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/05/ftc-says-ed-tech-provider-edmodo-unlawfully-usedchildrens-personal-information-advertising.
60

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14

Now under FTC order, Chegg is required to implement strong data security measures, including
documenting and following a data collection and retention schedule, providing multifactor
authentication or an equivalent authentication method to its customers and employees, and
providing customers with access and deletion rights for the information that Chegg collects
about them. 63
62F

3.

Strengthening Data Security

The best way for firms to protect consumers’ data is to not collect it in the first place. In
the last three years, we have secured 17 data security and privacy orders with mandated
restrictions on what data firms can collect and retain. 64 For example, our proposed order
against Blackbaud, a provider of data services and financial, fundraising, and administrative
software services, requires the company to delete data that it no longer needs and put in place a
data retention schedule that would detail why it maintains personal data and when it will delete
such information. 65 The Commission’s orders against the online alcohol marketplace Drizly,
63F

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56F

Press Release, Fed. Trade Comm’n, FTC Brings Action Against Ed Tech Provider Chegg for Careless Security
that Exposed Personal Data of Millions of Customers (Oct. 31, 2022), https://www.ftc.gov/news-events/news/pressreleases/2022/10/ftc-brings-action-against-ed-tech-provider-chegg-careless-security-exposed-personal-data-millions.
64
These include proposed or final orders in actions the FTC has taken against X-Mode Social (Apr. 11, 2024),
https://www.ftc.gov/legal-library/browse/cases-proceedings/2123038-x-mode-social-inc; RiteAid (Mar. 8, 2024),
https://www.ftc.gov/legal-library/browse/cases-proceedings/2023190-rite-aid-corporation-ftc-v; Global Tel*Link
(Feb. 23, 2024), https://www.ftc.gov/legal-library/browse/cases-proceedings/2123012-global-tel-link-corporation;
Avast Limited (Feb. 22, 2024), https://www.ftc.gov/legal-library/browse/cases-proceedings/2023033-avast;
Blackbaud (Feb. 14, 2024), https://www.ftc.gov/legal-library/browse/cases-proceedings/2023181-blackbaud-inc.;
InMarket Media (Jan. 18, 2024), https://www.ftc.gov/legal-library/browse/cases-proceedings/2023088-inmarketmedia-llc; Epic Games (Jan. 10, 2024), https://www.ftc.gov/legal-library/browse/cases-proceedings/1923203-epicgames-matter; Edmodo (Aug. 28, 2023), https://www.ftc.gov/legal-library/browse/cases-proceedings/202-3129edmodo-llc-us-v; Amazon Alexa (July 21, 2023), https://www.ftc.gov/legal-library/browse/cases-proceedings/1923128-amazoncom-alexa-us-v; BetterHelp (July 14, 2023), https://www.ftc.gov/legal-library/browse/casesproceedings/2023169-betterhelp-inc-matter; Easy Healthcare (June 26, 2023), https://www.ftc.gov/legallibrary/browse/cases-proceedings/202-3186-easy-healthcare-corporation-us-v; Vitagene (June 16, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/06/ftc-says-genetic-testing-company-1health-failedprotect-privacy-security-dna-data-unfairly-changed; GoodRX Holdings (Feb. 17. 2023), https://www.ftc.gov/legallibrary/browse/cases-proceedings/2023090-goodrx-holdings-inc; Chegg (Jan. 26, 2023), https://www.ftc.gov/legallibrary/browse/cases-proceedings/chegg; Drizly (Jan. 10, 2023), https://www.ftc.gov/legal-library/browse/casesproceedings/2023185-drizly-llc-matter; CafePress (Jan. 10, 2023), https://www.ftc.gov/legal-library/browse/casesproceedings/1923209-cafepress-matter;, and Kurbo (f/k/a Weight Watchers) (Mar. 4, 2022),
https://www.ftc.gov/legal-library/browse/cases-proceedings/1923228-weight-watchersww. ngs, Epic Games, Chegg,
Drizly, CafePress, and Kurbo (f/k/a Weight Watchers).
65
Press Release, Fed. Trade Comm’n, FTC Order Will Require Blackbaud to Delete Unnecessary Data, Boost
Safeguards to Settle Charges its Lax Security Practices Led to Data Breach (Feb. 1, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-order-will-require-blackbaud-delete-unnecessarydata-boost-safeguards-settle-charges-its-lax.
63

15

LLC 66 and the online merchandise platform CafePress also require the companies to minimize
the data they collect, store, and retain. 67
65F

66F

The Commission has also obtained remedies that require companies to delete data they
unlawfully collected or used, and to delete the algorithms they developed with that data. For
example, in Rite Aid, we required the company to delete any images or photos it collected for
use in Rite Aid’s facial recognition system as well as any algorithms or other products that were
developed using those images and photos. 68 And, in the proposed order with Avast, the
Commission required the company to delete any models, algorithms, or software developed
from data unlawfully collected. 69
67F

68F

4.

Developing Market-wide Initiatives to Protect Consumers’ Data

In August 2022, the Commission issued an advance notice of proposed rulemaking on
commercial surveillance and lax data security, which sought comment on the widespread
collection of consumers’ personal information (such as browsing data, precise geolocation data,
and health-related data), ongoing concerns around the security of consumer data, harm to kids
and teens, and concerns around automated decision-making. 70 The Commission is reviewing
the more than 11,000 comments we received and considering next steps. The Commission also
has significantly strengthened the Safeguards Rule, amending the rule in 2021 to include more
detailed requirements for financial institutions’ information security programs, and again in
2023 to require financial institutions to notify the FTC of breaches affecting 500 or more
consumers. 71 The breach notification requirement went into effect on May 13, 2024. And we
69F

57F

70F

Press Release, Fed. Trade Comm’n, FTC Takes Action Against Drizly and its CEO James Cory Rellas for
Security Failures that Exposed Data of 2.5 Million Consumers (Oct. 24, 2022), https://www.ftc.gov/newsevents/news/press-releases/2022/10/ftc-takes-action-against-drizly-its-ceo-james-cory-rellas-security-failures- exposeddata-25-million. The Drizly settlement also names the CEO, and thus imposes separate obligations on him which will
follow him beyond Drizly, underscoring the need for C-Suite attention to data security obligations.
67
Press Release, Fed. Trade Comm’n, FTC Takes Action Against CafePress for Data Breach Cover Up (Mar. 15,
2022), www.ftc.gov/news-events/news/press-releases/2022/03/ftc-takes-action-against-cafepress-data-breach-cover.
68
Press Release, Fed. Trade Comm’n, Rite Aid Banned from Using AI Facial Recognition After FTC Says Retailer
Deployed Technology without Reasonable Safeguards (Dec. 19, 2023), https://www.ftc.gov/newsevents/news/press-releases/2023/12/rite-aid-banned-using-ai-facial-recognition-after-ftc-says-retailer-deployedtechnology-without.
69
Press Release, Fed. Trade Comm’n, FTC Order Will Ban Avast from Selling Browsing Data for Advertising
Purposes, Require It to Pay $16.5 Million Over Charges the Firm Sold Browsing Data After Claiming Its Products
Would Block Online Tracking
(Feb. 22, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-order-will-ban-avast-sellingbrowsing-data-advertising-purposes-require-it-pay-165-million-over.
70
Press Release, Fed. Trade Comm’n, FTC Explores Rules Cracking Down on Commercial Surveillance and Lax
Data Security Practices (Aug. 11, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/08/ftcexplores- rules-cracking-down-commercial-surveillance-lax-data-security-practices.
71
Press Release, Fed. Trade Comm’n, FTC Strengthens Security Safeguards for Consumer Financial Information
Following Widespread Data Breaches (Oct. 27, 2021), https://www.ftc.gov/news-events/news/pressreleases/2021/10/ftc-strengthens-security-safeguards-consumer-financial-information-following-widespread-data;
Press Release, Fed. Trade Comm‘n, FTC Amends Safeguards Rule to Require Non-Banking Financial Institutions to
Report Data Security Breaches (Oct. 27, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/10/ftc66

58F

16

continue to review other rules, including COPPA, to assess whether changes are necessary to
better protect consumers’ data.
5.

Confronting the Challenges of Artificial Intelligence

The rapid emergence of new tools powered by artificial intelligence (“AI”) presents
opportunities for consumers, workers, and our economy. But it also poses significant risks, and
the Commission is working to address these risks in a number of ways while also promoting
innovation that affirms America’s leadership around this emerging technology.
First, the Commission is using its existing legal authorities to take action against illegal
practices involving AI. 72 For instance, the FTC alleged that Amazon and Ring used highly
private data—voice recordings collected by Amazon’s Alexa voice assistant 73 and videos
collected by Ring’s internet-connected home security cameras 74—to train their algorithms while
violating customers’ privacy. 75 The Alexa matter, in particular, underscored that COPPA’s
prohibition on the indefinite retention of children’s data and similar legal rules are not
superseded by claims from businesses that data must be indefinitely retained to improve machine
learning algorithms. Claims about AI permeated the allegations against two companies—
Automators AI 76 and Wealthpress 77—that the FTC alleged engaged in investment scams and
touted the use of AI to enhance investment success. And, in Rite Aid, the Commission charged
the company with failing to implement reasonable safeguards when the company deployed AI
71F

72F

73F

74F

75F

76F

amends-safeguards-rule-require-non-banking-financial-institutions-report-data-security-breaches. 27, 2023 Press 7,
303)Press Release, Fed. Trade Comm’n, Trade Comm’n, FTC Amends Safeguards Rule to Require Non-Banking
Financial Institutions to Report Data Security Breaches | Federal Trade Commission (Oct. 2023).
72
Press Release, Fed. Trade Comm’n, FTC Chair Khan and Officials from DOJ, CFPB and EEOC Release Joint
Statement on AI (April 15, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/04/ftc-chair-khanofficials-doj-cfpb-eeoc-release-joint-statement-ai.
73
Press Release, FTC and DOJ Charge Amazon with Violating Children’s Privacy Law by Keeping Kids’ Alexa
Voice Recordings Forever and Undermining Parents’ Deletion Requests (May 31, 2023), https://www.ftc.gov/newsevents/news/press-releases/2023/05/ftc-doj-charge-amazon-violating-childrens-privacy-law-keeping-kids-alexavoice-recordings-forever.
74
Press Release, FTC Says Ring Employees Illegally Surveilled Customers, Failed to Stop Hackers from Taking
Control of Users' Cameras (May 31, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/05/ftc-saysring-employees-illegally-surveilled-customers-failed-stop-hackers-taking-control-users.
75
Press Release, FTC and DOJ Charge Amazon with Violating Children’s Privacy Law by
Keeping Kids’ Alexa Voice Recordings Forever and Undermining Parents’ Deletion Requests (May 31, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/05/ftc-doj-charge-amazon-violating-childrensprivacylaw-keeping-kids-alexa-voice-recordings-forever; Press Release, FTC Says Ring Employees Illegally
Surveilled Customers, Failed to Stop Hackers from Taking Control of Users’ Cameras (May 31, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/05/ftc-says-ring-employees-illegallysurveilledcustomers-failed-stop-hackers-taking-control-users.
76
Press Release, FTC Action Leads to Ban for Owners of Automators AI E-Commerce Money-Making Scheme
(Feb. 27, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-action-leads-ban-ownersautomators-ai-e-commerce-money-making-scheme.
77
Press Release, FTC Suit Requires Investment Advice Company WealthPress to Pay $1.7 Million for Deceiving
Consumers (Jan. 13, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/01/ftcsuit-requiresinvestment-advice-company-wealthpress-pay-17-million-deceiving-consumers.

17

facial recognition technology that falsely tagged consumers, especially women and people of
color, as shoplifters or other bad actors. 78
77F

Second, the Commission is using every tool to fight AI-related fraud. The Commission
has issued a rule outlawing government and business impersonation scams—a type of fraud that
generative AI can turbocharge. 79 The Commission has also embarked on a supplemental
rulemaking to extend this ban to the impersonation of individuals. 80
78F

79F

The Commission has also tapped American ingenuity to help fight back against fraud. On
April 8, it announced the four winners of its groundbreaking Voice Cloning Challenge. Each
winner’s submission proposed a novel approach to detect and prevent voice cloning schemes,
which scammers often deploy to target older Americans. 81 The Commission has also made clear
that AI robocalls are not exempt from the Telemarketing Sales Rule. 82 And the Commission
proposed a rule cracking down on firms that generate fake reviews—an online scourge that AI
threatens to exacerbate. 83
80F

81F

82F

Third, the Commission is helping guide consumers and businesses as they navigate the
potential perils of AI. The Commission has issued award-winning consumer and business
guidance around various AI-related issues. 84 Moreover, the Commission held a Technology
83F

Press Release, Rite Aid Banned from Using AI Facial Recognition After FTC Says Retailer Deployed Technology
without Reasonable Safeguards (Dec. 19, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/12/riteaid-banned-using-ai-facial-recognition-after-ftc-says-retailer-deployed-technology-without.
79
Press Release, Fed. Trade Comm’n, FTC Announces Impersonation Rule Goes into Effect Today (Apr. 1, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-impersonation-rule-goes-effect-today.
80
Id.
81
Press Release, FTC Announces Winners of Voice Cloning Challenge (Apr. 8, 2024), https://www.ftc.gov/newsevents/news/press-releases/2024/04/ftc-announces-winners-voice-cloning-challenge.
82
Press Release, FTC Implements New Protections for Businesses Against Telemarketing Fraud and Affirms
Protections Against AI-enabled Scam Calls, (Mar. 7, 2024), https://www.ftc.gov/news-events/news/pressreleases/2024/03/ftc-implements-new-protections-businesses-against-telemarketing-fraud-affirms-protectionsagainst-ai.
83
Press Release, Federal Trade Commission Announces Proposed Rule Banning Fake Reviews and Testimonials
(Jun. 30, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/06/federal-trade-commissionannounces-proposed-rule-banning-fake-reviews-testimonials.
84
See Lesley Fair, For Business Opportunity Sellers, FTC says “AI” Stands for “Allegedly Inaccurate”, FTC
Business Blog (Aug. 22, 2023), https://www.ftc.gov/business-guidance/blog/2023/08/business-opportunity-sellersftc-says-ai-stands-allegedly-inaccurate; Michael Atleson, Can’t Lose What You Never Had: Claims About Digital
Ownership and Creation in the Age of Generative AI, FTC Business Blog (Aug. 16, 2023),
https://www.ftc.gov/business-guidance/blog/2023/08/cant-lose-what-you-never-had-claims-about-digital-ownershipcreation-age-generative-ai; Michael Atleson, Watching the Detectives: Suspicious Marketing Claims for Tools That
Spot AI-Generated Content, FTC Business Blog (July 6, 2023), https://www.ftc.gov/businessguidance/blog/2023/07/watching-detectives-suspicious-marketing-claims-tools-spot-ai-generated-content; Elisa
Jillson, Hey, Alexa! What Are You Doing With My Data?, FTC Business Blog (June 13, 2023),
https://www.ftc.gov/business-guidance/blog/2023/06/hey-alexa-what-are-you-doing-my-data; Michael Atleson, The
Luring Test: AI and the Engineering of Consumer Trust, FTC Business Blog (May 1, 2023),
https://www.ftc.gov/business-guidance/blog/2023/05/luring-test-ai-engineering-consumer-trust; Michael Atleson,
Keep Your AI Claims in Check, FTC Business Blog (Feb. 27, 2023), https://www.ftc.gov/businessguidance/blog/2023/02/keep-your-ai-claims-check; Elisa Jillson, Aiming for Truth, Fairness, and Equity in Your
78

18

Summit concerning AI 85 and a roundtable concerning the impact of generative AI on creative
fields. 86 Finally, the Commission wants to ensure that biometric information—a particularly
sensitive category of health data—is being protected, and in 2023, issued a policy statement
identifying factors the FTC will consider in determining whether business’ use of biometric
information or biometric information technologies, including those powered by AI and machine
learning, could be unfair in violation of the FTC Act. 87
84F

85F

86F

C.

Ensuring Fairness for Workers, Entrepreneurs, and Small Businesses

American workers and small businesses are consumers too, and the Commission is taking a
comprehensive approach—through enforcement, rulemaking, and advocacy—to ensuring that
they are not held back by unfair or deceptive practices.
1.

Ensuring Domestic Manufacturers Can Compete Fairly

Marketers making false “Made in USA” claims can expect consequences. Just last
month, the Commission announced its largest-ever action targeting deceptive Made in USA
claims. In an action against Williams-Sonoma, the Commission secured a $3 million civil
penalty and strong injunctive relief to prevent further deception. This action builds on nearly
a dozen actions over the last three years to combat deceptive Made in USA marketing.
For example, in January we charged tractor maker Kubota North America Corporation
with deceptively labeling thousands of imported replacement parts as Made in USA. That action
resulted in a $2 million civil penalty. 88 Other recent Made in USA actions have involved
companies making false claims for imported textile products, 89 glass baking products, 90 and
motocross parts. 91
64F

63F

87F

88F

89F

90F

61F

The FTC continues to carefully monitor the market for false “Made in America” claims
and will use all available tools to ensure scammers who cheat consumers, honest businesses, and
62F

Company’s Use of AI, FTC Business Blog (Apr. 19, 2021), https://www.ftc.gov/businessguidance/blog/2021/04/aiming-truth-fairness-equity-your-companys-use-ai.
85
Press Release, FTC Hosts Virtual Tech Summit on January 25 Focused on Artificial Intelligence (Jan. 24, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/01/ftc-hosts-virtual-tech-summit-january-25-focusedartificial-intelligence.
86
Press Release, FTC to Host Roundtable Discussion on October 4 on Artificial Intelligence and the Creative Fields
(Oct. 3, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/10/ftc-host-roundtable-discussionoctober-4-artificial-intelligence-creative-fields.
87
Policy Statement of the Federal Trade Commission on Biometric Information and Section 5 of the Federal Trade
Commission Act, https://www.ftc.gov/news-events/news/press-releases/2023/05/ftc-warns-about-misuses-biometricinformation-harm-consumers.
88
U.S. v. Kubota North America Corp., No. 3:24-cv-00159-S (N.D. Tex. Jan 25, 2024).
89
See In re Lions Not Sheep Products, LLC, No. C-4772 (July 28, 2022),
https://www.ftc.gov/system/files/ftc_gov/pdf/C4772%20Decision%20and%20Order.pdf (imported apparel products
relabeled as “Made in USA”); In re Electrowarmth Products, LLC, No. C-4779 (Oct. 25, 2022) (imported bedding
products entering the USA pre-labeled as “Made in USA”).
90
In re Instant Brands LLC, Docket No. C-4788 (Mar. 1, 2023) (imported glass measuring cups advertised as
“Made in USA”).
91
In re Cycra, Inc., Docket No. C-4794 (May 2023).

19

American workers face heavy consequences for their lawbreaking. The Commission will also
continue to return significant funds to consumers deceived by these claims whenever possible. 92
91F

2.

Helping Consumers to Repair Their Products and Giving
Independent Repairers a Chance to Compete

In May 2021, the Commission submitted a report to Congress entitled Nixing the Fix: An
FTC Report to Congress on Repair Restrictions. 93 In the report, the Commission found “scant
evidence” to support manufacturers’ justifications for repair restrictions. 94 The Commission
followed this report with an enforcement policy statement and three major actions against
companies for allegedly imposing unlawful repair restrictions on consumers. 95 The Commission
also is exploring other avenues to strengthen consumers’ rights, including by supporting federal
and state efforts to advance the right to repair. 96
92F

93F

94F

70F

95F

3.

Protecting Franchisees from Unfair or Deceptive Practices
71F

The agency continues to take an integrated approach to franchise issues, undertaking
both enforcement and policy initiatives. In 2022, for example, we partnered with the
Department of Justice (“DOJ”) to file a suit against a fast-food chain, alleging that the chain
made false promises and withheld information required by the Franchise Rule to persuade more
than 1,500 consumers, some of them veterans, to purchase franchises. 97 In November 2023, the
72F

74F

96F

73F

See, e.g., redress programs in In re Resident Home LLC, No. C-4767; In re Lions Not Sheep Products, LLC, No.
C-4772, and others.
93
FTC, Nixing the Fix: An FTC Report to Congress on Repair Restrictions (May 2021),
https://www.ftc.gov/system/files/documents/reports/nixing-fix-ftc-report-congress-repairrestrictions/nixing_the_fix_report_final_5521_630pm-508_002.pdf.
94
Id. at 6.
95
Policy Statement of the Federal Trade Commission on Repair Restrictions Imposed by Manufacturers and Sellers
(July 21, 2021),
https://www.ftc.gov/system/files/documents/public_statements/1592330/p194400repairrestrictionspolicystatement.p
df; Press Release, Fed. Trade Comm’n, FTC Takes Action Against Harley-Davidson and Westinghouse for Illegally
Restricting Customers’ Right to Repair (June 23, 2022), https://www.ftc.gov/news-events/news/pressreleases/2022/06/ftc-takes-action-against-harley-davidson-westinghouse-illegally-restricting-customers-right-repair0; Press Release, Fed. Trade Comm’n, FTC Takes Action Against Weber for Illegally Restricting Customers’ Right
to Repair (July 7, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/07/ftc-takes-action-againstweber-illegally-restricting-customers-right-repair.
96
Press Release, Fed. Trade Comm’n, FTC Testifies Before California State Senate on Right to Repair (Apr. 11,
2023), https://www.ftc.gov/news-events/news/press-releases/2023/04/ftc-testifies-california-state-senate-rightrepair; Press Release, Fed. Trade Comm’n, FTC Testifies in Support of Colorado’s Right-to-Repair Law (Feb. 29,
2024), https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-testifies-support-colorados-right-repairlaw; Press Release, Fed. Trade Comm’n, FTC and DOJ File Comment with the U.S. Copyright Office Supporting
Renewal and Expansion of Exemptions Facilitating Consumers’ and Businesses’ Right to Repair Their Own
Products (Mar. 14, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/03/ftc-doj-file-comment-uscopyright-office-supporting-renewal-expansion-exemptions-facilitating#:~:text=The%20FTCDOJ%20submitted%20the%20comment%20as%20the%20Copyright,protection%20measures%20that%20control%
20access%20to%20copyrighted%20content.
97
Press Release, Fed. Trade Comm’n, FTC Sues Burger Franchise Company That Targets Veterans and Others with
False Promises and Misleading Documents (Feb. 8, 2023), https://www.ftc.gov/news-events/news/pressreleases/2022/02/ftc-sues-burger-franchise-company-targets-veterans-others-false-promises-misleading-documents.
92

75F

20

court entered a stipulated permanent injunction against the individual defendant 98 and in
January 2024, the court entered a default judgment against the corporate defendants. 99
97F

98F

In March 2023, the agency issued a Request for Information (“RFI”) related to
franchise agreements and franchisor business practices. 100 The RFI sought information about
the means by which franchisors may exert control over franchisees and their workers. In
addition, last year the FTC launched the consumer education blog series entitled Franchise
Fundamentals in which the FTC highlights for prospective franchisees factors they should
consider when deciding whether to purchase a franchise. The five-part blog series covered:
(1) debunking certain myths about being a franchisee; 101 (2) researching franchise
opportunities; 102 (3) a review of the items listed in franchise disclosure documents; 103 (4) key
steps prospective franchisees should take before joining a franchise; 104 and (5) reducing risk
and reporting to the FTC. 105
99F

100F

101F

102F

103F

104F

Finally, the agency is building on these efforts through policy and advocacy. In
December 2021, the FTC filed an amicus brief in a class action suit by 7-Eleven franchisees in
which the Commission successfully argued that the FTC’s Franchise Rule does not address
whether franchisees are employees under Massachusetts law. Most recently, the agency issued
the Noncompete Clause Rule, which, among other things, prohibits imposing noncompete
clauses on workers, including franchisees’ employees. 106
105F

FTC v. BurgerIM Group USA, Inc., et al., No. CV 22-825 (Feb. 7, 2022). Among other things, the order bans
defendant Loni from selling franchises and includes a suspended monetary judgment of more than $38,000,000 in
consumer redress and $5,000,000 in civil penalties.
99
Id. The order, among other things, bans the defendants from selling franchises and includes a monetary judgment
of more than $48,000,000 for consumer redress and $7,750,000 in civil penalties.
100
Press Release, Fed. Trade Comm’n, Solicitation for Public Comments on Provisions of Franchise Agreements and
Franchisor Business Practices (Mar. 10, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/03/ftcseeks-public-comment-franchisors-exerting-control-over-franchisees-workers.
101
Lesley Fair, Franchise Fundamentals: Debunking five myths about buying a franchise (Apr. 24, 2023),
https://www.ftc.gov/business-guidance/blog/2023/04/franchise-fundamentals-debunking-five-myths-about-buyingfranchise.
102
Lesley Fair, Franchise Fundamentals: Researching franchise opportunities (May 2, 2023),
https://www.ftc.gov/business-guidance/blog/2023/05/franchise-fundamentals-researching-franchise-opportunities.
103
Lesley Fair, Franchise Fundamentals: Taking a deep dive into the Franchise Disclosure Document (May 24,
2023), https://www.ftc.gov/business-guidance/blog/2023/05/franchise-fundamentals-taking-deep-dive-franchisedisclosure-document.
104
Lesley Fair, Franchise Fundamentals: Considering, calculating, and consulting (July 10, 2023),
https://www.ftc.gov/business-guidance/blog/2023/07/franchise-fundamentals-considering-calculating-consulting
105
Lesley Fair, Franchise Fundamentals: Reducing the risks – and reporting if things go awry (Aug. 29, 2023),
https://www.ftc.gov/business-guidance/blog/2023/08/franchise-fundamentals-reducing-risks-reporting-if-things-goawry.
106
Press Release, Fed. Trade Comm’n, FTC Announces Rule Banning Non-competes (April 23, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes.
98

21

IV.

COMPETITION MISSION

To ensure the Commission is faithfully discharging its statutory obligations, the FTC is
using all its authorities to maximize the agency’s impact.
Exercising the Commission’s competition rulemaking authority under Section 6(g) of the
FTC Act is an example of this effort. On April 23, 2024, the Commission issued a final rule that
prohibits new noncompete clauses (“noncompetes”) with workers. The final rule provides that it
is an unfair method of competition—and therefore a violation of Section 5—for employers to
enter into noncompetes with workers. For existing noncompetes, the final rule adopts a different
approach for senior executives than for other workers. For senior executives, existing
noncompetes can remain in force. Existing noncompetes with workers other than senior
executives are not enforceable after the final rule’s effective date. 107
106F

Based on the available evidence, the Commission estimates that approximately one in
five American workers—or approximately 30 million workers—is subject to a noncompete. 108
Noncompetes are restraints on these workers’ economic freedom, as they prevent workers from
switching jobs or starting their own competing businesses. Substantial evidence shows that
noncompetes are reducing the competitiveness of labor markets and depriving businesses of a
talent pool that they need to enter, build, and expand. Substantial evidence also shows that
noncompetes reduce competition in product and service markets, inhibiting new business
formation and innovation. The Commission estimates that the final rule will increase new firm
formation by 2.7%—over 8,500 new businesses each year—and will lead to an average of
17,000-29,000 patents each year. Moreover, the Commission estimates that the final rule will
increase workers’ total earnings by an estimated $400 billion to $488 billion over ten years. 109
107F

108F

D.

Prioritizing Vigorous Merger Enforcement to Combat Consolidation

In partnership with the Antitrust Division at the Department of Justice, the work that the
FTC does to prevent unlawful consolidation is enormously demanding and critically important.
While merger filings have fallen from their recent peak in 2021, Commission staff and resources
are still strained by the short statutory deadlines and the scale and complexity of mergers.
Against this backdrop, the FTC remains committed to identifying and challenging unlawful
mergers and acquisitions.
Last December, the FTC and DOJ jointly issued the 2023 Merger Guidelines, which
describe factors and frameworks the agencies use when reviewing mergers and acquisitions. 110
The 2023 Merger Guidelines are the culmination of a nearly two-year process of public
engagement and reflect market realities, advances in economics and law, and the experiences of
a diverse array of market participants. They emphasize the dynamic and complex nature of
109F

Id.
See Non-Compete Clause Rule, 89 Fed. Reg. 38342 (May 7, 2024),
https://www.federalregister.gov/documents/2024/05/07/2024-09171/non-compete-clause-rule#h-55.
109
Id. Part X.F.6.
110
Press Release, Fed. Trade Comm’n, Federal Trade Commission and Justice Department Release 2023 Merger
Guidelines (Dec. 18, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/12/federal-tradecommission-justice-department-release-2023-merger-guidelines.
107
108

22

competition, as well as the commercial realties of the modern U.S. economy to ensure that
merger enforcement protects competition in all its forms. Relatedly, the Commission has
proposed updates to the premerger review process through changes in the rules implementing the
Hart-Scott-Rodino Act. 111 In the proposed rule, the Commission stated that the proposed
changes would improve the effectiveness and efficiency of mandatory premerger review by
updating the information the agencies receive in Hart-Scott-Rodino (“HSR”) filings. This would
help ensure that public resources are focused on investigating mergers that are most likely to
violate the antitrust laws and should therefore be challenged prior to consummation.
110F

Consistent with these principles, in FY 2023 and to date in FY 2024, the FTC has moved
to challenge major transactions in sectors across the economy, including retail grocery, energy,
healthcare, mortgage technology, and digital markets. 112 This includes filing suit to block nine
mergers outright, 113 as well as scrutinizing 19 other anticompetitive mergers that parties have
abandoned or restructured after the agency indicated competition concerns but before it filed a
complaint. 114
111F

112F

113F

Press Release, Fed. Trade Comm’n, FTC and DOJ Propose Changes to HSR Form for More Effective, Efficient
Merger Review (Jun. 27, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/06/ftc-doj-proposechanges-hsr-form-more-effective-efficient-merger-review.
112
Fed. Trade Comm’n & Dep’t of Justice, Hart-Scott-Rodino Annual Rep. Fiscal Year 2022 (2023),
https://www.ftc.gov/system/files/ftc_gov/pdf/p110014fy2021hsrannualreport.pdf.
113
Press Release, Fed. Trade Comm’n, FTC Moves to Block Tapestry’s Acquisition of Capri (Apr. 22, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-moves-block-tapestrys-acquisition-capri; Press
Release, Fed. Trade Comm’n, FTC Challenges Kroger’s Acquisition of Albertsons (Feb. 26, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-challenges-krogers-acquisition-albertsons; Press
Release, Fed. Trade Comm’n, FTC Sues to Block Novant Health’s Acquisition of Two Hospitals from Community
Health Systems (Jan. 25, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/01/ftc-sues-blocknovant-healths-acquisition-two-hospitals-community-health-systems; Press Release, Fed. Trade Comm’n, FTC
Seeks to Block Sanofi’s Acquisition of Rare Disease Drug that Threatens Sanofi’s Monopoly (Dec. 11, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/12/ftc-seeks-block-sanofis-acquisition-rare-diseasedrug-threatens-sanofis-monopoly; Press Release, Fed. Trade Comm’n, FTC Sues to Block John Muir Health’s
Takeover of San Ramon Regional Medical Center (Nov. 17, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/11/ftc-sues-block-john-muir-healths-takeover-san-ramon-regional-medical-center; Press Release, Fed.
Trade Comm’n, FTC Sues to Block IQVIA’s Acquisition of Propel Media to Prevent Increased Concentration in
Health Care Programmatic Advertising (July 17, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/07/ftc-sues-block-iqvias-acquisition-propel-media-prevent-increased-concentration-health-care; Press
Release, Fed. Trade Comm’n, FTC Sues to Block Biopharmaceutical Giant Amgen from Acquisition That Would
Entrench Monopoly Drugs Used to Treat Two Serious Illnesses (May 16, 2023), https://www.ftc.gov/newsevents/news/press-releases/2023/05/ftc-sues-block-biopharmaceutical-giant-amgen-acquisition-would-entrenchmonopoly-drugs-used-treat; Press Release, Fed. Trade Comm’n, FTC Acts to Block Deal Combining the Two Top
Mortgage Loan Technology Providers (Mar. 9, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/03/ftc-acts-block-deal-combining-two-top-mortgage-loan-technology-providers; Press Release, Fed.
Trade Comm’n, FTC Seeks to Block Microsoft Corp.’s Acquisition of Activision Blizzard, Inc. (Dec. 8. 2022),
https://www.ftc.gov/news-events/news/press-releases/2022/12/ftc-seeks-block-microsoft-corps-acquisitionactivision-blizzard-inc.
114
See, e.g., Press Release, Fed. Trade Comm’n, FTC Statement on Amendment to Global Partners, Gulf Oil
Acquisition (Apr. 9, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-statementamendment-global-partners-gulf-oil-acquisition; Press Release, Fed. Trade Comm’n, Statement Regarding the
111

23

The Commission is particularly concerned about mergers that may cause significant
economy-wide harm. Earlier this year, the Commission challenged Kroger Company’s $24.6
billion acquisition of Albertsons, the largest supermarket deal in U.S. history. The Commission
authorized staff to seek a preliminary injunction in federal court to block the merger, alleging
that it would lead to higher prices for groceries and other essential household items for millions
of Americans. 115 The Commission’s complaint also alleges that the merger would eliminate
competition for workers in certain areas of the country, threatening the ability of employees to
secure higher wages, better benefits, and improved working conditions. A federal district court
hearing is scheduled for August 2024.
114F

The FTC recently took unanimous action to authorize staff to seek an injunction to block
Tapestry, Inc.’s proposed acquisition of Capri Holdings Limited. 116 The Commission’s
complaint alleges that the transaction would eliminate head-to-head competition between
Tapestry’s Coach and Kate Spade branded products and Capri’s Michael Kors branded products,
which includes competition on price, discounts and promotions, innovation, design, marketing,
and advertising. The complaint also alleges that the deal threatens to eliminate the incentive for
the two companies to compete for employees and could negatively affect employees’ wages and
workplace benefits. Post-acquisition, the combined Tapestry and Capri would employ roughly
33,000 employees worldwide. A federal district court hearing is scheduled for September 2024.
115F

The Commission remains committed to stopping illegal mergers, especially in markets
for healthcare services. 117 Those mergers threaten patients with higher cost and lower quality
116F

Termination of Qualcomm’s Proposed Acquisition of Autotalks (Mar. 25, 2024), https://www.ftc.gov/newsevents/news/press-releases/2024/03/statement-regarding-termination-qualcomms-proposed-acquisition-autotalks;
Press Release, Fed. Trade Comm’n, Statement Regarding the Termination of Choice Hotel’s Proposed Takeover of
Wyndham Hotels & Resorts (Mar. 12, 2024), https://www.ftc.gov/news-events/news/pressreleases/2024/03/statement-regarding-termination-choice-hotels-proposed-takeover-wyndham-hotels-resorts; Press
Release, Fed. Trade Comm’n, Statement Regarding the Termination of Amazon’s Proposed Acquisition of iRobot
(Jan. 31, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/01/statement-regarding-terminationamazons-proposed-acquisition-irobot.
115
Press Release, Fed. Trade Comm’n, FTC Challenges Kroger’s Acquisition of Albertsons (Feb. 26, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/02/ftc-challenges-krogers-acquisition-albertsons.
116
Press Release, Fed. Trade Comm’n, FTC Moves to Block Tapestry’s Acquisition of Capri (Apr. 22, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-moves-block-tapestrys-acquisition-capri.
117
See, e.g., Press Release, Fed. Trade Comm’n, FTC Sues to Block Merger Between Utah Healthcare Rivals HCA
Healthcare and Steward Health Care System (June 2, 2022), https://www.ftc.gov/news-events/news/pressreleases/2022/06/ftc-sues-block-merger-between-utah-healthcare-rivals-hca-healthcare-steward-health-care-system;
Press Release, Fed. Trade Comm’n, Federal Trade Commission Opposition to Transaction Leads New Jersey
Healthcare Rivals RWJBarnabas Health and Saint Peter’s Healthcare System to Abandon Proposed Merger (June
14, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/06/federal-trade-commission-oppositiontransaction-leads-new-jersey-healthcare-rivals-rwjbarnabas. Additionally, the two largest healthcare systems in
Rhode Island, Lifespan Corp. and Care New England Health System, called off their merger after the FTC, in
conjunction with the Rhode Island Attorney General, sought to block the merger. See Press Release, Fed. Trade
Comm’n, Statement Regarding Termination of Attempted Merger of Rhode Island’s Two Largest Healthcare
Providers (Mar. 2, 2022), https://www.ftc.gov/news-events/news/press-releases/2022/03/statement-regardingtermination-attempted-merger-rhode-islands-two-largest-healthcare-providers.

24

care 118 and healthcare workers with lower wages and poorer working conditions. Last
November, the Commission took action to block John Muir Health’s proposed $142.5 million
acquisition of sole ownership rights in San Ramon Regional Medical Center, a rival hospital that
also provides care to patients in California’s I-680 corridor. In a joint complaint filed with the
California Attorney General, the Commission alleged the deal would allow John Muir to demand
higher rates at its two hospitals as well as San Ramon Medical for inpatient general acute care
services, which covers a broad range of essential medical, surgical, and diagnostic services that
require an overnight hospital stay. Soon after the Commission filed suit, the companies
abandoned their plans. 119 Similarly, in January, the Commission moved to block Novant Health
Inc.’s $320 million acquisition of two rival hospitals serving North Carolina’s Eastern Lake
Norman Area. The Commission alleges that the acquisition would allow Novant to control nearly
65 percent of inpatient general acute care services in the area, likely leading to higher costs that
are passed on to patients. 120
117F

118F

119F

The Commission is also attentive to acquisitions by pharmaceutical companies that
threaten to raise the cost of life-saving treatments. In May 2023, the Commission moved to block
Amgen’s $27.9 billion acquisition of Horizon Therapeutics. In a joint complaint filed with the
attorneys general from six states, the Commission alleged that the deal would allow Amgen to
leverage its portfolio of blockbuster drugs to entrench the monopoly positions of Horizon
medications used to treat two serious conditions, thyroid eye disease and chronic refractory gout.
In particular, the Commission alleged that as one of the world’s largest biopharmaceutical
companies—with global sales of $24.8 billion and a product portfolio that included blockbuster
drugs such as Enbrel (for rheumatoid arthritis), Otezla (psoriasis), and Prolia (osteoporosis)—
Amgen could further entrench its position to negotiate with insurers and PBMs to gain
advantages over potential rivals through strategies such as cross-market bundling. To settle these
charges, Amgen agreed not to bundle any Amgen product with the two Horizon products,
Tepezza or Krystexxa, or to condition any product rebate on the sale of these drugs. 121
120F

The Commission works to prevent dominant incumbents from acquiring nascent
competitors that are poised to enter the market and challenge their existing monopoly power. In
December 2023, the Commission filed suit to block Sanofi’s proposed acquisition of an
See, e.g., Zack Cooper et al., The Price Ain’t Right? Hospital Prices and Health Spending on the Privately
Insured, 134 Q.J. ECON. 51 (2019); Nancy Beaulieu et al., Changes in Quality of Care after Hospital Mergers and
Acquisitions, 382 NEW ENG. J. MED. 51 (2020). For surveys of the research literature, see, e.g., Martin Gaynor &
Robert Town, The Impact of Hospital Consolidation, THE SYNTHESIS PROJECT, ROBERT WOOD JOHNSON
FOUNDATION (June 2012), http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2012/rwjf73261; Martin
Gaynor, Kate Ho & Robert Town, The Industrial Organization of Health-Care Markets, 53 J. ECON. LITERATURE
235 (2015).
119
See Press Release, Statement Regarding the Termination of John Muir’s Takeover of San Ramon Regional
Medical Center from Tenet Healthcare (Dec. 18, 2023), https://www.ftc.gov/news-events/news/pressreleases/2023/12/statement-regarding-termination-john-muirs-takeover-san-ramon-regional-medical-center-tenet.
120
Press Release, FTC Sues to Block Novant Health’s Acquisition of Two Hospitals from Community Health
Systems (Jan. 25, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/01/ftc-sues-block-novanthealths-acquisition-two-hospitals-community-health-systems.
121
See Press Release, FTC Approves Final Order Settling Horizon Therapeutics Acquisition Challenge (Dec. 14,
2023), https://www.ftc.gov/news-events/news/press-releases/2023/12/ftc-approves-final-order-settling-horizontherapeutics-acquisition-challenge.
118

25

exclusive license to Maze Therapeutics Inc.’s therapy-in-development to treat Pompe disease, a
debilitating and potentially fatal genetic disorder. According to the Commission’s complaint,
Sanofi is a monopoly supplier of Food and Drug Administration (“FDA”) approved drugs to treat
the disease, and Maze’s Phase 2-ready developmental drug—a glycogen synthase 1 inhibitor
called MZE001—threatened to undermine this monopoly as the first oral medication available
for Pompe disease patients. After the Commission filed suit, Sanofi abandoned its plans. 122
121F

The Commission has moved to block mergers involving critical technology products and
services, which so many businesses depend on in today’s economy. For instance, in March 2023,
the Commission challenged the $13.1 billion merger between the two leading providers of
mortgage technology, Intercontinental Exchange, Inc. (“ICE”) and Black Knight. 123 The FTC’s
complaint alleged that the merger would eliminate competition between the merging parties for
certain key mortgage processing platforms and tools used by lenders to secure the best interest
rates for customers, leading to higher prices for lenders and homebuyers. Later that year, to avoid
the costs of further litigation, ICE agreed to divest key Black Knight businesses to a
Commission-approved buyer. 124 The Commission also moved to block the world’s largest health
care data provider, IQVIA Holdings Inc., from acquiring Propel Media, the leading provider of
programmatic advertising for health care products—including prescription drugs—to doctors and
other health care professionals. After a trial on the Commission’s motion for a preliminary
injunction, the court granted the FTC’s request for a preliminary injunction and the parties
abandoned their plans. 125
122F

123F

124F

The Commission has also taken action to protect competition in energy markets. In May
2024, the FTC issued a consent order to resolve antitrust concerns surrounding Exxon Mobil
Corporation’s acquisition of oil producer Pioneer Natural Resources. 126 The FTC’s complaint
alleged that former Pioneer CEO Scott Sheffield had, through public statements and private
communications, attempted to collude with representatives of OPEC and a related cartel of other
oil-producing countries known as OPEC+ to reduce output of oil and gas. The proposed consent
order prevents Sheffield from gaining a seat on Exxon’s board of directors or serving in an
advisory capacity at Exxon. In August 2023, the FTC issued a consent order to resolve antitrust
concerns stemming from a deal between private equity firm Quantum Energy Partners and
125F

Press Release, Statement Regarding the Termination of Sanofi’s Proposed Acquisition of Maze Therapeutics’
Pompe Disease Drug (Dec. 13, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/12/statementregarding-termination-sanofis-proposed-acquisition-maze-therapeutics-pompe-disease-drug.
123
Press Release, Fed. Trade Comm’n, FTC Acts to Block Deal Combining the Two Top Mortgage Loan
Technology Providers (Mar. 9, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/03/ftc-acts-blockdeal-combining-two-top-mortgage-loan-technology-providers.
124
Press Release, FTC Approves Final Order Resolving Antitrust Concerns Surrounding ICE, Black Knight Deal
(Nov. 3, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/11/ftc-approves-final-order-resolvingantitrust-concerns-surrounding-ice-black-knight-deal.
125
Press Release, Fed. Trade Comm’n, “Statement on FTC Win Securing Temporary Block of IQVIA’s Acquisition
of Propel Media” (Jan. 3, 2024), https://www.ftc.gov/news-events/news/pressreleases/2024/01/StatementonFTCWinSecuringTemporaryBlockofIQVIA%E2%80%99sAcquisitionofPropelMedia.
126
Press Release, Fed. Trade Comm’n, FTC Acts to Prevent Interlocking Directorate Arrangement, Anticompetitive
Information Exchange in EQT, Quantum Energy Deal (Aug. 16, 2022), https://www.ftc.gov/newsevents/news/press-releases/2023/08/ftc-acts-prevent-interlocking-directorate-arrangement-anticompetitiveinformation-exchange-eqt.
122

26

natural gas producer EQT Corporation, both direct competitors in the production and sale of
natural gas in the Appalachian Basin, the largest natural gas-producing region in the United
States. 127 According to the FTC’s complaint, the proposed deal would have made Quantum one
of EQT’s largest shareholders and given Quantum, an active investor in natural gas in the region,
a seat on EQT’s board of directors. The Commission had reason to believe this was deal was
illegal because it would provide Quantum with the ability to sway or influence EQT’s
competitive decision-making and to access EQT’s competitively sensitive information. The
FTC’s order enacted ground-breaking structural relief, prohibiting Quantum from occupying the
EQT board seat, requiring Quantum to divest its EQT shares, prohibiting information exchange,
and unwinding a separate joint venture between the two entities, among other provisions. This
action marks the Commission’s first case in 40 years enforcing Section 8 of the Clayton Act,
which prohibits interlocking directorates.
126F

The Commission is also concerned about evolving business strategies, including those
involving a series of acquisitions that can result in unlawful consolidation, even if each
individual transaction seems benign. Roll-up strategies across sectors, including healthcare,
make it especially critical that enforcers look at aggregate trends, not just isolated deals. 128
Consistent with these principles, last fall the Commission charged private equity firm Welsh
Carson with undertaking an illegal roll-up scheme to monopolize anesthesiology markets in
Texas. 129 The Commission alleged that, after buying out nearly every large practice in Texas,
Welsh Carson used its dominance to raise prices for anesthesia services—raking in tens of
millions of extra dollars for their executives at the expense of Texas patients and businesses. We
are also studying closely the empirical work examining the effects of private equity expansion
into healthcare, 130 and have been alarmed by studies showing that some private equity buyouts
have resulted in not just higher prices but also a dramatic fall-off in quality—in some cases
resulting in higher mortality rates. 131
127F

128F

129F

130F

Press Release, Fed. Trade Comm’n, FTC Order Bans Former Pioneer CEO from Exxon Board Seat in ExxonPioneer Deal (May 2, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/05/ftc-order-bans-formerpioneer-ceo-exxon-board-seat-exxon-pioneer-deal.
128
See 2023 Merger Guidelines, supra note 116, Guideline 8.
129
Press Release, Fed. Trade Comm’n, FTC Challenges Private Equity Firm’s Scheme to Suppress Competition in
Anesthesiology Practices Across Texas (Sept. 21, 2023), https://www.ftc.gov/newsevents/news/pressreleases/2023/09/ftc-challenges-private-equity-firms-scheme-suppress-competitionanesthesiology-practices-across.
130
See, e.g., Loren Adler, Conrad Milhaupt & Samuel Valdez, Measuring Private Equity Penetration and
Consolidation in Emergency Medicine and Anesthesiology, 1 HEALTH AFFS. SCHOLAR 1 (June 20, 2023);
Joseph D. Bruch, Sohas Gondi & Zirui Song, Changes in Hospital Income, Use, and Quality Associated With
Private Equity Acquisition, 180 JAMA 1,428 (Nov. 1, 2020); Yashaswini Singh, Zirui Song & Daniel Polsky,
Association of Private Equity Acquisition of Physician Practices With Changes in Health Care Spending and
Utilization, 3 JAMA HEALTH FORUM 1 (Sept. 2, 2022).
131
See, e.g., Atul Gupta, et al., Owners Incentives and Performance in Healthcare: Private Equity Investment in
Nursing Homes, NBER Working Paper 28474 (Aug. 2023),
https://www.nber.org/system/files/working_papers/w28474/w28474.pdf (finding that “private equity ownership
increases short-term mortality by 10%, which implies about 21,000 lives lost due to private equity ownership over
our sample period. Private equity ownership also increases spending by 19%, the vast majority of which is billed to
taxpayers. We observe several channels that help explain the increase in mortality: declines in patient-level health
127

27

As a complement to this strengthened merger enforcement, the FTC is also reassessing
the efficacy of its approach to merger remedies and identifying how to learn from lessons of the
past. Specifically, we strongly disfavor behavioral remedies and will not hesitate to reject
proposed divestitures when our experience and expertise suggests that they cannot fully cure the
underlying harm. For example, prior to filing suit, the FTC rejected a remedy proposal from the
merging parties in the deal between ICE and Black Knight. 132 Only when the companies agreed
to completely divest the business lines that would cause the merger to violate the law did the
Commission agree to accept a settlement to avoid further litigation. Similarly, the Commission
rejected several offers from Amgen before securing the company’s commitment not to engage in
future anticompetitive conduct that would have pushed drug prices higher.
131F

It is also important that companies take seriously their obligation to comply with the
Commission’s orders. Last December, the Commission sued 7-Eleven, Inc., alleging that the
convenience store chain violated a 2018 FTC consent order by acquiring a fuel outlet in St.
Petersburg, Florida without first providing notice to the Commission. 133 The consent order
stemmed from 7-Eleven’s $3.3 billion acquisition from Sunoco of more than 1,000 retail fuel
outlets with attached convenience stores. The FTC is seeking civil penalties for 7-Eleven’s
violation of the consent order to protect the public interest and deter 7-Eleven, a serial acquirer
of retail fuel outlets, and others from flouting future consent orders.
132F

E.

Targeting Anticompetitive Conduct for Maximum Impact

Outside of the merger context, the FTC also continues to identify and stop
anticompetitive conduct. The Commission is continuing to target root causes of anticompetitive
conduct and tackle the most significant harms across markets, particularly by dominant firms
whose business practices affect many Americans.
To this end, the FTC continues to scrutinize digital markets, recognizing that distinct
features of digital technologies have ushered in new market dynamics and business strategies
that require us to update our enforcement approach. Dominant digital platforms have captured
control over key arteries of commerce and communications in ways that can undermine
competition. The FTC’s investigations in digital markets recognize the critical role of data,
network externalities, moat-building strategies, and other key factors to ensure that our
enforcement is reflecting commercial realities.
In September, following a thorough investigation, the Commission and 17 state attorneys
general filed a lawsuit against Amazon alleging that the company has engaged in a course of
exclusionary conduct to maintain its monopoly in the online superstore and the online

measures, such as worsening mobility and elevated use of anti-psychotic medications; declines in nurse availability
per patient; and declines in compliance with federal and state standards of care”).
132
Press Release, Fed. Trade Comm’n, FTC Acts to Block Deal Combining the Two Top Mortgage Loan
Technology Providers (Mar. 9, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/03/ftc-acts-blockdeal-combining-two-top-mortgage-loan-technology-providers.
133
Press Release, Fed. Trade Comm’n, FTC Sues 7-Eleven for Anticompetitive Acquisition in Violation of 2018
Consent Order (Dec. 4, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/12/ftc-sues-7-elevenanticompetitive-acquisition-violation-2018-consent-order.

28

marketplace services markets. 134 The complaint alleges that Amazon’s conduct has stopped
sellers from lowering prices, degraded quality for shoppers, overcharged sellers, stifled
innovation, and prevented rivals from fairly competing. These alleged tactics include antidiscounting measures that deter online sellers from offering lower prices than Amazon,
maintaining higher prices for products across the internet, and conditioning online vendors’
ability to obtain Prime status on the use of Amazon’s costly fulfillment services. This alleged
exclusionary conduct has impacted hundreds of billions of dollars in retail sales every year,
harming hundreds of thousands of online businesses, large and small, and tens of millions of
American households.
133F

The FTC also continues to prosecute its complaint against Meta in a lawsuit that, in
addition to other forms of relief, seeks the divestment of Instagram and WhatsApp. 135 The
FTC’s amended complaint highlights the competitive importance of data and notes that privacy
degradation can constitute an antitrust harm—a fact that the court also acknowledged when it
denied Facebook’s motion to dismiss the FTC’s case. 136
134F

135F

Preventing the abuse of monopoly power that harms American farmers also continues to
be a priority for the Commission. In that vein, the FTC is pursuing the case it filed in September
2022 with a bipartisan coalition of ten state attorneys general that charges the two largest
pesticides manufacturers, Syngenta and Corteva, with maintaining their monopoly positions by
paying distributors to block competitors from selling their cheaper generic products to
farmers. 137 The complaint alleges that Syngenta Crop Protection and Corteva, Inc. rely on payto-block schemes in which distributors get paid only if they limit their dealings with competing
manufacturers. The primary legal issue in this case is whether the antitrust laws bar firms from
extending their patent monopolies through these pay-to-block schemes that restrict distributors
from buying cheaper generic products. But for farmers, the question is more practical: whether
the antitrust laws protect them from abusive monopoly practices that threaten their livelihood by
denying them access to cheaper versions of critical inputs. This case is pending in federal court
in North Carolina. 138
136F

137F

Continuing a long tradition of challenging illegal conduct by pharmaceutical
manufacturers, 139 the FTC has partnered with the Food and Drug Administration (FDA) to
138F

Press Release, Fed. Trade Comm’n, FTC Sues Amazon for Illegally Maintaining Monopoly Power (Sept. 26,
2023), https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-sues-amazon-illegally-maintainingmonopoly-power.
135
Press Release, Fed. Trade Comm’n, FTC Alleges Facebook Resorted to Illegal Buy-or-Bury Scheme to Crush
Competition After String of Failed Attempts to Innovate (Aug. 19, 2021),
https://www.ftc.gov/newsevents/news/press-releases/2021/08/ftc-alleges-facebook-resorted-illegal-buy-or-buryscheme-crush-competitionafter-string-failed.
136
FTC v. Facebook, Inc., 581 F. Supp. 3d 34 (D.D.C. 2022).
137
Press Release, Fed. Trade Comm’n, FTC and State Partners Sue Pesticide Giants Syngenta and Corteva for Using
Illegal Pay-to-Block Scheme to Inflate Prices for Farmers (Sept. 29, 2022), https://www.ftc.gov/newsevents/news/press-releases/2022/09/ftc-state-partners-sue-pesticide-giants-syngenta-corteva-using-illegal-pay-blockscheme-inflate.
138
See FTC v. Syngenta Crop Protection AG, et al., No. 1:22-cv-00828 (M.D.N.C.).
139
The FTC has a long history of suing pharmaceutical companies for illegal pay-for-delay agreements that extend
their patent monopolies and delay generic entry. See FTC v. Actavis, Inc., 570 U.S. 136 (2013).
134

29

challenge certain companies’ patent listings in the FDA’s publication of “Approved Drug
Products with Therapeutic Equivalence Evaluations,” commonly known as the Orange Book. 140
Improper or inaccurate Orange Book patent listings can delay cheaper generic alternatives from
entering the market, keeping brand name drug prices artificially high. Last November, after
notifying the FDA, FTC staff issued warning letters to ten pharmaceutical companies stating that
over a hundred patent listings on medical devices like inhalers and epi-pens may have been
improperly listed in the Orange Book. 141 Soon after, several companies delisted their patents,
opening a path for lower-priced generic versions to enter the market. And three of the four top
asthma inhaler companies have announced plans to lower costs so that, starting in June, the
maximum amount that any American will have to pay for an asthma inhaler is $35. 142 Just a few
weeks ago, FTC staff issued warning letters to another ten pharmaceutical companies related to
over 300 Orange Book listings for an additional 20 brand-name treatments for diabetes, weight
loss, asthma, and COPD drugs, including Novo Nordisk Inc.’s blockbuster drug, Ozempic. 143
FDA Commissioner Robert M. Califf has vowed to continue to engage with the FTC on this
issue so that consumers can get access to the medicines they need.
139F

140F

141F

142F

F.

FTC Research and Policy Development

Alongside enforcement, the Commission is making long-term investments to maximize
the impact of our policy and research work. To tackle the pressing issues of today and tomorrow,
we are broadening our institutional skillsets to ensure we are fully grasping market realities,
especially as the economy becomes increasingly digitized.
Despite a very heavy enforcement workload, we continue to prioritize making substantial
investments to remain faithful to our mandate to engage in policy and research development
pursuant to Section 6 of the FTC Act. Through Section 6(b) of the FTC Act, Congress gave the
agency broad investigative powers to conduct market-wide inquiries that allow us to keep pace
with new business practices and market trends. In seeking to examine and get diverse feedback
from stakeholders about pressing or emergent issues, the agency has also issued RFIs.
The Commission recently issued a report on grocery supply chain disruptions resulting
from the COVID-19 pandemic. 144 The report revealed that large market participants accelerated
143F

Press Release, Fed. Trade Comm’n, FTC Issues Policy Statement on Brand Pharmaceutical (Sept. 14, 2023),
https://www.ftc.gov/news-events/news/pressreleases/2023/09/ftc-issues-policy-statement-brand-pharmaceuticalmanufacturers-improper-listing-patents-fooddrug.
141
Press Release, Fed. Trade Comm’n, FTC Challenges More Than 100 Patents as Improperly Listed in the FDA’s
Orange Book (Nov. 7, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/11/ftc-challenges-more100-patents-improperly-listed-fdas-orange-book.
142
See Reuters, GSK to cap out-of-pocket inhaler costs in US, March 20, 2024,
https://www.reuters.com/business/healthcare-pharmaceuticals/gsk-cap-out-of-pocket-inhaler-costs-us-2024-0320/#:~:text=March%2020%20(Reuters)%20%2D%20British,by%20two%20of%20its%20rivals.
143
Press Release, FTC Expands Patent Listing Challenges, Targeting More Than 300 Junk Listings for Diabetes,
Weight Loss, Asthma and COPD Drugs (Apr. 30, 2024), https://www.ftc.gov/news-events/news/pressreleases/2024/04/ftc-expands-patent-listing-challenges-targeting-more-300-junk-listings-diabetes-weight-lossasthma.
144
Press Release, Fed. Trade Comm’n, FTC Releases Report on Grocery Supply Chain Disruptions (Mar. 21, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/03/ftc-releases-report-grocery-supply-chain-disruptions.
140

30

and distorted the negative effects associated with supply chain disruptions. The FTC’s report also
examined how supply chain disruptions affected competition among retailers, wholesalers, and
producers, as well as the impacts on consumers and businesses. The report found that consumers
felt the negative effects of supply chain disruptions in the form of sky-high prices for groceries
and product shortages for essentials, like toilet paper. Notably, consumers are still facing the
negative impact of the pandemic’s price hikes, as the Commission’s report finds that some in the
grocery retail industry seem to have used rising costs as an opportunity to further raise prices to
increase their profits, which remain elevated. As the report explains, supply chain disruptions did
not equally impact every retailer, wholesaler, or producer. Instead, smaller firms, especially
smaller grocery retailers, disproportionately faced difficulties obtaining products compared to
larger firms. Some larger firms were better able to protect their product supply compared to
smaller competitors. Taken together, the report’s findings reveal how supply chain bottlenecks
can leave markets exposed to major supply chain shocks—and that those shocks, in turn, can
allow major firms to exploit and further entrench their dominance.
One focus of research and policy for the Commission has been healthcare markets. For
example, in June 2022, the Commission authorized a 6(b) study of the contracting practices of
pharmacy benefits managers (“PBMs”). 145 In May and June 2023, the FTC expanded its PBM
study by issuing three additional compulsory orders to companies that perform rebate services
for their affiliated PBMs. 146 This important study will shine a light on the opaque operations of
these large pharmacy middlemen who can dictate the pricing and access to life-saving drugs for
so many Americans.
144F

145F

Based on an RFI relating to the infant formula crisis, in March, the Commission issued a
report on market factors relevant to infant formula supply disruptions, which details aspects of
the U.S. infant formula market that rendered it vulnerable to supply disruptions in 2022. 147 The
report also outlines considerations for policymakers to help create a more resilient infant formula
market going forward.
146F

Press Release, Fed. Trade Comm’n, FTC Launches Inquiry Into Prescription Drug Middlemen Industry (June 7,
2022), https://www.ftc.gov/news-events/news/press-releases/2022/06/ftc-launches-inquiry-prescription-drugmiddlemen-industry. Consistent with the competition concerns that prompted the PBM study, the Commission
issued a “Policy Statement on Rebates and Fees in Exchange for Excluding Lower Cost Products,” putting the drug
industry on notice that paying rebates and fees to exclude competition from formularies violates the antitrust laws.
Press Release, Fed. Trade Comm’n, FTC to Ramp Up Enforcement Against Any Illegal Rebate Schemes, Bribes to
Prescription Drug Middlemen that Block Cheaper Drugs (June 16, 2022), http://www.ftc.gov/newsevents/news/press-releases/2022/06/ftc-ramp-up-enforcement-against-illegal-rebate-schemes.
146
Press Release, Fed. Trade Comm’n, FTC Deepens Inquiry into Prescription Drug Middlemen (May 17, 2023),
https://www.ftc.gov/news-events/news/press-releases/2023/05/ftc-deepens-inquiry-prescription-drug-middlemen;
Press Release, Fed. Trade Comm’n, FTC Further Expands Inquiry into Prescription Drug Middlemen Industry
Practices (June 8, 2023), Launches Inquiry Into Prescription Drug Middlemen Industry (June 7, 2022),
https://www.ftc.gov/news-events/news/press-releases/2023/06/ftc-further-expands-inquiry-prescriptiondrugmiddlemen-industry-practices.
147
Press Release, Fed. Trade Comm’n, FTC Issues Infant Formula Supply Disruptions Report (Mar. 13, 2024),
https://www.ftc.gov/news-events/news/press-releases/2024/03/ftc-issues-infant-formula-supply-disruptions-report.
145

31

In November 2023, the FTC staff published a summary of responses from the RFI on
cloud computing. 148 The Commission is gathering information to inform our understanding of
key features of cloud computing; the potential for outages from large cloud providers to have
widespread impact on large parts of the economy; security risks; and issues related to market
power and business practices affecting competition.
147F

In January, the Commission launched an inquiry into generative AI investments and
partnerships, issuing orders to five companies requiring them to provide information regarding
recent investments and partnerships involving generative AI companies and major cloud service
providers. The agency’s 6(b) inquiry will scrutinize corporate partnerships and investments with
AI providers to build a better internal understanding of these relationships and their impact on
the competitive landscap

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3Af4c7d4b358103443. Public record. Not legal advice.