Department of Justice (DOJ)
On Friday, December 27, 2024, the Justice Department issued a final rule to address “urgent national security risks posed by access to U.S. sensitive personal and government-related data from countries of concern and covered persons.” The final rule was posted publicly and addresses “continued efforts of countries of concern to access, exploit, and weaponize Americans’ bulk sensitive personal and U.S. government-related data.”
This rule reflects the Department’s careful consideration of the comments received in response to the March 5, 2024 Advance Notice of Proposed Rulemaking (“ANPRM”) and the October 29, 2024 Notice of Proposed Rulemaking (“NPRM”) as well as feedback from hundreds of representatives from companies and organizations and extensive consultation with dozens of other U.S. Government agencies and offices, along with engagement foreign partners.
As previewed in the ANPRM and NPRM, the final rule establishes a national-security program within the Justice Department’s National Security Division that restricts and in some instances prohibits U.S. persons from engaging in certain categories of data transactions with six “countries of concern” (including covered persons and entities subject to coercion by those countries) because such transactions pose unacceptable national-security risks of giving those countries, entities, or persons access to U.S. bulk sensitive personal data or government-related data.
The rule will become effective 90 days after publication. Certain affirmative compliance obligations will be phased in with a later effective date of 270 days after publication.
The Department also intends to continue engaging with industry and other stakeholders to determine whether any general licenses are appropriate as this program goes into effect.
The Federal Trade Commission and the Justice Department’s Antitrust Division recently participated in the G7 Competition Authorities and Policymakers Summit to discuss ways to ensure competition in artificial intelligence (AI)-related technologies, products, and applications. At the conclusion of the summit, FTC Chair Lina M. Khan and other representatives of the G7 competition authorities and government policymakers issued a Communiqué highlighting potential competition concerns in AI-related markets and identifying guiding principles to ensure fair competition across AI markets.
The Communiqué underscores the important role that competition authorities and policymakers have in addressing competitive threats. As the Communiqué outlines, concentrated market power in AI-related markets and possible collusion or improper information sharing using AI technologies require careful vigilance and vigorous and timely competition enforcement. The G7 competition authorities and policymakers reaffirmed that they are working to ensure there is open and fair competition in digital markets and AI and seeking to ensure that the benefits of AI are fully realized and widely available across society.
The summit was convened by the G7 Industry, Technology and Digital Ministerial Declaration and hosted in Rome by the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato) in conjunction with Italy’s rotating G7 presidency.
The Federal Trade Commission works with counterpart agencies to promote sound antitrust, consumer protection, and data privacy enforcement and policy.
Richard B. Newman is an FTC defense lawyer at Hinch Newman LLP.
Informational purposes only. Not legal advice.
On August 30, 2024, the Federal Trade Commission announced that the Department of Justice filed a complaint upon notification and referral from the FTC against a surveillance camera company that allegedly failed to provide reasonable security for the personal information it collected—including 150,000 live camera feeds in sensitive areas like psychiatric hospitals, women’s health clinics, elementary schools and prison cells.
According to the complaint, these alleged failures allowed a threat actor – in March 2021 – to remotely access the company’s customer camera feeds and watch consumers live, without their knowledge or consent. Despite the purported invasive security breach, the company allegedly remained unaware of the threat actor’s exploration until the threat actor self-reported the hack to the media.
According to the FTC, the vast majority of the company’s customers throughout the U.S. and abroad include small businesses spanning multiple industries, including education, government, healthcare, and hospitality. The FTC says that the compromise went beyond the company’s security cameras. According to the complaint, the threat actor also exfiltrated data about the company’s own customers, mostly businesses, including, but not limited to, names, email addresses, physical addresses, usernames and password hashes, and geolocation data for security cameras.
The company’s alleged security failures “are in stark contrast to its many public promises to keep personal and customer information safe,” according to the FTC.
According to the complaint, the company’s own privacy policy claimed that the company “take[s] customer privacy seriously,” and “[w]e will use best-in-class data security tools and best practices to keep your data safe and protect [the company’s] products from unauthorized access.”
The FTC also states that the company’s publicly promised that it was HIPAA certified or compliant and that it followed the EU-U.S.
The Federal Trade Commission and the U.S. Department of Justice possess both overlapping and distinct authority to challenge anti-competitive practices under federal law. The FTC enforces, without limitation, the FTC Act and the Clayton Act. The DoJ enforces, without limitation, the Sherman Act and the Clayton Act. The FTC also may refer evidence of criminal antitrust violations to the DoJ. Only the DoJ can obtain criminal sanctions.
The FTC primarily focuses on policing deceptive or unfair business practices, and from unfair methods of competition. The DoJ enforces a much wider range of legal regulations on behalf of the federal government. Sometimes, the federal agencies cooperate on antitrust issues. There is a clearance process to determine which federal agency will investigate and enforce a particular matter.
FTC and Department of Justice Announce Public Strike Force on Unfair and Illegal Pricing Meeting
On July 26, 2024, the Federal Trade Commission and U.S. Justice Department announced the first public meeting of the Strike Force on Unfair and Illegal Pricing on Thursday, August 1, 2024, to discuss Strike Force enforcement actions taken to lower prices for Americans.
The meeting will include an open-press session with remarks by FTC attorney and Chair Lina M. Khan, Associate Attorney General Benjamin C. Mizer, Assistant Attorney General for the Antitrust Division Jonathan S. Kanter, and Principal Deputy Assistant Attorney General for the Civil Division Brian M. Boynton. Senior officials from other agencies will then offer remarks as well.
On June 18, 2024, the Federal Trade Commission released a statement regarding the agency’s referral to the Department of Justice a complaint against TikTok, the successor to Musical.ly, and its parent company ByteDance Ltd.
The FTC’s investigation of these companies began in connection with its order compliance review of Musical.ly following a 2019 settlement with the company for alleged violations of the Children’s Online Privacy Protection Act. The FTC also investigated additional potential violations of COPPA and the FTC Act, according to the statement.
The investigation uncovered reason to believe named defendants are violating or are about to violate the law and that a proceeding is in the public interest, so the FTC has voted to refer a complaint to the DOJ, according to the procedures outlined in the FTC Act.
The FTC does not typically make public the fact that it has referred a complaint. Here, however, the agency states that it has “determined that doing so here is in the public
interest.”
Richard B. Newman is an FTC defense lawyer at Hinch Newman LLP. Follow FTC defense attorney on X.
Informational purposes only. Not legal advice. May be considered attorney advertising.
On August 14, 2023, the Federal Trade Commission announced that it will require Experian Consumer Services, which offers consumers access to their Experian credit information, to pay $650,000 to settle charges it sent consumers unsolicited email without offering them a way to opt out of such messages, as required under the CAN-SPAM Act.
In a complaint filed by the Department of Justice on behalf of the FTC, the agency says that California-based Experian Consumer Services (ECS), also known as ConsumerInfo.com, Inc., spammed consumers with marketing offers after they signed up for an account with the company in order to manage their Experian credit report information.
In the emails, the FTC alleges that the company failed to provide clear and conspicuous notice of consumers’ ability to opt out of receiving additional marketing messages and a mechanism for doing so, in violation of the CAN-SPAM Act, according to the complaint.
“Signing up for a membership doesn’t mean you’re signing up for unwanted email, especially when all you’re trying to do is freeze your credit to protect your identity,” said FTC lawyer Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “You always have the right to unsubscribe from marketing messages, and the FTC takes enforcing that right seriously.”
Consumers who wish to freeze or take other steps to manage their Experian credit information online must create an account with ECS. The complaint charges that consumers who signed up for a free membership account with ECS were then sent emails promoting Experian’s products and services such as one touting Experian Boost,
On April 14, 2023, the U.S. Supreme Court provided FTC action defendants with the ability to directly challenge the structural constitutionality of the Federal Trade Commission (and the Securities and Exchange Commission) in federal court without having to wind their way through pre-enforcement administrative proceedings that many believe deprive defendants of due process.
Axon Enterprise, Inc. v. FTC (consolidated with SEC v. Cochran, a similar case involving the Securities and Exchange Commission).
Like the Supreme Court’s recent blow to the FTC’s authority in AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341 (2021), the Axon decision was unanimous.
At issue in Axon was whether defendants in an agency’s administrative enforcement action are permitted to challenge its structure or processes in a federal district court or must first endure the agency’s administrative proceeding, which may be costly and time consuming.
By ruling in the affirmative, the Supreme Court has once again brought into question the scope and legitimacy of the agencies’ respective enforcement authority.
The FTC administrative adjudication process, in part, consists of the FTC’s commissioners voting to initiate complaints. Then, FTC staff investigates and prosecutes those complaints before the agency’s Administrative Law Judge. The commissioners themselves then assess (and virtually always affirm) the complaints that they voted to initiate. That is an enormous amount of discretion bestowed upon the prosecutor, judge and jury. Defendants are only permitted to appeal in federal court once all three steps are completed.
The Federal Trade Commission recently announced that it has taken action to stop an alleged interconnected web of operations purportedly responsible for delivering tens of millions of unwanted Voice Over Internet Protocol and ringless voicemail bogus debt service robocalls to consumers nationwide.
The Department of Justice (DOJ) filed the complaint in federal court on the FTC’s behalf.
The DOJ also filed a proposed consent order against one of the companies and individuals involved in the operation, which would, if approved by the court, bar them from making further misrepresentations about debt relief services and ordering them to comply with the Telemarketing Sales Rule.
“This case targets the ecosystem of companies who perpetrate illegal telemarketing to cheat American consumers who are struggling financially,” said FTC lawyer Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue to take aggressive action to protect consumers from the scourge of illegal robocalls.”
“The Department of Justice is committed to stopping individuals and companies from making illegal robocalls and peddling predatory debt relief services,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to work with the FTC to enforce the FTC Act and the Telemarketing Sales Rule against those who use misleading sales tactics to prey on consumers.”
According to the complaint, Stratics Networks, Inc.’s outbound calling service enabled its clients to route and transmit millions of robocalls using VoIP technology.
On January 30, 2023, the Criminal Liaison Unit of the Federal Trade Commission’s Bureau of Consumer Protection (BCP CLU) issued its 2022 Criminal Liaison Unit Report, describing the history of the BCP CLU, its program operations, and major accomplishments over the past five years. In an effort to ensure criminal prosecution of appropriate consumer fraud cases, the BCP CLU refers cases to partner agencies with criminal jurisdiction, including U.S. Attorney’s Offices across the county, Divisions of the Department of Justice (DOJ) and others.
“For the worst individual and corporate wrongdoers, civil remedies may not be sufficient to protect the public from further harm,” said FTC lawyer Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Government works best when agencies work together toward a common goal, and we are proud that our partnership with criminal enforcers leads to justice for bad actors and a safer marketplace for us all.”
The FTC, which is not authorized to bring criminal law enforcement actions, established the BCP CLU in 2002 to bring the “worst of the worst” offenders to the attention of prosecutors. As it grew, the BCP CLU worked to establish relationships with prosecutors and educate them about the Commission’s consumer fraud and deception cases. Success in initial cases proved that criminal consumer protection cases were not only viable, but could result in substantial prison sentences.
Over the past five years, the report notes, BCP CLU referrals have led to criminal charges against 107 new defendants,
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Hinch Newman LLP’s advertising and marketing practice includes successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. The firm possesses superior knowledge and deep legal experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. Through these advertising and marketing law updates, Hinch Newman provides commentary, news and analysis on issues and trends concerning developments of interest to digital marketers, including FTC and state attorneys general advertising compliance, civil investigative demands (CIDs), and administrative/judicial process. This blog is sponsored by Hinch Newman LLP.