In March 2023, the Federal Trade Commission announced a number of consumer protection actions involving data privacy, COVID health claims, a robocall debt relief pitch scheme, and alleged harmful noncompete restrictions. The FTC also announced that it intends to host a workshop on “recyclable” claims as part of its ongoing review of the agency’s Green Guides.

FTC Bans BetterHelp from Revealing Consumers’ Data, Including Sensitive Mental Health Information, to Facebook and Others for Targeted Advertising

BetterHelp offers online counseling services under several names, including BetterHelp Counseling, Faithful Counseling focused on Christians, Teen Counseling, which caters to teens and requires parental consent, and Pride Counseling, which is targeted to the LGBTQ community.

The FTC recently announced that it has issued a proposed order banning online counseling service BetterHelp, Inc. from sharing consumers’ health data, including sensitive information about mental health challenges, for advertising.

At several points in the signup process, BetterHelp allegedly promised consumers that it would not use or disclose their personal health data except for limited purposes, such as to provide counseling services. Despite these promises, BetterHelp allegedly used and revealed consumers’ email addresses, IP addresses, and health questionnaire information to Facebook, Snapchat, Criteo, and Pinterest for advertising purposes, according to the FTC’s complaint.

The proposed order also requires the company to pay $7.8 million to consumers to settle charges that it revealed consumers’ sensitive data to third parties such as Facebook and Snapchat for advertising after promising to keep such data private.

FTC Takes Action Against doTerra Distributors for Alleged False COVID-19 Health Claims

The FTC has recently announced that it initiated legal action against three current and former high-level distributors – so-called “Wellness Advocates” – of the multi-level marketing company doTERRA International, LLC, for allegedly making claims that the company’s essential oils and dietary supplements could treat, prevent or cure COVID-19.

The distributors, all current or former healthcare practitioners, purportedly made the claims in a series of webinars in early 2022 and touted their medical expertise in recommending the products.

“Those making baseless claims that essential oils and supplements can prevent or treat COVID-19 will pay a price,” said FTC attorney Sam Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s actions against doTERRA ‘wellness advocates’ should be a reminder that distributors for multilevel marketing companies can face consequences for making deceptive claims.”

The three complaints, filed by the Department of Justice on behalf of the FTC, allege that the defendants made numerous claims in violation of the FTC Act and the COVID-19 Consumer Protection Act.

The three complaints, filed by the Department of Justice on behalf of the FTC, allege that the defendants made numerous claims about the ability of various doTERRA products to prevent, treat, or cure COVID-19, in violation of the FTC Act and the COVID-19 Consumer Protection Act. The defendants are:

The defendants have agreed to court orders that will require them to:

• Stop making unfounded COVID claims: The orders prohibit the defendants from making any claims that a product can prevent, cure, or treat COVID-19 unless the Food and Drug Administration has approved the claim.

• Back up any health claims: The orders require the defendants to have reliable human clinical testing to support claims about other diseases, require them to have scientific proof for any other health claims they make, and prohibit them from mispresenting that a product’s benefits are scientifically or clinically proven.

• Pay a $15,000 financial penalty: Each defendant will be required to pay a $15,000 civil penalty.

The DOJ filed the complaints and proposed consent decrees on behalf of the Commission in U.S. District Court as follows: in the Northern District of Georgia; in the District of Utah; and in the Central District of California.

The FTC staff attorneys on this case are Christine DeLorme and Tiffany Woo of the Bureau of Consumer Protection.

FTC Sues to Stop Interconnected Web of VoIP Service Providers Allegedly Carrying Robocalls Pitching Phony Debt Relief Services

The Federal Trade Commission also recently announced that it filed a lawsuit to stop an alleged interconnected web of operations responsible for delivering tens of millions of unwanted Voice Over Internet Protocol (VoIP) and ringless voicemail (RVM) phony 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 (TSR).

“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. From at least 2013 to 2020, Stratics sold its wholesale SIP termination service to other VoIP technology service providers, including Texas-based defendants Netlatitude, Inc. and its owner, and many others. Stratics also sold access to its platform for delivering RVM, a call that goes to a consumer’s voicemail without ringing their phone. Netlatitude used Stratics’ wholesale SIP termination services to operate its own RVM service, which it then sold to a foreign telemarketer of debt relief services.

Other Stratics customers included lead generation telemarketers that allegedly used Stratics’ services to blast illegal robocalls to millions of consumers nationwide. Despite receiving repeated notices from USTelecom’s Industry Traceback Group that some customers’ robocall traffic was likely illegal, the complaint outlines how Stratics continued to assist a California-based debt relief scheme, which included a specific defendant, and the related companies of Atlas Marketing Partners, Inc.; Atlas Investment Ventures, LLC; Tek Ventures, LLC, doing business as Provident Solutions, and the companies’ owners.

The complaint alleges that these companies used Stratics’ RVM service to run an illegal robocall campaign pitching supposed debt relief services to consumers. Another defendant, Nevada-based Ace Business Solutions LLC and its owner, allegedly provided debt validation letter writing services and payment processing as part of Provident Solutions’ debt relief scam.

The complaint alleges that this web of interconnected platform providers, lead generators, telemarketers, and debt relief service sellers respectively violated the TSR in various individual ways, including: making misrepresentations regarding debt relief services; assisting and facilitating violations of the TSR by knowing, or consciously avoiding knowing, that their customers’ operations caused the initiation of telemarketing calls to numbers on the FTC’s Do Not Call Registry, as well as calls in which telemarketers failed to disclose the identity of the seller and services being offered; initiating illegal pre-recorded telemarketing messages, commonly known as robocalls; failing to make oral disclosures required by the TSR, including the identity of the debt relief sellers; misrepresenting material aspects of debt relief services; charging or receiving a fee from consumers before providing a debt relief service.

One set of defendants has agreed to settle the complaint in this case. A proposed court order announced today, would, if approved by the court, prohibit the debt relief lead generator and the company’s owner from making the misrepresentations alleged in the complaint and from violating the TSR. It also requires the defendants to review the methods used by their existing lead generators, determine and obtain leads sold or offered to them illegally, and stop buying leads from any lead generator found to have sold them such leads.

Finally, the proposed consent order imposes a $3.38 million judgment against the defendants, which will be partially suspended based on their inability to pay, after they pay the FTC $7,500 to be used for consumer redress. If they are later found to have misrepresented their financial condition, the full amount will immediately become due.

FTC Takes Action Against Glass Company That Allegedly Imposed Harmful Noncompete Restrictions on Its Workers

The FTC ordered manufacturing company Anchor Glass Container Corp. to drop noncompete restrictions that it imposed on more than 300 workers.

In a complaint filed against Anchor and its owners, Lynx Finance GP, LLC and Lynx Finance L.P., the FTC said Anchor illegally imposed noncompete restrictions on more than 300 workers across a variety of positions, including salaried employees who work with the plants’ furnaces and forming equipment and in other glass production, engineering, and quality assurance positions.

The complaint alleges the company illegally imposed one-year noncompete restrictions that constituted an unfair method of competition under Section 5 of the FTC Act.

The agency’s order bans Anchor from entering into, maintaining, enforcing or attempting to enforce, or threatening to enforce noncompete restrictions on relevant workers. For the next 10 years, Anchor must provide a clear and conspicuous notice to any new relevant employees that they may freely seek or accept a job with any company or person, run their own business, or compete with Anchor at any time following their employment.

The FTC has voted to extend until April 19, 2023 the public comment period for its proposed new rule to ban employers from imposing noncompetes on their workers. The proposed rule, announced by the FTC in January, is based on a preliminary finding that noncompetes constitute an unfair method of competition and therefore violate Section 5 of the FTC Act.

FTC To Host Workshop on “Recyclable” Claims As Part of Its Ongoing Review of the Agency’s Green Guides

The FTC will host a workshop on May 23, 2023 in Washington, DC to examine “recyclable” advertising claims as part of its recently announced review of the Guides for the Use of Environmental Marketing Claims, commonly known as the Green Guides.

The workshop, Talking Trash at the FTC: Recyclable Claims and the Green Guides, is free and open to the public, and pre-registration is not required. According to the Federal Register notice, the half-day event will cover topics including: the current state of recycling practices and recycling-related advertising in the United States, consumer perception of current and emerging recycling-related claims, and the need for any updates or other changes to the Green Guides related to recycling claims. The event likely will include panels on these subjects, and a more detailed agenda will be published in the coming months.