Federal and Regulatory Legal Actions

The Federal Trade Commission (FTC) has opened an investigation into manufacturers of infant formula to determine if the various companies engaged in collusion on their bids for state contracts, in violation of antitrust laws.

Companies bid against one another to win contracts to supply food for the Women, Infants and Children program, which includes infant formula. The FTC says any collusion on bids would likely increase the cost of the product.

Abbott Labs, the maker of Similac infant formula, told the Wall Street Journal that it is cooperating with the investigation. Lawyers for the company have said they are unaware of any collusion and are in the dark about what triggered the probe.

The industry has drawn regulator’s attention since the COVID-19 pandemic, when a shutdown of Abbott’s main production facility, coupled with supply chain issues, created shortages in the infant formula market.

In February 2022, Abbott recalled powder formulas, including Similac, Alimentum, and EleCare, that were manufactured at its Sturgis, Mich., plant. The firm said it had received complaints related to Cronobacter sakazakii or Salmonella Newport in infants. Cronobacter sakazakii can cause fever, poor feeding, excessive crying, or low energy in infants.

In June, Abbott Labs reopened the Sturgis facility but it took several weeks to make it fully operational.

The Federal Trade Commission (FTC) has finalized its recent order and will require Epic Games, the company that makes the popular Fortnite video game, to pay $425 million to consumers.

Back in December, the FTC and Epic games reached an agreement to settle charges that the company employed dark patterns to trick users to make unwanted purchases. The FTC also charged that the company allowed children to run up large bills without their parent’s approval.

The company agreed to pay the FTC $520 million, with $425 million going to reimburse consumers.

“Fortnite’s counterintuitive, inconsistent, and confusing button configuration led players to incur unwanted charges based on the press of a single button,” the agency charged. “The company also made it easy for children to make purchases while playing Fortnite without requiring any parental consent.”

When players complained or tried to dispute the charges, the FTC charged Epic locked them out of their accounts.

What to do

If you or your children played Fortnite and ended up buying things you didn’t want, you’re probably due a refund. The FTC is in the process of setting up its compensation system.

For starters, refunds will be made to:

• Parents whose children made an unauthorized credit card purchase in the Epic Games Store between January 2017 and November 2018

• Fortnite players who were charged in-game currency (V-Bucks) for unwanted in-game items (such as cosmetics, llamas, or battle passes) between January 2017 and September 2022

• Fortnite players whose accounts were locked between January 2017 and September 2022 after disputing unauthorized charges with their credit card companies.

The FTC said it will send emails to consumers who made in-game purchases when it has developed instructions for applying for a refund. However, if you think you are eligible you should bookmark www.FTC.gov/Fortnite and check it from time to time.

It costs nothing to apply for a refund, so if you are contacted by someone claiming to be from the FTC and requesting payment, the FTC said you are dealing with a scammer. 

The Federal Trade Commission (FTC) has announced how it plans to distribute $245 million of a $520 million settlement with Epic Games, the maker of the Fortnite video game. Players and parents of children who play the game may be in line for compensation.

According to the FTC, the company charged parents and gamers of all ages for unwanted items and locked the accounts of customers who disputed wrongful charges with their credit card companies.

The FTC plans to make refunds available to:

• Parents whose children made an unauthorized credit card purchase in the Epic Games Store between January 2017 and November 2018

• Fortnite players who were charged in-game currency (V-Bucks) for unwanted in-game items (such as cosmetics, llamas, or battle passes) between January 2017 and September 2022

• Fortnite players whose accounts were locked between January 2017 and September 2022 after disputing unauthorized charges with their credit card companies.

No action is required right now

The agency has not disclosed when it plans to begin the distribution of the funds. If you believe that you are eligible for a payment, you don't need to do anything right now. 

“When we have more information about the refund program, we will post updates here and send email notices to customers who paid for in-game purchases,” the FTC said.

Officials suggest that people who think they are eligible bookmark FTC.gov/Fortnite and check back often for updates. You can also sign up here to get email updates about the refund program.

Since a lot of money is involved and so many people may be eligible for compensation, the FTC warns consumers to beware of scammers who try to take advantage of the situation. The FTC said it never asks you to pay to file a claim or get a refund. Don't pay anyone who promises you an FTC refund in exchange for a fee.

If you have been a Vonage customer and found it nearly impossible to cancel the service, the Federal Trade Commission (FTC) may have some money for you.

The agency has gone to court to stop Vonage, which provides internet phone service, from imposing “junk” fees and creating obstacles for those who try to cancel their service. The FTC alleges that the company used dark patterns to make it difficult for consumers to cancel and often continued to illegally charge them even after they spoke to an agent directly and requested cancellation. 

The FTC has negotiated a court order that, if approved, would require Vonage to pay $100 million in refunds to consumers harmed by the company’s actions. The company would also be required to make its cancellation process simple and transparent, and stop charging consumers without their consent.

“Today the FTC delivers on our commitment to protect consumers from illegal dark pattern tactics by companies that prevent consumers from canceling their services,” said Samuel Levine, director of the FTC's Bureau of Consumer Protection. “This record-breaking settlement should remind companies that they must make cancellation easy or face serious legal consequences.”

The FTC has previously served notice on companies that sell subscriptions that they must offer “clear and conspicuous” instructions for customers who want to cancel the service. A year ago the FTC issued a new policy enforcement statement that warned companies not to deploy illegal dark patterns that trick or trap consumers into subscription services. 

Rising number of complaints

At the time, the FTC said the move was a response to a rising number of complaints about the financial harms caused by deceptive sign-up tactics, including unauthorized charges or ongoing billing that is impossible to cancel.

The FTC’s policy statement puts companies on notice that they will face legal action if their sign-up process fails to provide clear, up-front information, obtain consumers’ informed consent, and make cancellation easy. The FTC said the action against Vonage is a result of that policy.

The FTC complaint against Vonage contends the company has harmed consumers by:

• Eliminating cancelation options

• Making the cancelation process difficult to complete

• Imposing “junk” fees when customers do cancel

• Continuing the charge customers even after they cancel

If the agreement is approved by the court, Vonage will pay the FTC $100 million. The agency will then distribute the money to consumers.

Can’t pay your mortgage? The Federal Trade Commission (FTC) warns homeowners who are trying to keep the proverbial wolf away from their door that there are companies who say they can help out, but they’re only helping themselves.

The FTC and California’s Department of Financial Protection and Innovation (DFPI) have secured a court order, in response to their lawsuit, suspending operations by Home Matters USA, Academy Home Services, Atlantic Pacific Service Group, Golden Home Services America, as well as their owners.

The court agreed there was strong evidence that people were illegally charged thousands of dollars up-front for the false promise that the company would help the homeowner out by negotiating lower interest rates or monthly payments on their mortgage.

The suit also claimed Home Matters led people to believe the company was connected with government mortgage relief programs and COVID-19 relief programs that the company said it could enroll them in.

Additionally, the FTC said that Home Matters told people to stop paying and communicating with their mortgage companies for three months, the estimated time the company said it would take to get the modification completed.

FTC said that in many cases, Home Matters never got the promised modification. It said people not only lost the money they paid Home Matters, but also had to pay their mortgage lenders more to avoid foreclosure.

Adding insult to injury, the agency said many people ended up with lower credit scores, had their homes placed in foreclosure, or even lost their homes completely.

In making its ruling the U.S. District Court for Central California ordered Home Matters and its affiliates to temporarily suspend operations pending trial or settlement. 

"Weighing the equities and considering Plaintiffs’ likelihood of ultimate success on the merits, a temporary restraining order with an asset freeze, the appointment of a temporary receiver, expedited discovery, and other equitable relief is in the public interest, the court ruled. 

If making a mortgage payment becomes a problem…

FTC guidelines state "It's illegal to charge upfront fees. You can't collect money from a customer unless you deliver – and the customer agrees to – a written offer of mortgage relief from the customer's lender or servicer." 

So, what’s someone to do in this situation? Among the pieces of advice the agency passes out, one word to the wise is that anyone who’s having trouble paying their mortgage or has received a foreclosure notice should first reach out to their mortgage servicer, even if they’re already in foreclosure. 

Another safety net is talking to a certified housing counselor for free. The U.S. Department of Housing and Urban Development (HUD) provides a searchable list of approved housing counseling agencies across the country and can be accessed here.

The Federal Trade Commission (FTC) has filed an administrative complaint against HomeAdvisor over allegations that the company misrepresented the quality and the source of project leads to businesses, as well as the odds that those leads would result in actual jobs.

The agency alleges that HomeAdvisor has been making false, misleading, or unsubstantiated claims about the quality and source of the leads the company sells to service providers since 2014. Those service providers include general contractors and small lawn care businesses that used the company's service to search for potential customers.

The HomeAdvisor model is dependent on gig economy workers who offer services like remodeling, cleaning services, and small appliance installation. Once service providers join HomeAdvisor’s network and pay an annual membership fee, the company provides leads that service providers use to contact potential customers.

“Gig economy platforms should not use false claims and phony opportunities to prey on workers and small businesses,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s administrative complaint against HomeAdvisor shows that the FTC will use every tool in its toolbox to combat dishonest commercial practices.”

Misrepresenting leads

The FTC accused HomeAdvisor of misrepresenting the quality of its leads to service providers by informing them that they had a higher chance of landing more home improvement jobs by using its system than its in-house data actually showed. Officials also alleged that HomeAdvisor possibly deceived service providers about the price of an optional one-month subscription to a software platform that HomeAdvisor pitched as an add-on to the leads it sold.

The FTC said service providers were told that they would get to use that platform for free for their first month with an annual membership package. In reality, the first month was not free and resulted in a package that cost $59.99 more than “properly informed” service providers might have otherwise paid.

The FTC stated that service providers ultimately wasted time following up on leads that were below the quality that HomeAdvisor guaranteed. They also allegedly wasted time seeking refunds from the company for those less-than-favorable leads.

In response to the FTC's accusations, an Angi spokesperson told ConsumerAffairs that the agency's claims were meritless and that it plans to "vigorously fight" the allegations.

"The FTC allegations against HomeAdvisor are based on a false narrative using a small handful of cherry picked, incomplete, and out-of-context recorded sales calls - to serve their agenda," the spokesperson said.

Consumer questions vetting of professionals

HomeAdvisor scores a very respectable 4.4 stars out of a possible 5 stars from ConsumerAffairs reviewers, but there were some instances in which the process fell apart for consumers.

“I was looking for someone to deliver and install mulch. A Google search gave me several options with 800 numbers and when I called all of them (3), they were all to Home Advisor,” Deborah from Orlando stated in her ConsumerAffairs review. 

“Finally I gave my project information to Home Advisor and they gave me 4 pro referrals. I called all 4. Two (2) did not provide the service I wanted. One (1) did not return my calls. I did speak with one (1) landscaper and we engaged in text dialog about the project for a couple of weeks, including his availability and price. When I confirmed the quote and asked for a scheduled date, he stopped responding all together. When I asked him for the courtesy of a response whether he could do the job or not, nothing.”

Deborah’s said there appeared to be a lack of transparency on HomeAdvisor’s part when she wanted to write a review about her situation.

“When I tried to write a review for Hector on Home Advisor, because I did not hire the pro, Home Advisor sends my review to the pro (Hector) but does not publish it on their website. What good is that? I did not hire him because he ‘ghosted’ me when it came time to commit to the job,” she said in her review. “Texting was his request, not mine. Beware of Home Advisor using different phone numbers on search engines to drive business their way. Their vetting of pros is apparently not satisfactory in all cases.”

The Federal Trade Commission (FTC) wants to see if it can take a larger bite out of corporate crime. The agency announced Friday that it will expand its criminal referral program and intensify its commitment towards combating misconduct it uncovers in its antitrust and consumer protection investigations.

The FTC says the new program should also allow it to speed up the process of enforcing those efforts, giving local, state, federal, and international agencies the wherewithal to bring criminals to justice sooner.

“At a time when major corporate lawbreakers can treat civil fines as a cost of doing business, government authorities must ensure that criminal conduct is followed by criminal punishment,” FTC Chair Lina M. Khan said in an announcement.

What consumers can expect from the new program

Some of the consumer protection misconduct and antitrust violations the agency wants to hone in on include price-fixing and market allocation deals. Stopping bid-rigging dead in its tracks -- like Pilgrim’s Pride was accused of last year -- is also high on the FTC’s list.

The agency will also be looking to ensure that lower-priced generic drugs are given a fair chance of making it to market. In one notable example, the agency charged Reckitt Benckiser Group and Indivior of using a deceptive scheme to impede lower-priced generic competition to their branded opioid addiction treatment, suboxone. The case ultimately resulted in a $1.4 billion settlement with Reckitt, guilty pleas from former Indivior executives and an Indivior subsidiary, and a civil settlement with Indivior.

The agency’s new policy allows it to use several methods to improve its cooperation with its law enforcement partners. Some of those include:

• Publicly reporting on criminal referral efforts on a regular basis to help reinforce the public’s understanding of how important the agency’s work is, and also to highlight the criminal prosecutions it’s taken on;

• Creating guidelines to ensure criminal law violations — particularly by major corporations and their executives — are identified by staff and promptly referred to criminal law enforcement agencies; and

• Holding regular meetings with federal, state, and local criminal authorities to facilitate the coordination that will enable the appropriate law enforcement partners to take up cases referred by the FTC and develop best practices to enhance this coordination.

“Today the FTC is redoubling its commitment and improving its processes to expeditiously refer criminal behavior to criminal authorities, promoting accountability and deterrence,” Khan said.