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The [[FTC|Commission]] has used its Section 5 powers to pursue deception claims against [[online]] companies for a variety of [[Internet]]-related claims unrelated to a violation of published [[privacy policies]]. These include claims against: |
The [[FTC|Commission]] has used its Section 5 powers to pursue deception claims against [[online]] companies for a variety of [[Internet]]-related claims unrelated to a violation of published [[privacy policies]]. These include claims against: |
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| − | # [[spyware]] and [[adware]] [[distributor]]s that surreptitiously [[download]]ed [[software]] onto unsuspecting [[user]]s’ [[computer]]s; |
+ | # [[spyware]] and [[adware]] [[distributor]]s that surreptitiously [[download]]ed [[software]] onto unsuspecting [[user]]s’ [[computer]]s,<ref>''See, e.g.,'' In re Zango, Inc. f/k/a/ 180Solutions, Inc., Complaint, Mar. 7, 2007[http://www.ftc.gov/os/caselist/0523130/0523130c4186complaint.pdf]; Federal Trade Comm’n v. MaxTheater, Inc., 2005 WL 3724918, at *2 (E.D. Wash. Dec. 6, 2005); Federal Trade Comm’n v. Seismic Entertainment Productions, Inc., 2004 WL 2403124 (D.N.H. Oct. 21, 2004).</ref> |
| − | # those who made materially deceptive representations in marketing a [[spyware]] removal product |
+ | # those who made materially deceptive representations in marketing a [[spyware]] removal product,<ref>Federal Trade Comm’n v. Trustsoft, Inc., 2005 WL 1523915 (S.D. Tex. June 14, 2005).</ref> |
| − | # those who made [[fraud]]ulent claims in selling prescription drugs [[online]] |
+ | # those who made [[fraud]]ulent claims in selling prescription drugs [[online]],<ref>Federal Trade Comm’n v. Rennert, Complaint (filed D. Nev. July 6, 2000).[http://www.ftc.gov/os/2000/07/iogcomp.htm]</ref> |
| − | # a credit reporting company that failed to verify the identity of persons to whom it was [[disclosure|disclosing]] [[confidential]] consumer information and failed to monitor unauthorized activities |
+ | # a credit reporting company that failed to verify the identity of persons to whom it was [[disclosure|disclosing]] [[confidential]] consumer information and failed to monitor unauthorized activities,<ref>United States v. Choicepoint, Inc., Case No. 106-CV-0198, Stipulated Final Judgment and Order (N.D. Ga. Jan. 26, 2005).[http://www.ftc.gov/os/caselist/choicepoint/0523069stip.pdf]</ref> |
| − | # a [[reverse auction]] site that used improper promotional activities to solicit [[user]]s of a competitive [[auction site]], and |
+ | # a [[reverse auction]] site that used improper promotional activities to solicit [[user]]s of a competitive [[auction site]],<ref>Federal Trade Comm’n v. ReverseAuction.com, Complaint (filed D.D.C. Jan. 6, 2000).[http://www.ftc.gov/os/2001/01/reversecmp.htm]</ref> and |
| + | # unauthorized charges in connection with “[[phishing]].”<ref>Federal Trade Comm’n v. Hill, No. H 03-5537 (filed S.D. Tex. Dec. 3, 2003)[http://www.ftc.gov/os/caselist/0323102/040322cmp0323102.pdf]; Federal Trade Comm’n v. C.J., No. 03-CV-5275-GHK (RZX) (filed C.D. Cal. July 24, 2003).[http://www.ftc.gov/os/2003/07/phishingcomp.pdf] |
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| − | # unauthorized charges in connection with “[[phishing]].” |
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== Unfair Acts or Practices == |
== Unfair Acts or Practices == |
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Revision as of 01:44, 1 May 2008
Overview
Section 5 of the FTC Act prohibits entities from engaging in unfair or deceptive acts or practices in interstate commerce.[1]
Deceptive Acts or Practices
An act or practice is deceptive if it involves a representation, omission, or practice that is likely to mislead consumers acting reasonably under the circumstances, and the representation, omission, or practice is material.[2]
Thus, an advertisement is deceptive if it includes material information that is false or that is likely to mislead a consumer acting reasonably under the circumstances. Likewise, an advertisement is deceptive if it omits material information, and that omission is likely to mislead a consumer acting reasonably under the circumstances.[3] Requiring accurate disclosure of material terms allows consumers to compare similar services offered by one or multiple providers and weigh the different terms being offered in making decisions about what services to purchase.
The FTC has taken action against websites for violating their own privacy policies as a deceptive trade practice.
The Commission has used its Section 5 powers to pursue deception claims against online companies for a variety of Internet-related claims unrelated to a violation of published privacy policies. These include claims against:
- spyware and adware distributors that surreptitiously downloaded software onto unsuspecting users’ computers,[4]
- those who made materially deceptive representations in marketing a spyware removal product,[5]
- those who made fraudulent claims in selling prescription drugs online,[6]
- a credit reporting company that failed to verify the identity of persons to whom it was disclosing confidential consumer information and failed to monitor unauthorized activities,[7]
- a reverse auction site that used improper promotional activities to solicit users of a competitive auction site,[8] and
- unauthorized charges in connection with “phishing.”Cite error: Closing
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The Act authorizes the Commission to seek injunctive and other equitable relief, including redress, for violations of the Act, and provides a basis for government enforcement of certain fair information practices (e.g., failure to comply with stated information practices may constitute a deceptive practice or information practices may be inherently deceptive or unfair). However, the Commission has noted that, as a general matter, it lacks authority to require firms to adopt information practice policies.
The Commission has used its unfairness jurisdiction in a broad array of cases. For example, the Commission has taken the position that cramming unauthorized charges for information services onto consumers’ telephone bills is an unfair practice.[9] In the data security context, the Commission has challenged the failure to implement reasonable safeguards to protect the privacy of consumer information, where the failure causes substantial injury without offsetting benefits, as an unfair practice.[10]
The Commission also has taken the position that a unilateral change of contract may be an unfair practice.
References
- ↑ 5 U.S.C. §45(a).
- ↑ Cliffdale Assocs., Inc., 103 F.T.C. 110, 164-65 (1984). See also Federal Trade Comm'n v. Pantron I Corp., 33 F.3d 1088, 1095 (9th Cir. 1994); Federal Trade Comm'n v. Minuteman Press, 53 F. Supp. 2d 248, 258 (E.D.N.Y. 1998).
- ↑ Cliffdale Assocs., 103 F.T.C. at 175 (appending FTC Policy Statement on Deception).
- ↑ See, e.g., In re Zango, Inc. f/k/a/ 180Solutions, Inc., Complaint, Mar. 7, 2007[1]; Federal Trade Comm’n v. MaxTheater, Inc., 2005 WL 3724918, at *2 (E.D. Wash. Dec. 6, 2005); Federal Trade Comm’n v. Seismic Entertainment Productions, Inc., 2004 WL 2403124 (D.N.H. Oct. 21, 2004).
- ↑ Federal Trade Comm’n v. Trustsoft, Inc., 2005 WL 1523915 (S.D. Tex. June 14, 2005).
- ↑ Federal Trade Comm’n v. Rennert, Complaint (filed D. Nev. July 6, 2000).[2]
- ↑ United States v. Choicepoint, Inc., Case No. 106-CV-0198, Stipulated Final Judgment and Order (N.D. Ga. Jan. 26, 2005).[3]
- ↑ Federal Trade Comm’n v. ReverseAuction.com, Complaint (filed D.D.C. Jan. 6, 2000).[4]
- ↑ See, e.g., Federal Trade Comm'n v. Verity Int’l Ltd., 443 F.3d 48 (2d Cir. 2006).
- ↑ See, e.g., CardSystems Solutions, Inc., FTC Dkt. No. C-4168 (Sept. 5, 2006) (decision and order) [5]; DSW, Inc., FTC Dkt. No. C-4157 (Mar. 7, 2006) (decision and order) [6]; United States v. ChoicePoint, Inc., No. 106-CV-0198 (N.D. Ga.) (settlement entered on Feb. 15, 2006)[7]; BJ’s Wholesale Club, Inc., FTC Dkt. No. C-4148 (Sept. 20, 2005) (decision and order) [8].