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Chairman Jon Leibowitz and
Commissioners Edith Ramirez, J. Thomas Rosch, and Julie Simone Brill
LEFT TO RIGHT:

The FTC in 2012

March 2012

Federal Trade Commission
Jon Leibowitz, Chairman
J. Thomas Rosch, Commissioner
Edith Ramirez, Commissioner
Julie Simone Brill, Commissioner

Contents
Message from the Chairman........................ ii
Highlights
Protecting Consumer Privacy...................................1
Fighting “Last Dollar” Fraud.....................................2
Promoting Competition in Health Care.................4
Containing Costs of Prescription Drugs.................5
Trending in Technology............................................7
Challenging Deceptive Advertising
and Marketing............................................................9
Safeguarding Children............................................10
Monitoring Energy Markets
and Enforcing Environmental Claims...................12
Cooperating with International Counterparts.....13
Practicing Good Government................................15

Senior Staff of the FTC............................... 17

FTC in 2012

Message from the Chairman
This booklet previews the first
edition of the FTC’s Annual
Highlights online — a description
of our major accomplishments
since March 2011. We encourage
you to access more information,
links, and multimedia features at
ftc.gov/highlights.
Our activities underscore our agency’s unique dual mission
to protect consumers and to promote competition and
innovation critical to the recovering national economy. They
show how we:
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protect consumer privacy — both online and off;

XX

stop scammers who use the economic downturn to pick
the last dollar out of people’s pockets;

XX

promote competition for health care providers, products,
and prescription drugs; and

XX

work to understand new technologies, which bring
tremendous benefits to consumers and the economy —
and can also pose significant challenges.

The FTC also stops deceptive advertising and shady
marketing practices, safeguards our children, and scrutinizes

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energy markets. In our global economy, we cooperate with
international partners to promote sound policy that benefits
U.S. consumers and businesses.
It has been an extraordinarily productive year. We’re proud
that the FTC has been at the forefront of good government,
effective law enforcement, and outstanding outreach to
consumers, businesses, and our law enforcement partners
around the world. We’re also proud that of 37 federal agencies
with more than 1,000 full-time employees surveyed by
OPM in 2011, the FTC ranked second in leadership and
knowledge management, a results-oriented culture, and talent
management, and fifth in job satisfaction.
We try to be a practical and bipartisan agency, too. My
colleagues, Commissioners Tom Rosch, Edith Ramirez, and
Julie Brill, join me in saluting the FTC’s talented and dedicated
staff and their impressive work on behalf of American
consumers.

Jon Leibowitz
Chairman

See more at ftc.gov/highlights

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Protecting Consumer Privacy
As consumers go about their
lives, they share information.
The companies with whom
they share it must honor the
promises they make — online
and off — including those
about privacy. The FTC began
a national conversation about
privacy decades ago, and has
continued to raise the profile of privacy practices through
law enforcement, consumer education, and policy initiatives.
FTC settlement orders against Facebook and Google resolved
charges that these companies violated their privacy promises
to consumers. The FTC also challenged the privacy practices
of ScanScout and Chitika, online behavioral advertising
networks that allegedly deceptively tracked online activities
even after people opted out of such tracking. The FTC took
action against Teletrack, charging that it violated the Fair
Credit Reporting Act by selling protected consumer credit
reports to marketers, and against Upromise, a membership
reward service that allegedly collected consumers’ personal
information through a web browser tool.
The FTC’s final report on privacy adopts three principles
proposed in the draft report — privacy by design, greater

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transparency, and more consumer choice — to help ensure
consumer privacy and business innovation. The report
continues to encourage businesses to improve their privacy
practices through self-regulation, including a Do Not Track
system, and notes some industry progress in this area. The
report also identifies areas such as large platforms, mobile,
and data brokers for further attention in the coming year, and
recommends that Congress consider legislation implementing
basic privacy protections.

Fighting “Last Dollar” Fraud
The FTC is on the beat to stop
scammers who take advantage of
the nation’s most financially fragile
consumers through deceptive
mortgage servicing practices,
abusive debt collection tactics,
bogus credit repair services,
mortgage, tax, and debt relief
offers, and fraudulent job and
business opportunity schemes. Here are a few examples:
The Commission alleged that First Universal Lending charged
struggling homeowners $7,000 in advance fees that brought
little or no mortgage relief. In May 2011, the court entered a
settlement order that bans the defendants from the mortgage

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modification business and requires them to pay nearly $19
million in consumer redress.
Through a settlement with Countrywide (now Bank of
America), 450,000 homeowners whom the FTC says were
charged excessive loan servicing fees received checks worth
nearly $108 million. Several months later, Bank of America
refunded or reversed charges for $36 million more to resolve
allegations that it violated the FTC settlement.
The FTC took action against American Credit Crunchers, a
“phantom” payday lender that made millions of collection calls
from India demanding payment of “debts” that consumers
did not owe. The agency reached settlements with other debt
collectors that imposed civil penalties, including one for $2.5
million against Asset Acceptance, LLC, which allegedly used
deceptive tactics to try to collect old debts, many of which
were time-barred.
The Commission shut down several firms that guaranteed
government grants (Grant Connect), jobs (National Sales
Group), and lucrative work-at-home opportunities (Real
Wealth), getting judgments totaling $40.2 million and orders
that ban the companies from marketing in these areas.
It also permanently stopped United States Benefits, LLC,
which allegedly took advantage of unemployed, uninsured,
and uninsurable people by deceptively marketing “medical
discount plans” as comprehensive insurance.

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FTC in 2012

Promoting Competition in
Health Care
The Commission works to prevent
anticompetitive mergers and
conduct that might undermine
competition in health care
markets. Many recent FTC merger
enforcement actions involved
companies that provide health
care services, from dialysis clinics
to testing labs. In particular, the
FTC has redoubled its efforts to prevent hospital mergers
that may leave insufficient local options for in-patient services,
challenging three such mergers in federal court in the past year.
The agency also combats anticompetitive conduct by health
care providers that may raise costs or reduce options for
patients. For instance, the Commission found that the North
Carolina State Board of Dental Examiners illegally sought to
prevent non-dentists from providing teeth whitening services.
On the policy front, when asked, the Commission commented
on the competitive implications of state proposals that may
impose burdens on health care providers without generating
offsetting benefits to patients in terms of access or cost. In
addition, the FTC worked with the DOJ and other agencies
— most notably the Centers for Medicare and Medicaid

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Services — to develop a Joint Statement of Antitrust
Enforcement Policy for Accountable Care Organizations. The
Statement makes clear that the antitrust laws are not a barrier
to bona fide collaboration, while at the same time ensuring
that any benefits from increased collaboration will not be lost
to anticompetitive conduct.

Containing Costs of Prescription
Drugs
With the cost of prescription
drugs increasing faster than other
health care costs, the FTC is
committed to preventing mergers
or conduct that may allow firms to
raise drug prices. In the last year,
the Commission challenged seven
mergers involving pharmacies or
pharmaceutical manufacturers,
preserving competition for blood-plasma derived drugs, acne
and cancer creams, and pain medicines, among others.
One of the Commission’s top priorities continues to be
restricting anticompetitive “pay-for-delay” patent settlements
Because these agreements delay the availability of low-cost
generic drugs, branded manufacturers profit by continuing to
charge monopoly prices, and generic manufacturers receive

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substantial compensation for agreeing not to compete.
Meanwhile, consumers, businesses, and government programs
such as Medicare bear the heavy costs of higher drug prices.
The FTC monitors these agreements, which have increased
significantly in response to permissive court rulings; has
challenged several in court; and is pressing for a legislative fix
to put an end to these deals.
The Commission also brought charges that CVS Caremark
misrepresented the prices of certain Medicare Part D
prescription drugs on important websites. As a result, some
seniors and disabled consumers allegedly paid significantly
more for their drugs than they had expected. CVS Caremark
agreed to pay $5 million to reimburse affected Medicare Part
D consumers for the price discrepancy to settle the charges.

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Trending in Technology
Nearly 100 years of experience
gives the FTC a unique perspective
when it comes to anticipating and
evaluating new technology, and
using appropriate measures of
enforcement, education, and public
engagement to address evolving
markets and business models.
It has been widely reported that the FTC has ongoing
investigations into potentially anticompetitive conduct by
dominant firms in certain high-profile, high-tech industries.
The Commission takes a balanced approach when applying
antitrust principles to fast-paced technology markets,
focusing on the facts as they develop in real time to assess
what competition is likely to look like in the future.
The FTC charged the developer of peer-to-peer file-sharing
software with marketing an application that was likely to
cause consumers to unwittingly expose sensitive personal
information stored on their mobile devices. The resulting
settlement requires the company to provide free upgrades
to correct the unintended sharing. Following a recent surf,
staff sent warning letters to six marketers of mobile apps that
provide background screening reports, alerting them that

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the Fair Credit Reporting Act applies in full force to FCRAprotected information shared on mobile apps.
The FTC convened a public workshop to discuss how firms
negotiate rights to intellectual property when participating
in standard-setting organizations. The nation’s leading
technology companies discussed how to avoid patent
“hold-up” — a patent holder’s demand for higher royalties
or burdensome licensing terms after the standard is
implemented, which can subvert the competitive process
and lead to higher prices for consumers. Another workshop
explored the privacy and security implications of facial
recognition technology, which is being used in a variety
of contexts from online social networks to digital signs to
mobile apps.
Technological advances have made it difficult for consumers
and law enforcement to identify the location of fraudsters
pitching scams on the telephone. Some companies remain
virtually anonymous by faking the phone number on a caller
ID display. At the same time, technology has made it cheap
and efficient to make large numbers of illegal pre-recorded
calls, often from overseas. The FTC has taken aggressive
action against some of the biggest players in the robo-call
business, including permanently stopping the defendants in
Voice Marketing, Inc., and VoiceBlaze, who paid civil penalties
after allegedly providing services enabling marketers to deliver
tens of millions of robocalls for pennies a call.

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Challenging Deceptive Advertising
and Marketing
The FTC monitors advertising
in all media, and has successfully
challenged a number of deceptive
claims about disease prevention
and health promotion.
The Commission recently
challenged claims that Oreck
vacuum cleaners and air purifiers
prevented the flu; that certain Reebok shoes toned and
strengthened lower body muscles; and that Nivea My
Silhouette! skin cream reduced users’ body size. Each of these
cases resulted in settlements that require the companies to
refund money to consumers who bought their products:
Reebok, for example, will refund $25 million.
The FTC polices the internet for deceptive ads, and recently
brought a slew of cases involving questionable advertising
techniques. In one recent sweep, the Commission filed 10
lawsuits against online marketers, alleging that they created
fake news sites where they posted phony testimonials touting
acai berry supplements as effective weight-loss products.
The FTC also stopped several fraudulent online negative
option schemes, obtaining settlements banning their

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operators from marketing negative option programs and
requiring them to surrender assets. Cases against Jesse Willms
and Michael Bruce Moneymaker, both of whom allegedly
charged consumers recurring fees without first getting their
consent, were significant wins for consumers.
In Millenium Telecard, the FTC challenged a company that
sold prepaid phone cards ­— many to immigrants who used
them to call overseas — with allegedly false and deceptive
claims about the number of minutes of talk time and fees that
reduced the value of the cards.

Safeguarding Children
It’s no secret that children and
teenagers are early adopters of
technology, and the Commission
is focused on using enforcement,
education, and engagement to
safeguard them from unfair
and deceptive marketing and
advertising.
Recent FTC enforcement of the Children’s Online Privacy
Protection Act (COPPA) resulted in strong settlement orders
against Playdom, a company operating online virtual world
websites for kids; W3 Innovations, a developer of mobile
applications, including children’s games; and Skid-e-kids, a

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social networking site targeting children ages 7 to 14. The
settlement against Playdom included a $3 million civil penalty,
the highest to date for violations of the FTC’s COPPA Rule.
The Commission is considering proposed amendments that
are intended to ensure that the COPPA Rule continues to
protect children’s privacy as online technology evolves.
On the theory that the users of mobile devices are getting
younger, FTC staff surveyed information available to parents
before downloading mobile apps for their children in Google’s
Android Market and Apple’s iTunes App Store. The survey
found that the stores didn’t offer parents any information on
the kind of data collected, who is collecting it, and why. The
staff recommends that industry members provide greater
transparency about their data collection practices.
Other recent activities related to kids dealt with entertainment
ratings for movies, electronic games and music, and child
identity theft. A workshop co-hosted by the FTC and the DOJ
Office for Victims of Crime addressed how best to prevent
child identity theft and resolve the problems that it creates.

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Monitoring Energy Markets and
Enforcing Environmental Claims
Few issues are as important to
consumers as the cost of gas for
their cars, and the price they pay to
heat, cool, and light their homes.
The FTC keeps a weather eye on
energy markets, closely scrutinizes
mergers and acquisitions in the
energy sector, and monitors
environmental marketing to make
sure it is truthful and based on solid scientific evidence.
The FTC challenged an acquisition of terminal and pipeline
assets, charging that it would lead to higher gasoline and
diesel fuel prices in Maine. The Commission also required
two of the nation’s largest propane distributors to carve
out overlapping assets to preserve competition for propane
exchange cylinders used for backyard barbeque grills.
The FTC opened an investigation into pricing anomalies
among gasoline refiners; issued a report on the key factors
that influence gas prices; and tracked daily wholesale and
retail gasoline and diesel price data to identify anticompetitive
activities. The FTC and the Commodity Futures Trading
Commission signed an MOU to facilitate information
sharing in investigations in petroleum and other markets.

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On the home front, five window marketers settled FTC
charges that they made deceptive energy efficiency and costsaving claims about their products. The Commission also took
action against retailers who allegedly failed to post required
EnergyGuide information on their websites about major home
appliances; and reached a settlement that stops marketers
from making bogus claims that their fuel device could boost
automobile gas mileage by at least 50 percent. The FTC
sought public comments on proposed changes to its Appliance
Labeling Rule, which requires energy efficiency labels for
major household appliances and other consumer products.

Cooperating with International
Counterparts
The FTC strives to promote sound
approaches to common problems
by building relationships with
sister agencies around the world.
The FTC and DOJ recently
signed a landmark MOU with
China’s competition agencies, and
reaffirmed a set of best practices
for use in US/European Union
merger reviews. These efforts foster consistent outcomes in
antitrust investigations, especially international mergers. For
example, the FTC cooperated with 10 foreign jurisdictions
to review Western Digital’s proposed acquisition of Hitachi

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Global Storage Technologies and design remedies to resolve
allegations that the deal would likely harm competition in the
personal computer hard disk drive market.
The FTC continued successful implementation of the US
SAFE WEB Act. This law strengthens the FTC’s ability
to fight cross-border fraud that harms U.S. consumers by
allowing the agency both to share information with foreign
law enforcement agencies and to obtain information on their
behalf.
In recent months, the Commission urged the Internet
Corporation for Assigned Names and Numbers (ICANN)
to implement consumer protection safeguards before it
dramatically expands the internet domain name system. The
FTC warned that without additional protections, the rapid
expansion in the number of generic top-level domain names
will increase opportunities for consumer fraud.
The agency also continued its outreach to aid effective
international cooperation by creating an online virtual
university for competition authorities worldwide as part
of the International Competition Network's Curriculum
Project. In the last year, the FTC’s technical assistance
to foreign agencies included intensive training for the
Competition Commission of India and for consumer
protection agencies in Latin America.

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Practicing Good Government
The FTC reviews all its rules and
guides on a 10-year cycle to ensure
they are up-to-date, effective, and not
overly burdensome. To foster public
participation and transparency, the
FTC launched a regulatory review
web page at ftc.gov/ftc/regreview,
a one-stop shop for the public to get
information and comment on rules
under review. Nearly a third of the Commission’s rules and
guides are under review in 2012 .
The Commission revised its Part III rules in 2009 to ensure
that administrative litigation is not time-consuming or
burdensome, and made further improvements in 2011.
New timelines for discovery, motions practice, trial, and
decision-making result in a faster-paced administrative
process, especially in merger cases. A notable example is the
ProMedica hospital merger case, where the Commission
issued a complaint, the case was tried, and the Administrative
Law Judge issued his Initial Decision within 11 months.
The FTC proposed changes to its Part II Rules to keep pace
with changes in electronic discovery and improve the agency
process for resolving disputes during the investigatory phase.

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The agency streamlined the process for approving divestitures
by waiving the prior-approval requirement for modifications
that do not conflict with the Commission’s order and,
with DOJ, made improvements to the Hart-Scott-Rodino
premerger notification form.
The FTC and the new Consumer Financial Protection
Bureau signed an MOU to share information and coordinate
enforcement and regulatory efforts, among other activities,
to ensure that policies and activities are consistent, wellinformed, and not duplicative.
The FTC’s Criminal Liaison Unit (CLU) works with federal
and state criminal prosecutors to send recalcitrant FTC
defendants to prison. In the last year, criminal authorities
have charged 42 FTC defendants and their associates
with crimes; 29 have been convicted or pled guilty, and
received sentences totaling more than 168 years. Since its
inception in 2002, the CLU program has led to more than
400 prosecutions, including charges against fraudulent
telemarketers, marketers of bogus cures, sweepstakes
scammers, and internet con artists.

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Senior Staff of the FTC
Chief of Staff

Joni Lupovitz

Executive Director

Eileen Harrington

Director, Bureau of Competition
Deputy Directors

Richard Feinstein
Norman Armstrong, Jr.
Marian Bruno		
Peter Levitas

Director, Bureau of Consumer Protection David Vladeck
Deputy Director
Chuck Harwood
Acting Deputy Director
Daniel Kaufman
Director, Bureau of Economics
Deputy Directors

Joseph Farrell
Pauline Ippolito
Alison Oldale
Paul Pautler

General Counsel

Willard K. Tom

Director, Office of International Affairs

Randy Tritell

Director, Office of Congressional Relations Jeanne Bumpus
Director, Office of Policy Planning

Susan S. DeSanti

Director, Office of Public Affairs

Cecelia Prewett

Secretary of the Commission

Donald Clark

Inspector General

John Seeba

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See more at
ftc.gov/highlights

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Federal Trade Commission
March 2012
ftc.gov/highlights