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FTC

Threat of Scams Heightened in Age of Coronavirus, Say House Consumer Protection Subcommittee Members

Elijah Labby

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Photo of Cathy McMorris Rogers by Gage Skidmore used with permission

May 11, 2020 — The coronavirus pandemic has given birth to all-too-predictable scams, agreed members of the House Consumer Protection and Commerce Subcommittee and the Federal Trade Commission during a teleconference Monday.

The conference, hosted by Subcommittee Chair Jan Schakowsky, D-Ill., and Ranking Member Cathy McMorris Rodgers, R-Wash., featured FTC Chairman Joe Simons for a discussion about the FTC’s response to the increased fraudulent activity.

The scams take many forms, McMorris Rodgers said. “Whether it’s scams, robocalls, price-gouging, privacy and data security, or other fraud … the FTC is the top cop on the beat for protecting consumers from harm.”

FTC Chairman Joe Simons agreed, saying that the FTC has sent more than 120 warning letters to coronavirus scammers with a high degree of effectiveness.

“We’ve also pursued targeted federal law enforcement, and we’ve worked aggressively to educate consumers,” he said. “The FTC is monitoring the marketplace and will hold accountable those who take advantage of consumers’ financial distress, or their fears and anxiety about COVID-19.”

In April, Rep. Schakowsky joined with Reps. David Cicilline, D-R.I., Frank Pallone, D-N.J. and Jerry Nadler, D-N.Y. to introduce legislation that would “prohibit the sale of consumer goods and services at an unconscionably excessive price.”

The FTC would be interested in prosecuting price-gouging if Congress passed such a law, Simons said. Although he conceded that the agency does not currently have the authority, he told the congresswomen that he “would be very much willing, eager, and enthusiastic and interested in protecting consumers under any statute that you provide.”

The FTC has warned several high-profile individuals to stop selling sham cures for the coronavirus, including televangelist Jim Bakker. On a February broadcast of “The Jim Bakker Show,” Bakker and “natural health expert” guest Sherrill Sellman suggested that Bakker’s “Silver Solution” could cure the coronavirus.

“This influenza that is now circling the globe,” Bakker said, “you’re saying that Silver Solution would be effective.”

“Well, let’s say it hasn’t been tested on this strain of the coronavirus, but it has been tested on other strains of the coronavirus and has been able to eliminate it within 12 hours,” Sellman said. “Totally eliminate it. Kills it. Deactivates it.”

Soon after, the state of Missouri filed a lawsuit against Bakker and his production company, Morningside Church Productions. The FCC and the FDA also warned Bakker that he was hawking unapproved new drugs.

Simons said that fighting such scams was not merely a matter of taking legal action but also of informing consumers.

“For all of these scams and other scams, we’re doing extensive outreach and consumer education,” he said. “And you know we’re going to just continue to be aggressive and bring law enforcement appropriate actions as appropriate.”

Elijah Labby was a Reporter with Broadband Breakfast. He was born in Pittsburgh, Pennsylvania and now resides in Orlando, Florida. He studies political science at Seminole State College, and enjoys reading and writing fiction (but not for Broadband Breakfast).

FCC

Biden’s Inauguration Raises Questions of New Leadership at Communications and Trade Commissions

Derek Shumway

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Former Federal Communications Commission Chairman Ajit Pai

January 20, 2021 – President Joe Biden’s inauguration Wednesday will usher in a wave of new faces at the helm of many federal agencies, including the Federal Communications Commission and the Federal Trade Commission.

Following through on an announcement made last November, FCC Chairman Ajit Pai stepped down from his post Wednesday.

Pai’s last day at the FCC was preceded by one of his last actions as Chairman. On Tuesday, Pai declared in the FCC’s 14th annual broadband deployment report that the agency will continue to maintain its six year-old benchmark definition of “broadband” as 25 Megabit per second (Mbps) download speeds and 3 Mbps upload speeds.

The report concludes that the loosely-regulated telecom industry is doing enough to extend reliable broadband access to all Americans, despite FCC Democrats largely disagreeing with the claim.

FCC Commissioner Jessica Rosenworcel, who may well be named the acting chair or chair at the agency, has repeatedly argued that the FCC should adopt a higher-speed definition of broadband service. “With so many of our nation’s providers rolling out gigabit service, it’s time for the FCC to adjust its baseline upward, too,” Rosenworcel said last year, calling for new speed benchmarks requiring 100 Mbps download speeds and an upload standard higher than 3 Mbps.

Rosenworcel’s nomination for Chair is backed by the Communications Workers Union of America and the National Education Association.

Although Commissioner Geoffrey Starks has been backed by racial justice groups in the guessing game for next chairman, but having joined the Commission in 2019, he is junior to Rosenworcel. Color of Change, a civil rights advocacy group in the U.S., said it supports Starks for the role, given his advocacy for achieving racial economic equity through tech, specifically in Black communities in the past.

Transitions at the Federal Trade Commission

At the Federal Trade Commission, Chairman Joseph Simons said Tuesday he and members of his senior staff would resign on January 29. Simons offered no reason for the date of his departure. As with the FCC, the president names the chairman of independent agencies like the FTC.

FTC Commissioner Rohit Chopra, appointed by President Donald Trump in 2018 to fill an open Democratic seat, has since been nominated by Biden to serve as director of the Consumer Financial Protection Bureau. The remaining commissioners will include Democrat Rebecca Slaughter and Republicans Noah Phillips and Christine Wilson, meaning that there is room for two democrats at the agency.

The interagency transitions come as advocacy groups, led by Public Citizen, sent a letter to the FTC saying the steps required to cancel Amazon Prime “are designed to unfairly and deceptively undermine the will of the consumer,” and may violate FTC rules as well as other consumer protection laws.

Amazon’s market power is already the subject of a lengthy congressional antitrust investigation, as well as probes by the FTC, European Commission, and other regulators. The letter used a complaint from Norway’s consumer protection agency, which on Thursday asked Norwegian regulators to determine whether Amazon violated local law.

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Antitrust

Antitrust and Data Protection Emerge as Top FTC Priorities During Senate Hearing

Jericho Casper

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Screenshot of Sen. Richard Blumenthal from the webcast

August 5, 2020 — The five leaders of the Federal Trade Commission testified together before a Senate panel for the first time in nearly two years on Wednesday.

The FTC is charged with maintaining a competitive marketplace and protecting consumers’ personal information, and members of the U.S. Senate Committee on Commerce, Science, and Transportation maintained that the agency has a significant role to play in the enforcement of antitrust and data privacy legislation.

Sen. Richard Blumenthal, D-Conn., reminded the FTC commissioners that tech conglomerates Facebook and Amazon are within their purview, arguing that last Wednesday’s historic House Judiciary Antitrust Subcommittee hearing brought about a greater sense of urgency to act.

This led FTC Chairman Joseph Simons to reveal that litigation against Facebook is currently ongoing.

Referencing Facebook’s acquisition of WhatsApp, Simons reported that “breaking up Facebook is an option that is definitely on the table.”

When Blumenthal asked Simons when the American public can expect antitrust action against these companies, Simons replied that the agency has been giving out warning letters.

Blumenthal suggested that a better course of action for the commission would be to introduce legislation on the books, rather than continuously sending warning letters, “which is like starting over every time,” he said.

Simons revealed that no investigation into Amazon has been started as of yet, when Blumenthal questioned whether he believed it would be necessary to depose Mark Zuckerberg and Jeff Bezos.

The hearing was further aimed at ensuring Congress had done enough to empower the FTC to ensure the agency was able to act against big tech companies.

“We believe we need more authority,” Simons said.

Other FTC commissioners requested to be granted jurisdiction over common carriers and given the ability to impose civil penalties.

The commissioners urged members of the Senate to continue enacting data privacy and security legislation.

“The FTC stands ready to enforce a national data privacy law,” said FTC Commissioner Rebecca Kelly Slaughter.

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Cybersecurity

Federal Trade Commission Aims to Ramp Up the Cybersecurity Efforts of Financial Institutions

Jericho Casper

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Screenshot of the virtual Federal Trade Commission workshop

July 13, 2020 — The Federal Trade Commission is seeking to ramp up mandated cybersecurity efforts for financial institutions by altering the Gramm-Leach-Bliley Act’s Safeguards Rule, which requires financial institutions to develop, implement and maintain a comprehensive information security program.

After collecting public comments throughout 2019, the commission proposed certain alterations to the act, which has been left untouched for nearly two decades since being enacted in 2002.

In a virtual FTC workshop on Monday, David Lincicum, an attorney for the FTC, discussed the changes the proposed rulemaking hopes to bring about with a panel of cybersecurity professionals.

Sam Rubin, vice president at cybersecurity consulting firm The Crypsis Group, said that the two biggest threats to financial institutions currently occur through business email compromise and ransomware attacks.

The amendments the FTC has proposed aim to alleviate these issues, protecting consumers and decreasing overall risk, he said.

Current rules maintain that financial institutions must design safeguards to control risks and must regularly test the effectiveness of those safeguards.

The new proposal seeks to maintain the flexibility of the current rule, while providing more guidance about the contents of an information security program, according to Lincicum.

Under the proposed rule, financial institutions would be required to designate one qualified individual to be responsible for overseeing the program.

This individual would be responsible for ensuring that the program is constructed off of a written risk assessment.

Panelists agreed that this is an important issue currently being overlooked.

“People are not generally doing what we would consider risk assessments,” said Chris Cronin, a partner at HALOCK Security Labs. “Instead, they’ll have an auditor come in and run an audit.”

Financial institutions are not grappling with the real risks, he added.

Cronin argued what FTC regulators are aiming for is not an audit, but an evaluation of the likelihood and magnitude of possible harm.

The proposed rule calls for regularly testing and monitoring the effectiveness of institutions’ defense programs.

“Risk assessments are not something that can be done once and forgotten,” Lincicum said. “New threats arise and new vulnerabilities are discovered.”

Two further consumer protection elements that would require specific action under the proposed rule are encryption and multifactor authentication.

The proposed encryption requirement demands that all customer information held or transmitted be encrypted at all times, both in transit over external networks and at rest.

The proposed multifactor authentication requirement would require any individuals accessing customer information to go through a two-step authentication process.

Some financial institutions would be an exception from aspects of the proposed rule, including institutions that maintain the information of fewer than 5,000 consumers, which are exempt from most of the written requirements.

The participating panelists expressed a shared fear that people may call the proposed rule unreasonable, as the only benefit of implementing these programs is something not happening.

“A lot of people are going to have a hard time demonstrating reasonableness,” Cronin said.

Companies that have not experienced a breach may have a hard time understanding the benefits of conducting risk assessments, predicted panelists.

“It’s hard to explain,” Rubin said. “You don’t get a bonus for not getting hacked.”

Pablo Molina, chief information security officer at Drexel University, argued that many community members currently remain ill-informed on the issue and called for educating employees, clients and society at large.

 

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