Three New Jersey brothers will pay $1.66 million to settle a federal lawsuit that said they made 59.6 million robocalls.
Environmental Safety International, run by Sean and Joseph Carney, and telemarketing company Carbo, run by Raymond Carney, were using the calls to sell cesspool and septic-tank cleaning products, the Justice Department said on Friday.
The DOJ said the three Carney brothers agreed to a civil penalty of $10.2 million, most of which was suspended. They’ll instead pay $1.66 million, along with forfeiting $774,000 in property. They also agreed not to collect $164,402 in unpaid customer balances.
Working cooperatively, the two companies made millions of unlawful telemarketing calls between January 2018 and December 2020, according to the Federal Trade Commission.
The government said in its complaint that the calls were made in two groups. The first was 45 million calls, followed nine months later by another 14.6 million calls.
More than 37.7 million calls, or about 63%, were made to numbers listed on the National Do-Not-Call Registry, according to a complaint filed in federal court earlier this month.
“Hello, this is not a sales call or a solicitation,” the robocalls began, according to a transcript in the complaint. “We’re calling from an environmental company with information for all septic tank and cesspool owners.”
They added: “We would like to give you some free info on our environmentally safe, all-natural septic-tank cleaning product.”
If customers pressed “1” during the , they were put into a pipeline that led them eventually to a live telemarketer offering Environmental Safety International’s products, the government’s lawsuit said.
The cleaning products were called the “Activator 1000” and “Activator 2000.”
The DOJ complaint said the calls violated the FTC’s Telemarketing Sales Rule, which requires telemarketers to disclose the seller’s identity. It also requires callers to skip numbers on the Do-Not-Call Registry.
“The Department of Justice is working together with the FTC to prevent the scourge of robocalls that harass and invade the privacy of millions of people every day,” said Brian M. Boynton, acting assistant attorney general at the Justice Department.
President Joe Biden is set to crack down on employers who collaborate to suppress workers’ wages in an executive order scheduled for Friday.
The White House published details of the upcoming order Friday morning. Biden will push the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to “prevent employers from collaborating to suppress wages or reduce benefits” by sharing wage and benefit information with each other.
The executive order will say that workers may be “harmed” by existing DOJ and FTC guidance that allows third parties to make wage data available to employers in certain circumstances without triggering antitrust scrutiny, per the White House’s notes.
Workers’ wages tend to decrease when there are fewer employers competing with each other for their labor, according to research from the University of Pennsylvania.
The order, which focuses on promoting economic competition, will aim to help more businesses break into markets dominated by large employers, which it says should give workers more chance to negotiate higher pay.
The president has urged Congress to pass the Protecting the Right to Organize Act, which would include protections for workers who want to unionize and collectively bargain for better pay.
In Friday’s order, Biden will also call for the FTC to ban or limit non-compete agreements and “unnecessary, cumbersome” occupational licensing restrictions. These would make it easier for workers to change jobs and help raise wages, per the White House’s briefing notes.
Tens of millions of Americans, including people working in construction and retail, have to sign non-compete agreements as a condition of getting a job, which makes it harder for them to switch to better-paying options and “stifles” competition, the order will say, per the White House.
It will also say that nearly 30% of jobs in the US require an occupational license, and that there is huge disparity in license requirements between states, which makes it difficult for people to move between states.
Biden has appointed Lina Khan, a vocal critic of big tech, as FTC chair in a decision widely thought to signal his administration’s desire to bring in strict antitrust rules to prevent tech companies from monopolizing markets.
Amazon says there’s a conflict of interest because Khan has been publicly critical of large tech companies, especially Amazon, in the past.
“Given her long track record of detailed pronouncements about Amazon, and her repeated proclamations that Amazon has violated the antitrust laws, a reasonable observer would conclude that she no longer can consider the company’s antitrust defenses with an open mind,” Amazon said in the filing, which was published by Axios and also reported by Bloomberg and the Wall Street Journal.
An FTC spokesperson declined to comment, saying petitions and letters to the FTC are not public.
Facebook leapt into the $1 trillion territory on Monday after an antitrust court victory helped its stock reach that valuation for the first time, making it the fifth US company to achieve the milestone.
The social-media giant’s stock closed 4.2% higher on Monday at $355.64 per share, after a US federal judge dismissed two complaints filed against the company in December by the Federal Trade Commission and a group of state attorneys general.
The ensuing rally lifted Facebook into the trillion-dollar club as markets gave the court win a huge “like,” and boosted the rest of the tech sector, said Jeffrey Halley, a senior market analyst at OANDA.
US District Judge James Boasberg in Washington ruled that the FTC failed to support its claims that Facebook held monopoly power as it controls more than 60% of the social-networking market. However, the antitrust and consumer protection agency has 30 days to refile its complaint and try again.
Social networking “services are free to use, and the exact metes and bounds of what even constitutes a [social networking] service – i.e., which features of a company’s mobile app or website are included in that definition and which are excluded – are hardly crystal clear,” Boasberg said in the ruling dismissing the FTC’s complaint.
“The FTC’s inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook’s market share renders its vague ‘60%-plus’ assertion too speculative and conclusory to go forward,” he added.
The judge separately dismissed a lawsuit brought by 46 states challenging Facebook’s purchase of Instagram and WhatsApp, on grounds that they waited too long to put forward their claims. The states’ attorneys general argued that Facebook had acquired those companies to stifle competition from emerging social-media rivals.
Facebook, co-founded by Mark Zuckerberg in 2004, is the youngest of five US companies to hit the $1 trillion milestone, after just 17 years of existence. The Menlo Park, California-based company’s all-time-high market valuation sees it join other tech leaders Apple, Microsoft, Amazon, and Google parent Alphabet in reaching the 13-digit mark.
Facebook’s stock has added more than $592 billion in value since it hit a March 2020 market-cap low of about $416 billion. Its gains have been aided by people increasingly relying on its platform for staying in touch with friends, family, and businesses during the COVID-19 pandemic.
Khan has a rare background for someone assuming such an influential role in US government: an extensive knowledge of tech companies and how complex antitrust laws could apply to them. Some pro-Big Tech players already appear concerned, Vox reported, as the industry has long operated without strict regulation.
Khan attended Yale Law School and has been critical of Amazon
She told the BBC in January that she realized “markets had come to be controlled by a very small number of companies” and said that trend was “systemic” in the US. Khan was particularly inspired by a trip to the grocery store in 2013 when she realized the candy selection was largely owned by just two or three confectioners.
“I think there is a very coherent story to be told about how market power is harming us as a whole in all these bizarre ways that are not readily apparent,” she told Time in 2019.
She later decided to study law at Yale Law School. In 2017, during her time as a student there, Khan published a paper called “Amazon’s Antitrust Paradox,” drawing attention to the current “unequipped” and unnuanced antitrust framework. She wrote that it enabled the tech giant to evade antitrust scrutiny.
She specifically said Amazon has focused on growing rapidly and using predatory pricing, which has helped it evade government scrutiny since the consumer stays unharmed.
Current US antitrust law stipulates that companies should be scrutinized when their bloated market power directly harms consumers, like if prices increase for them. But Khan instead says there are other, less obvious negative side effects that result from a small number of monopolies holding so much dominance – even if the consumer goes unharmed – like firms harnessing their market power to squeeze out smaller competitors.
The paper was widely publicized and cemented Khan as “Amazon’s antitrust antagonist,” as The New York Times wrote in late 2018. Then-Republican Sen. Orrin Hatch criticized Khan’s paper and dubbed her the leader of the “hipster antitrust” movement.
She’s become a vocal critic at large of big players in the tech world and has advocated for stronger anticompetitive regulation, an issue that has bipartisan support.
Lawmakers on both sides of the aisle, like Sen. Elizabeth Warren and Republican Sen. Josh Hawley, have supported her ideology, and Sen. John Thune of South Dakota was one of the 21 Republicans that backed her FTC confirmation, NBC reported.
She’s already been helping the US crackdown on Big Tech
Khan was counsel to the House Judiciary Committee’s subcommittee on antitrust, commercial, and administrative law while the group was investigating Google, Apple, Facebook, and Amazon over their role in online market competition. Khan sat behind lawmakers as they questioned the CEOs of the Big Four in a high-profile late July 2020 hearing.
Crypto scammers impersonating Elon Musk have stolen more than $2 million in the past six months alone, according to the Federal Trade Commission. The activity comes amid exploding interest in crypto investing.
The FTC said the fraudulent schemes have many forms, and so-called giveaway scams are among the most common. They’re false setups supposedly sponsored by celebrities who promise to multiply or match the amount of cryptocurrency sent. Under such a scam, people send cryptocurrency directly into the scammers’ wallets.
It may not come as a surprise that the Tesla chief is among the figures being impersonated the most given his vocal opinions as a cryptocurrency enthusiast, which also seem to have market-moving effects.
Musk, one of the prominent figures in the cryptocurrency space, has, several times in the past, moved the price of dogecoin, GameStop, and Etsy, among others.
Since October 2020, nearly 7,000 people have reported losses of more than $80 million on these scams at a median loss of $1,900 – 12 times the number of reports and nearly 1,000% more in reported losses compared to the same period last year.
Another type of ploy, which topped the list as the most lucrative way to obtain cryptocurrencies, is the “investing” scam, FTC said. This typically involves impersonating a government authority or a well-known business.
“Sites use fake testimonials and cryptocurrency jargon to appear credible, but promises of enormous, guaranteed returns are simply lies,” the agency said. “But people report that, when they try to withdraw supposed profits, they are told to send even more crypto – and end up getting nothing back.”
Many told the FTC that they fed cash into bitcoin ATMs to pay fraudsters claiming to be from the Social Security Administration. Coinbase Global, a cryptocurrency exchange, is another commonly referred to business by scammers.
As for the demographic profile of those being people targetted, the agency said people in the age group 20 to 49 were five times more likely to report losing money to scams compared to older age groups.
People 50 and older were far less likely to report losing money, but on an individual basis, reported losses at an average of $3,250.
“Cryptocurrency enthusiasts congregate online to chat about their shared passion,” the agency said. “And with bitcoin’s value soaring in recent months, new investors may be eager to get in on the action.”
Cryptocurrencies have skyrocketed in 2021, hitting a $2 trillion market valuation in April, just three months after it breached the $1 trillion mark. The rally is led by bitcoin, which has grown 51% year-to-date, ether at 354%, and dogecoin at around 10,300%.
With the travel industry poised to boom thanks to rising coronavirus vaccination rates, scammers could very well target would-be travelers in the coming months, spoiling many long-awaited vacations.
Two senators are calling on the Federal Trade Commission to do more to protect tourists from scammers, as travel is slated to spike along with coronavirus vaccination rates. United States Sens. Amy Klobuchar of Minnesota and Steve Daines of Montana sent a letter to the FTC on Thursday asking the commission to bolster protections for travelers and expressing “concern” over reports detailing a proliferation of travel scams.
“While the FTC posts advisories pertaining to travel scams, we believe that more must be done to protect consumers,” the senators wrote. “Travel reservations made on fraudulent websites can be costly and stressful for travelers, and it is critical to ensure that Americans understand how to recognize travel scams and their recourse options should they fall victim to these scams.”
Payments company Flywire found that 7 out of 10 frequent travelers say they’ll likely spend more on travel in 2022. But more tourists also means more scammers looking to prey on travelers. Travel scams could take the form of fraudsters disguised as booking agents or counterfeit tickets being sold online. The FTC’s website warns consumers of rental-listing rip-offs, timeshare tricks, and sweepstakes swindles.
In their letter, the senators also included four specific questions addressed to acting FTC chief Rebecca Kelly Slaughter about the commission’s coordination with the Department of Justice, any additional measures needed to “better protect consumers,” data around travel scams, and “additional resources” that the organization may need to better address travel scams.
The FTC did not immediately respond to Insider’s request for further comment.
This isn’t the first time that Klobuchar has crossed party lines on the issue of tourism. She introduced the Protecting Tourism in the United States Act in February, along with Republican Sen. Roy Blunt of Missouri.
Read the entire letter from Klobuchar and Daines here:
Facebook has motioned to dismiss two lawsuits that aim to break up the tech giant.
The firm filed motions asking to dismiss lawsuits filed by the Federal Trade Commission and 48 state attorneys general on December 9. The suits alleged Facebook neutralizes competitors – like by buying WhatsApp and Instagram – before they can threaten the social media giant’s dominance.
Facebook argued the suits fail to provide enough evidence that the tech giant engaged in anticompetitive practices. For instance, the social media giant does not have monopoly power over prices because it offers products for free, the motion argues.
Regarding the attorney general suit, Facebook argues the states waited too long to act, and cannot prove that Instagram and WhatsApp would have been competitors to the social media giant.
“Over the many years since the government cleared the Instagram and WhatsApp mergers, this competition has only gotten more fierce, and consumers have benefitted enormously from Facebook’s investments in these free apps,” a Facebook spokesperson said in a statement to Insider. ” The government ignores these realities and attempts to rewrite history with its unprecedented lawsuit.”
The US has threatened to break up tech giants, including Facebook, Apple, Amazon, and Google, for years. The Department of Justice filed an anticipated lawsuit against Google’s alleged exclusionary business deals in October.
Experts previously told Insider the suits are unlikely to lead to a break up of WhatsApp and Instagram from Facebook but will pave the way for greater tech oversight.
President Joe Biden is planning on stacking his administration with antitrust advocates as insiders expect him to strengthen tech regulation.
Slaughter began her term at the FTC in May 2018, after being nominated by President Donald Trump. Rosenworcel was first nominated to serve on the FCC by President Barack Obama in 2012, and is the longest-serving Democratic commissioner at the agency.
The appointments signal that Biden’s administration will likely continue to get tougher on regulating tech and telecom companies, building on the Trump administration’s mix of increasing antitrust enforcement, attempts to roll back Section 230’s legal protections for internet companies, and laissez-faire approach to telecom regulations.
Slaughter has supported the FTC’s increasingly hard line on antitrust issues as well as privacy, but she has also argued the agency should have taken action earlier and issued harsher penalties more likely to deter companies from future law-breaking, including holding executives personally liable for their companies’ privacy violations.
Slaugher has also said that the FTC’s enforcement efforts should be “anti-racist” through ensuring markets aren’t racially discriminatory and protecting consumers from algorithmic bias.
Rosenworcel’s appointment to the FCC, however, marks an even greater departure from her predecessor, the outgoing Chairman Ajit Pai.
Rosenworcel has pushed for the FCC to use its authority and resources to expand internet access, particularly to students whose lack of home internet has prevented them from keeping up in school while participating in remote learning during the pandemic – the so-called “homework gap.” She has also voiced support for net neutrality in the past, and will likely face pressure to reinstate the policy.
Slaughter and Rosenworcel will likely play a key role in any efforts to modify Section 230, which some Democrats say lets tech companies off the hook for not doing enough to disincentivize hate speech, harassment, and violence on their platforms.
The appointments aren’t final, as Biden will still need to decide whether to nominate Slaughter and Rosenworcel as permanent chairs. They will also likely face delays implementing their more ambitious plans until Biden nominates additional commissioners to break the current 2-2 split between Democrats and Republicans at both agencies.
Both the FTC and FCC are led by as many as five commissioners, appointed by the president, and neither is allowed to have more than three members of one party. Biden’s appointments will need to be confirmed by the Senate, a likely prospect as Vice President Kamala Harris could break any tie between the evenly divided upper chamber.
Facebook was slammed with two antitrust lawsuits this week — one from the FTC and one from a group of 48 attorneys general — that take aim at the company’s practices of stifling market competition.
They also seek to force Facebook’s spin-off of WhatsApp and Instagram, but experts told Business Insider that that’s unlikely to happen, and the suits will likely stretch out for years.
What the lawsuits really represent, experts said, is an indication that the government will no longer look the other way when it comes to how Facebook operates.
“Every acquisition they try to make from here on will be met with such a level of inspection and skepticism associated with it,” one expert told Business Insider.
The lawsuits are the cherry on top of a rocky few months for Facebook as a reckoning in tech looks to be on the horizon.
Congress has been investigating Facebook over antitrust concerns, the public has accused the company of allowing the spread of misinformation and hate speech, and Republicans are convinced that the platform is one of many that discriminates against the right.
Here’s what the lawsuits mean for Facebook and what they could change.
Why? Because the commission alleges that when Facebook acquired the two companies, it did so to neutralize them as competitors. As Facebook CEO Mark Zuckerberg said in a 2008 email, unearthed for the first time in the FTC’s lawsuit, “it is better to buy than compete.”
That would be illegal, according to US antitrust laws. (This also isn’t a new accusation – Zuckerberg faced questioning over the same topic in front of Congress in July as part of its investigation into online competition.)
Antitrust laws are designed to prevent firms from using anticompetitive business practices that stifle competition, thereby allowing the companies to dominate the market and hold monopoly power.
In addition to the divestitures, the filings are also seeking to keep Facebook from engaging in anticompetitive conduct. Such conduct could include Facebook preventing competing services from gaining access to its customer base, David Dinielli – an antitrust lawyer and a former special counsel with the antitrust division of the Department of Justice – told Business Insider. The ultimate goal, he said, is to restore competition in the market.
“This is the incredibly strong opening salvo of what could be a multi-year battle,” Dinielli said.
Why is the FTC lawsuit a big deal?
The lawsuit represents a major legal action taken by the US government against Facebook. It also coincides with a separate lawsuit filed by 48 attorneys general that includes similar allegations.
Dinielli also said an important fact about these filings is that they aren’t political documents but are rather explanations that anyone, regardless of political affiliation, will understand. Regulation of the tech industry has been largely politicized this year, especially as platforms like Facebook began fact-checking President Donald Trump’s online posts.
The suit’s demands that WhatsApp and Instagram be spun off are notable.
Divesting WhatsApp could have a dire impact on the future of the social media company, as Bloomberg’s Kurt Wagner reported. Facebook bet big bucks on the popular mobile messaging platform, and as those types of services continue to veer into the social networking world, a company like WhatsApp will be an invaluable asset. Zuckerberg and Facebook leadership recognized as much, according to internal emails made public as part of the FTC lawsuit.
Facebook also recognized Instagram as a formidable challenger before it acquired the platform – Zuckerberg wrote in 2012 that it would be “really scary” for Facebook if Instagram remained a standalone competitor.
“It’s kind of ridiculous in and of itself that they bought Instagram in 2012 and now, eight years later, [regulators are] saying, ‘Oh, you shouldn’t have done that,'” Ari Lightman, professor of digital media at Carnegie Mellon and social media expert, told Business Insider.
But that doesn’t mean that investigators will get their way with a WhatsApp-Instagram spin-off.
Will anything change because of the lawsuit?
Experts say, not really.
Wall Street analysts told Business Insider’s Martin Coulter that the lawsuit might not actually have legs to hold up in court, and a spinoff of Instagram and WhatsApp is unlikely to happen, Lightman said.
“If you break them up now, are you going to give them a refund check?” Lightman said. There are so many integrated assets, from engineers and executives to user data, so the question is how does that even begin to be unraveled, according to Lightman.
Experts said what the lawsuit really represents is being part of a series of governmental actions signaling the broader consensus that the industry needs oversight.
“It’s time to take all of these companies seriously, both in terms of the incredible benefits they’ve provided to our economy, to the marketplace of ideas and to our personal lives, but also the problems that they pose for those same things,” Dinielli said.
And Lightman said “every acquisition they try to make from here on will be met with such a level of inspection and skepticism associated with it.” What Facebook needs is better legislation that applies to them specifically as internet platforms, according to Lightman.
He also said Facebook will spend “a lot of money, a lot of resources, a lot of time, a lot of energy fighting this thing,” leaving the door open for other competitors to catch up with their own innovations.
The lawsuits come after a tumultuous year for Facebook
Both the FTC’s suit and that filed by 48 attorneys general come on the heels of a rocky few months for Facebook, as a reckoning in tech looks to be on the horizon.
Antitrust scrutiny, accusations surrounding the proliferation of misinformation and hate speech on its platform, election interference, a vendetta against Republicans – it has not been smooth sailing for Facebook this year. Though its problems, of course, stretch back years, when the Cambridge Analytica scandal really kicked off a “techlash” against the company and its industry.
The House antitrust subcommittee has investigated Facebook, the Senate judiciary subcommittee is mulling over tweaking Section 230 protections, and a greater public discourse around tech regulation has taken hold as online consumers become more aware of the platforms they use every day.
“Running unregulated, unchecked, unsupervised – it’s great for growth in the early days, but now it doesn’t fit the model, and trying to use a blunt hammer, which is 120-year-old piece of legislation, is the wrong answer as well,” Lightman said.