FTC


'FTC' Articles

FTC Looking Into Impact of Apple's Sales Agreement With Amazon on Independent Resellers

Last year, Apple began selling many of its products on Amazon, including the latest iPhone, iPad, Mac, and Apple Watch models. As part of Apple's agreement with Amazon, unauthorized resellers who offered new or refurbished Apple products on Amazon had their listings removed after January 4, 2019. Since then, independent sellers have been required to apply for Apple Authorized Reseller status and the Amazon Renewed program to continue to offer used or refurbished Apple products on Amazon, but this is not always feasible due to hefty requirements outlined by The Verge earlier this year:The first is to purchase at least $2.5 million worth of refurbished inventory every 90 days from Apple itself or through a retailer with more than $5 billion in annual sales, like a wireless carrier or big-box retailers like Target or Walmart. The second is to reach out directly to Apple to become an authorized reseller. Apple has yet to make its reseller requirements known to the public, but to become an Apple-authorized provider of repairs requires a physical retail space for customers to enter.Now, The Verge reports that the FTC has looked into the Apple-Amazon deal, although it has yet to formally raise any antitrust concerns. Specifically, the report claims that FTC lawyers recently reached out to John Bumstead, a Minnesota man who sold refurbished MacBooks on Amazon until his listings were removed from the platform due to the new policy:"They wanted to know how Amazon works, how eBay works. I went into describing how a listing works on Amazon. Amazon is interesting in that you

FTC Wins Antitrust Lawsuit Against Qualcomm [Updated]

The FTC today won its antitrust lawsuit against Qualcomm over the chipmaker's anticompetitive business practices. As first reported by legal expert Florian Mueller on his blog FOSS Patents, U.S. District Judge Lucy Koh has ruled that Qualcomm's so-called "no license, no chips" model, under which the chipmaker has refused to provide chips to companies without a patent license, violates federal antitrust laws. The ruling has significant implications for Apple, as Koh ordered that Qualcomm must negotiate or renegotiate license terms with its customers in good faith without threatening to cut off access to its cellular modem chips or related software and technical support, according to Mueller. Qualcomm also must make patent licenses available to rival cellular modem suppliers on fair, reasonable, and non-discriminatory or "FRAND" terms, and may not enter exclusive agreements for the supply of modem chips. Apple sued Qualcomm in early 2017 over these anticompetitive business practices, and unpaid royalty rebates, but the two companies announced an agreement to end all ongoing litigation worldwide last month. The settlement includes a six-year licensing agreement and a multiyear chipset supply agreement. It's unclear if Apple had any hint that the FTC was likely to win its antitrust case and if that had any implications on its settlement with Qualcomm. While it appears that Intel will remain the sole supplier of LTE modems in 2019 iPhones, Qualcomm is expected to supply Apple with its industry-leading 5G modems for 2020 iPhones now that the companies have

Qualcomm Facing Off With FTC in Antitrust Trial That Kicks Off Today

With the intense ongoing legal battle between Qualcomm and Apple, it's easy to forget that Qualcomm is also facing an FTC antitrust lawsuit for using anticompetitive tactics to remain the main supplier for baseband processors for smartphones. The FTC hasn't forgotten, though, and FTC lawyers are in a Northern California courtroom before well-known judge Lucy Koh, who also presided over the Apple-Samsung legal fight. Lawyers for Qualcomm, the FTC, Apple, and other manufacturers have gathered as the trial commences, with the FTC set to argue that Qualcomm refused to provide chips to OEMs without a patent license, refused to license its technology to rivals, and set exclusive deals with Apple. Manufacturers like Huawei and Lenovo will testify that Qualcomm threatened to disrupt their chip supply during licensing negotiations, forcing them into signing deals. The FTC first filed a complaint against Qualcomm in January 2017, which was actually the catalyst for Apple's own lawsuit against the company just a few weeks later. In that complaint, the FTC said that Qualcomm uses its position and its portfolio of patents to impose anticompetitive supply and licensing terms on cell phone manufacturers, impacting its competitors. Part of the complaint addressed a deal with Apple in which Qualcomm required Apple to exclusively use its modems from 2011 to 2016 in exchange for lower patent royalties. Qualcomm is also accused of refusing to license its standard-essential (FRAND) patents to competing suppliers and implementing a no license, no chips policy to drive up

FTC Targeting Qualcomm for Forcing Apple to Use its Modems [Updated]

The United States Federal Trade Commission today filed a complaint against Qualcomm, accusing the company of violating the FTC Act by using anticompetitive tactics to remain the dominant supplier of baseband processors (aka LTE chips) for smartphones. According to the FTC, Qualcomm uses its position and its portfolio of patents to impose "onerous and anticompetitive supply and licensing terms on cell phone manufacturers," negatively impacting its competitors. The complaint specifically addresses a deal with Apple in which Qualcomm required Apple to exclusively use its modems from 2011 to 2016 in exchange for lower patent royalties.Qualcomm precluded Apple from sourcing baseband processors from Qualcomm's competitors from 2011 to 2016. Qualcomm recognized that any competitor that won Apple's business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm's competitors.Up until 2016, Apple only used Qualcomm modems in its line of iPhones, deviating from the norm with the iPhone 7. Both Intel and Qualcomm modems were adopted for the iPhone 7 and the iPhone 7 Plus, leading to some compatibility and performance discrepancies. Qualcomm is also accused of refusing to license its standard-essential patents to competing suppliers and implementing a "no license, no chips" tax policy where it supplies its baseband processors only when manufacturers agree to Qualcomm's preferred licensing terms, causing smartphone makers to pay higher royalties to Qualcomm when a competitor's modem chips are used. The

AT&T Customers to Receive More Than $88M in Refunds Following Mobile Cramming Settlement

The United States Federal Trade Commission today announced that it is giving more than $88 million in refunds to 2.7 million AT&T customers who had unauthorized third-party charges added to their service bills, something better known as "mobile cramming." The refunds come from a $105 million settlement AT&T paid the FTC back in October of 2014, after the carrier was accused of allowing third-party companies to bill customers for things like ringtone subscriptions without their consent. Money was also collected from Tatto and Acquinity, two companies involved in the cramming scheme. Nearly 2.5 million AT&T customers can expect to receive a credit on their bill within the next 75 days, and over 300,000 former customers will be given refund checks. The FTC says the average refund amount customers will receive is $31, and checks are going out starting today."AT&T received a high volume of complaints related to mobile cramming prior to the FTC and other federal and state agencies stepping in on consumers' behalf," said FTC Chairwoman Edith Ramirez. "I am pleased that consumers are now being refunded their money and that AT&T has changed its mobile billing practices."According to the FTC, the AT&T refunds being provided to customers represent the most money that's ever been returned to consumers in a mobile cramming case. Up until late 2014, AT&T and several third-party companies were charging customers up to $9.99 per month for subscriptions that provided sham services like ringtones, horoscopes, love tips, and more, with AT&T keeping 35 percent of the money that was

Korea FTC Investigating Apple Over Unfair Mobile Carrier Contracts

South Korea's Fair Trade Commission (FTC) is investigating "some matters" relating to Apple's business practices in the country, according to a Reuters report this morning. The comment was made Tuesday by the FTC chairman Jeong Jae-chan during a parliamentary hearing, but he declined to elaborate when asked to do so by a South Korean lawmaker. Last week, the Korea Times cited sources tying an upcoming FTC investigation to the terms of Apple's marketing contracts with local mobile carriers. Sources said Apple was suspected of pressing carriers into buying a minimum volume of promotional iPhones and sharing the burden of repair costs. "The Fair Trade Commission (FTC) is investigating mobile carriers over the exact terms of their contracts with Apple, and Apple Korea will also be looked into soon," said the source. Apple has faced criticism over its business practices in the country before. In April, the FTC ordered the company to change unfair provisions in its contracts with certified repair service partners which stipulated that the firms could not file lawsuits against Apple within a year after any dispute. The repair service partners were seen to have little choice but to agree with the terms, due to the market power of Apple's iPhones. Apple complied with the FTC order and changed the contracts. In 2015, the FTC also ordered Apple to allow customers refunds for repair services. Sources speculate that the latest investigation may result in the FTC fining the company and urging it to revise its contracts with mobile carriers if similar unfair

Brain Training App 'Lumosity' to Pay $2 Million to Settle Deceptive Advertising Charges

Lumos Labs, the company behind the Lumosity app that promises to "challenge your brain" using a daily training program of cognitive games, will pay out $2 million to settle deceptive advertising charges brought against it by the United States Federal Trade Commission. According to the FTC, Lumos Labs deceived consumers by telling them the games in Lumosity would help them perform better at work, get better scores on standardized tests, and stave off the decline of cognitive impairment related to age or disease. It also claimed its games could help with conditions like dementia and Alzheimer's disease, as well as improving cognitive impairment associated with conditions like stroke, traumatic brain injury, PTSD, ADHD, chemotherapy, and more. "Lumosity preyed on consumers' fears about age-related cognitive decline, suggesting their games could stave off memory loss, dementia, and even Alzheimer's disease," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection. "But Lumosity simply did not have the science to back up its ads."Available in the iOS App Store, Lumosity offers a selection of more than 50 cognitive games it claims were developed by scientists and game designers to train the brain. While a basic membership to access a limited number of games is free, a membership costs from $6.70 to $11.95 per month or up to $299.95 for a lifetime pass. Lumosity TV, Internet, radio, and social media advertisements suggested customers could play the games for 10 to 15 minutes three or four times per week to achieve "full potential in every aspect of life,"

AT&T Fined $100 Million by FCC for Unlimited Data Throttling Practices

The United States Federal Communications Commission today announced plans to fine AT&T $100 million for misleading customers about its unlimited mobile data plans. Following an investigation, the FCC is accusing AT&T of severely slowing down the data speeds of customers with unlimited data plans and failing to adequately warn them about the slower data speeds.In 2011, AT&T implemented a "Maximum Bit Rate" policy and capped the maximum data speeds for unlimited customers after they used a set amount of data within a billing cycle. The capped speeds were much slower than the normal network speeds AT&T advertised and significantly impaired the ability of AT&T customers to access the Internet or use data applications for the remainder of the billing cycle.The FCC says AT&T violated the 2010 Open Internet Transparency Rule by falsely calling its plans "unlimited" and by not informing customers of the maximum speed they would receive under AT&T's Maximum Bit Rate policy. Millions of customers suffered slow data speeds, with some seeing speed reductions for 12 days per month on average. On the decision, FCC chairman Tom Wheeler had this to say: "Customers deserve to get what they pay for. Broadband providers must be upfront and transparent about the services they provide. The FCC will not stand idly by while consumers are deceived by misleading marketing materials and insufficient disclosure." AT&T ceased offering unlimited data plans years ago, but it continues to have customers with grandfathered unlimited data plans. AT&T previously throttled all of those customers after

AT&T Scales Back Throttling of Grandfathered Unlimited Data Plans

AT&T has quietly updated one of its policies to reflect that it will now only throttle customers that are connected to a cell tower experiencing network congestion, reports Ars Technica. The carrier previously throttled all grandfathered customers with unlimited data plans that exceeded 5GB of 4G LTE data usage in a single monthly billing period, regardless of network congestion. The updated policy reads as follows:"As a result of AT&T's network management process, customers on a 3G or 4G smartphone or on a 4G LTE smartphone with an unlimited data plan who have exceeded 3 gigabytes (3G/4G) or 5 gigabytes (4G LTE) of data in a billing period may experience reduced speeds when using data services at times and in areas that are experiencing network congestion. All such customers can still use unlimited data without incurring overage charges, and their speeds will be restored with the start of the next billing cycle." Last October, the U.S. Federal Trade Commission filed a federal court complaint against AT&T, accusing the carrier of misleading its smartphone customers by charging them for unlimited data while reducing their data speeds by up to 90 percent. The FTC claimed that AT&T did not adequately inform its customers that they would be throttled for using more than a certain amount of data during a billing cycle. AT&T could still face penalties from the FTC if it loses the case, despite changing its policy. AT&T customers with unlimited data plans have experienced speeds as low as half a megabit per second when being throttled, according to the report, resulting in

FTC Also Investigating Apple's Upcoming Music Streaming Service

The Federal Trade Commission is investigating Apple's efforts to set up deals with record labels as it prepares to launch its new music streaming service, a rebranded version of Beats Music, according to Bloomberg. This would make the FTC the third government body to look into the new music service after the U. S. Department of Justice and European Commission. The FTC's investigators, still in the early stages, of their inquiry, are asking whether Apple’s efforts will change the way music labels work with other streaming services, for example curtailing ad-supported music and pushing more songs into paid tiers of service at higher rates, according to one of the people.A couple days ago, a report emerged that Apple was utilizing its power within the music industry to push record labels to stop licensing freemium tiers offered by Spotify and other music services. The Cupertino company also reportedly offered to pay YouTube's licensing fee to Universal Music Group if the label stopped allowing its music on the website, which is a popular destination for music videos. The FTC is speaking to multiple record labels about Apple's practices. However, music-industry executives told Bloomberg that Apple has made no such demands. Similarly, the Department of Justice is also interviewing high-ranking music executives about Apple's practices. The European Commission is doing the same, concerned that Apple will use its size to force record labels to stop supporting freemium music tiers. Apple's Beats-based music streaming service will reportedly launch in June at WWDC, though

FTC Levies $40M Fine Against TracFone for Throttling Unlimited Data Customers

In recent months, the Federal Trade Commission has taken a significant interest in carrier throttling practices and today handed down a ruling that could have future ramifications for carriers who throttle their unlimited customers. As reported by Re/code, the FTC has ordered prepaid wireless carrier TracFone to pay $40 million to consumers who paid for unlimited service and were then throttled after reaching certain data limits. TracFone advertised "unlimited text, talk, and data" for $45 a month under the brands Straight Talk, Net10, Simple Mobile, and Telcel America, and until September 2013, did not clearly disclose its throttling policies that saw customers experiencing data speeds that were cut by up to 90 percent, thereby violating the FTC Act. While this ruling only affects TracFone at the current time, there are several other carriers that have similar practices for their unlimited customers. AT&T and Verizon no longer offer unlimited data plans, but continue to provide unlimited data for many people who remain on grandfathered plans. AT&T has engaged in throttling practices for years, often cutting off customers who exceed 5GB of LTE data usage."The issue here is simple: when you promise consumers 'unlimited,' that means unlimited," said Jessica Rich, director of the FTC's Bureau of Consumer Protection. "This settlement means that Straight Talk, Net10, Simple Mobile, and Telcel America customers will be able to get money back from the company for services the company promised but didn't deliver."Last year, Verizon planned to throttle its high-usage