Federal Trade Commission and
Consumer Protection
Devesh R. Raval
U.S. Federal Trade Commission
Mexico City
March 15, 2016
The views expressed herein are those of the speaker and do not necessarily represent the views of
the Federal Trade Commission or any individual Commissioner
Mission: Protect Consumers
Competition
Consumer
Protection
Mission: Protect Consumers
• Research Mandate
– Regularly conduct economic studies
• Data Broker report
• Patent Assertion Entity study
• Independent Bureau of Economics
Consumer Protection
• Prevent Deceptive and Unfair Practices
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Advertising
Marketing
Fraud
Privacy and Data Security
Case Study: Premium SMS Market
• Receive Text Messages on your mobile
• Charge to your mobile phone bill
• Market Size: $2-3 billion in US at peak
– $150-$200 million in California
• Voluntarily eliminated in late 2013
Market Structure
Content Provider
Aggregator
Carrier
Mobile Cramming
• Fraudulent charges on phone bill
• Inattentive Consumers don’t notice charges
• FTC action:
– First sued Content Providers
– Then Carriers (AT&T and T-Mobile)
Why sue the carriers?
• Efficient to hold carrier responsible
• Receive the most information (complaints)
• Can easily monitor/terminate providers
• Crammers themselves are judgment proof
Evidence Against Carriers
• High refund rates (13-15% in California)
– Much higher than comparable markets
– Similar to those for “crammers”
• Evidence from carrier reforms
• Used data to estimate degree of fraud
FTC, FCC, States Joint Settlements
• With AT&T and T-Mobile
• Monetary provisions
– Consumer Refunds (FTC)
– Civil Penalties (FCC, States)
• Order for Third Party Charges
– Provide Purchase notifications
– Obtain Express Informed Consent
– Provide Information on Charge Blocks