Techdirt. Stories about "ftc"

FTC Reminds EPIC That Suing The FTC To Get It To Investigate Google Might Not Be The Best Idea

Mike Masnick — Wed, 22 Feb 2012 07:44:30 PST

If you're unfamiliar with EPIC, it's an extremist "privacy" rights group. We've called the group out in the past for its rather ridiculous position on privacy issues. EPIC has particularly had it in for Google, which it appears to think is the evilest of evil sites and the government has to step in and stop it from collecting information to make your search experience better (even if users can block such data collection themselves). What I hadn't realized was that EPIC has such an infatuation with Google that it actually sued the FTC (pdf) to try to force it to investigate Google for its recent privacy policy change. No matter what you think of Google's privacy policy issues, it's ridiculous for EPIC to go that far, and the FTC is making that clear to the overzealous organization, pointing out that it has absolutely no standing whatsoever in terms of making the FTC do anything at all. The FTC may still investigate, but EPIC should have no part of that.

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Apparently Twitter Will Be Allowed To Mislead Consumers In 20 Years (But Not Before)

Mike Masnick — Thu, 17 Mar 2011 08:21:59 PDT

Twitter recently settled a complaint from the FTC concerning some of its security practices. That story, by itself, isn't all that interesting: basically Twitter had some problems when it was growing, the FTC slapped them down, and the company is now promising to be more careful , going forward. Nothing too out of the ordinary. However, ChurchHatesTucker points out one odd aspect to the settlement:

"Under the terms of the settlement, Twitter will be barred for 20 years from misleading consumers about the extent to which it protects the security, privacy, and confidentiality of nonpublic consumer information, including the measures it takes to prevent unauthorized access to nonpublic information and honor the privacy choices made by consumers."

From that quote, it certainly sounds like Twitter will actually be allowed to mislead consumers about the extent to which it protects the security, privacy and confidentiality of nonpublic consumer information after those 20 years are up. I mean, why even put such a term on something like this?

In the meantime, it seems worth pointing out the contrast here, where the FTC (part of the Obama administration) is slapping down Twitter for revealing nonpublic consumer information... at the very same time that the very same administration has demanded all sorts of nonpublic consumer information about Twitter users. Mixed messages much?

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Surprising, But Good, News: FTC Appoints Ed Felten As CTO

Mike Masnick — Thu, 4 Nov 2010 16:58:46 PDT

This is a surprise, but really excellent news. Princeton Computer Science professor Ed Felten -- one of the few folks out there who seems to really understand various tech issues having to do with e-voting, DRM, net neutrality, copyright and other issues has been appointed as the first ever CTO of the FTC. Felten is the guy who was threatened by the RIAA years ago for cracking their DRM and daring to want to actually publish an academic paper about how weak the DRM was. He's also been heavily involved in exposing security weaknesses with e-voting machines (and has been legally threatened about that as well). His blog (which now includes posts from lots of others), called Freedom To Tinker, has long been a must read. Hopefully Felten is able to actually make a difference.

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FTC Concludes Investigation Into Google's Street View Data Collection Without Penalties

Mike Masnick — Wed, 27 Oct 2010 19:04:14 PDT

For all the hype about Google's Street View data collection, it appears that the FTC now agrees that it was an accident, where Google didn't even realize it was collecting the data. Even with the recent revelation that some of the data included emails and passwords, the FTC has now concluded its investigation of Google, and won't be punishing the company. It appears the FTC is satisfied that Google did not realize it was collecting this data and that the company did nothing with it. Combined with the company's new policies to try to avoid such things in the future, the FTC appears to believe no further action is necessary.

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Entertainment Industry Propaganda Campaign Against Limewire Fails; FTC Drops ID Fraud Investigation

Mike Masnick — Mon, 30 Aug 2010 02:43:03 PDT

While Limewire is facing a difficult future after losing its lawsuit to the major record labels, the company was also the target of a ridiculous propaganda campaign over the years, orchestrated by a few entertainment industry organizations, which tried to connect Limewire to identity fraud, by claiming that people were putting personal data into shared folders... and this was somehow Limewire's fault. Either way, the FTC stepped in to investigate and has now dropped the investigation, saying that, while the company could still do a better job educating users on how not to inadvertently share information, it didn't see anything that was actionable against Limewire.

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FTC Cracks Down On Marketing Firm That Put Up Fake Reviews In iPhone App Store

Mike Masnick — Fri, 27 Aug 2010 05:10:52 PDT

While lots of us were quite concerned about how the FTC might enforce its seemingly arbitrary new disclosure guidelines, so far, it should be admitted, that the FTC has enforced these new rules carefully. It did, for example, warn clothing retailer Ann Taylor for giving gift cards to bloggers who covered their new line of clothes. That was interesting in that it targeted the retailer, rather than the bloggers themselves -- but was potentially problematic in that blaming a retailer for potential actions of bloggers doesn't seem like correct application of liability. Still, in that case, the FTC only issued a warning.

Now the FTC has announced a settlement with marketing firm Reverb Communications, who was accused of writing fake reviews of apps in the iPhone app store. This FTC action makes sense, as it's clearly a case of someone passing off a review as legit, when it was part of a marketing campaign: That said, you could argue, at this point, that most people recognize that some percentage of online reviews come from insiders or friends anyway. And, considering that the FTC's explanation for why such rules did not apply to celebrities was that most people understand that celebrities get free stuff all the time, this all seems like something of an arbitrary standard. I don't have a problem with the FTC cracking down on these fake reviews, but it's still not clear that the FTC has an objective standard here, rather than an arbitrary one.

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Google Explains Why Making Special Copyright Laws For Newspapers Is A Mistake

Mike Masnick — Wed, 21 Jul 2010 15:38:22 PDT

We've written a few times about how ridiculous the FTC's proposals to "save journalism" are. They're much more focused on saving newspapers, not journalism. And they seem to totally misunderstand the problem -- or to believe the problem is some amorphous threat from "internet aggregators," which is based on no actual evidence. Google has now responded to the FTC's proposal, and, as Jeff Jarvis notes, effectively "taken the FTC to school" on the basics of journalism economics and copyright. My favorite segment may be:

The large profit margins newspapers enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers. With the Internet, that scarcity has been taken away and replaced by abundance. No policy proposal will be able to restore newspaper revenues to what they were before the emergence of online news. It is not a question of analog dollars versus digital dimes, but rather a realistic assessment of how to make money in a world of abundant competitors and consumer choice.

There's also a nice dig for those who believe that paywalls are the solution (even though Google is more than willing to help publishers hang themselves with that noose). First, it notes that subscription revenue today represents only 3% of newspaper revenue, and then points out that perhaps paywalls could "raise the 3% revenue figure," though it clearly seems to be emphasizing that we're talking about a really minor revenue stream here.

Hopefully the FTC pays attention, but you could see them just dismissing Google as a "biased" party. The newspapers pushing these sorts of solutions are barking up the wrong tree, and hopefully the FTC realizes this, rather than providing a big crutch for the news organizations unwilling to adapt to a changing market.

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FTC Trying To Save Journalism Too... But It Seems To Think Journalism Is Old Newspapers

Mike Masnick — Tue, 1 Jun 2010 11:11:00 PDT

As you may have heard, last week, we announced a fun event that we've put together, coming up on June 16th, called Techdirt Saves* Journalism, which you can sign up for here: Of course, we're not the only ones looking to "save" journalism. Google, which is sponsoring and hosting our event is, looking to "save" journalism too. And, not to be left out, the FTC is working on its own plans for "saving" journalism, as well. In fact, it's holding a roundtable discussion on the topic just one day before our get-together. Except... the FTC's initial discussion seems a bit suspect. It has put out a "staff discussion" (pdf) of various ideas that are being considered from a policy perspective: Jeff Jarvis summarizes the problems with the document nicely, in highlighting that they don't appear to be about helping journalism at all. Instead, they seem almost entirely focused on helping legacy newspaper companies survive. Perhaps tellingly, the document kicks off by both admitting and denying that very claim:

Although many of the issues confronting journalism cut across different news media platforms, such as broadcast television and radio, most of the discussion in this document will use the perspective of newspapers to exemplify the issues facing journalism as a whole. Studies have shown that newspapers typically provide the largest quantity of original news to consumers over any given period of time. We include within the term "newspapers" online news websites run either by an existing newspaper or by an online-only news organization. Other sources of news are also important, of course, and proposals for action should not favor newspapers over other news platforms.

That last sentence is the "denial" part, but it never seems to come up again. Many of the proposals would almost certainly massively favor newspapers over other platforms for no good reason other than the fact that some media folks are begging the government to set up laws that favor them over upstart competitors. It's a shame really. The FTC could have put out a document and a discussion that was focused on all of the compelling new business models and sources of reporting and journalism that are happening all over the place. Instead, it seems to just accept that such business models can't possibly produce enough revenue to matter and support the kind of journalism necessary.

While the FTC document goes to great pains to say that it's not clearly recommending any of these particular proposals at this point, the fact that things like expanding hot news is even listed as a possibility is downright scary. Expanding hot news is in no way about helping journalism. It's about stifling it.

All in all the problems with the document are pretty serious. It's an attempt to define the future by extrapolating the past. That's not how innovation happens. However, if anyone from the FTC would like to take a more forward-looking approach to enabling journalism in the modern era, they're welcome to attend our event...

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Not Illegal To Ask Your Fans To Spam A Judge... Though, Still Not Particularly Smart

Mike Masnick — Wed, 26 May 2010 02:53:23 PDT

Earlier this year, we noted that infomercial king Kevin Trudeau was sentenced to 30 days in jail for contempt of court after asking his "fans" to email the judge in a case in which Trudeau is battling the FTC. The contempt charge is a bit tricky, because it's difficult to see what's wrong with having people email a publicly available judge. And, indeed, it appears that the contempt charge has been overturned and Trudeau won't have to go to jail over it after all. That said, it still doesn't seem particularly wise to ask people to spam a judge who's in charge of determining your fate.

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FTC Gives Ann Taylor A Pass In First 'Blog Disclosure' Investigation

Mike Masnick — Fri, 14 May 2010 16:40:00 PDT

We expressed some serious concerns with the somewhat ambiguous FTC disclosure rules directed at blogs and new media that went into effect last year, and we've been waiting to see how the FTC enforces those rules. We found it odd that the FTC apparently felt that celebrities could be held to different standards. There have been some questions about different activities -- for example, Viacom's actions in trying to make authorized uploads look as if they were bootlegs certainly appears to run afoul of the rules. And, more recently, there were some concerns over the NY Times' lack of disclosure concerning its relationship with Apple when reporting on the iPad.

However, back in February, some were wondering if retailer Ann Taylor's offer of gift cards to bloggers who covered their new line of clothing violated the rules. Apparently, the FTC did take notice, and Michael Scott points us to the news that last month, the FTC decided to give Ann Taylor a one-time pass, though it did express some concerns about the program: What strikes me as interesting here is that the FTC investigation focuses on the advertiser's actions, rather than the bloggers'. That is, most of the concerns about the program were about whether the FTC would take action against bloggers. But, here, it was focused on the advertiser and its actions. That does make more sense, but does leave open a questionable loophole: if an advertiser tells a blogger to disclose some information and then the blogger does not do so... is the advertiser still liable? In this case, the FTC even mentions that one of the reasons it's not taking action is because many (though not all) of the bloggers, who wrote about the event, disclosed the gift cards. But if they had not -- even though Ann Taylor had told them to -- then is Ann Taylor to blame?

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Feds Just Itching To Regulate The Internet

Mike Masnick — Fri, 30 Apr 2010 07:42:00 PDT

It looks like the folks in DC are looking for all sorts of ways to further regulate companies in Silicon Valley. Senator Chuck Schumer is pushing for the FTC to regulate how Facebook handles privacy issues, which has some legal experts scratching their heads noting that the FTC doesn't have the authority to do so:

I have to say, in the words of my boyhood hero John McEnroe, "You cannot be serious." Schumer is asking the FTC to do his job for him. Surely Schumer -- who has been in Congress since 1991 and in the Senate since 1999 -- knows that the FTC's authority to regulate online privacy is on very shaky and politically charged ground. At a minimum, he knows that Congress has failed to act, despite calls for federal online privacy legislation for over a decade.

Except... well... that may be changing. A few folks have sent over noting that "a little-known provision" in the currently debated financial overhaul bill would suddenly grant the FTC more power to regulate the internet. This comes just a few months after someone in the Commerce Department suggested that it was time for the current administration to "rescind" its "leave the internet alone" regulatory stance -- specifically including taking an active role when it comes to internet privacy (along with cybersecurity and copyright...).

If this is indeed happening, then it certainly shouldn't be a part of the financial regulatory reform bill, but should stand to be debated alone, so that there's an actual discussion of what's happening and why, and people can weigh in. As a part of a larger bill, there will likely be little if any public debate on a potentially massive policy change. Right now, what's being said is a bit scary. The article quotes FTC chair Jon Leibowitz saying:

"If we had a deterrent, a bigger stick to fine malefactors, that would be helpful."

But there are pretty big questions about who should be considered malefactors and who should be allowed to fine them and for what. In the past, Leibowitz has sounded reasonable, but he's also been a bit quick to ask for additional regulatory powers in the past as well. And, for those of you worried about the question of getting power to regulate the internet over copyright, it is worth mentioning that Liebowitz worked at the MPAA for four years.

No matter what, this would be a pretty massive change in policy, and as such, it deserves a full and open debate -- something that seems increasingly rare when it comes to regulating the internet these days.

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Will YouTube Case Lead To FTC Investigation Of Viacom's Questionable Marketing Practices?

Mike Masnick — Fri, 19 Mar 2010 10:55:00 PDT

Here's one more point concerning the motions filed in the YouTube case by Google and Viacom. We had mentioned in our analysis that Google highlights the details of Viacom's rather large "stealth marketing" campaign to upload videos to YouTube, but Eric Goldman points out that the practices Google uncovered certainly sound like they cross the line of what the FTC says is legitimate:

YouTube also scored points for its descriptions of Viacom's stealth marketing practices. Although these facts only help YouTube's legal posture a little, the lawsuit's discovery process has unveiled some non-public information about Viacom’s practices that should be interesting to the FTC and state attorney generals. Viacom's alleged stealth marketing practices are aggressive--close to the permissible line, if not over it. As a result, they might be exactly the kind of consumer misdirection and inauthentic online content that the FTC has been railing against, and we know the FTC is looking for test cases in this area. So, a lawsuit that began as Viacom v. YouTube might morph into FTC v. Viacom. This is one of the known risks of picking a fight--once started, you can't control where it goes.

Indeed, Google presents rather detailed evidence of the lengths Viacom went through to fool users into thinking that clips were uploaded by people other than Viacom. Among Viacom's actions:

Hiring "an army of third-party marketing agents to upload clips on its behalf"
Having the uploads come from names that are made to look like random users
Using non-Viacom email addresses to sign up for accounts -- with the company admitting that it wanted to use email addresses that "can't be traced" back to the company.
Leaving Viacom offices to go elsewhere to do the uploads (such as Kinkos) to avoid connecting the uploads to Viacom.
Altering the footage of videos to make them appear unauthorized: "so users feel they have found something unique."

While certainly helping Google make the point that it's ridiculous to expect it to know which videos were legit and which were infringing, these also seem to certainly violate the spirit of the FTC's recent guidelines on questionable "stealth" marketing practices. As Goldman notes, if the FTC is looking for a high profile test case, they may have just been handed a ton of useful evidence.

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FTC Finally Forces FreeCreditReport.com To Be Honest In Its Advertising

Mike Masnick — Wed, 3 Mar 2010 10:20:00 PST

It's been many years since we first wrote about the scammy services set up by the major credit reporting agencies to pretend to give you your federally guaranteed free credit report. The worst of the bunch has been FreeCreditReport.com, run by Experian, which despite its name, was actually just a way to get people to sign up for costly monthly credit monitoring services. The place to get your real free credit report is AnnualCreditReport.com, but FreeCreditReport.com tricked an awful lot of people into believing it was the real site, leading many to end up paying money (a lot of it) when they just wanted their mandated free report.

The FTC has been battling Experian and the other rating agencies for years over this blatantly misleading advertising. The misleading ads have been incredibly lucrative for Experian, who apparently has convinced an astounding 20 million people to sign up for FreeCreditReport, and spends $70 million per year in advertising to get more people to sign up. For all that, the FTC forced Experian to pay a measly $1 million in fines (and refund money to plenty of customers), but you can understand why Experian has kept up its misleading adverising.

However, Experian and the other credit reporting agencies are now required to clearly disclose what's going on, and they're testing much more straightforward messages on their websites. For example, MSNBC reports that some visitors to FreeCreditReport are already seeing a giant gray box at the top of the page with text that reads:

"You have the right to a free credit report from AnnualCreditReport.com ... the only authorized source under federal law,"

And, with it, there's a link and a call to action: "Take me to the authorized source." What's amazing is that it took this long to actually require basic truth in advertising on such ads.

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FTC Continues Going After Robocallers

Mike Masnick — Tue, 8 Dec 2009 21:08:27 PST

Earlier this year, the FTC started going after those annoying and misleading car warranty robocallers, and I've noticed that -- for the most part -- I've stopped receiving such calls. Instead, I've been getting lots of robocalls about credit card "interest rate reduction" programs. So, it's nice to see the FTC is cracking down on those as well (noting, in case you didn't know, that most of those offers are total scams). Now we'll see what sort of robocallers show up next. Still, it does feel like the FTC is starting to respond to these types of things much more quickly, which is a good thing.

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Athletes Can Start Endorsing A Brand In Hours... But A Blogger Does It And It's A Federal Issue?

Mike Masnick — Tue, 20 Oct 2009 05:23:00 PDT

As the FTC still wants to stick by its questionable guidelines concerning bloggers "endorsing" products, I found it interesting that the NY Times was profiling a new online service that more easily allows brands to sign endorsement deals with star athletes. Basically, they just need to fill out a few forms, and within hours, that athlete may be the face of the local car dealership. Now, I don't see anything wrong with this, but I'm curious as to why this is somehow okay, but when a blogger fails to mention that he or she got a book for free, the FTC will consider fining them? Does anyone actually believe that the star football player shops at the local Ford dealer?

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IAB Takes On FTC Over Silly Blogger Disclosure Rules

Mike Masnick — Fri, 16 Oct 2009 13:00:00 PDT

While more disclosure is generally a good thing, the FTC's new guidelines for blogging disclosure have some pretty massive problems, and probably aren't legal. As more and more people are recognizing this -- and interviews with the FTC folks in charge of this suggest they either haven't put very much thought into this issue or they don't quite know how the world works outside of their government cocoon -- the backlash is growing. Now, the Internet Advertising Bureau (IAB) has stepped in with quite the open letter to the FTC, asking them to scrap the rules, while noting (snarkily) how impossible they are to follow, in practice:

So there I was last Saturday, about to send out on my Twitter feed -- which automatically updates my Facebook page and links to my personal blog -- a photograph of this wonderful baked halibut dish I'd just made as a surprise for my wife. I was in the middle of typing a rave review of the recipe, which I'd pulled from my favorite cookbook, Delicioso! The Regional Cooking of Spain by Penelope Casas. But before I could press the "post" button, I stopped and canceled the whole thing.

I remembered that the book was a freebie, sent to me by an editor at the Alfred A. Knopf publishing house 13 years ago. And I didn't want you guys to haul me into court and fine me for violating the rules you've just promulgated to muzzle social media.

While this may seem silly, it really does highlight the problems with the FTC's rules. They're totally unclear and absolutely could concern things like this. Getting a free book here or there happens all the time -- and the FTC actually claimed that if people don't return them, then they may face sanctions. That's ridiculous. Last month, we ran a fun contest for people to win free copies of a Kevin Smith book. If the winners from our comments mention that book anywhere online, do they need to mention they got the book for free? If they mention it to a friend, do they need to do the same thing? Because most of the time when posting stuff online, people really are just talking to their friends.

Again, it's not clear why people can't just sort this out themselves. People who post bogus reviews of things because someone pays them to, or because of something "free," are going to get called out on it eventually and lose their credibility. When people talk amongst friends, they don't reveal where they got the products they talk about, or if they happened to get a promotional sample -- and that's fine. While you can understand where the FTC is coming from, it really has gone overboard with these rules.

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Did The FTC's New 'Blogger' Guidelines Just Change The Way All Book/Music Reviews Must Be Conducted?

Mike Masnick — Mon, 5 Oct 2009 16:01:00 PDT

A bunch of folks have been sending in the fact that the FTC has (as was widely expected) approved new rules on "endorsements" or "testimonials," including a section on bloggers or "word-of-mouth marketers." The end goal here is definitely admirable, but I question whether or not this ruling really makes sense:

The revised Guides also add new examples to illustrate the long standing principle that "material connections" (sometimes payments or free products) between advertisers and endorsers -- connections that consumers would not expect -- must be disclosed. These examples address what constitutes an endorsement when the message is conveyed by bloggers or other "word-of-mouth" marketers. The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service.

Again, the concept is definitely admirable. There's long been a fear that companies are effectively bribing people with free stuff in order to get good reviews, and the FTC wants people to reveal that info. But... does that really make sense? It seems to me like this could just create a totally unnecessary minefield for anyone who blogs. And why is this focused on bloggers and word-of-mouth marketers? Almost all book and music reviews in the mainstream press involve the books and music being sent for free - and there's never been any question of impartiality of most of those reviews -- but why are they now left out of these rules? Is every blogger who reviews a book going to have to disclose where they got it? What about music? Many music bloggers are sent mp3s by the record labels. Do they need to reveal who sent them stuff? Does that really matter?

The real question, from my standpoint, is whether or not the FTC is really needed here. If someone is constantly blogging positively about stuff they get for free, they put their own credibility at risk, as people realize that the products aren't actually very good. It seems like the type of situation that sorts itself out. Those who are constantly pushing products for questionable reasons hurt themselves and soon no one trusts them. Does the FTC really need to be involved in that process? In the meantime, I'm suddenly glad that we don't do reviews on this site for the most part. I do occasionally mention or review books, but I guess I'll have to mention when I buy those books vs. when I'm sent them for free (it's about 50/50), which seems pretty pointless.

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Apparently Google's Lawyers Were Prepped For Google/Apple Antitrust Inquiry

Mike Masnick — Thu, 7 May 2009 20:18:37 PDT

With the (not particularly surprising) news coming out that the FTC was looking at the relationship between Apple and Google (specifically the ties between the Board of Directors of both companies), John Paczkowski noticed that Google's outside law firm (full disclosure: it's our outside law firm as well, though it's a big, big law firm), Wilson Sonsini Goodrich and Rosati had not only already prepared a presentation on the issue but had posted it to its website. Soon after noticing it, WSGR pulled down the presentation. So Paczkowski pointed to the Google cache of it... only to see that disappear quickly as well. Amusingly, Danny Sullivan noted that it's still available in Microsoft's cache. Either way, it seems like Google should be quite prepared for the issue, though Eric Schmidt's initial responses to questions about it don't seem very reassuring. You would think that he would have thought through a slightly more nuanced answer than saying that he hadn't even considered leaving Apple's board. Either way, it seems pretty clear that Google is going to spend an awful lot of time in the antitrust spotlight -- justified or not -- over the next few years, and the company better get used to it.

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Sleight Of Hand: If We Don't Call It DRM, We Can Pretend That DRM Is Gone

Mike Masnick — Fri, 27 Mar 2009 18:11:00 PDT

I was upset that I had to miss the FTC's workshop on DRM earlier this week. I had been invited to speak at the event, but had already committed to speaking at the Leadership Music Digital Summit in Nashville, so had to decline. But, from the writeups about the event, it's quite clear that many in the content industry still believe DRM is a good idea (or, rather a "necessary" idea), despite the fact that it doesn't work. DRM, despite what they might say, does not "enable new business models" at all. It simply gives the content holders the illusion that they can somehow control the content. But, it never stops any copying at all. So, it actually tends to just annoy those who are trying to legitimately purchase and/or access the content. Because those who are going to access it in an unauthorized manner will do so separately.

That said, a bunch of folks have sent in a series of stories this week that are somewhat amusing. Basically, it seems that video game companies have decided to stop calling DRM "DRM." This follows a series of horrific PR nightmares, where firms made use of DRM in ways that significantly limited the value of certain games, and players (or potential customers) of those games struck back in trashing those gaming companies for treating them as criminals. So, now, we have stories about Valve launching a new DRM that "makes DRM obsolete" even though it's still DRM. Then there's EA -- who received the biggest brunt of consumer backlash for its DRM choices. It's releasing the new Sims "without DRM methods that feel overly invasive." But, of course, it will still have DRM.

It's really difficult to understand what these execs think they're doing that benefits them in any way. It's not about enabling new business models. Any business model they're talking about can work just fine without DRM. It's not about "keeping honest people honest," because you don't have to keep honest people honest -- that's why they're honest. It's not about stopping unauthorized file sharing or "piracy," because no DRM has yet been shown to do that at all. It's not about "slowing down" unauthorized file sharing, because once an unauthorized copy is out there, it gets pretty quickly copied everywhere. One copy is all it takes and then nothing is "slowed down" at all. The only thing DRM serves to do is get in the way of legitimate customers trying to do what they want with content they thought they had legally purchased. In other words, it destroys value for legitimate customers -- and it's difficult to see any business rationale where that's an intelligent move.

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Details On The FTC's DRM Workshop

Mike Masnick — Tue, 27 Jan 2009 23:37:00 PST

At the beginning of January we noted -- with some amount of surprise -- that it appeared that the FTC was preparing a workshop on DRM. When I was in Washington, DC recently, I had the chance to meet some of the folks putting that workshop together, and now they've sent over a more detailed list of topics up for discussion at the session, and it does seem like a pretty good list -- covering pretty much the entire range of questions concerning DRM, specifically from a consumer perspective. It's definitely an encouraging sign that folks at the FTC are recognizing that DRM can be used to do harm, rather than just (as the industry would have you believe) to "open up new business models."

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Companies To Be Held Liable For Selling To Online Criminals

Mike Masnick — Mon, 28 Apr 2008 17:34:00 PDT

One of the reasons why various safe harbor rules exist is to protect parties who really have nothing to do with any kind of law breaking from being liable for the activities of others. Thus, we don't blame an ISP for the activities of one of its users, even if that user breaks the law. That's both reasonable and fair. Those who want to blame those providers often do so just because it's easier -- or, more commonly, because they somehow think it's better for that service provider to somehow act in the role of the police to make things easier. Something similar seems to be happening with the FTC placing the onus on small businesses to make sure they don't sell to online criminals. Slashdot points us to the news that, starting November 1st, all companies are supposed to compare customer info with a "red flag" list of online identity fraudsters and money launderers. Firms that fail to check may be liable if they end up doing business with "known" criminals. You can understand the reasoning here. It certainly makes it a lot easier for the FTC to try to crack down on these crimes. But it adds significant expense and liability to small businesses for potential crimes in which they were totally uninvolved.

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Court Overturns FTC Ruling Against Rambus

Mike Masnick — Tue, 22 Apr 2008 16:06:59 PDT

We've been covering the story of Rambus' tricks to get itself a patent that covered a standard by sitting in on standards meetings and then modifying its patents to cover the standard. The rulings on the various lawsuits have gone back and forth on this, and while Rambus has had some wins and some losses in court, last year the FTC stepped in and smacked the company down, noting that it had used questionable means to get itself an effective monopoly on the memory market. Unfortunately, that FTC ruling has now been overturned by an appeals court that said the FTC failed to show evidence of a monopoly. This is unfortunate for a variety of reasons. If the FTC's ruling had been allowed to stand, it would have shown how an ill-gotten patent would be the equivalent of an illegal monopoly. That seems like the proper result, as a patent clearly is a government granted monopoly. So, if the patent is gained through questionable means, then that monopoly should be considered an illegal monopoly. Unfortunately the appeals court disagreed, and that will make us all worse off, as it will give the government fewer tools to crack down on abusers of the patent system.

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FTC Notices That Diet Pill Spammer's Diet Pills Don't Work

Mike Masnick — Mon, 27 Aug 2007 03:59:00 PDT

Last week, the FTC announced that a judge had shut down the operation of a diet pill spammer after it turned out (shockingly, we know) that the claims made by the spammers about the pills were either completely false or (at best) unsubstantiated. While the spammers were in violation of the CAN SPAM law, it would seem that they should be in violation of other fraud regulations as well, such as false advertising. Of course, with so much spamming going overseas these days, perhaps what's more amazing is that these guys were in the US and it was possible to find them in order to shut them down. We're sure someone somewhat less easily shut down will quickly fill in the void.

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Cramming Scammers Apparently Spent All Their Money -- Paying Back 5% Of The Money Taken

Mike Masnick — Mon, 20 Aug 2007 06:52:00 PDT

We haven't heard much about cramming scams lately, but they still happen all the time. For those who don't know, cramming is when a third party company either illegally gets additional charges on your telephone bill or (more often) tricks you into agreeing to more charges on your phone bill. Four years ago, we wrote about some of the tricks used in cramming call centers, where they pretend they're just "verifying" information -- and then bundle a whole bunch of questions together, tricking people into saying yes to all of the questions, when they really mean to say yes to the last question. The companies later use those recordings (sometimes edited) to prove to people that they "approved" the charges and refuse to cancel the charges or refund the money. Various state governments and the FTC have tried cracking down on these companies for a while, and the FTC went after a bunch last summer -- which has resulted in a settlement. Unfortunately, while the companies took people for $24.7 million, they're only paying back $1.2 million (and not admitting any guilt). Apparently, the firms claim that the $1.2 million is all they can afford. Apparently lesson one if you're going to scam a bunch of people is to spend all that money before the authorities catch up with you.

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