The Federal Trade Commission (FTC) said Tuesday (Aug. 13) that it had filed an amicus brief on behalf of Epic in the case, outlining how a federal judge should consider potential remedies when determining relief following a ruling that found Google liable for illegal monopolization.

Epic in April proposed that a judge should require Google to allow for more competition in the distribution of apps on its Android mobile platform. This came after a jury determined in 2023 that Google had abused its power as a gatekeeper for apps for the platform.

Epic wants the judge to require the Google Play Store to allow distribution by other, third-party app stores for six years, to block Google’s dealmaking with device makers that prevents the preloading of other app stores and to stop Google from barring apps from informing users of other, out-of-app purchasing options.

“In its amicus brief, the FTC encourages the court to use its broad power to order a remedy that stops the illegal conduct, prevents its recurrence, and restores competition,” the commission said in a news release.

The brief also argues for injunctive relief that restores lost competition “in a forward-looking way” and makes sure a monopolist reap benefits obtained through the antitrust violation.

“Looking forward in cases like Epic v. Google often requires the consideration of network effects, data feedback loops, and other key features of digital markets,” the FTC said. “This could help ensure that potential competitors can overcome the advantages established digital platforms often gain, which include network effects and data incumbency.”

The brief comes days after Google achieved a victory in another antitrust case, with a federal judge dismissing a lawsuit that had accused the tech giant of unlawfully dominating web search on smartphones.

U.S. District Judge Rita Lin found the plaintiffs had not provided enough evidence showing harm from Google’s dominance of the market, but said they could file an amended suit by Sept. 9, pointing to a Washington, D.C., court’s ruling in a separate lawsuit earlier this month which found that Google had created an illegal monopoly over search engines. Google has denied the allegations in both suits.

The post FTC Offers Support to Epic Games in Battle With Google appeared first on PYMNTS.com.

The agreement, approved Wednesday (Aug. 7) by U.S. District Judge P. Kevin Castel, is part of a settlement between the fallen cryptocurrency platform and the Commodity Futures Trading Commission (CFTC).

Under the agreement, FTX and Alameda will pay back $8.7 billion to investors defrauded by Sam Bankman-Fried, the now-jailed founder of FTX. The companies must also pay a $4 billion “disgorgement” for “gains received in connection with the violations” mentioned in the CFTC’s complaint against the defendants.

The order also bans FTX and Alameda Research from “cheating or defrauding” commodity customers, engaging in transactions involving “digital asset commodities,” either by themselves or on behalf of third parties. However, the agreement does not require the companies to pay a civil penalty.

FTX had been one of the most prominent crypto exchanges until November of 2022 when a liquidity shortage led to its quick demise.

The CFTC had accused Bankman-Fried of orchestrating a fraud at the company with the help of his executives, who used billions in FTX funds – including customer funds — to trade on other crypto exchanges and fund “high-risk” digital asset investments.

Bankman-Fried was convicted last year of fraud and conspiracy to commit money laundering and sentenced in March to 25 years in prison. He is appealing the verdict.

Two other ex-FTX executives are scheduled to be sentenced this fall: former director of engineering Nishad Singh in late October and co-founder Gary Wang in November.

Singh pleaded guilty last year and agreed to cooperate with prosecutors, admitting that he knew by the middle of 2022 that Bankman-Fried was using customer funds without their knowledge. He testified during Bankman-Fried’s criminal trial that he was “embarrassed and ashamed” of reckless and excessive outlays made by his boss, even before he learned the money was coming from allegedly stolen customer funds.

Wang pleaded guilty to fraud in December 2022. Authorities had charged that he created the specific software code that allowed FTX-affiliated company Alameda to divert FTX customer funds. He also testified on behalf of the prosecution, saying that although Bankman-Fried knew of the multi-billion-dollar deficit at Alameda and FTX, he repeatedly told customers and investors that “FTX was fine.”

The post FTX and Alameda Pay $12.7 Billion to End CFTC Lawsuit appeared first on PYMNTS.com.

The proposed court orders include permanent bans for those behind an alleged credit repair pyramid scheme and a requirement to turn over more than $12 million in assets, the regulator said in a Monday (Aug. 5) press release.

“These companies promised to clean up people’s credit but failed to deliver,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in the release. “Meanwhile, honest businesses make money selling products and services, not by recruiting, and the drive to recruit, especially when coupled with inflated income claims, is the hallmark of an illegal pyramid.”

The FTC filed its suit against FES in May 2022, alleging that the company falsely promised an easy fix to consumers with low credit scores and then recruited those consumers to join a pyramid scheme that sold credit repair services to others, according to the release.

When that suit was filed, a federal court temporarily shut down FES in response to the FTC’s allegations, PYMNTS reported at the time.

The regulator’s complaint charged that FES and its owners, operators and associated companies deceived consumers about the credit repair services, charged them upfront for the service and made inflated claims about the income consumers could make by recruiting others into FES, the report said.

In one of the proposed settlements, defendant Parimal Naik, along with Financial Education Services, United Wealth Services, VR-Tech, Youth Financial Literacy Foundation and LK Commercial Lending will be permanently prohibited from several unlawful activities, will be required to put a compliance monitoring system in place and will be required to turn over $5.5 million in cash, according to the release.

In other proposed settlements, defendant Michael Toloff, along with VR-Tech Mgt and Statewide Commercial Lending; defendant Christopher Toloff, along with CM Rent; and defendant Gerald Thompson will be permanently banned from providing credit repair services or having any involvement in multi-level marketing.

Those three defendants will also be required to turn over assets worth “millions of dollars,” in assets, $1.7 million and $215,000, respectively, per the release.

“The FTC is committed to stopping deceptive credit repair tactics and shutting down illegal pyramid schemes that prey on struggling consumers,” Levine said in the release.

The post FTC Announces Proposed Settlements With Financial Education Services appeared first on PYMNTS.com.

The world’s richest man had sued the artificial intelligence (AI) company in March, only to withdraw the suit in June one day before it was set to go to trial.

Now, he has resumed the legal action, once again accusing OpenAI and co-founders Sam Altman and Greg Brockman of violating the company’s founding principles by prioritizing profits over the larger common good, The New York Times reported Monday (Aug. 5).

Musk alleges that Altman and Brockman, with whom he teamed in 2015 to launch OpenAI, abandoned the company’s original mission of humanity-focused AI when they teamed up with benefactor — and rival — Microsoft.

Musk, the suit says, was “betrayed by Mr. Altman and his accomplices … the perfidy and deceit is of Shakespearean proportions.”

OpenAI has said it had planned to move to have the suit dismissed, arguing that it remains committed to a mission to “ensure AGI benefits all of humanity,” in reference to artificial general intelligence, a version of AI that can think and reason on pace with human beings.

OpenAI said at the time that it realized AGI will require “far more resources than we’d originally imagined,” and that the company and Musk agreed in 2017 that a for-profit entity would be needed to acquire those resources. The company also says it advances its mission by building beneficial tools that are widely available.

Musk has also sought to ban Apple devices at his companies — which include X, Tesla and SpaceX — if they integrate OpenAI at the operating system (OS) level. This came  after Apple announced it was teaming with OpenAI and will integrate that company’s ChatGPT 4o artificial intelligence chatbot into iOS, macOS and iPadOS.

“If Apple integrates OpenAI at the OS level, then Apple devices will be banned at my companies,” Musk said in a post on X. “That is an unacceptable security violation.”

“And visitors will have to check their Apple devices at the door, where they will be stored in a Faraday cage,” Musk added in a later post.

The multibillionaire last year founded his own AI company, dubbed xAI, which recently began training its AI chatbot Grok on X – formerly Twitter – user accounts.

The post Musk Alleges ‘Shakespearean’ Betrayal in Revived OpenAI Lawsuit appeared first on PYMNTS.com.

The lawsuit, filed Wednesday (July 31) by Washington, D.C., Attorney General Brian Schwalb, said the concert/event ticketing platform engages in the “deceptive and unfair” practice of hiding mandatory fees from customers, while also not offering information about why those fees are levied or how they’re calculated.

“For years, StubHub has illegally deceived district consumers through its convoluted junk fee scheme,” Schwalb said in a Wednesday news release. “StubHub lures consumers in by advertising a deceptively low price, forces them through a burdensome purchase process, and then finally reveals a total on the checkout page that is vastly higher than the originally advertised ticket price. This is no accident — StubHub intentionally hides the true price to boost profits at its customers’ expense.”

The company’s use of a countdown timer pressures consumers into making purchases out of fear that they will lose their tickets, the lawsuit said. Drip pricing makes it almost impossible for consumers to comparison shop as they don’t know what the fee will be until they are near the end of checkout.

“Since adopting the drip pricing model in 2015, StubHub has sold nearly 5 million tickets to district consumers, extracting an estimated $118 million in hidden fees,” the news release said.

Reached for comment by PYMNTS, a StubHub spokesperson provided this statement: “We are disappointed that the D.C. attorney general is targeting StubHub when our user experience is consistent with the law, our competitors’ practices and the broader eCommerce sector. We strongly support federal and state solutions that enhance existing laws to empower consumers, such as requiring all-in pricing uniformly across platforms.”

Regardless of the outcome of the suit, research by PYMNTS Intelligence showed the importance of a smooth checkout, with half of all consumers considering the ease of a merchant’s checkout process when deciding where to shop.

“Businesses that can adapt to very convenient ways for customers to pay are going to win in the long run … so staying on top of offerings for a streamlined payment and checkout approach is a heavy focus,” Justin Downey, vice president of product at Maverick Payments, told PYMNTS earlier this year.

“Anything that makes processes quicker and easier with less obstacles for customers, that’s where the excitement is,” he added.

The Washington lawsuit comes weeks after StubHub reportedly halted plans for an initial public offering (IPO), citing an unpredictable market.

The post StubHub Accused of ‘Convoluted Junk Fee Scheme’ in DC Lawsuit appeared first on PYMNTS.com.

In a Tuesday (July 30) news release, Texas Attorney General Ken Paxton said the settlement was the largest ever from an action brought by a single state, and is the largest privacy settlement obtained by an attorney general.

According to the release, the settlement will stop Meta’s practice of “capturing and using the personal biometric data of millions of Texans without the authorization required by law.”

Paxton sued Meta in 2022, accusing the company of capturing millions of Texans’ biometric data without their consent.

“In 2011, Meta rolled out a new feature, initially called Tag Suggestions, that it claimed would improve the user experience by making it easier for users to ‘tag’ photographs with the names of people in the photo,” the release said. “Meta automatically turned this feature on for all Texans without explaining how the feature worked.”

The release adds that Meta — unbeknownst to most people in Texas — spent more than a decade using facial recognition software on essentially every face contained in the photographs uploaded to Facebook, despite knowing that state law forbids this practice unless a business gets a person’s consent.

PYMNTS has contacted Meta for comment but has not received a reply. A report on the settlement Tuesday by CNBC included this statement from the company:

“We are pleased to resolve this matter, and look forward to exploring future opportunities to deepen our business investments in Texas, including potentially developing data centers.”

The settlement comes at a time of heightened privacy concerns surrounding facial recognition, as PYMNTS wrote in May.

At the time, Microsoft had just updated its code of conduct to prevent its artificial intelligence (AI) service from being used for facial recognition purposes by or for U.S. law enforcement.

“Microsoft is banning it because, as a whole, there is still some hesitancy and trepidation regarding the use of facial recognition by police,” Bob Eckel, CEO of biometric solutions provider Aware, told PYMNTS. “Some argue that facial recognition fosters discrimination by being less accurate for certain races, nationalities and ethnicities. However, this is not true.”

Underlining the advancements in facial recognition accuracy, Eckel added, “Today’s facial recognition tools are tested and validated by trustworthy third parties, and certain states require police agencies using facial recognition to only use software deemed to be at least 98 percent accurate across all demographics.”

The post Meta Settles Landmark $1.4 Billion Biometrics Suit With Texas appeared first on PYMNTS.com.

The 5th U.S. Circuit Court of Appeals in New Orleans announced that ruling Wednesday (July 24), saying the charge is “a multibillion-dollar tax nobody voted for,” Bloomberg reported Wednesday.

The ruling came in one of three cases filed by Consumers’ Research, according to the report.

In earlier decisions, two other courts — the 6th Circuit in Cincinnati and the 11th Circuit in Atlanta — upheld the program, the report said.

The U.S. Supreme Court declined to review those decisions but could decide to do so now that the 5th Circuit in New Orleans delivered a different decision, per the report.

The program, the Universal Service Fund, is funded by charges levied by the Federal Communications Commission (FCC) and the Universal Service Administrative Co., a nonprofit organization that administers the fund, according to the report.

It disbursed $8.1 billion in 2023, helping 8 million people afford phone and internet service and helping to build telecommunications infrastructure in remote areas, per the report.

“Incredible win for telecom consumers, American citizens, and the Constitution,” Will Hild said in a post on X that was reposted by Consumers’ Research.

“This is a significant victory that could set the stage for an even bigger one to come at SCOTUS,” Casey Mattox said in another post on X that was reposted by the advocacy group.

FCC Chairwoman Jessica Rosenwercel said in a statement on the ruling that the FCC will “pursue all available avenues for review.”

“This decision is misguided and wrong,” Rosenwercel said. “It upends decades of bipartisan support for FCC programs that help communications reach the most rural and least-connected households in our country, as well as hospitals, schools and libraries nationwide. The opinion reflects a lack of understanding of the statutory scheme that helped create the world’s best and most far-reaching communications network.”

It was reported in June that AT&T CEO John Stankey said during a telecom industry forum that Congress should empower the FCC to mandate financial contributions from major technology firms towards the Universal Service Fund.

Under current legislation, the fund is sustained by fees levied on subscribers of cellphone and landline services.

The post Telecom Subsidy Ruled Unconstitutional, May Go to Supreme Court appeared first on PYMNTS.com.

The Federal Trade Commission (FTC) said Monday (July 22) that a federal court halted the operations and froze the assets of the operators of USA Student Debt Relief (USASDR).

The FTC asked the court to issue the order, alleging that the operators pretended to be affiliated with the Department of Education and its loan servicers and made false promises to student loan borrowers, the regulator said in a Monday press release.

The regulator’s complaint names Start Connecting LLC, Start Connecting SAS, and their owners and operators Douglas Goodman, Doris Gallon-Goodman and Juan Rojas, according to the release. The organizations collectively do business as USA Student Debt Relief.

“By pretending to be affiliated with the Department of Education and misrepresenting features of its free income-driven loan repayment programs, these scammers bilked millions from the consumers these programs were designed to help,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in the release.

USA Student Debt Relief did not immediately reply to PYMNTS’ request for comment.

The FTC’s complaint says that the defendants falsely promised permanent low, fixed monthly payments and generous lump-sum loan forgiveness; charged illegal advanced fees; and pocketed consumers’ monthly payments rather than applying them to their loan balances, according to the release.

The complaint also says that USASDR falsely marketed its services with fake testimonials and reviews on its website, on its social media pages, and on third-party consumer review platforms, the release said.

In addition, the complaint alleges that USASDR telemarketers based in Colombia placed unwanted telemarketing calls to consumers, including those on the Do Not Call Registry, and provided English-language contracts to Spanish-speaking consumers, per the release.

“We are pleased that the court preliminarily shut down this predatory operation and froze its assets, and we will continue our efforts to crack down on junk fees, unwanted calls and exploitation of consumers struggling with student loan debt,” Levine said in the release.

In an earlier case involving student loans, the FTC said in March that it was sending millions in refunds to victims of a student fraud scheme.

That case involved a fake loan forgiveness scam that used many names, including Mission Hills Federal, Federal Direct Group, National Secure Processing and The Student Loan Group.

The post FTC: Federal Court Freezes Assets of USA Student Debt Relief appeared first on PYMNTS.com.

The regulator said in a Friday press release that while marketing, selling and servicing its prepaid debit card products and its tax return preparation payment services, Green Dot violated consumer law.

Specifically, the Federal Reserve Board said, the company failed to adequately disclose the tax refund processing fee for tax preparation services offered on a third-party’s website; blocked access to the accounts of legitimate customers receiving unemployment benefits; lacked reasonable policies and procedures to help those customers solve those blocks; and failed to maintain effective consumer compliance risk management and anti-money laundering (AML) programs.

“The Board is requiring the firm to take several steps to improve these programs,” the regulator said in the release. “Green Dot must hire an independent third-party to strengthen its consumer compliance risk management programs and address the root causes of consumer complaints. The firm must also develop an effective anti-money laundering program and hire an independent third-party to conduct a review of certain transaction activities.”

In a Friday statement addressing this consent order, George Gresham, director, CEO and president of Green Dot, said that the company announced earlier this year that it was expecting a public enforcement action from the Federal Reserve, that it has been working closely with the regulator and that it is pleased that the consent order has been finalized.

“As we shared previously, the order relates to practices in place years ago, and we have taken and will continue taking meaningful steps to correct and remediate those issues, including significant updates to our processes, our product packaging and marketing, our management team and our compliance programs,” Gresham said in the statement.

Green Dot will work closely with the Federal Reserve Board to address and comply with all concerns noted in the consent order, he added.

“We remain optimistic about our financial and regulatory positions as well as our future growth potential and opportunity as we serve and empower customers directly and through our partners,” Gresham said.

Gresham assumed the roles of CEO and president at Green Dot in October 2022, having previously served as the company’s chief financial officer and chief operating officer, as well as serving as a member of the board.

The post Federal Reserve Fines Green Dot $44 Million, Alleging Unfair Practices appeared first on PYMNTS.com.

On one hand, some politicians and legal experts were outraged that an activist court attacked what it saw as the federal government’s right to regulate. On the other hand, free market advocates saw justification that it hoped would balance what it saw as an overly aggressive federal regulation stance.

In the interim, cooler legal minds have prevailed. Also in the interim, the potential implications of “Chevron” — as well as another lesser-known case decided in the waning days of the court’s term — are being weighed. Both could have an impact on the banking and payments sector.

Contrary to early published reports, the decision does not spell the beginning of the end of federal regulation over financial services and payments. It does not put the Consumer Financial Protection Bureau (CFPB) on notice. But it does open legitimate challenges to that authority, especially in cases where current statutes are still open to judicial interpretation.

“I think anytime that longstanding laws are overturned, you’re going to see a step back and try to figure out what it means,” Steven Brotman, associate at the legal firm Locke Lord, told PYMNTS recently. “But I think it is important to know what this decision doesn’t do, and first and foremost, is that it doesn’t overrule any existing decisions. So, if there’s already been litigation and decisions on a statute that’s still binding, maybe someone challenges that very same statute or does something to bring it back into the fold. But as things stand now, it doesn’t change anything that’s already happened.”

In keeping with Brotman’s commentary, Loper, as the case is now known in legal parlance, does not put the CFPB, Federal Deposit Insurance Corporation, Federal Deposit Insurance Corporation, or any other federal agency that regulates banking and payments at an existential risk.

But to understand why they’re not at risk, the word “ambiguity” needs to be placed in the context of this decision. As interpreted by several analysts and legal firms, the decision, led by Chief Justice John Roberts, shifts the power to interpret ambiguous laws from federal agencies to the courts, marking a major change in how regulations are interpreted and applied.

The concept of “ambiguity” was central to the Court’s reasoning. Under the now-defunct “Chevron doctrine,” if a law was deemed ambiguous, courts were required to defer to a government agency’s reasonable interpretation.

However, Roberts argued that determining whether a statute is truly ambiguous has proven problematic, making the Chevron doctrine unworkable. The majority of Justices asserted that even when faced with ambiguity in technical or scientific matters, courts are capable of making informed decisions, aided by expert briefings and arguments.

Dissenting opinions took issue with that interpretation. Critics, including dissenting Justice Elena Kagan, warned of a “massive shock to the legal system.” Kagan argued that the Chevron doctrine has been deeply integrated into modern governance and that its removal could lead to increased judicial activism and policy uncertainty.

No high-profile cases capitalizing on the new “ambiguity” ruling have been brought so far, and Brotman said his firm had yet to see one.

Judging from writing and opinions that have come out recently, if a federal regulation is unclear or leaves room for interpretation, it can be challenged in court and heard by a judge. If a federal regulation is judged to be “unambiguous,” the court would seem to be required to apply it. By that standard, the CFPB’s existence would seem to be unambiguous as determined by an earlier Supreme Court decision. But if an individual regulation from the CFPB is judged to be ambiguous, current writing and opinions indicate it could be challenged.

“I think one of my takeaways would be that existing regulations that have been around for a long time will stand,” Brotman said. “There’s no reason to panic and think that those are going to change overnight. I think the types of topics going forward that are in the state of play could be junk fees or artificial intelligence or cryptocurrency areas that haven’t really been litigated much over the years. Those are the areas where I think you’ll see the initial litigation.”

Loper was not the only decision in the Court’s waning days that could have implications for financial services.

In another late June decision called “Corner Post v. Board of Governors of the Federal Reserve System,” the Court made an important decision about when people or businesses can sue government agencies for harmful decisions. A law called the Administrative Procedure Act (APA) gives people 6 years to file such lawsuits. The Court decided that this 6-year countdown starts when the person or business actually experiences harm from the agency’s decision, not when the agency first made the decision.

This case is particularly important for the payments industry because it involves a challenge to a regulation called Regulation II, which sets the maximum fees that can be charged for debit card usage.

The Court sent the case back to a lower court, allowing the plaintiff (Corner Post) to continue arguing against the regulation. Corner Post believes that the fee limit set by Regulation II is higher than what the law actually allows.

In simpler terms, this decision might give businesses in the payments industry more time to challenge regulations they believe are unfair, even if those regulations were put in place years ago.

“Taken together, Loper Bright and Corner Post afford greater opportunity to bring challenges to final agency action, including action by the CFPB, the Federal Reserve, and FinCEN,” stated legal firm K&L Gates, which specializes in FinTech law, in a blog post.

“While the Court in Loper Bright noted that its ruling does ‘not call into question prior cases that relied on the Chevron framework,’ that statement does not necessarily preclude timely challenges to final agency action that previously passed muster under Chevron, including challenges that are deemed timely under Corner Post. For instance, under the clarification of the APA limitations period in Corner Post, a court might determine that the Regulation II fee limitations are impermissible even though the final agency action setting the fee limitations occurred in 2011,” the post said.

The post Will Supreme Court Rulings Keep Federal Regulators in Court? appeared first on PYMNTS.com.