Business Blog
Share your perspectives on the Health Breach Notification Rule
By
Lesley Fair
July 12, 2023
Ask people about the records they consider the most private and they may say personal health data. (If they misunderstand the question, they may mention disco singles they bought in junior high – but perhaps that’s just us.) Of course, say “health privacy” and many people think of HIPAA – the Health Insurance Portability and Accountability Act. Did you know that some entities that hold or interact with consumers’ personal health records aren’t subject to HIPAA? But they may be covered by the FTC’s Health Breach Notification Rule. Given the proliferation of health apps, fitness trackers, and other health-related monitors subject to the Rule, the FTC is thinking about whether the Rule should be updated to reflect changes in technology and in how consumers use those products. In May, the FTC put a proposal on the table and wants your feedback by the August 8, 2023, deadline.
You’ll want to read the Notice of Proposed Rulemaking for the specifics, but there’s helpful information on the Rule’s Regulations.gov page. The most important thing is to share your insights by filing a public comment by August 8th. Save a step by filing online.
If you have never filed a public comment, here are some how-tos:
- Yes, the FTC wants your feedback. We welcome comments from industry members, but we also value the viewpoints of consumers, consumer groups, small businesses, and others with practical perspectives on the topic. Of course, this isn’t a vote. So rather than just saying yes or no, please help us by explaining your thinking on the subject.
- Not a lawyer? Not a problem. If we could debunk one myth about filing a public comment, it’s that comments have to be replete with cites, footnotes, and cross-references. No! We’ll wade through lofty legal language if we have to, but we want to hear straight talk from real people about the real issues.
- The online process for filing comments is simple. Visit the Health Breach Notification Rule page on Regulations.gov to let you voice be heard. Click the COMMENT button and start typing. It’s as simple as that. Looking for more advice on collecting your thoughts? Just under the WRITE A COMMENT button, there’s a helpful Commenter’s Checklist. You can also browse comments that people have already filed.
- Please don’t include personal health information or other sensitive data. Public comments are just that: public. Your comment can be read by anyone who visits the website. So before clicking the SUBMIT COMMENT button, please reread what you’ve written to make sure you haven’t mentioned something you would prefer to keep private.
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Business Blog
Crypto platform Celsius feels the heat from FTC lawsuit alleging unfair and deceptive practices
By
Lesley Fair
July 13, 2023
When it comes to law enforcement action against unlawful conduct in the cryptocurrency marketplace, the temperature is rising, according to a proposed FTC settlement with crypto platform Celsius Network and a pending complaint against its former corporate officers. The make-no-mistake message for others in the industry: Don’t believe that “wild west” talk. Your sector may be novel, but established FTC consumer protection standards apply to you with full force.
New Jersey-based Celsius Network marketed a broad range of cryptocurrency products and services to consumers – interest-bearing accounts, personal loans secured by cryptocurrency deposits, a cryptocurrency exchange, and the like. Celsius’ promotional claims grabbed the attention of consumers, even those who might have had initial qualms about crypto. Not to worry, consumers were assured. Because Celsius earned profits by making secured crypto loans to other exchanges, the company claimed to be “safer than a bank” and posed “less risk” or even “no risk” to consumers.
According to the complaint, the defendants further enticed people with claims that deposits in their “Earn” program could yield “up to 18.63% APY.” Celsius also told consumers they could withdraw their crypto “at any time” because Celsius maintained sufficient reserves – described as “billions of dollars in liquidity” – to meet customer obligations. To reinforce that representation, Celsius claimed to have a belt-and-suspenders $750 million insurance policy to cover consumers’ assets.
That’s what the defendants promised, but as its June 2022 collapse suggests, Celsius’ fast talk generated a lot more heat than light. The FTC lawsuit alleges that Celsius lured consumers in with deceptive promises and flat-out falsehoods. For example, despite those “safer than a bank” promises, Celsius allegedly took title to customers’ deposits and misappropriated them – in effect, treating other people’s accounts as a piggy bank to borrow against, to pay corporate bills, to fund interest payments to other consumers, and to make high-risk investments.
Consider Celsius’ conduct regarding unsecured loans. One corporate officer claimed in a 2020 promotional video that Celsius didn’t make non-collateralized loans “because that would be taking too much risk on your behalf.” But according to the FTC, in July 2020, Celsius had approximately $160 million in unsecured loans. A year later viewers were told, “We only do asset back[ed] lending meaning you have to give us an asset like crypto or things that we accept.” Yet as of August 2021, the FTC says nearly half of Celsius’ institutional lending portfolio – over $700 million – was unsecured. The FTC alleges that while Celsius was engaging in risky lending practices at odds with its promises, the company had just a small capital reserve on hand and nowhere near the cushion they claimed.
Even as the company’s fiscal health headed south, the complaint alleges that top executives continued to reassure prospective depositors with soothing promises of safety. As one corporate officer said in a May 2022 video, “Celsius is stronger than ever, we have billions of dollars in liquidity”– a message the company continued to convey right up until the time it froze customer accounts and filed for bankruptcy after allegedly squandering customers’ deposits. What Celsius didn’t reveal was that corporate officials allegedly protected themselves by withdrawing significant sums of cryptocurrency from Celsius two months before the company filed for bankruptcy.
The complaint charges multiple violations of the FTC Act and the Gramm-Leach-Bliley Act, which makes it illegal to use deceptive statements to get consumers’ financial information. The proposed settlement with corporate defendant Celsius and affiliated outfits includes a permanent ban on marketing, promoting, offering, or distributing any product or service that could be used to deposit, exchange, invest, or withdraw assets. In addition to prohibiting misrepresentations about the benefits of any product or service, the order imposes a $4.7 billion suspended judgment based on the companies’ financial condition.
The lawsuit against former Celsius CEO and co-founder Alexander Mashinsky, co-founder Shlomi Daniel Leon, and co-founder Hanoch “Nuke” Goldstein is pending in a New York federal court. The FTC is seeking injunctive relief and money back from the defendants to provide refunds for consumers.
Even at this early stage, the FTC’s law enforcement action sends a strong message to those in the crypto marketplace.
Crypto companies: Familiarize yourself with the expansive terms of the Federal Trade Commission Act. Disabuse yourself immediately of an “anything goes” attitude in the marketing of crypto. The FTC Act’s prohibition on unfair or deceptive acts or practices imposes sweeping liability for violations of the law. Like any other business, your claims must be truthful, you must have solid proof for your representations before you convey them to prospective customers, any disclosures necessary to dispel deception must be clear and conspicuous, and you must treat consumers fairly. If there’s any question about how seriously the FTC takes fast-and-loose practices related to consumers’ finances, the permanent ban in the proposed settlement with Celsius should provide an answer.
The scope of the FTC Act’s prohibition on false advertising is similarly broad. The FTC Act covers misleading statements in traditional TV, radio, print, and online ads, but it doesn’t stop there. What you say about your products and services in social media platforms – including the 179 videos Celsius’ representatives uploaded to YouTube – also must meet the FTC Act’s truth-in-advertising standards. Those provisions are designed to protect consumers from deceptive or unfair practices. They’re also in place to protect honest businesses from having to compete against alleged fabricators and falsifiers.
Don’t think the “Inc.” after a company name shields corporate executives from the consequences of their illegal actions. Read the first page of the complaint and you’ll see the FTC is suing Mashinsky, Leon, and Goldstein “individually and as an officer” of various Celsius-related companies. Let’s not mince words. Depending on the facts, the FTC will take action to hold corporate decision makers individually accountable for violations of the law.
Thinking about investing in cryptocurrency? The FTC has advice for consumers to consider before sinking their savings into crypto.
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Business Blog
Crypto platform Celsius feels the heat from FTC lawsuit alleging unfair and deceptive practices
By
Lesley Fair
July 13, 2023
When it comes to law enforcement action against unlawful conduct in the cryptocurrency marketplace, the temperature is rising, according to a proposed FTC settlement with crypto platform Celsius Network and a pending complaint against its former corporate officers. The make-no-mistake message for others in the industry: Don’t believe that “wild west” talk. Your sector may be novel, but established FTC consumer protection standards apply to you with full force.
New Jersey-based Celsius Network marketed a broad range of cryptocurrency products and services to consumers – interest-bearing accounts, personal loans secured by cryptocurrency deposits, a cryptocurrency exchange, and the like. Celsius’ promotional claims grabbed the attention of consumers, even those who might have had initial qualms about crypto. Not to worry, consumers were assured. Because Celsius earned profits by making secured crypto loans to other exchanges, the company claimed to be “safer than a bank” and posed “less risk” or even “no risk” to consumers.
According to the complaint, the defendants further enticed people with claims that deposits in their “Earn” program could yield “up to 18.63% APY.” Celsius also told consumers they could withdraw their crypto “at any time” because Celsius maintained sufficient reserves – described as “billions of dollars in liquidity” – to meet customer obligations. To reinforce that representation, Celsius claimed to have a belt-and-suspenders $750 million insurance policy to cover consumers’ assets.
That’s what the defendants promised, but as its June 2022 collapse suggests, Celsius’ fast talk generated a lot more heat than light. The FTC lawsuit alleges that Celsius lured consumers in with deceptive promises and flat-out falsehoods. For example, despite those “safer than a bank” promises, Celsius allegedly took title to customers’ deposits and misappropriated them – in effect, treating other people’s accounts as a piggy bank to borrow against, to pay corporate bills, to fund interest payments to other consumers, and to make high-risk investments.
Consider Celsius’ conduct regarding unsecured loans. One corporate officer claimed in a 2020 promotional video that Celsius didn’t make non-collateralized loans “because that would be taking too much risk on your behalf.” But according to the FTC, in July 2020, Celsius had approximately $160 million in unsecured loans. A year later viewers were told, “We only do asset back[ed] lending meaning you have to give us an asset like crypto or things that we accept.” Yet as of August 2021, the FTC says nearly half of Celsius’ institutional lending portfolio – over $700 million – was unsecured. The FTC alleges that while Celsius was engaging in risky lending practices at odds with its promises, the company had just a small capital reserve on hand and nowhere near the cushion they claimed.
Even as the company’s fiscal health headed south, the complaint alleges that top executives continued to reassure prospective depositors with soothing promises of safety. As one corporate officer said in a May 2022 video, “Celsius is stronger than ever, we have billions of dollars in liquidity”– a message the company continued to convey right up until the time it froze customer accounts and filed for bankruptcy after allegedly squandering customers’ deposits. What Celsius didn’t reveal was that corporate officials allegedly protected themselves by withdrawing significant sums of cryptocurrency from Celsius two months before the company filed for bankruptcy.
The complaint charges multiple violations of the FTC Act and the Gramm-Leach-Bliley Act, which makes it illegal to use deceptive statements to get consumers’ financial information. The proposed settlement with corporate defendant Celsius and affiliated outfits includes a permanent ban on marketing, promoting, offering, or distributing any product or service that could be used to deposit, exchange, invest, or withdraw assets. In addition to prohibiting misrepresentations about the benefits of any product or service, the order imposes a $4.7 billion suspended judgment based on the companies’ financial condition.
The lawsuit against former Celsius CEO and co-founder Alexander Mashinsky, co-founder Shlomi Daniel Leon, and co-founder Hanoch “Nuke” Goldstein is pending in a New York federal court. The FTC is seeking injunctive relief and money back from the defendants to provide refunds for consumers.
Even at this early stage, the FTC’s law enforcement action sends a strong message to those in the crypto marketplace.
Crypto companies: Familiarize yourself with the expansive terms of the Federal Trade Commission Act. Disabuse yourself immediately of an “anything goes” attitude in the marketing of crypto. The FTC Act’s prohibition on unfair or deceptive acts or practices imposes sweeping liability for violations of the law. Like any other business, your claims must be truthful, you must have solid proof for your representations before you convey them to prospective customers, any disclosures necessary to dispel deception must be clear and conspicuous, and you must treat consumers fairly. If there’s any question about how seriously the FTC takes fast-and-loose practices related to consumers’ finances, the permanent ban in the proposed settlement with Celsius should provide an answer.
The scope of the FTC Act’s prohibition on false advertising is similarly broad. The FTC Act covers misleading statements in traditional TV, radio, print, and online ads, but it doesn’t stop there. What you say about your products and services in social media platforms – including the 179 videos Celsius’ representatives uploaded to YouTube – also must meet the FTC Act’s truth-in-advertising standards. Those provisions are designed to protect consumers from deceptive or unfair practices. They’re also in place to protect honest businesses from having to compete against alleged fabricators and falsifiers.
Don’t think the “Inc.” after a company name shields corporate executives from the consequences of their illegal actions. Read the first page of the complaint and you’ll see the FTC is suing Mashinsky, Leon, and Goldstein “individually and as an officer” of various Celsius-related companies. Let’s not mince words. Depending on the facts, the FTC will take action to hold corporate decision makers individually accountable for violations of the law.
Thinking about investing in cryptocurrency? The FTC has advice for consumers to consider before sinking their savings into crypto.
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Consumer Alert
Cryptocurrency deposits with no returns
By
Cristina Miranda
Consumer Education Specialist, FTC
July 13, 2023
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How much do you know about cryptocurrency? If your answer is “not much,” that’s exactly what crypto scammers want to hear. And that’s exactly who one cryptocurrency company targeted with its false and misleading claims, according to a lawsuit filed by the FTC.
The FTC’s complaint against Celsius Network LLC says the company marketed and sold financial services using YouTube and Twitter to promote marketing videos that were full of false and misleading claims. For example, Celsius claimed its crypto platform was safer and more stable than a bank. (It wasn’t.) And it told people that depositing crypto onto its platform came with a “no risk” promise that they’d earn high interest on their deposits. (A lie.) Even worse, the FTC says the company used people’s crypto deposits without permission to spend, trade, invest, or pay business expenses. When Celsius started running out of money, it blocked people’s account access, preventing them from withdrawing their crypto. Now, Celsius is in bankruptcy, and consumers are unlikely to get all their crypto back.
Here’s how to avoid a cryptocurrency-related scam:
- Don’t trust people who make big promises or guarantees. Only scammers promise “no risk” and guarantee high returns.
- Research the company or cryptocurrency platform. Search online for the company or crypto platform name, plus “review,” “scam,” or “complaint” to see what people say.
- Know that cryptocurrency accounts are not backed by a government like traditional FDIC-backed bank accounts.If something happens to your crypto account or funds, the government may not have an obligation to step in and help get your money back.
- Learn about cryptocurrency and scams. Scammers take advantage of people’s understanding (or not) of cryptocurrency and how it works. Visit ftc.gov/cryptocurrency to learn more.
Using a crypto platform that isn’t living up to its promises or guarantees? Tell the FTC at ReportFraud.ftc.gov.
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Consumer Alert
Have a disability? What to know about Medicaid and scams
By
Carol Kando-Pineda
Attorney, FTC’s Division of Consumer and Business Education
July 13, 2023
Every July, Disability Pride Month is a powerful reminder about the importance of disability rights. This July, it’s also a time to talk about Medicaid renewal scams that could affect millions of people with disabilities.
To make sure people had insurance during the pandemic, states had to keep people enrolled in Medicaid — but that requirement has been phased out.
So where do scams come in? Well, people eligible for Medicaid now have to re-enroll. If they’re not eligible for Medicaid, they need to find new insurance. And that means scammers will start targeting those people — including people with disabilities.
To avoid the scams, here’s what to know:
- Medicaid won’t charge you to renew or enroll. Your state Medicaid agency may call, text, or email you to renew. But it won’t ask for money or information like your credit card or bank account number. Learn about eligibility at Medicaid.gov/renewals.
- Start at HealthCare.gov if you need new insurance. HealthCare.gov compares insurance plans, coverage, prices, and your eligibility. It only asks for your monthly income and age to give you a price quote. Don’t share your bank account or credit card number to get a quote for health insurance. That’s a scam.
- Scammers try to sell medical discount plans that are not medical insurance. Medical discount plans charge a monthly fee for supposed discounts on some medical services or products from a list of providers. They’re not a substitute for health insurance. Some plans just take your money for little or nothing in return. If anyone pressures you to sign up quickly for a medical discount plan, that’s a red flag.
During Disability Pride Month, share this information with your friends, family, colleagues, and social networks. And if you spot a scam, tell the FTC at ReportFraud.ftc.gov.Leave a comment
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