Data breaches were missed learning opportunities for ed tech company
By
Seena Gressin
Attorney, Division of Consumer & Business Education
October 31, 2022
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An easy step can help protect your online accounts from hackers. Whenever you can, make sure your accounts ask for two credentials to verify your identity when you log in. It’s called multifactor, or two-factor, authentication. The protection is so powerful that the FTC insisted that Chegg, Inc., offer it to users of its online educational services as part of a settlement of an FTC data breach case against it.
According to the FTC, Chegg didn’t use reasonable security measures to protect the personal information of its users — mostly high school and college students — and employees. An FTC complaint charges that Chegg’s lax security resulted in four data breaches from 2017-2020.
One breach, in 2018, exposed 40 million users’ names, email addresses, passwords and, for some, their religion, heritage, date of birth, sexual orientation, disabilities, and parents’ income range, the FTC says. Other breaches exposed employees’ financial, medical, and W-2 information, including birthdates and Social Security numbers. The FTC says that Chegg repeatedly failed to fix the data security problems the breaches revealed, resulting in further breaches.
Under an FTC settlement, Chegg must take steps including offering users multifactor authentication options to secure their accounts. With multifactor authentication, you need a credential, or “factor,” beyond your password or PIN to log into your account. The factor can be something you have, like a one-time verification passcode you get from a security key or by text, email, or from an authenticator app. Or, it can be something you are, like your fingerprint, your face, or your retina.
With multifactor authentication, even if a hacker knows your username and password, they can’t log in to your account without the second credential, making your account far more secure than it would be with just a password for protection.
Under the settlement, Chegg also must put a comprehensive data security program into place, minimize the personal data it collects, and let users delete certain personal information from Chegg’s files.
Learn how to turn on multifactor authentication and other ways to secure your account on our website.
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For Release
FTC, California Act to Stop Ygrene Energy Fund from Deceiving Consumers About PACE Financing, Placing Liens on Homes Without Consumers’ Consent
Order will require Ygrene to stop deception, oversee contractors more closely, and provide consumer lien relief
October 28, 2022
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Tags:
- Consumer Protection
- Regional Offices
- Bureau of Consumer Protection
- Western Region Los Angeles
- Credit & Loan Offers
- Energy Savings
- deceptive/misleading conduct
- Construction
- Real Estate and Mortgages
- Advertising and Marketing
- Advertising and Marketing Basics
- Credit and Finance
- Credit and Loans
- Mortgages
The Federal Trade Commission and State of California are taking actionagainst home improvement financing provider Ygrene Energy Fund Inc. for deceiving consumers about the potential financial impact of its financing, and for unfairly recording liens on consumers’ homes without their consent. The FTC and California allege that Ygrene and its contractors falsely told consumers that the financing wouldn’t interfere with the sale or refinancing of their homes, in many instances relying on high-pressure sales tactics or outright forgery to sign consumers up.
“Ygrene and its sales force deceived consumers about home improvement financing and then stuck consumers with liens that made it difficult to sell their homes,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Our proposed order would require Ygrene to clean up its business practices, monitor its sales force, and help defrauded consumers remove their liens.”
“Ygrene Energy Fund took advantage of hardworking California families, jeopardizing their most valuable asset in the process,” said California Attorney General Rob Bonta. “Today’s settlement holds Ygrene accountable for their misconduct and establishes guardrails to protect property owners from future deception. PACE financing was meant to help families make important home improvements, but the dishonesty of companies like Ygrene has left some homeowners at risk of losing their homes. Before signing a PACE contract, I urge all Californians to familiarize themselves with this program and take the time to understand what it is and, most importantly, what it isn’t.”
A proposed court orderwould require Ygrene to stop its deceptive practices and meaningfully oversee the contractors who have served as its salesforce. As part of the settlement, Ygrene will be required to dedicate $3 million to provide relief to certain consumers whose homes are subject to the company’s liens.
California-based Ygrene has provided PACE financing, a form of secured home-improvement financing, for clean-energy home improvements in parts of California, Missouri, and Florida. Since 2015, Ygrene has trained home-improvement contractors to market the company’s PACE financing to homeowners as a way to pay for energy upgrades (e.g., solar panels or updated insulation) to consumers’ homes. These sales often happen door-to-door, with contractors approaching consumers in their homes, selling both the energy upgrade and the supposed benefits of Ygrene’s PACE financing.
PACE financing is a relatively new form of financing that relies on the property-tax system to collect payments from consumers. When a consumer uses PACE financing to pay for a clean energy project, a first-priority lien is placed against the consumer’s home, and the payments on the financing are collected through the homeowner’s property-tax bill. Failing to pay could subject a consumer to foreclosure on the property itself.
The FTC and California allege that Ygrene recruited and authorized home-improvement contractors, whom Ygrene did not adequately train or oversee, to sell its financing, leading to many consumers being deceived during the sales process and being unfairly subjected to liens on their homes without their express, informed consent. Specifically, according to the FTC and California, Ygrene and its contractors harmed consumers by:
- Deceiving consumers about PACE’s impact on home sales: The complaint alleges that Ygrene or its contractors provided false or misleading information that the lien placed on their home as a result of PACE financing could simply be transferred with a property when it was sold. In fact, many mortgage lenders will not provide financing to buy a property unless the PACE lien is paid off in full.
- Deceiving consumers about PACE’s impact on refinancing: In many cases, the complaint alleges, Ygrene or its contractors told consumers that the PACE lien would not interfere with their ability to refinance their homes. As with home sales, many lenders will not approve new financing until the PACE lien has been removed.
- Trapping consumers with PACE liens without clear consent: In many cases, Ygrene relies on an electronic signing system for its financing agreements with consumers. In some of these cases, the complaint alleges, Ygrene’s contractor sales practices have prevented consumers from meaningfully reviewing or consenting to key disclosures concerning the PACE lien. Contractors have rushed consumers through the electronic signing of the financing agreement, which appears in small print and is often presented to the consumer on a mobile phone or handheld tablet device – in many cases owned by the contractor – with a small screen that adds difficulty to navigating and understanding the agreement. In other cases, the contractor has forged the consumer’s signature by e-signing the contract without the consumer’s authorization. The complaint notes that even in some instances after Ygrene has received an electronic signature and has called the consumer to explain the terms of the agreement, the company has failed to ensure that it was speaking to the consumer or that the consumer has given clear consent to the lien.
Enforcement Action
Ygrene has agreed to a proposed court order with the FTC and California that would require it to stop violating the FTC Act and the California Unfair Competition and False Advertising Laws. The court order would require Ygrene to:
- Stop deceiving consumers: The order would require Ygrene to stop deceiving consumers about the transferability of the PACE financing obligation to the new owner in the event of a sale, the impact of PACE financing on the sale or refinancing of a home, or whether a home will be used as collateral in PACE financing.
- Closely monitor contractors: Ygrene would be required to create a program to closely monitor the actions of contractors who sell their financing products, to ensure they do not deceive consumers and do not forge consumers’ signatures on finance agreements. The order would also require Ygrene to investigate and act on consumer complaints about its contractors.
- Ensure that it has properly obtained consumer consent: The order would require Ygrene to obtain the consumer’s express, informed consent before causing the consumer’s property to be used as collateral to secure PACE financing.
- Conduct a lien-release process or provide refunds to consumers: The order would require Ygrene to send a survey to consumers with outstanding liens to determine whether the consumer personally signed the financing documents or authorized them to be signed by someone else. Survey responses and Ygrene documentation may be reviewed by a settlement administrator. The order would require Ygrene to establish a $3 million fund that could be used to release the liens placed on consumers’ homes without their consent. If the cost of releasing the liens is less than $3 million, the order would require Ygrene to provide the remaining funds to the FTC to be used to redress consumers harmed by practices alleged in the complaint.
The Commission vote authorizing the staff to file the complaint and stipulated final order was 4-0. The FTC filed the complaint and final order/injunction in the U.S. District Court for the Central District of California.
NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final injunctions/orders have the force of law when approved and signed by the District Court judge.
The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.
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FTC Consumer Response Center
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Business Blog
Funeral Rule retained, but FTC also wants to know if amendments to the Rule are warranted
By
Lesley Fair
October 21, 2022
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As the FTC observed in enacting the Funeral Rule, “A funeral is more than a social ritual: it is also an expensive consumer purchase.” But unlike other major expenditures, “Decisions must often be made while under the emotional strain of bereavement. In addition, consumers lack familiarity with the funeral transaction.” Those considerations are still at the forefront of the protections the Funeral Rule extends to grieving families, but traditions and technology have changed. So what’s the future of the Funeral Rule? Three developments merit your attention, including a new Advance Notice of Proposed Rulemaking.
First, the FTC initiated a routine review of the Funeral Rule in 2020 and received 785 comments. Among the industry members, consumer groups, and individuals who responded, overall support for the Rule was close to unanimous. Therefore, the FTC has decided to retain the Funeral Rule – but it doesn’t stop there.
The FTC also just released a staff report, Shopping for Funeral Services Online: An FTC Review of Funeral Provider Websites, that explores the results of research conducted between June and September 2021 – a time during the pandemic when many people couldn’t visit funeral homes to get pricing information in person. According to the report, less than 40% of funeral providers offered any price information on their websites. Consumers could get a general price list from only about 24% of the sites.
That research jibes with some of the comments we received as part of the 2020 Rule review. A number of commenters posed this question: Why not require funeral providers to make price information available online and through other electronic means? During times of bereavement – and especially in the middle of a pandemic – people aren’t in a position to go from funeral home to funeral home to get pricing information. The availability of online information would make it easier for consumers to compare costs.
So in addition to announcing the retention of the Funeral Rule and the results of the staff report, the FTC has published an Advance Notice of Proposed Rulemaking asking for your comments about seven issues under consideration:
- Electronic price disclosure – whether and how funeral providers should be required to display or distribute price information online or through electronic media
- Cremation-related fees disclosure – whether funeral providers should be required to disclose on the general price list third party crematory or other fees
- Limited exceptions to the basic service fee – whether the Rule’s requirements regarding reduced basic services fees should be amended
- New alternative disposal methods – whether the Rule should be amended to account for new forms of disposition
- Amendment of the mandatory embalming disclosure – whether the Rule’s embalming disclosure requirements should be amended
- Improvement of price list readability – whether the Rule should be changed to improve the readability of the price lists
- Effect on historically underserved communities – whether changes should be made to the Rule to avoid negatively impacting underserved communities.
Once the ANPR runs in the Federal Register, you’ll have 60 days to file your public comment. Save a step by filing online.
Tags:
- Consumer Protection
- Bureau of Consumer Protection
- Funerals
- Advertising and Marketing
- Online Advertising and Marketing
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For Your Information
FTC Approves Final Order against Opendoor Labs, Preventing Company from Misleading Consumers about Cost Savings of Using the Online Real Estate Listing Service
October 21, 2022
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Following a public comment period, the Federal Trade Commission has finalized a consent order against Opendoor Labs, Inc. designed to prevent the online real estate business from deceiving consumers about how much money they could save by selling their home to Opendoor, as opposed selling on the open market.
The final order requires Opendoor to pay $62 million, which is expected to be used for consumer redress; prohibits it from making the deceptive, false, and unsubstantiated claims to consumers about how much money they will receive or the costs they will have to pay to use its service; and requires it to have competent and reliable evidence to support any representations made about the costs, savings, or financial benefits associated with using its service, and any claims about the costs associated with traditional home sales.
Opendoor, headquartered in Tempe, Arizona, operates an online real estate business that, among other things, buys homes directly from consumers as an alternative to consumers selling their homes on the open market. Advertised as an “iBuyer,” Opendoor claimed to use cutting-edge technology to save consumers money by providing “market-value” offers and reducing transaction costs compared with the traditional home sales process.
According to the FTC’s complaint, the company cheated potential home sellers by tricking them into thinking that they could make more money selling their home to Opendoor than on the open market using the traditional sales process. The FTC alleged Opendoor pitched potential sellers using misleading and deceptive information, and in reality, most people who sold to Opendoor made thousands of dollars less than they would have by selling their homes using the traditional process.
The Commission vote approving final consent order was 4-0.
The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.
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Contact Information
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Matthew Wilshire
FTC’s Southwest Region
