Consumer protection

US Supreme Court weighs Facebook’s role in Cambridge analytica scandal

The US Supreme Court is currently deliberating whether to allow a securities fraud lawsuit against Facebook, now Meta, to proceed. Investors, led by Amalgamated Bank, allege that the company misled them by failing to disclose details about a 2015 data breach involving Cambridge Analytica, which ultimately affected millions of users. The case questions whether Facebook’s public risk disclosures should have included specific details about this incident rather than presenting it as a potential future risk.

During the hearing, justices debated whether Facebook’s statements to investors were misleading by suggesting the risk was hypothetical. Conservative Chief Justice John Roberts noted that risk disclosures might imply past occurrences, while Justice Clarence Thomas highlighted how a lack of explicit detail might lead investors to believe the incident had never happened. The case has significant implications for the interpretation of the Securities Exchange Act, which requires firms to report business risks transparently.

This lawsuit is one of two upcoming US Supreme Court cases examining corporate transparency in investor disclosures. A ruling in favor of the investors could heighten the standards companies must meet in alerting investors to both past and potential risks, with the decision expected by June.

FTX Europe’s license suspension extended by Cyprus regulator

Cyprus’ financial regulator, the Cyprus Securities and Exchange Commission (CySEC), has extended the suspension of FTX’s European branch by another six months, lasting until 30 May 2025. The continued suspension means that FTX EU remains barred from accepting new clients, providing services, or advertising, though it can still process transactions to return funds to existing clients.

The extension comes as the second anniversary of FTX’s bankruptcy filing approaches. After FTX declared Chapter 11 bankruptcy in the US in November 2022, CySEC halted FTX Europe’s license, questioning the firm’s management suitability and ensuring the protection of client assets. FTX Europe, initially acquired by FTX in 2021 for $323 million, has since been resold to its original owners for $32.7 million following legal disputes over the acquisition price.

FTX Europe’s website currently only supports balance viewing and withdrawal requests. Clients who do not withdraw funds will have their balances moved to a client-segregated account, which will be held for up to six years.

Italy’s data watchdog slams Intesa over data breach

Italy’s data protection authority has criticised Intesa Sanpaolo for underestimating the severity of a data breach that affected thousands of customers, including Prime Minister Giorgia Meloni. The breach, which involved an Intesa employee accessing the data of around 3,500 clients, was initially reported with a higher number of affected individuals. However, the bank later clarified that the number was lower than what had been reported in the media.

The data watchdog instructed Intesa to notify all impacted customers within 20 days and noted that the bank had not adequately communicated the full scope of the breach. The authority emphasised that the breach posed a significant risk to the affected individuals’ rights and freedoms, including potential harm to their financial status and reputation. Intesa had already dismissed the employee involved and informed both the data protection authority and prosecutors.

The authority is now reviewing the bank’s security measures and has asked Intesa to provide an update within 30 days. In response, the bank assured that it had prioritised customer data security and had taken steps to enhance its systems and control procedures. Intesa also stated there was no evidence that the data had been shared outside the bank.

Apple faces first EU fine under Digital Markets Act

Apple is set to face its first fine under the European Union‘s Digital Markets Act (DMA) for breaching the bloc’s antitrust regulations, according to sources familiar with the matter. This comes after EU regulators charged Apple in June for violating the new tech rules, which are designed to curb the dominance of big tech companies. The fine, expected to be imposed later this month, adds to Apple’s ongoing antitrust challenges in the EU.

In March, Apple was hit with a €1.84 billion fine for restricting competition in the music streaming market through its App Store policies. The company also faces additional investigations related to new fees on app developers and potential violations of the DMA, which could result in penalties of up to 10% of its global annual revenue.

The Digital Markets Act, which came into effect earlier this year, mandates Apple to make changes, such as allowing users to choose default browsers and permitting alternative app stores on its operating systems. Apple has not commented on the impending fine, and the European Commission has yet to provide a response.

UK’s CMA suspends GXO Wincanton merger citing competition risks

The Competition and Markets Authority (CMA) has temporarily halted the proposed £762 million acquisition of UK logistics firm Wincanton by American logistics company GXO, citing potential competition risks. This decision follows the CMA’s preliminary investigation, which raised concerns about the merger’s impact on the already competitive contract logistics services sector.

An interim enforcement order (IEO) is now in effect, preventing any integration of the two firms during the review process. The CMA’s phase 1 investigation indicated that the merger could reduce competition in a market valued at £16 billion in the UK, where GXO and Wincanton are key players competing for contracts with major retailers. Naomi Burgoyne, senior director of mergers at the CMA, warned that diminished competition could lead to higher costs for consumers reliant on efficient delivery services.

GXO has five days to propose solutions to address the CMA’s concerns. If the proposals are found inadequate, the regulator will proceed to a more detailed phase two investigation. In response to the CMA’s announcement, a GXO spokesperson stated that they are reviewing the decision and are committed to collaborating with the CMA to achieve a favourable outcome, asserting that the acquisition would benefit logistics customers across the UK and support government initiatives for economic growth.

Lawsuit over Google Play gift card scams dismissed

A federal judge has dismissed a proposed class-action lawsuit claiming Google illegally profited from scams involving Google Play gift cards. The plaintiff, Judy May, alleged she lost $1,000 after a scammer posed as a government official, instructing her to purchase Google Play gift cards to claim grant money. She argued that Google should have warned consumers about such scams on the card packaging.

However, Judge Beth Labson Freeman ruled that Google was not responsible for May’s losses, as the tech giant neither caused her financial harm nor knowingly benefited from the stolen funds. Freeman also dismissed claims that Google’s 15% to 30% commission on purchases using the gift cards was linked to the initial fraud.

The Federal Trade Commission reported that Americans lost $217 million to gift card fraud in 2023, with Google Play cards implicated in roughly 20% of reported cases. Though May’s case was dismissed, the judge allowed her the option to refile.

Facebook parent Meta continues post-election ban on new political ads

Meta has announced an extended ban on new political ads following the United States election, aiming to counter misinformation in the tense post-election period. In a blog post on Monday, the Facebook parent company explained that the suspension will remain in place until later in the week, preventing any new political ads from being introduced immediately after the election. Ads that were served at least once before the restriction will still be displayed, but editing options will be limited.

Meta‘s decision to extend its ad restriction is part of its ongoing policy to help prevent last-minute claims that could be difficult to verify. The social media giant implemented a similar measure in the last election cycle, underscoring the need for extra caution as elections unfold.

Last year, Meta also barred political advertisers and regulated industries from using its generative AI-based ad products, reflecting a continued focus on reducing potential misinformation through stricter ad controls and ad content regulations.

South Korea fines Meta $15.7 million for privacy violations

South Korea’s data protection agency has fined Meta Platforms, the owner of Facebook, 21.62 billion won ($15.67 million) for improperly collecting and sharing sensitive user data with advertisers. The Personal Information Protection Commission found that Meta gathered details on nearly one million South Korean users, including their religion, political views, and sexual orientation, without obtaining the necessary consent. This information was reportedly used by around 4,000 advertisers.

The commission revealed that Meta analysed user interactions, such as pages liked and ads clicked, to create targeted ad themes based on sensitive personal data. Some users were even categorised by highly private attributes, including identifying as North Korean defectors or LGBTQ+. Additionally, Meta allegedly denied users’ requests to access their information and failed to secure data for at least ten users, leading to a data breach.

Meta has not yet issued a statement regarding the fine. This penalty underscores South Korea’s commitment to strict data privacy enforcement as concerns over digital privacy intensify worldwide.

Temu eyes EU anti-counterfeit initiative amid scrutiny

Chinese online retailer Temu is exploring joining a European Union-led initiative to combat counterfeit goods, which includes major retailers such as Amazon, Alibaba, and brands like Adidas and Hermes. Temu is scheduled to present at an upcoming meeting on 11 November as a ‘potential new signatory’ to the Memorandum of Understanding on counterfeits, a voluntary anti-counterfeit agreement supported by the European Commission.

Temu’s interest in the initiative coincides with increasing regulatory pressure from the European Union. The European Commission recently launched an investigation into Temu over potential breaches of EU laws prohibiting the sale of illegal goods, following an earlier request for information under the Digital Services Act (DSA), a law governing large online platforms. In May, the Commission designated Temu a ‘very large online platform,’ requiring it to take stronger measures against illegal content and counterfeits.

As a subsidiary of China‘s PDD Holdings, Temu has rapidly expanded in Europe and the United States, luring customers with low prices and a ‘shop like a billionaire’ slogan. Its platform offers items like clothing and accessories that often resemble popular branded products at significantly lower prices. Some industry insiders have expressed concerns that Temu’s entry into the anti-counterfeit network could impact the credibility of the initiative.

The US federal agency investigates how Meta uses consumer financial data for targeted advertising

The Consumer Financial Protection Bureau (CFPB) has informed Meta of its intention to consider ‘legal action’ concerning allegations that the tech giant improperly acquired consumer financial data from third parties for its targeted advertising operations. This federal investigation was revealed in a recent filing that Meta submitted to the Securities and Exchange Commission (SEC).

The filing indicates that the CFPB notified Meta on 18 September that it evaluated whether the company’s actions violate the Consumer Financial Protection Act, designed to protect consumers from unfair and deceptive financial practices. The status of the investigation remains uncertain, with the filing noting that the CFPB could initiate a lawsuit soon, seeking financial penalties and equitable relief.

Meta, the parent company of Instagram and Facebook, is facing increased scrutiny from regulators and state attorneys general regarding various concerns, including its privacy practices.

In the SEC filing, Meta disclosed that the CFPB has formally notified the company about an investigation focusing on the alleged receipt and use for advertising of financial information from third parties through specific advertising tools. The inquiry targets explicitly advertising related to ‘financial products and services,’ although it remains to be seen whether the scrutiny pertains to Facebook, Instagram, or both platforms.

While a Meta spokesperson refrained from commenting on the matter, the company stated in the filing that it disputes the allegations and believes any enforcement action would be unjustified. The CFPB also opted not to provide additional comments.

Amid this scrutiny, Meta recently reported $41 billion in revenue for the third quarter, a 19 percent increase from the previous year. A significant portion of this revenue is generated from its targeted advertising business, which has faced criticism from the Federal Trade Commission (FTC) and European regulators for allegedly mishandling user data and violating privacy rights.

In 2019, Meta settled privacy allegations related to the Cambridge Analytica scandal by paying the FTC $5 billion after it was revealed that the company had improperly shared Facebook user data with the firm for voter profiling. Last year, the European Union fined Meta $1.3 billion for improperly transferring user data from Europe to the United States.