Consumer protection

Indian police arrest Garantex administrator wanted by US

Indian authorities have arrested Aleksej Besciokov, an administrator of the Russian cryptocurrency exchange Garantex, at the request of the US.

Besciokov, a Russian resident and Lithuanian national, was taken into custody in Kerala on charges of money laundering and violating sanctions. The Central Bureau of Investigation (CBI) said he was planning to flee India, and Washington is expected to seek his extradition.

The arrest follows a joint operation by the US, Germany, and Finland to dismantle Garantex’s online infrastructure.

The exchange, under US sanctions since 2022, has processed at least $96 billion in cryptocurrency transactions since 2019. The US Justice Department recently charged two administrators, including Besciokov, with operating an unlicensed money-transmitting business.

Experts warn that sanctioned exchanges often attempt to bypass restrictions by setting up new entities. Blockchain research firm TRM Labs called the Garantex takedown a significant step in combating illicit finance but emphasised the need for continued vigilance against evasion tactics.

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FTC confirms no delay in Amazon trial

The US Federal Trade Commission (FTC) announced on Wednesday that it does not need to delay its September trial against Amazon, contradicting an earlier claim by one of its attorneys about resource shortages.

Jonathan Cohen, an FTC lawyer, retracted his statement that cost-cutting measures had strained the agency’s ability to proceed, assuring the court that the FTC is fully prepared to litigate the case.

FTC Chairman Andrew Ferguson reaffirmed the agency’s commitment, dismissing concerns over budget constraints and stating that the FTC will not back down from taking on Big Tech.

Earlier in the day, Cohen had described a ‘dire resource situation,’ citing employee resignations, a hiring freeze, and restrictions on legal expenses. However, he later clarified that these challenges would not impact the case.

The lawsuit, filed in 2023, accuses Amazon of using ‘dark patterns’ to mislead consumers into enrolling in automatically renewing Prime subscriptions, a program with over 200 million users.

With claims exceeding $1 billion, the trial is expected to be a high-profile battle between regulators and one of the world’s largest tech companies. Amazon has denied any wrongdoing, and three of its senior executives are also named in the case.

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Spain approves bill to regulate AI-generated content

Spain’s government has approved a bill imposing heavy fines on companies that fail to label AI-generated content, aiming to combat the spread of deepfakes.

The legislation, which aligns with the European Union’s AI Act, classifies non-compliance as a serious offence, with penalties reaching up to €35 million or 7% of a company’s global revenue.

Digital Transformation Minister Oscar Lopez stressed that AI can be a force for good but also a tool for misinformation and threats to democracy.

The bill also bans manipulative AI techniques, such as subliminal messaging targeting vulnerable groups, and restricts the use of AI-driven biometric profiling, except in cases of national security.

Spain is one of the first EU nations to implement these strict AI regulations, going beyond the looser US approach, which relies on voluntary compliance.

A newly established AI supervisory agency, AESIA, will oversee enforcement, alongside sector-specific regulators handling privacy, financial markets, and law enforcement concerns.

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Coinbase secures approval to operate in India

Coinbase has officially registered with India’s Financial Intelligence Unit (FIU), allowing it to offer crypto trading services in the country, the company announced on Tuesday. The US-based exchange plans to launch its initial retail services later this year, followed by further investments and product rollouts. While a specific timeline has not been disclosed, Coinbase sees India as a key market with strong growth potential.

Interest in cryptocurrency has surged in India, particularly among young investors looking to supplement their incomes. Despite a 30% tax on crypto trading gains—one of the highest globally—the sector remains largely unregulated. Other major exchanges operating in the country include CoinDCX, Binance, and KuCoin.

India requires virtual asset service providers to register with the FIU and comply with anti-money laundering regulations. The government is currently reviewing its stance on crypto, influenced by global regulatory trends and recent policy shifts in the US. As the regulatory landscape evolves, Coinbase aims to establish a strong foothold in the Indian market while adhering to local compliance standards.

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Allstate faces lawsuit for security failures in data breach

New York State has taken legal action against Allstate, accusing its National General unit of mishandling customer data security and failing to report a breach that exposed sensitive information.

The state’s Attorney General, Letitia James, filed the lawsuit in Manhattan, claiming that the breaches, which occurred in 2020 and 2021, resulted in hackers accessing the driver’s license numbers of over 360,000 people.

According to the lawsuit, National General did not notify affected drivers or state agencies about the first breach, which occurred between August and November 2020.

The second, larger breach, was discovered three months later in January 2021. James alleges that National General violated the state’s Stop Hacks and Improve Electronic Data Security Act by failing to protect customer information adequately.

In response, Allstate defended its actions, stating that it had resolved the issue years ago, secured its systems, and offered free credit monitoring to affected consumers.

The lawsuit seeks civil fines of $5,000 per violation, in addition to other remedies. This legal action follows similar penalties imposed on other US companies for data security lapses, including fines for Geico and Travelers.

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US drops AI investment proposal against Google

The US Department of Justice (DOJ) has decided to drop its earlier proposal to force Alphabet, Google’s parent company, to sell its investments in AI companies, including its stake in Anthropic, a rival to OpenAI.

The proposal was originally included in a wider initiative to boost competition in the online search market. The DOJ now argues that restricting Google’s AI investments might lead to unintended consequences in the rapidly changing AI sector.

While this move represents a shift in the government’s approach, the DOJ and 38 state attorneys general are continuing their antitrust case against Google. They argue that Google holds an illegal monopoly in the search market and is distorting competition.

The government’s case includes demands for Google to divest its Chrome browser and implement other measures to foster competition.

Google has strongly opposed these efforts, stating that they would harm consumers, the economy, and national security. The company is also planning to appeal the proposals.

As part of the ongoing scrutiny, the DOJ’s latest proposal mandates that Google notify the government of any future investments in generative AI, a move intended to curb further concentration of power in the sector.

This case is part of a broader wave of antitrust scrutiny facing major tech companies like Google, Apple, and Meta, as US regulators seek to rein in the market dominance of Big Tech.

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Authors challenge Meta’s use of their books in AI training

A lawsuit filed by authors Richard Kadrey, Sarah Silverman, and Ta-Nehisi Coates against Meta has taken a significant step forward as a federal judge has ruled that the case will continue.

The authors allege that Meta used their books to train its Llama AI models without consent, violating their intellectual property rights.

They further claim that Meta intentionally removed copyright management information (CMI) from the works to conceal the alleged infringement.

Meta, however, defends its actions, arguing that the training of AI models qualifies as fair use and that the authors lack standing to sue.

Despite this, the judge allowed the lawsuit to move ahead, acknowledging that the authors’ claims suggest concrete injury, specifically regarding the removal of CMI to hide the use of copyrighted works.

While the lawsuit touches on several legal points, the judge dismissed claims related to the California Comprehensive Computer Data Access and Fraud Act, stating that there was no evidence of Meta accessing the authors’ computers or servers.

Meta’s defence team has continued to assert that the AI training practices were legally sound, though the ongoing case will likely provide more insight into the company’s stance on copyright.

The ruling adds to the growing list of copyright-related lawsuits involving AI models, including one filed by The New York Times against OpenAI. As the debate around AI and intellectual property rights intensifies, this case could set important precedents.

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NHS looks into Medefer data flaw after security concerns

NHS is investigating allegations that a software flaw at private medical services company Medefer left patient data vulnerable to hacking.

The flaw, discovered in November, affected Medefer’s internal patient record system in the UK, which handles 1,500 NHS referrals monthly.

A software engineer who found the issue believes the vulnerability may have existed for six years, but Medefer denies this claim, stating no data has been compromised.

The engineer discovered that unprotected application programming interfaces (APIs) could have allowed outsiders to access sensitive patient information.

While Medefer has insisted that there is no evidence of any breach, they have commissioned an external security agency to review their systems. The agency confirmed that no breach was found, and the company asserts that the flaw was fixed within 48 hours of being discovered.

Cybersecurity experts have raised concerns about the potential risks posed by the flaw, emphasising that a proper investigation should have been conducted immediately.

Medefer reported the issue to the Information Commissioner’s Office (ICO) and the Care Quality Commission (CQC), both of which found no further action necessary. However, experts suggest that a more thorough response could have been beneficial given the sensitive nature of the data involved.

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Labour probe launched into Scale AI’s pay and working conditions

The United States Department of Labor is investigating Scale AI, a data labeling startup backed by Nvidia, Amazon, and Meta, for its compliance with fair pay and working conditions under the Fair Labor Standards Act.

The inquiry began nearly a year ago during Joe Biden’s presidency, with officials examining whether the company meets federal labour regulations. Scale AI has been cooperating with the department to clarify its business practices and the evolving nature of the AI sector.

Founded in 2016, Scale AI plays a crucial role in training advanced AI models by providing accurately labeled data. The company also operates a platform where researchers exchange AI-related insights, with contributors spanning over 9,000 locations worldwide.

In response to the investigation, a company spokesperson stated that the majority of payments to contributors are made on time, with 90% of payment-related inquiries resolved within three days.

Valued at $14 billion following a late-stage funding round last year, Scale AI serves major clients such as OpenAI, Cohere, Microsoft, and Morgan Stanley.

The company insists that contributor feedback is overwhelmingly positive and maintains that it prioritises fair pay and support for its workforce.

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Fast-delivery firms face antitrust scrutiny in India

Fast-delivery giants Zomato, Swiggy, and Zepto are facing an antitrust investigation in India over allegations of deep discounting practices that harm smaller retailers.

The All India Consumer Products Distributors Federation (AICPDF), which represents 400,000 distributors, has filed a case with the Competition Commission of India (CCI) to examine the business practices of these companies.

They claim that the discounting strategies of these platforms result in unfair pricing models that harm traditional retailers.

The quick-commerce sector in India, where products are delivered within minutes from local warehouses, has grown rapidly in recent years. However, this growth has come at the expense of brick-and-mortar stores, which cannot match the discounts offered by online platforms.

A recent survey showed a significant shift in consumer behaviour, with many shoppers reducing their purchases from supermarkets and independent stores due to the appeal of fast-delivery options.

The filing by the AICPDF, which has reviewed the pricing of several popular products, accuses companies like Zepto, Swiggy’s Instamart, and Zomato’s Blinkit of offering products at prices significantly lower than those available in traditional stores.

However, this has raised concerns about the long-term impact on local businesses. The CCI is now set to review the case, which may result in a formal investigation.

As India’s quick-commerce market continues to grow, estimated to reach $35 billion by 2030, the regulatory scrutiny of this sector is intensifying. The outcome of this case could shape the future of the industry, especially as companies like Zepto and Swiggy prepare for further expansion.

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