Consumer protection Archives | Page 203 of 227

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.

Crypto firm Gotbit’s founder faces fraud charges

Aleksei Andriunin, the founder of cryptocurrency firm Gotbit, has been indicted in the US for alleged involvement in a conspiracy to manipulate cryptocurrency markets. The Justice Department claims that Andriunin and his firm provided market manipulation services to increase artificial trading volumes for various cryptocurrency companies from 2018 to 2024.

The superseding indictment also names Gotbit’s directors, Fedor Kedrov and Qawi Jalili, who were already charged earlier in October. Prosecutors allege that these actions aimed to distort the cryptocurrency markets, with several companies, including some in the United States, reportedly benefitting from these tactics.

If convicted, Andriunin faces significant penalties, with wire fraud charges carrying a potential 20-year prison sentence. He could also face an additional five years for conspiracy charges. The allegations form part of a larger crackdown on crypto market manipulation, which has already led to several arrests and asset seizures worth $25 million.

Recent moves by federal prosecutors highlight a more aggressive stance on crypto-related fraud. They have targeted multiple firms, including Gotbit, and several leaders have already agreed to plead guilty. The crackdown aims to strengthen transparency and curb malpractice in the cryptocurrency market.

Nvidia’s $700 million Run:ai acquisition under EU review

Nvidia is seeking antitrust approval from the European Union for its planned acquisition of Israeli AI startup Run:ai valued at approximately $700 million. The European Commission has raised concerns that the merger could harm competition in the markets where both companies operate, prompting increased scrutiny of tech giants acquiring startups. This move reflects a broader regulatory trend aimed at preventing potential monopolistic practices in the tech sector.

Although the acquisition does not meet the EU’s turnover threshold for automatic review, it was flagged by Italy’s competition agency, which requested the EU to investigate further. The Commission has accepted this request, indicating that the transaction could significantly impact competition across the European Economic Area.

In response to the regulatory review, Nvidia expressed its readiness to cooperate and answer any questions regarding the acquisition. The company is committed to ensuring that AI technologies remain accessible across various platforms, emphasising its role as a leader in the chip industry, particularly for AI applications like ChatGPT.

Singh avoids prison in FTX crypto fraud scandal

Nishad Singh, former chief engineer at FTX, avoided prison after cooperating in the fraud investigation that led to the conviction of FTX founder Sam Bankman-Fried. The judge granted Singh three years of supervised release, crediting his detailed testimony, which helped expose fraudulent activities at FTX. Singh, once a billionaire on paper, admitted to participating in the scheme but has since expressed deep regret for his involvement.

Singh testified last year about the theft of billions in customer funds, revealing his role in concealing transactions and supporting Bankman-Fried’s political donations. Reflecting on his actions, he told the court of his remorse for betraying his values and causing harm. Defence lawyers argued for leniency, noting Singh’s limited role compared to Bankman-Fried and other executives.

Judge Kaplan praised Singh’s swift cooperation, emphasising the difficulty of his decision to implicate himself in such a high-profile case. Despite being part of FTX’s inner circle, Singh’s cooperation and openness about the crime were acknowledged by the court as significant contributions to the investigation.

Singh’s leniency contrasts with Bankman-Fried’s 25-year sentence, imposed after FTX’s collapse in November 2022. Another executive, Caroline Ellison, received a two-year sentence despite her cooperation. The case highlights the court’s complex approach to sentencing as former FTX associates face accountability in one of the largest crypto frauds to date.

Musk’s platform under fire for inadequate fact-checking

Elon Musk’s social media platform, X, is facing criticism from the Center for Countering Digital Hate (CCDH), which claims its crowd-sourced fact-checking feature, Community Notes, is struggling to curb misinformation on the upcoming US election. According to a CCDH report, out of 283 analysed posts containing misleading information, only 26% showed corrected notes visible to all users, allowing false narratives to reach massive audiences. The 209 uncorrected posts gained over 2.2 billion views, raising concerns over the platform’s commitment to truth and transparency.

Community Notes was launched to empower users to flag inaccurate content. However, critics argue this system alone may be insufficient to handle misinformation during critical events like elections. Calls for X to strengthen its safety measures follow a recent legal loss to CCDH, which faulted the platform for an increase in hate speech. The report also highlights Musk’s endorsement of Republican candidate Donald Trump as a potential complicating factor, since Musk has also been accused of spreading misinformation himself.

In response to the ongoing scrutiny, five US state officials urged Musk in August to address misinformation on X’s AI chatbot, which has reportedly circulated false claims related to the November election. X has yet to respond to these calls for stricter safeguards, and its ability to manage misinformation effectively remains under close watch as the election approaches.

MyTrade founder admits to fraud in Boston court

The founder of cryptocurrency firm MyTrade, Liu Zhou, pleaded guilty in Boston federal court on Wednesday to charges of market manipulation and wire fraud. Zhou, who described himself as the ‘mastermind’ behind the company, entered the plea just weeks after being indicted along with 14 others as part of a groundbreaking FBI investigation dubbed ‘Operation Token Mirrors.’ This operation was notable for involving the creation of a digital token by the FBI itself to uncover fraud in the crypto sector.

Prosecutors revealed that MyTrade was one of three market makers involved in providing illicit trading services to cryptocurrency firms. During the investigation, Zhou agreed to manipulate the market for a token backed by the FBI, known as NexFundAI, which operates on the Ethereum blockchain. As part of a plea agreement, Zhou faces a maximum prison sentence of 1.5 years and must refrain from appealing if sentenced within that timeframe. Additionally, MyTrade must stop facilitating fraudulent trades that had previously manipulated the trading volumes of about 60 cryptocurrencies.

Zhou founded MyTrade in 2021, a British Virgin Islands-registered company that offered services like ‘volume support,’ where automated bots were used to inflate trading volumes. Prosecutors characterised this practice as ‘wash trading,’ which artificially boosts an asset’s trading activity. Zhou’s discussions with NexFundAI promoters included plans for market manipulation and ‘pump and dump’ schemes. Following a meeting on 23 September, Zhou quickly agreed to plead guilty after the FBI approached him. Four others involved in the investigation have also pleaded guilty.