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FTC Probes Google-Waze $1.1 Billion Deal After Consumer Watchdog Cites Antitrust Issues

3:40 pm in Uncategorized by Consumer Watchdog

FTC BuildingLess than two weeks ago after Google said it was buying Waze, developer of a mobile mapping application, for a reported $1.1 billion, the Federal Trade Commission has stepped in and said in effect, “wait just a minute here.”

Word of the FTC’s antitrust investigation was originally reported over the weekend by the New York Post and later confirmed by Google. It came less than a week after Consumer Watchdog wrote the FTC and the Department of Justice urging them to reject the deal.

Both agencies have the authority to scrutinize acquisitions for antitrust concerns and it wasn’t clear which agency was likely to handle it.

I did the prudent thing and wrote both. It looks like the FTC is listening — or at least shares many of our concerns. The antitrust problems with this deal are blatant.

“Google already dominates the online mapping business with Google Maps. The Internet giant was able to muscle its way to dominance by unfairly favoring its own service ahead of such competitors as Mapquest in its online search results,” I wrote in my letters. “Now with the proposed Waze acquisition the Internet giant would remove the most viable competitor to Google Maps in the mobile space. Moreover, it will allow Google access to even more data about online activity in a way that will increase its dominant position on the Internet.”

Read the letter to the FTC here.

John SimpsonIronically, Waze CEO Noam Bardin has made one of the strongest cases against the deal. He publicly described Google as his only competitor at last May’s All Things Digital conference. He said, “What search is for the Web, maps are for mobile…We feel that we’re the only reasonable competition to [Google] in this market of creating maps that are really geared for mobile, for real-time, for consumers — for the new world that we’re moving into.”

“You should take Bardin at his word,” I wrote in my letter to the FTC. “Approval of the Waze deal can only allow Google to remove any meaningful competition from the market. It will hurt consumers and hinder technological innovation. If the acquisition comes before the you, I urge you to reject it in the strongest possible terms.”

The investigation has just started, but the FTC is clearly off on the right foot.

Posted by John M. Simpson, Director of Consumer Watchdog’s Privacy Project. Follow Consumer Watchdog online on Facebook and Twitter.

Bipartisan Privacy Caucus Asks Important Privacy Questions About Google Glass

1:33 pm in Uncategorized by Consumer Watchdog

Sergey Brin Wearing Google Glass Eight members of Congress have sent a letter to Google CEO Larry Page asking tough and necessary questions about the Internet giant’s new wearable computing device, Google Glass.

The letter from members of the Bipartisan Privacy Caucus, whose Co-chair is conservative Joe Barton, (R-TX), says, “As members of the Congressional Bipartisan Privacy Caucus, we are curious whether this new technology could infringe on the privacy of the average American.”

It’s great to see that in a largely dysfunctional Congress some members can reach across the aisle and demonstrate that privacy is not a partisan issue. Besides Barton others signing the letter are Rep. John Barrow (D-GA), Rep. Steve Chabot (R-OH), Rep. Henry C. “Hank” Johnson Jr. (D-GA), Rep. Walter Jones (R-NC), Rep. Richard Nugent (R-FL), Rep. Bobby Rush (D-IL) and Rep. Loretta Sanchez (D-CA).

The letter also poses several questions intended to make sure consumers’ rights are protected. They include:

  • When using Google Glass, is it true that this product would be able to use Facial Recognition Technology to unveil personal information about whomever and even some inanimate objects that the user is viewing? Would a user be able to request such information? Can a non-user or human subject opt out of this collection of personal data? If so, how? If not, why not?
  • In Google’s privacy policy, it states that the company “may collect device-specific information (such as your hardware model, operating system version, unique device identifiers, and mobile network information including phone number).” Would Google Glass collect any data about the user without the user’s knowledge and consent? If so, why? If not, please explain.
  • Will Google Glass have the capacity to store any data on the device itself? If so, will Google Glass implement some sort of user authentication system to safeguard stored data? If not, why not? If so, please explain.

Read a copy of the Bipartisan Privacy Caucus letter here.

John M. SimpsonThe Representatives want answers to their questions by June 14. I’m betting that Google stalls. Ultimately I think the Representatives will need a Congressional hearing where CEO Page has to answer queries under oath.

As word of the Privacy Caucus’s letter was being reported, Google was holding its annual meeting with developers. Google Glass product director Steve Lee claimed in a “fireside chat” that the Glass team takes privacy seriously.

What a joke! The fact is that Google has become a serial privacy violator. It’s executives just don’t understand what privacy means and there is no reason to expect that they will. For instance, asked about whether Glass will offer facial recognition technology, Lee said, “We’ve definitely experimented with it but it is not in the product today. I can imagine that existing…”

Posted by John M. Simpson, Director of Consumer Watchdog’s Privacy Project. Follow Consumer Watchdog online on Facebook and Twitter.

Google Ending Privacy Breach Consumer Watchdog Targeted in FTC Complaint

12:40 pm in Uncategorized by Consumer Watchdog

Google PlayGoogle apparently is ending an egregious privacy breach involving people who buy apps from its Google Play store using Google Wallet to pay. Consumer Watchdog filed a complaint to the Federal Trade Commission with a copy to California Attorney General Kamala Harris about what Google was doing. The complaint alleged that the Internet giant was violating its privacy policies and its “Buzz” consent agreement with the FTC.

Rep. Hank Johnson, D-GA, also questioned Google about what it was doing. Google was sending to apps developers the name, email address and address of people who bought apps on Google play. It tried to claim that the the information was necessary for the transaction, but that’s clearly not the case when talking about downloading an app from its app store. Neither Apple nor Microsoft provide such personal information about people who buy apps from their stores. Google’s response to Rep. Johnson, confirmed what Google was doing and actually showed it was unnecessary. Consumer Watchdog sent a second letter to the FTC with a copy to California Attorney General Harris when Google answered Rep. Johnson’s letter.

On Tuesday WebProNews and DroidLife reported Google was addressing the concerns on a new Wallet Merchant Center it is rolling out and no longer sending the personal information about apps buyers.

I’m glad the change is coming, but I’ve got questions.

What role did the Federal Trade Commission or the California Attorney General’s office play in this change? Why did Google only act when formal complaints were filed? Will there be fines?

John M. SimpsonGoogle has become a serial privacy violator. You’ll remember that new sooner was the ink dry on the “Buzz” consent agreement than it was caught hacking around the privacy settings on the Safari browser used on iPhones, iPads and other Apple devices. It ultimately cost Google a fine of $22.5 million, which is pocket change to a company that has annual revenue of around $50 billion. It’s like giving a $25 parking ticket to a person who makes $50,000 a year.

Google is simply figuring that fines are a cost — and a minor one at that — of doing business. In case you missed it, on Monday Germany hit Google with a $189,225 for the Wi-Spy incident where its Street View Cars sucked up emails, URLs, passwords, account numbers as they snapped photos around the world.

In describing the fine The New York Times‘ Claire Cain Miller wrote:

Regulators in Germany, one of the most privacy-sensitive countries in the world, unleashed their wrath on Google on Monday for scooping up sensitive personal information in the Street View mapping project, and imposed the largest fine ever assessed by European regulators over a privacy violation.

The penalty? $189,225.

Put another way, that’s how much Google made every two minutes last year, or roughly 0.002 percent of its $10.7 billion in net profit.
It is the latest example of regulators’ meager arsenal of fines and punishments for corporations in the wrong. Academics, activists and even regulators themselves say fines that are pocket change for companies do little to deter them from misbehaving again, and are merely baked into the cost of doing business.

The fact Google is changing Google Wallet’s practices makes it clear Google violated the Buzz Agreement. Google claims that it is taking privacy seriously now that it is operating for 20 years under the Buzz Agreement. It isn’t and the regulators aren’t holding Google’s feet to the fire.

The company’s executives need to be held to account in a meaningful way. I’ve always argued the way to get corporate executives’ attention is to hit them with jail time when they flout the law. It’s not going to happen here, but a meaningful fine for the second Buzz violation sure would be nice.

Posted by John M. Simpson, Director of Consumer Watchdog’s Privacy Project. Follow Consumer Watchdog online on Facebook and on Twitter.

EU’s Google Antitrust Deal Beats FTC, But Still Doesn’t Do Enough

4:26 pm in Uncategorized by Consumer Watchdog

European Union

Details of Google’s proposed settlement with the European Union to avoid antitrust charges have been leaking out of Brussels over the weekend. And while EU competition authorities appear to have accomplished more that the gentle tap on the wrist meted out by the U.S. Federal Trade Commission, the deal as so far revealed doesn’t do enough to end Google’s anti-competitive practices.

The provisions of the EU agreement still have to be publicly released, but based on what’s emerged so far, here’s the good news: Unlike the deal with the FTC, which wasn’t even a consent agreement, the EU is demanding that the settlement would be legally binding for five years. A third party would ensure compliance and Google would face fines of 10 percent of its global annual sales if it fails to keep its promises.
The bad news is that instead of requiring Google to change its algorithm and treat all services the same, the deal will apparently allow Google to continue favoring its own services in search results so long as it labels them as its own.

Google essentially has been using its dominant position as gatekeeper of the Internet to unfairly promote its own service at the expense of competitors and consumers. In Europe it has about 90 percent of the search market. In the U.S. it’s around 70 percent. About all this agreement appears to do is require Google to be transparent about the way it unfairly abuses its market position.

Indeed, labeling could actually leave the impression with some consumers that the Google-branded result was a better one, rather than one that received a better position because Google had its thumb on the scale.

Another problem with the deal is that it doesn’t seem to do anything to rectify the damage to the market that Google has already wreaked. I’d have thought some sort of disgorgement of the Internet giant’s ill-gotten gains would have been appropriate.

John SimpsonThe next step in the EU process is for the Google deal to be “market tested.” The competition authorities will make the settlement public and receive comments on whether it solves the problems or not. I suppose it’s possible there may ultimately be stronger sanctions than currently appear to be the case in what’s been leaked or that the authorities will do more after the “market testing,” but frankly I doubt it.

Bottom line: Google has had its wings clipped a little bit. Google will be legally bound to follow labeling rules in Europe for five years and have a third-party enforcer to ensure that happens. It also means that European search results will look different than in the U.S. unless Google decides to take the same approach here or someone forces the company to do so. That could happen. Several state attorneys general led by the Texas attorney general have an open antitrust probe. I’d hope that they would settle for nothing less than what the Europeans got.

And further down the road? Fairsearch Europe has recently filed another antitrust complaint with the EU accusing Google of using Android software “as a deceptive way to build advantages for key Google apps in 70 percent of the smartphones shipped today.” Now that mobile is becoming more important than the wired Internet, Google is flexing its muscles there. The more things change, the more they stay the same…

Posted by John M. Simpson, head of Consumer Watchdog’s Privacy Project. Follow Consumer Watchdog on Facebook and Twitter.

Google’s Privacy Chief Is Stepping Down

1:16 pm in Uncategorized by Consumer Watchdog

Google's WatchingGoogle’s privacy chief, Alma Whitten, is stepping down the Internet giant confirmed Monday. Since word of her departure came out on April Fools’ Day many folks probably thought this was part of the company’s annual elaborate pranks like its “announcement” of a new service called “Google Nose.”

I mean how many of you actually thought Google even had a privacy chief?

Whitten, an engineer based in London (now that’s a location convenient to its Mountain View Headquarters) took the position in 2010 about six months after the Wi-Spy scandal was uncovered and as Google was reaching a consent agreement with the Federal Trade Commission for invading users’ privacy when it launched the ill-fated Buzz social network.

Well, about all that happened on Whitten’s watch was that Google became a confirmed serial privacy violator. No sooner was the ink dry on the Buzz Consent Decree with the FTC, than Google was caught hacking around privacy settings on Apple’s Safari browser, which is on iPads and iPhones, and lying about its practices on the Google website. Google was fined $22.5 million by the FTC, pocket change to the Internet giant.

John SimpsonAlso on Whitten’s watch Google was fined $25,000 for obstructing the Federal Communications Commission’s investigation of Wi-Spy and just settled for a paltry $7 million with 38 states attorney general who were investigating. They’ve also got to make a YouTube video telling people how to improve Wi-Fi network security and have a Privacy Day for employees. That’s like asking the fox teach the chickens about how to make the coop safe.

It was also on Whitten’s watch that Google combined its privacy and data collection policies across its services without asking users’ consent first. European data protection officials led by the French are still investigating and action is likely this spring.
Whitten intends to stay on the job through June — not that it makes much difference to users — until her successor Lawrence You takes over.

I guess it makes sense a certain amount of sense that this got announced on April Fools’ Day. Privacy at Google is a joke. Google’s executives view the taps on the wrist the Internet giant has received for privacy violations as nothing more than the cost of doing business.

John M. Simpson is director of Consumer Watchdog’s Privacy Project. Follow Consumer Watchdog online on Facebook and Twitter.

Consumer Watchdog Files 2nd Request Asking FTC To Act Against Google For Apps Privacy Violations

8:15 pm in Uncategorized by Consumer Watchdog

FTC Building

Consumer Watchdog has filed a second complaint asking that the Federal Trade Commission act immediately against Google’s most recent privacy violation – sharing users’ personal information with apps developers — after new information became available in a letter from Google to Rep. Hank Johnson, (D-GA).

We’ve also expressed our concerns again to California Attorney General Kamala Harris.

When we filed our first complaint, we estimated that Google — which has effectively become a serial privacy violator — in ignoring the terms of its so-called “Buzz Consent Order” with the FTC should face penalties that reach into the billions of dollars.

Here is what Google has been doing: They have been sending to app developers personal information about each user who purchased an app from Google, without obtaining the user’s permission. The personal information sent by Google includes the users’ names, certain physical address information and email addresses. Neither Apple nor Microsoft engage in similar conduct when they sell apps through their stores.

Google’s activities caught the eye of Rep. Johnson who wrote the Internet giant a letter asking that Google to explain what was going on. Susan Molinari, chief of Google’s Washington DC lobbying shop, responded.

Rather than justifying its conduct, Google’s argument demonstrated that the company lacks any satisfactory explanation for its practices. Here is part of what I wrote in our second letter to Charles Harwood, Acting Director of the FTC’s Bureau of Consumer Protection:

In its response to Congressman Johnson, Google did not challenge the accuracy of widespread reports that the company routinely discloses confidential information to applicant developers regarding all users who purchase applications from Google. For purposes of evaluating Google’s conduct under the Buzz Consent Order, then, it can be taken as fact that Google engages in this behavior.

Certainly, Google implied in its response that users know or should have assumed that the company would share confidential user identification information with application developers. But that suggestion directly contradicts the privacy representations made by Google to users that users should feel secure because Google will not willy nilly share their information but will only disclose confidential information when “necessary” to process the user’s transaction. More specifically, Google responded to Congressman Johnson as follows:

“Information such as name and email address is necessary for developers to issue refunds, reversals, payment adjustments — all of which developers are responsible for under the Seller Terms of Service — and investigate chargebacks.”

“Refunds, reversals, payment adjustments” are not the transactions at issue in this matter. Rather, Google’s privacy policy misrepresentation goes to the initial user purchase transactions for device applications. As I noted in my earlier letter, developers do not need users’ private information for the initial purchase transactions. They have routinely processed such transactions without using confidential user information. Google never contests this fact in its response to the congressman.

John Simpson
So, let’s assume everything Google says in its letter to Rep. Johnson is true. That means developers only need the users’ confidential information when a request for a refund, reversal or payment adjustment is made. The disclosure exception Google points to in its policy (“necessary to process your transaction”) might justify Google giving confidential information to developers for specific users who request refunds (and the like), but not for every single user who bought an app. It’s clear Google violated its pledge to protect the confidentiality of millions of users who bought applications in good faith reliance on Google’s public statements and who never sought a refund, reversal or payment adjustment.

For what it’s worth the FTC’s Harwood has told me that he referred both of Consumer Watchdog’s formal complaints to the Bureau of Consumer Protection’s Enforcement Division. Meanwhile, Adam Miller, Supervising Deputy Attorney General in the Privacy Enforcement and Protection Unit of the California Attorney General’s office also responded to my earlier letter. He wrote:

“Although our office cannot share any details of any investigation we may pursue, I can assure you that we will look into the concerns raised in your letter to us, as well as your letter to the Federal Trade Commission on the same matter. Should you have any further concerns please contact me at the above telephone number or address.”

Google’s most recent violation of the Buzz Consent Order is a matter of intense concern to Consumer Watchdog, to other privacy advocacy groups, to apps users across the country, and to the press. Although given the opportunity by Congressman Johnson, Google has yet to come up with a credible justification for its inappropriate conduct. In fact the letter to the Congressman simply makes Google’s violations clear. Both the FTC and the California Attorney General need to take strong action against Google.
______________________________________________________________________________________________________
Posted by John M. Simpson. John is a leading voice on technological privacy and stem cell research issues. His investigations this year of Google’s online privacy practices and book publishing agreements triggered intense media scrutiny and federal interest in the online giant’s business practices. His critique of patents on human embryonic stem cells has been key to expanding the ability of American scientists to conduct stem cell research. He has ensured that California’s taxpayer-funded stem cell research will lead to broadly accessible and affordable medicine and not just government-subsidized profiteering. Prior to joining Consumer Watchdog in 2005, he was executive editor of Tribune Media Services International, a syndication company. Before that, he was deputy editor of USA Today and editor of its international edition. Simpson taught journalism a Dublin City University in Ireland, and consulted for The Irish Times and The Gleaner in Jamaica. He served as president of the World Editors Forum. He holds a B.A. in philosophy from Harpur College of SUNY Binghamton and was a Gannett Fellow at the Center for Asian and Pacific Studies at the University of Hawaii. He has an M.A. in Communication Management from USC’s Annenberg School for Communication.

Continuing Anti-Trust Action Against Google in Europe

2:16 pm in Uncategorized by Consumer Watchdog

European CommissionEleven Internet Companies are pressing European antitrust regulators to take strong action against Google so that the Internet giant’s smaller rivals aren’t hurt. And what happens across the pond in this case could have an impact on possible antitrust action in the United States.

The companies, organized by the British shopping comparison website Foundem, sent a letter Thursday to European competition commissioner, Joaquin Almunia saying that they “are becoming increasingly concerned that effective and future-proof remedies might not emerge through settlement discussions alone.” They want a formal complaint to be filed. That has a way of focusing settlement talks.

The EU opened its antitrust probe of Google more than two years ago. The regulators have been negotiating a possible settlement with Google and in January the company proposed steps it would be willing to take to respond the regulators’ concerns.

Supposedly Almunia and his staff are evaluating the settlement proposals. If they think they go far enough they would be made public and “market tested” before the settlement was finalized. The companies doubt Google will offer a serious remedy without a formal complaint. They wrote:

“We will respectfully withhold judgement on Google’s proposed commitments until we have seen them, but Google’s past behavior suggests that it is unlikely to volunteer effective, future-proof remedies without being formally charged with infringement. Given this, and the fact that Google has exploited every delay to further entrench, extend, and escalate its anti-competitive activities, we urge the Commission to issue the Statement of Objections.”

John Simpson The letter says that Google’s manipulation of search by promoting its own services while demoting the services of competitors hurt users by “degrading the user experience and limiting consumer choice, ” and “lay waste to entire classes of competitors in every sector where Google chooses to deploy them [search manipulation tactics].”

Our 2010 study, Traffic Report: How Google is Squeezing out Competitors and Muscling Into New Markets, demonstrated how with the launch of Universal Search, Google favored its own properties and services in search results to the detriment of its competitors.

Reuters, citing sources, says that Google “had offered to label its own services in search results to differentiate them from rival services, and also to impose fewer restrictions on advertisers” as part of a settlement with the EU.

That wouldn’t be enough for the 11 companies — or me for that matter. They wrote:

“Google must be even-handed. It must hold all services, including its own, to exactly the same standards, using exactly the same crawling, indexing, ranking, display, and penalty algorithms.”

The EU investigation could have significant impact in the United States. You’ll recall that after an 18-month antitrust investigation, the Federal Trade Commission gave Google a mere tap on the wrist. However, several states led by the Texas attorney general have an open antitrust investigation of Google. If the Europeans demand and get meaningful changes in Google’s behavior, the state attorneys general will almost certainly demand the same here.

Read the rest of this entry →

Will Google Buy Its Way Out Of Trouble For A Mere $7 Million?

8:40 pm in Uncategorized by Consumer Watchdog

Google

Reports were circulating in the tech press Friday that serial privacy violator Google is about to cut a deal with state attorneys general to close their investigation of the Wi-Spy scandal.

Remember what happened? Google sent specially equipped cars to travel the highways and byways of the world snapping photos of everything they passed. What Google did not say was that they were also sniffing out Wi-Fi networks and sucking up private data on those networks.

They got passwords, account numbers and email messages, including in France a couple trying to arrange an extramarital affair.

When first confronted, Google executives denied sucking up the data. Then they said it was all a mistake. Then they said it was the work of a rogue engineer. Consumer Watchdog was among those to call on the Federal Trade Commission to investigate. The FTC did, but dropped the probe after Google essentially said, “We’ll be nice.”

John Simpson The Federal Communication Commission opened a probe ultimately fining Google $25,000 for hindering its investigation. The FCC also found that the Wi-Fi snooping had been deliberate and that senior managers had been aware of it. The FCC said it could not determine if the law had been broken because the engineer who designed the Wi-Fi snooping exercised his Fifth Amendment rights and declined to testify.

Google tried to spin the FCC probe by saying the commission found they had not broken the law. That’s not what happened; the FCC said they could not determine if the law had been broken. A big difference.

Meanwhile, under the leadership of then Connecticut Attorney Richard Blumenthal, more than 30 state attorneys general launched their investigation of the incident, which is really the largest case of wiretapping in history.

It’s that state attorneys general probe that is reportedly about to be settled for $7 million. That may sound like a lot, but it’s not even pocket change to the Internet giant, which made $10.7 billion profit on revenues of $50.2 billion in 2012. Divide the fine among the states and it comes out to about $230,000 for each.

I asked Susan Kinsman, spokesperson for Connecticut Attorney General George Jepsen, now heading the investigation, about prospects for a deal. She said, “I spoke to our attorneys for a status report. As we’ve stated before, the Google investigation is active and ongoing. I can’t comment about any prospect for a settlement.”

Nonetheless, there are enough sourced reports out there focusing on the $7 million deal, that it sounds like it’s accurate. It was probably leaked on Friday by Google itself. That’s the way they usually play the PR game. By the time the settlement is officially announced it will be old news.

What’s important, by the way, is not the measly $7 million fine. It’s understanding what’s really happening. Once again it looks like Google, the serial privacy violator, is buying its way out of a jam with what for the Internet giant is pocket change.

We’ll need to see what other provisions the settlement contains. Will the state attorneys general give Google the same sort of pass that the FTC did when it allowed Google to explicitly deny it broke the law in the Safari hacking scandal and charged Google $22.5 million? What will happen to the data Google sucked up? Will there being any meaningful injunctive relief? Given Google’s record of repeated privacy violations and of bamboozling regulators, I’m not optimistic that much of anything significant will emerge.
________________________________________________________________________________________
Posted by John M. Simpson. John is a leading voice on technological privacy and stem cell research issues. His investigations this year of Google’s online privacy practices and book publishing agreements triggered intense media scrutiny and federal interest in the online giant’s business practices. His critique of patents on human embryonic stem cells has been key to expanding the ability of American scientists to conduct stem cell research. He has ensured that California’s taxpayer-funded stem cell research will lead to broadly accessible and affordable medicine and not just government-subsidized profiteering. Prior to joining Consumer Watchdog in 2005, he was executive editor of Tribune Media Services International, a syndication company. Before that, he was deputy editor of USA Today and editor of its international edition. Simpson taught journalism at Dublin City University in Ireland, and consulted for The Irish Times and The Gleaner in Jamaica. He served as president of the World Editors Forum. He holds a B.A. in philosophy from Harpur College of SUNY Binghamton and was a Gannett Fellow at the Center for Asian and Pacific Studies at the University of Hawaii. He has an M.A. in Communication Management from USC’s Annenberg School for Communication.

When In Doubt, Speak Out

2:25 pm in Uncategorized by Consumer Watchdog

A pro-consumer candidate to the Federal Trade Commission, who had the backing of the entire public interest community, really wanted the job. But this candidate didn’t want allies to go public for fear of alienating the White House. What happened? Today POTUS hosed us and gave the keys to the FTC to corporate attorney Edith Ramirez.

The lesson: if you want to speak for the public, you have to speak publicly.

It’s just too easy to get caught up in the quagmire of worrying about alienating powerful people. Back channels and back room are the domain of those who want to turn their back on the public, not advocates for the public.

And the lesson, which came in healthy helpings this morning, can even be lost on those of us who typically have no control of our tongues.

Consider Ron Shinkman’s remarkable report today in Payer and Providers about the pathetic record of California Department of Managed Health Care Director Brent Barnhart. We didn’t expect much from a former Kaiser lawyer Governor Brown appointed to regulate HMOs, but perhaps a healthy tongue lashing on the front end would have up-ended this record.

As Shinkman records:

Between 2009 and 2011, the Department of Managed Health Care issued nearly 1,000 enforcement actions against health plans, fining them nearly $9 million for a variety of misdeeds and demanding they take corrective actions to protect the interests of their enrollees.

But after Aug. 11, 2011, when Gov. Jerry Brown appointed former health plan lawyer and lobbyist Brent A. Barnhart to head the agency, enforcement actions dropped almost immediately. The DMHC issued only 74 such actions during the remainder of the year, compared to 433 in the portion of 2011 prior to his appointment – although an agency official said that number should be condensed.

In 2012, the DMHC issued 90 enforcement actions, well below its historical average dating back more than a decade. The most significant action of the year was taken not against a health plan, but against the Accountable Care IPA, a medical group that had been using non-physicians to make medical coverage determinations.

Jamie Court

Moreover, financial penalties levied against the plans dropped dramatically in 2012. Last year, $451,000 in fines were issued, or just over $5,000 per enforcement action. That’s a stark contrast to 2010, when $2.2 million in fines were issued, an average of more than $20,000 per action. In 2008, fines exceeded $18 million, which included several significant enforcement actions against insurers.

New rule, or old rule remembered: When in doubt, speak out.

Posted by Jamie Court, author of The Progressive’s Guide to Raising Hell and President of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Consumer Watchdog Calls On FTC to Seek Do Not Track Legislation

2:16 pm in Uncategorized by Consumer Watchdog

photo spyphones.jpg

Consumer Watchdog Wednesday called on the Federal Trade Commission to ask Congress to pass Do Not Track legislation because “the self-regulatory effort to design Do Not Track is virtually dead in the water.”

In a letter to FTC Chairman Jon Leibowitz John M. Simpson, the nonpartisan nonprofit public interest group’s Privacy Project Director wrote:

“Almost a year ago with great fanfare in the media you said a Do Not Track mechanism would be in place by the end of last year. You and you colleagues opted to rely on a self-regulatory process to implement Do Not Track, but alluded to the possibility of legislation if that process failed. Not surprisingly the self-regulatory effort to design Do Not Track is virtually dead in the water. After a year nothing has changed for the consumer. You tried to use the bully pulpit, but the advertising industry did not heed your call. The time for words has passed; if you expect Do Not Track to be implemented, the Commission must endorse Do Not Track legislation now.”

Read Consumer Watchdog’s letter here

“As the Commission advocated in its report, Protecting Consumer Privacy in an Era of Rapid Change, a Do Not Track mechanism would offer people control over whether data about them was collected,” Simpson wrote.

Consumer Watchdog noted that the World Wide Web Consortium (W3C), an Internet standards setting organization, has been trying to develop specifications about how the Do Not Track message would be sent and what the obligations would be for a website that receives it. “Talks have dragged on more than a year with weekly conference calls and six face-to-face meetings, while the W3C’s Tracking Protection Working Group has grown to 102 members,” Simpson wrote. “Another round of meetings is scheduled next month. Talks can at best be charitably described as stalled.”

“You and the Commission repeatedly put faith in self-regulatory efforts and predicted that a Do Not Track mechanism would be in place by the end of the year,” Simpson wrote. “Unfortunately that optimism has proved to be unwarranted.”

The letter concluded:

“The end of the year as passed. Your words have gone largely unheeded by the advertising industry. The bully pulpit has not brought about a Do Not Track standard. Lest your words be taken as empty threats and given the logjam in the World Wide Web Consortium process, the time for decisive action by the FTC has arrived. Sen. Jay Rockefeller, (D-WV) introduced a Do Not Track bill in the last session of Congress. We understand he intends to re-introduce the bill this session. We call on you and the entire Commission to endorse the urgent need for Do Not Track legislation. If nothing else, the threat of legislation could be the stick that prompts a recalcitrant advertising industry to stop its foot dragging and re-engage in real negotiations.”

The letter cited numerous times that Leibowitz had predicted the implementation of Do Not Track by the end of last year and raised the possibility of legislation if the effort failed. For instance, the letter noted:

“‘We are definitely at a critical point in whether folks will be able to come together and develop a real Do Not Track option for consumers,’ you told Politico in October. You said the lack of consensus was ‘encouraging the possibility of legislation — maybe not today, maybe not in the lame duck, but soon.’ You also told The New York Times, ‘It is time to drop some of the bluster and work toward compromise.’

“In November you used the bully pulpit again to tell Politico, ‘If by the end of the year or early next year, we haven’t seen a real Do Not Track option for consumers, I suspect the commission will go back and think about whether we want to endorse legislation.’”