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FEDERAL TRADE COMMISSION WASHINGTON, 0.C. 20580 ‘THE CHARMAN November 19, 2018 ‘The Honorable Mark Warner United States Senate Washington, DC 20510 Dear Senator Warn Thank you for your recent letter expressing concerns about digital advertising fraud, and calling attention to the Buzzfeed article that described a multi-million dollar digital advertising fraud involving bots and compromised Android apps. You asked the Commission to review this article, as well as reports that Google has been inattentive to misconduct in its App Store that may have facilitated fraudulent activity in the online ad market. ‘The Commission acts in the interest of all consumers to prevent deceptive or unfair acts or practices pursuant to the Federal Trade Commission Act, 15 U.S.C. §§ 41-58. Under the FTC Act, a practice is deceptive if it is likely to mislead reasonable consumers and affect their purchasing decisions.' A practice is unfair if it causes or is likely to cause substantial consumer injury, which consumers cannot reasonably avoid and is not outweighed by benefits to consumers or competition.” In determining whether to take enforcement or other action, the Commission may consider a number of factors, including the type of violation alleged, the nature and amount of consumer injury at issue, the number of consumers affected, and the likelihood of preventing future unlawful conduct and securing redress or other relief. We share your concer about the rising use of bots to commit fraud online, including digital advertising fraud. The FTC has addressed emerging online threats—and will continue to do so—through law enforcement,’ policy work,* and business and consumer education. For ' See, eg, FIC x Stefanchik, 559 F.3d 924, 928 (Sth Cit. 2009); in the Matter of Telebrands Corp., 140 FIL. 278, 290 (2005), aff'd 457 F.3d 354 (Ath Cir, 2006); see also Federal Trade Commission Policy. Statement on Deception, appended to Clifdale Assoes., Inc., 103 FC. 110, 174-83 (1984) 21SU.SC. §45(n); see also Federal Trade Commission Policy Statement on Unfeimess, appended to Int‘ Harvester Co, 104.T.C. 949, 1070-16 (1984). 5 See, eg, Inre Uber Technologies, In, Docket No. C-4662 (F.T.C. Oct. 26, 2018) (entering into settlement that Prohibited online platform from misrepresenting how it protects consumers’ personal data and requited it 10 implement a comprehensive privacy program); FTC w. Genius Technologies, LLC, No. 3:18-e¥-1096 (N.D. Cal. Fe. 21,2018) (alleging defendants used scamare to irik consumers into thinking their computers were infected with ‘malicious software, and then sold them software to “ix” che problem); inre Lenovo (United States). Inc, Docket No. €-4636 (F.7.C. Dec. 20, 2017) (setting case against a company that allegedly harmed consumers by pre- loading software into computers that diminished security protections in order to deliver ads to the consume). 4 See, e.g, FIC Staff Report, BLURRED LINES: AN EXPLORATION OF CONSUMERS’ ADVERTISING RECOGNITION IN THE CONTEXTS OF SEARCH ENGINES AND NATIVE ADVERTISING (Dec. 2017), ‘The Honorable Mark Warmer ~ page 2 example, on October 18, 2018 the Commission, along with the Department of Homeland Security, the National Institute of Standards and Technology, and the Small Business Administration, launched a national education campaign to help small business owners deal with cyberseourity threats. And in March 2019, the Commission will hold a public workshop that will address, among other things, illegal online ticket bot activity.” | appreciate your interest in this important consumer protection issue. If you or your staff has additional questions or comments, please feel free to contact Jeanne Bumpus, the Director of our Office of Congressional Relations, at (202) 326-2195. Sincerely, tog fdenme Joseph J. Simons Chairman |hnps:/www.fte,govisystemvfiles/documents/reports/blurred-lines-exploration-consumers-advertsing-recognition- contexts-search-engines-native/p164504_ftc_stafT_report_re_digital_advertising_and_appendices.paf 5 See, ¢.g., Press Release, FTC, FTC to Host Workshop in Chicago on Cryptocurrency Scams (June 22, 2018), hips:/wwrw.fte.govinews-events/press-releases/20 18/06 flc-host-workshop-chicago-cryptocurrency-scams. Cybersecurity for Small Business, https:/www.le-gov/tips-advice‘ousiness-center!small-businesses/eybersecurity, ” Press Release, FTC, FTC to Hold Workshop Examining Online Ticket Sales (Oct. 4, 2018), hspsi//www.te-gov/news-events/press-releases/20 18/10/Re-hold-workshop-examining-online-event-ticket-sales