Principal Deputy Assistant Attorney General Brian Boynton Delivers Remarks at the First Public Strike Force on Unfair and Illegal Pricing Meeting

The Civil Division is pleased to be a part of this important task force and shares the goal of preventing unfair and deceptive pricing practices that harm consumers. Many of the Civil Division's affirmative enforcement responsibilities, particularly those pursued by the division's Consumer Protection Branch and Civil Fraud Section, contribute to this objective.

Our Consumer Protection Branch enforces both criminal and civil laws that protect Americans' health, safety, economic security, and privacy. Some of these cases involve schemes designed to defraud consumers through unfair and deceptive marketing or billing practices.

We work closely with the Federal Trade Commission (FTC) to develop and bring civil penalties cases investigated and referred by the Commission. For example, in June 2024, the Consumer Protection Branch filed a suit against Adobe regarding its use of an "early termination fee" as part of its subscription service. Adobe fails to clearly inform consumers that the default option, which also appears to be the most affordable, actually includes a hefty termination fee if a consumer seeks to cancel after 14 days and before a year. For years, thousands of consumers have complained about Adobe's failure to disclose this fee.

Our complaint alleges that while Adobe has known about the detrimental impact of this hidden termination fee since at least 2019, Adobe has intentionally retained the fee structure because it discourages cancellations and increases Adobe's bottom line. Our lawsuit seeks injunctive relief as well as civil penalties for Adobe's years-long deceptive practice of imposing this termination fee on consumers without adequate notice.

Another example of the Consumer Protection Branch's efforts to protect consumers from unfair and deceptive pricing practices is the action it filed recently against telehealth companies Cerebral, Inc. and Zealthy, Inc., and high-level executives in those companies, among others. This case was also initially developed and referred by the FTC. Cerebral targets consumers seeking mental health services for conditions such as depression and anxiety, while Zealthy targets consumers seeking weight loss medications.

Our complaint alleges that both Cerebral and Zealthy engage in a variety of misleading billing practices, including advertising false low prices to entice consumers to enroll in their services and then making it difficult to cancel subscriptions once higher charges are incurred. After signing up based on advertisements touting the low cost of prescription drugs, Cerebral and Zealthy clients are routinely charged higher-than-advertised rates. When they try to cancel, these consumers often find their cancellation requests are ignored or deflected by the companies, forcing them to incur additional subscription fees. Consumers are also frequently told that they cannot receive a refund of the substantial costs they already incurred.

Cerebral has settled the United States' claims against it. As part of that settlement, the United States has recovered over $5 million dollars in consumer redress to help those affected by Cerebral's false and misleading actions, and Cerebral has agreed to pay at least $2 million more in civil penalties. The Consumer Protection Branch continues to pursue its claims against Zealthy.

Our Consumer Protection Branch also uses its criminal authority to target those who defraud consumers and drive up prices. For example, just this month, the Consumer Protection Branch and the U.S. Attorney's Office in Chicago tried and convicted an Illinois man of conspiracy to commit securities fraud, for agreeing with his brother and another man to alter the odometer readings on hundreds of used cars and sell those cars to unsuspecting consumer victims. The defendants purchased high-mileage cars at auto auctions, had the odometer readings on the cars altered, falsified title documents to reflect the false low mileage, and then sold the cars at other auctions with the false low mileage titles and false odometer readings. Two of the defendants pleaded guilty before trial; all three defendants await sentencing.

The Civil Division's Fraud Section also helps combat fraudulent pricing schemes through enforcement of various statutes that prohibit fraud or other misconduct involving government agencies and financial institutions. While these statutes do not provide a direct cause of action for conduct that is anticompetitive or results in unfair pricing, the Fraud Section's enforcement efforts often address such conduct.

One area, in particular, where the Fraud Section's work has helped protect against abusive practices is drug pricing. Working in parallel with our Antitrust colleagues, we have pursued cases involving price fixing. For example, three generic drug manufacturers paid over $400 million to resolve alleged violations of the False Claims Act for conspiring to fix the prices of various generic drugs. We argued that the conspiracy resulted in the payment of illegal kickbacks, in addition to violating other federal laws, and resulted in higher prices for federal health care programs and their beneficiaries.

The Fraud Section also recently filed an action against a major insurance company, National General Holdings Corporation, for subjecting purchasers of automobiles to unwanted and duplicative car insurance. The government's complaint alleges that for more than a decade National General involuntarily placed car insurance on those who took out automobile loans from Wells Fargo bank where National General lacked evidence that the borrower had insurance. According to the complaint, National General knew that its tracking system was wholly ineffective and that it was routinely imposing insurance on borrowers who already had such insurance and did not need it. National General allegedly force-placed insurance on over 650,000 borrowers in error, which often caused the borrowers to suffer additional harms beyond just unwarranted and costly premiums, such as late fees, lowered credit scores, or repossession of their vehicles. These are just some of the ways in which the Civil Division's enforcement efforts are helping to protect consumers from abusive pricing practices. We will continue to use all of the tools at our disposal to help protect both taxpayer dollars and American families from the harmful impact of such practices. Again, we very much appreciate the opportunity to be part of this task force and to support and contribute to its important mission.

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