5 stories compliance professionals need to know

5 stories compliance professionals need to know

In recent compliance news, Samsung faces allegations that one of its Chinese suppliers uses child labor. Whirlpool threatens to pull out from the Energy Star program and FedEx is under fire for transporting illegal pharmaceuticals.  In other news, the FTC is suing Amazon for unconsented in-app purchases made by children and Google faces waves of competition activity from the EU. To read more about these up and coming stories in compliance, click through the slideshow.

Google facing wave of competition activity in EU

Between the implementation of “right to be forgotten” laws and privacy concerns about their mapping software, Google has had no shortage of trouble in the European Union. And, as indicated by the recent stirring of EU antitrust regulators, those issues may only be the beginning. According to the Wall Street Journal, anti-trust regulators are readying a series of probes into Google’s operations and may also reopen issues previously settled with the search engine giant. While Google could have faced fines of up to 10 percent of its global annual revenue if anti-trust regulators continued their probe, at the time EU competition chief Joaquín Almunia said that Google’s promise to change this practice was sufficient in removing his agencies concerns. Sources close to the matter said on July 22 that those terms are likely to be reversed and that restructuring of the deal could fall to a new competition chief as Almunia prepares to leave the post in November. The competition commission has previously come down hard on tech companies. 

Samsung finds child labor in supply chain

Global companies face global problems. With supply chains that stretch across continents, it can often be a challenge to enforce compliance standards on suppliers and partners in far-flung areas. One company that has learned this lesson the hard way is Samsung Electronics. The South Korean electronics giant has faced allegations that one of its Chinese suppliers uses child labor. A nonprofit group known as the China Labor Watch called out Samsung, alleging that the Shinyang Electronics Company, makers or cellphone covers and other parts, was employing children who had used fake IDs to get jobs in the factory. Samsung had stood firm, denying these allegations in the past, but on July 14, the company announced that it would suspend business relations with Shinyang pending an investigation into this matter. The impetus for suspending relations with Shinyang seems to be Samsung’s own internal investigation into the matter, which was no doubt spurred by the watchdog allegations. Samsung reportedly found evidence of suspicious hiring practices and decided to look into the matter further. 

FedEx indictment debated

The recent indictment of FedEx for transporting pharmaceuticals from illegal online pharmacies has caused a lot of controversy. The Justice Department claims in a statement that FedEx continued to deliver controlled substances and prescription drugs for Chhabra-Smoley and Superior Drugs even though FedEx employees knew that online pharmacies and fulfillment pharmacies affiliated with Chhabra-Smoley and Superior Drugs were closed down by law enforcement and owners, operators, pharmacists and doctors were indicted, arrested and convicted of illegally distributing drugs, according to a statement from federal prosecutors. Sergio Acosta, a litigation attorney with Hinshaw & Culbertson, and former chief of the General Crimes Section of the Criminal Division of the U.S. Attorney’s Office for the Northern District of Illinois, also predicted in an interview, “There will be a lot of litigation before a case like this ever goes to trial.” Eventually, a case could be brought to federal appeals court or maybe even the Supreme Court, he adds.

Whirlpool threatens withdraw from Energy Star program if class action lawsuits are not halted

In 2010, a congressional panel found that the Environmental Protection Agency’s (EPA) Energy Star rating, which provides consumer guidance on which appliances and electronics offer efficient power usage, had standards that were laughably easy to meet. Auditors posing as fake companies were able to obtain Energy Star approval for appliances as ridiculously wasteful as a gas-powered alarm clock in an effort to prove that the bar was not nearly high enough at the EPA. The audit caused the EPA to reevaluate its rating process and retroactively revoked the Energy Star seal from many large home appliances. Consumers who had used the Energy Star rating as a barometer for their investment were miffed that their new dryers/washing machines/gas-powered alarm clocks were sold under false energy consumption pretenses. Predictably, a flurry of class action lawsuits followed. Now, the New York Times reports that one of the largest consumer appliance manufacturers in the world, Whirlpool Inc., has threatened that if the EPA does not block such lawsuits, it will withdraw from the Energy Star program. Whirlpool claims that the suits were prompted by mistakes made by the Fed, and therefore they and other manufacturers do not have culpability for the mislabeling.

FTC sues Amazon because children used mobile apps to make purchases without parents’ okay

Amazon has been sued by the Federal Trade Commission (FTC) because children used mobile apps to make purchases without parents’ approval. The popular online company let children charge millions of dollars to their parents’ accounts through in-app purchases via the company’s app store. “Amazon’s in-app system allowed children to incur unlimited charges on their parents’ accounts without permission,” FTC Chairwoman Edith Ramirez said in a statement. The FTC wants consumers to get refunds for the unauthorized charges and in the future prevent Amazon from billing parents. The FTC had proposed a settlement whereby refunds would be sent to consumers and the app store would no longer be able to let children make unintentional purchases, according to The Wall Street Journal. In response to the issue, Andrew DeVore, Amazon’s associate general counsel, wrote in a letter sent to the FTC that the company’s actions "were lawful from the outset and…already meet or exceed the requirements of the Apple consent order."

Contributing Author

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Jessica Liu

Jessica Liu is a sophomore at Haverford College, where she is majoring in political science. At InsideCounsel, she reports on news for the Women, Influence,...

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