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FTC Enforcement

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October 4, 2016

A federal court has found that racecar driver Scott A. Tucker and several corporate defendants in a Kansas City-based payday lending scheme violated Section 5 of the FTC Act and has ordered them to pay $1.3 billion for deceiving consumers across the country and illegally charging them undisclosed and inflated fees. The $1.3 billion order represents the largest litigated judgment ever obtained by the FTC. It stems from a complaint filed in 2012 by the agency, which alleged that the operators of AMG Services Inc. falsely claimed they would charge borrowers the loan amount plus a one-time finance fee. Instead, the defendants made multiple withdrawals from consumers’ bank accounts and assessed a new finance fee each time, without disclosing the true costs of the loan. The judgment represents the difference between what consumers actually paid on the loans and what they were told they would have to pay.

September 27, 2016

The FTC will return almost $20 million to more than 145,000 consumers across the country who were victimized by One Technologies LP and its two partner companies, in an online scheme that lured consumers with “free” access to their credit scores and then billed them a recurring $29.95 monthly fee for credit monitoring they never ordered. The FTC alleged that the defendants violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits charging consumers for goods or services sold online via a negative option unless the seller clearly discloses all material terms before obtaining the consumer’s billing information, obtains the consumer’s express informed consent before making the charge, and provides a simple way to stop recurring charges. FTC

September 22, 2016

The operators of an alleged mortgage relief scam that preyed upon distressed homeowners are banned from the mortgage loan modification and debt relief business under a court order obtained by the FTC. The order stems from a case the FTC brought in July 2014 against five defendants as part of a federal-state law enforcement effort called Operation Mis-Modification. According to the FTC, the defendants, operating under the fictitious names “2Apply” and “UW Solutions,” falsely claimed they could lower consumers’ mortgage payments and interest rates or prevent foreclosure, pretended to be affiliated with a government agency or consumers’ lenders or servicers, and illegally charged advance. The final orders impose a judgment of more than $1.7 million and bans defendants from selling secured or unsecured debt relief products or services.

September 15, 2016

The FTC alleged that business directory companies Construct Data Publishers a.s., also doing business as Fair Guide, tricked retailers, home-based businesses, local associations and others into thinking they had a preexisting business relationship with them. The defendants falsely suggested that consumers had to return a form confirming or updating their contact information for a trade show they had attended or planned to attend. Many recipients did not notice a statement, buried in fine print at the bottom of the form, that by signing and returning it they were agreeing to pay $1,717 annually to the company for a listing on its website. A court entered an order against Construct Data Publishers imposing a $7 million default judgment and banning them from the business directory business.

September 7, 2016

The FTC is mailing 6,192 refund checks totaling more than $1.3 million to people defrauded by Oro Marketing, Inc., a telemarketing scheme that targeted Spanish-speakers with false promises that they could make money by reselling high-end goods such as Gucci and Ralph Lauren. The FTC alleged the company charged more than $400 per package but delivered only shoddy, off-brand products. Defrauded consumers will get nearly a third of their money back, with the average check totaling $216.

September 1, 2016

The principals of a mortgage relief operation and their companies, Edward William Rennick III, Surety Law Group LLP and Redstone Law Group LLC, are banned from the mortgage loan modification and debt relief business under court orders obtained by the FTC. The orders resolve charges that the scheme falsely promised financially distressed homeowners they would receive legal representation to prevent foreclosure or lower their mortgage payments and interest rates, and illegally charged thousands of dollars in advance.

August 29, 2016

The ringleader and two other defendants in the massive IWorks online billing scheme have agreed to settle FTC charges that they took more than $280 million from consumers via deceptive “trial” memberships for bogus government-grant and money-making products. In addition, the wife and parents of IWorks’ owner and CEO Jeremy Johnson have agreed to settle FTC charges that they received assets and funds as gifts from Johnson that came from the unlawful scheme.

August 8, 2016

The FTC has sued 1-800 Contacts, the largest online retailer of contact lenses in the United States, alleging that it unlawfully orchestrated and now maintains a web of anticompetitive agreements with rival online contact lens sellers that suppress competition in certain online search advertising auctions and that restrict truthful and non-misleading internet advertising to consumers, resulting in some consumers paying higher retail prices for contact lenses. According to the FTC’s complaint, 1-800 Contacts entered into bidding agreements with at least 14 competing online contact lens retailers that constitute unfair methods of competition in violation of federal law.

August 4, 2016

Mars Petcare U.S., Inc., has agreed to settle FTC charges that it falsely advertised the health benefits of its Eukanuba brand dog food. Specifically, the FTC alleges that the company claimed, but could not prove, that a 10-year study found that dogs fed Eukanuba could extend their expected lifespan by 30 percent or more. “Two-thirds of all Americans have pets at home, and they spend billions of dollars to ensure that their pets are healthy and well-fed,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Pet owners count on ads to be truthful and not to misrepresent health-related benefits. In this case, Mars Petcare simply did not have the evidence to back up the life-extending claims it made about its Eukanuba dog food.”

July 27, 2016

Teva Pharmaceutical Industries Ltd. has agreed to sell the rights and assets related to 79 pharmaceutical products to settle FTC charges that its proposed $40.5 billion acquisition of Allergan plc’s generic pharmaceutical business would be anticompetitive. The remedy requires Teva to divest the drug portfolio to eleven firms, and marks the largest drug divestiture order in an FTC pharmaceutical merger case.
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