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Internet Marketers of Acai Berry Weight-Loss Pills and “Colon Cleansers” to Pay $1.5 Million to Settle Charges

January 14, 2012 By admin

ftc_logoThe Federal Trade Commission announced that an operation that marketed acai berry supplements, “colon cleansers,” and other products using allegedly fraudulent free trial offers and phony endorsements from Oprah Winfrey and Rachael Ray will pay .5 million as part of a settlement. The money will be made available for consumer refunds.

The case against Phoenix-based Central Coast Nutraceuticals, Inc., is part of the FTC’s ongoing efforts to protect consumers from fraudulent internet marketing, as well as false and misleading health claims. The settlement order bans the defendants from so-called “negative-option” sales, such as continuity plans and free or introductory price trial offers, in which consumers pay nothing up front or only a small fee to receive a product, but are then automatically charged a higher price unless they take steps to cancel the shipments, or return the product before the end of the trial period.

The 2010 FTC complaint alleged that two individuals and five related companies deceptively claimed that their Acai Pure supplement would cause rapid and substantial weight loss, and that their Colotox colon cleanser would prevent colon cancer. Also, despite claiming to offer a “free” trial for a nominal fee and full refunds upon request, the defendants allegedly repeatedly made unauthorized charges to consumers’ bank accounts, and made it all but impossible to avoid paying full price for the products, typically .95 to .95.

The FTC charged that the defendants violated the Federal Trade Commission Act, as well as the Electronic Fund Transfer Act and its implementing language, Regulation E.
At the request of the FTC in August 2010, a federal court halted the allegedly illegal conduct of the Central Coast Nutraceuticals defendants, imposed an asset freeze, and appointed a receiver to oversee the corporate defendants.

The settlement order against the defendants includes an million judgment, which represents the total amount of consumer injury caused by their scheme. The monetary judgment will be suspended when the FTC receives assets worth approximately .5 million from the defendants.

The settlement order requires defendant Graham D. Gibson to pay the FTC the balance of his investment account; transfer to the FTC 0,000 after mortgaging his home in Phoenix, Arizona, or transfer the property to a court-appointed liquidator if he cannot obtain the mortgage; and divest himself of his interest in a Hawaii vacation property. It also requires the court-appointed receiver to transfer to the FTC the estimated 0,000 that will remain in the accounts of Central Coast Nutraceuticals and the affiliated corporate defendants after their outstanding expenses are paid. If it is later determined that the financial information the defendants provided was false, the full amount of the judgment will become due.
In addition to banning the defendants from selling any products or services with a negative option feature, the settlement also prohibits them from:

  • making deceptive statements that there is no cost for a trial purchase; that all consumers who request full refunds will get them; that celebrities such as Oprah Winfrey and Rachael Ray endorse their products; that consumer testimonials reflect typical consumer experiences; about the total amount consumers will pay; or about any other material fact regarding any goods or services sold by the defendants;
  • failing to make adequate disclosures about the material terms and conditions of any offer;
  • charging consumers’ credit cards, or debiting their bank accounts without their consent;
  • making any claim that a product can diagnose, cure, mitigate, treat, or prevent any disease, including cancer, unless the claim is approved by the Food and Drug Administration;
  • making any claim that a product can cause weight loss, unless the claim is supported by two well-controlled human clinical studies;
  • making claims about the health benefits of any supplement, food, or drug without competent and reliable scientific evidence, and misrepresenting any tests or studies;
  • making deceptive or false statements or failing to disclose material facts, to a payment processor or financial institution; and
  • violating the Electronic Funds Transfer Act and Regulation E.

Under the settlement order, the defendants also are required to monitor the activities of any affiliate marketers selling products or services on their behalf, including reviewing any marketing materials used to ensure that they comply with the order.

Victimized consumers flooded law enforcement agencies and the Better Business Bureau with thousands of complaints about the company. The defendants’ marketing traded on the rampant popularity of acai berry supplements, which are derived from acai palm trees that are native to Central and South America. The Better Business Bureau named fake “free” trial offers – including those for acai supplements offered by the defendants in this case – as one of the “Top 10 Scams and Rip-Offs of 2009.”

For more information about free trial offers, products that claim to treat, prevent or cure diseases, and weight loss products, see: “Free Trials” Aren’t Always Free, Miracle Health Claims: Add a Dose of Skepticism, and Weight Loss Promises.

In addition to Gibson and Central Coast Nutraceuticals, Inc., the settlement order resolves the FTC’s charges against all other defendants in the case: Michael A. McKenzy; iLife Health and Wellness LLC; Simply Naturals LLC; Health and Beauty Solutions LLC; and Fit for Life LLC.

Source: FTC

 

Federal Trade Commission, Plaintiff v. Central Coast Nutraceuticals, Inc., iLife Health and Wellness, LLC, Simply Naturals, LLC, Fit for Life, LLC, Health and Beauty Solutions LLC, Graham D. Gibson, and Michael A. McKenzy, Defendants

(United States District Court for the Northern District of Illinois)  File Nos. 102 3028 and X100043

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Internet Marketers of Acai Berry Weight-Loss Pills and “Colon Cleansers” to Pay $1.5 Million to Settle Charges

January 12, 2012 By admin

ftc_logoThe Federal Trade Commission announced that an operation that marketed acai berry supplements, “colon cleansers,” and other products using allegedly fraudulent free trial offers and phony endorsements from Oprah Winfrey and Rachael Ray will pay .5 million as part of a settlement. The money will be made available for consumer refunds.

The case against Phoenix-based Central Coast Nutraceuticals, Inc., is part of the FTC’s ongoing efforts to protect consumers from fraudulent internet marketing, as well as false and misleading health claims. The settlement order bans the defendants from so-called “negative-option” sales, such as continuity plans and free or introductory price trial offers, in which consumers pay nothing up front or only a small fee to receive a product, but are then automatically charged a higher price unless they take steps to cancel the shipments, or return the product before the end of the trial period.

The 2010 FTC complaint alleged that two individuals and five related companies deceptively claimed that their Acai Pure supplement would cause rapid and substantial weight loss, and that their Colotox colon cleanser would prevent colon cancer. Also, despite claiming to offer a “free” trial for a nominal fee and full refunds upon request, the defendants allegedly repeatedly made unauthorized charges to consumers’ bank accounts, and made it all but impossible to avoid paying full price for the products, typically .95 to .95.

The FTC charged that the defendants violated the Federal Trade Commission Act, as well as the Electronic Fund Transfer Act and its implementing language, Regulation E.
At the request of the FTC in August 2010, a federal court halted the allegedly illegal conduct of the Central Coast Nutraceuticals defendants, imposed an asset freeze, and appointed a receiver to oversee the corporate defendants.

The settlement order against the defendants includes an million judgment, which represents the total amount of consumer injury caused by their scheme. The monetary judgment will be suspended when the FTC receives assets worth approximately .5 million from the defendants.

The settlement order requires defendant Graham D. Gibson to pay the FTC the balance of his investment account; transfer to the FTC 0,000 after mortgaging his home in Phoenix, Arizona, or transfer the property to a court-appointed liquidator if he cannot obtain the mortgage; and divest himself of his interest in a Hawaii vacation property. It also requires the court-appointed receiver to transfer to the FTC the estimated 0,000 that will remain in the accounts of Central Coast Nutraceuticals and the affiliated corporate defendants after their outstanding expenses are paid. If it is later determined that the financial information the defendants provided was false, the full amount of the judgment will become due.
In addition to banning the defendants from selling any products or services with a negative option feature, the settlement also prohibits them from:

  • making deceptive statements that there is no cost for a trial purchase; that all consumers who request full refunds will get them; that celebrities such as Oprah Winfrey and Rachael Ray endorse their products; that consumer testimonials reflect typical consumer experiences; about the total amount consumers will pay; or about any other material fact regarding any goods or services sold by the defendants;
  • failing to make adequate disclosures about the material terms and conditions of any offer;
  • charging consumers’ credit cards, or debiting their bank accounts without their consent;
  • making any claim that a product can diagnose, cure, mitigate, treat, or prevent any disease, including cancer, unless the claim is approved by the Food and Drug Administration;
  • making any claim that a product can cause weight loss, unless the claim is supported by two well-controlled human clinical studies;
  • making claims about the health benefits of any supplement, food, or drug without competent and reliable scientific evidence, and misrepresenting any tests or studies;
  • making deceptive or false statements or failing to disclose material facts, to a payment processor or financial institution; and
  • violating the Electronic Funds Transfer Act and Regulation E.

Under the settlement order, the defendants also are required to monitor the activities of any affiliate marketers selling products or services on their behalf, including reviewing any marketing materials used to ensure that they comply with the order.

Victimized consumers flooded law enforcement agencies and the Better Business Bureau with thousands of complaints about the company. The defendants’ marketing traded on the rampant popularity of acai berry supplements, which are derived from acai palm trees that are native to Central and South America. The Better Business Bureau named fake “free” trial offers – including those for acai supplements offered by the defendants in this case – as one of the “Top 10 Scams and Rip-Offs of 2009.”

For more information about free trial offers, products that claim to treat, prevent or cure diseases, and weight loss products, see: “Free Trials” Aren’t Always Free, Miracle Health Claims: Add a Dose of Skepticism, and Weight Loss Promises.

In addition to Gibson and Central Coast Nutraceuticals, Inc., the settlement order resolves the FTC’s charges against all other defendants in the case: Michael A. McKenzy; iLife Health and Wellness LLC; Simply Naturals LLC; Health and Beauty Solutions LLC; and Fit for Life LLC.

Source: FTC

 

Federal Trade Commission, Plaintiff v. Central Coast Nutraceuticals, Inc., iLife Health and Wellness, LLC, Simply Naturals, LLC, Fit for Life, LLC, Health and Beauty Solutions LLC, Graham D. Gibson, and Michael A. McKenzy, Defendants

(United States District Court for the Northern District of Illinois)  File Nos. 102 3028 and X100043

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Marketers Falsely Claimed to Be Affiliated with Federal Mortgage Relief, Operators in One Case Required to Pay $1.8 Million

August 26, 2011 By admin

The Consumers
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consumer-spendingThe Federal Trade Commission put an end to three schemes that claimed they would help consumers with their mortgage and debt problems, as part of settlements with defendants who allegedly claimed a bogus affiliation with government assistance programs.

Under the settlements, which are part of the agency’s ongoing effort to stop scams that prey on consumers in financial distress, the defendants are banned from marketing or helping others to market any mortgage assistance relief product or service; prohibited from misrepresenting the available terms or rates for financial products and the potential to improve a consumer’s credit history or ability to obtain credit; prohibited from representing the benefits of financial products without competent and reliable evidence to substantiate their claims; and prohibited from making misrepresentations about any good or service, including claims of an affiliation with any government entity or program.  They also are required to protect and properly dispose of customer personal information.

Truman Foreclosure Assistance, LLC.  The FTC alleged that the defendants bilked consumers out of thousands of dollars for phony mortgage relief and foreclosure rescue services. Settlement orders with two of the men behind the operation require them to pay .8 million, and ban them from marketing or helping others to market any mortgage relief and foreclosure rescue service.

The FTC’s complaint against Truman Foreclosure Assistance LLC, Eli Hertz, Benzion Jack Itzkowitz, and Richard Zafrani, along with several other defendants, was filed as part of a 2009 law enforcement sweep called “Operation Stolen Hope.”  The agency alleged that the Truman defendants charged up-front feesfrom ,500 to ,000, falsely claiming that for all or most consumers they could get their mortgage modified or stop their homes from being foreclosed.  They claimed a 90-percent success rate and a 100-percent money-back guarantee.  But in many instances, after consumers paid the up-front fees, the defendants failed to provide information about the status of their communication with the consumers’ lenders; failed to contact the consumers’ lenders or obtain mortgage loan modifications; and denied refunds to homeowners for whom they failed to obtain modifications, according to the FTC.

The settlement orders also prohibit Hertz and Itzkowitz from sharing or using customer information, such as Social Security numbers or bank account information, and require the information to be destroyed.

Fedmortgageloans.com.  In this case, the defendants marketed debt relief services as well as mortgage assistance relief services, and the settlement bans them from marketing or helping others to market both mortgage assistance relief and debt relief products or services.

In June 2010, the FTC charged the two corporate defendants and two individuals in this case with misrepresenting that the mortgage assistance and debt relief programs they marketed online were affiliated with the federal or state government, and that consumers were eligible for a federal or state government loan modification or debt relief program.  According to the complaint, the defendants used www.fedmortgageloans.com, www.fedhomeaffordableplan.com, and various other websites to market loan modification services, often displaying official government agency seals or logos and links to the websites of federal government agencies such as HUD, the U.S. Treasury Department, and the White House.  Likewise, multiple sites operated by the defendants promoting debt relief services featured federal or state government logos and seals.  Consumers who provided basic information on any of the sites were all assured that they qualified for mortgage assistance or debt relief programs.

The settlement imposes a ,080,931 judgment against all four defendants:  Dominant Leads, LLC; MAD TJ Holdings, LLC; James Rambadt, also known as James Kane; and Thomas Hayes.  Rambadt is required to pay ,000, with the rest of the judgment against him suspended because of his inability to pay.  Hayes is required to pay ,000, with the rest suspended due to his inability to pay.  If it is determined that the financial information the defendants gave to the FTC was untruthful, the full amount of the judgment will become due.

Making Home Affordable.  In its May 2009 complaint, the FTC alleged that the defendants impersonated MakingHomeAffordable.gov, a federal government website that helps eligible homeowners refinance or modify their mortgages.  The FTC previously settled with six other defendants and has now reached a settlement with the final defendant, Scott Lady.

According to the FTC, consumers looking for the federal Making Home Affordable program were diverted to commercial websites that pitched loan modification services or sold consumers’ personal information to marketers that did.  Lady marketed bogus mortgage relief services through two Internet websites that he operated and through search engine advertising promoting his sites.  Making claims such as “Instantly Stop Foreclosure,” and “Guaranteed Solutions to Lower Your Rate Today,” Lady sold to third parties the personal information of consumers who responded.

In addition to the prohibitions against offering mortgage modification services and restrictions on related activities, the settlement imposes a judgment against Lady for 0,415, which will be suspended because of his inability to pay.  If it is determined that the financial information Lady gave to the FTC was untruthful, the full amount of the judgment will become due.

Source: FTC

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Online Marketers with Charged Scamming Consumers out of Hundreds of Millions of Dollars with ‘Free’ Trial Offers

June 20, 2011 By admin

CES 2011 – Consumer Electronics Show – Las Vegas, NV
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Image by David Berkowitz
Consumer Electronics Show (CES) 2011 – Las Vegas, NV
(cc) David Berkowitz www.marketersstudio.com

scammersThe Federal Trade Commission has brought a law enforcement action against an online operation that allegedly raked in more than 0 million from consumers in the United States, Canada, the United Kingdom, Australia, and New Zealand by luring them into “free” or “risk-free” offers, and then charging them for products and services they did not want or agree to purchase. As part of its ongoing efforts to stamp out online fraud, the FTC seeks to stop the operation’s illegal practices and make the defendants repay injured consumers.

“The defendants used the lure of a ‘free’ offer to open an illegal pipeline to consumers’ credit card and bank accounts,” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. “‘Free’ must really mean ‘free’ no matter where the offer is made.”

The FTC worked closely with Canadian law enforcement, including the Alberta Partnership Against Cross Border Fraud, in investigating this international scheme. Most of the defendants are located in Alberta.

“Internet fraud is a global problem that requires an international enforcement response,” said Lisa Campbell, Deputy Commissioner of Competition for the Competition Bureau of Canada. “International cooperation ensures that fraudsters can’t hide behind borders.”

According to the FTC’s complaint, Jesse Willms and 10 companies he controls used deceptive tactics in offering “free trials” for various products online, including acai berry weight-loss pills, teeth whiteners, and health supplements containing resveratrol (the supposedly healthful ingredient in red wine), as well as for a work-at-home scheme, access to government grants, free credit reports, and penny auctions. (Penny auctions are online auctions in which consumers must purchase bids, usually for .50 to each. Regardless of whether a consumer actually wins a penny auction, the consumer has paid for each bid he or she placed during the auction. However, each bid that is placed raises the price of the auctioned item by a penny.)

According to the FTC, Willms and his companies obtained consumers’ credit or debit card account numbers, by enticing them with bogus “free” or “risk-free” trial offers that supposedly required only small shipping and handling fees, and also promised phony “bonus” offers just for signing up. Consumers had no reason to believe they would be charged for the trial product or the extra bonus products, but they were often charged for the “free” trial plus a monthly recurring fee, typically .95. Consumers were also charged monthly recurring fees for the so-called bonus offers. Although the defendants offered a money-back guarantee, consumers were often unsuccessful in canceling the charges or obtaining refunds, and the process involved time-consuming phone calls and other steps that made the deals far from risk-free, the FTC complaint alleged.

The defendants allegedly contracted with affiliate marketers whose banner ads, pop-ups, sponsored search terms, and unsolicited e-mail led consumers to the defendants’ websites, and the defendants paid the affiliates for each consumer whose credit or debit card was charged. The defendants allegedly made false claims about the total cost of products, recurring charges, and the availability of refunds. They also buried important terms and conditions in fine print, the FTC alleged.

The complaint charges that the defendants’ penny auction offers falsely indicated consumers would receive free “bonus” bids, but those who provided credit or debit card numbers to facilitate future auction buying were hit with charges they did not know about, including 0 for introductory “bonus” bids and .95 per month for ongoing “bonus” bids. The FTC also charged that Willms and his companies made false weight loss and cancer cure claims for their products, and touted bogus endorsements by Oprah Winfrey and Rachael Ray.

The FTC further alleged that the defendants provided merchant banks with false or misleading information, in order to acquire and maintain credit and debit card processing services from the banks in the face of mounting chargeback rates and consumer complaints. Willms and his companies also allegedly violated the Electronic Fund Transfer Act and Regulation E (issued by the Federal Reserve System’s Board of Governors) by debiting consumers’ bank accounts without their signed written consent and without providing consumers with a copy of the written authorization.

The defendants named in the FTC complaint are Jesse Willms, Peter Graver, Adam Sechrist, Brett Callister, Carey L. Milne; 1021018 Alberta Ltd., also doing business as Just Think Media, Credit Report America, eDirect Software, WuLongsource, and Wuyi Source; 1016363 Alberta Ltd., also doing business as eDirect Software; 1524948 Alberta Ltd., also doing business as Terra Marketing Group, SwipeBids.com, and SwipeAuctions.com; Circle Media Bids Limited, also doing business as SwipeBids.com, SwipeAuctions.com, and Selloffauctions.com; Coastwest Holdings Ltd.; Farend Services Ltd.; JDW Media LLC; Net Soft Media LLC, also doing business as SwipeBids.com; Sphere Media LLC, also doing business as SwipeBids.com and SwipeAuctions.com; and True Net LLC, also doing business as Selloffauctions.com.

The FTC would like to thank the Competition Bureau Canada, Service Alberta, the Royal Canadian Mounted Police, the Alberta Partnership Against Cross Border Fraud, the Edmonton Better Business Bureau, and the BBB of Southern Nevada for their invaluable assistance in this investigation.

Source: FTC

Federal Trade Commission, Plaintiff v. Jesse Willms; Peter Graver; Adam Sechrist; Brett Callister; Carey L. Milne; 1021018 Alberta Ltd., also d/b/a Just Think Media, Credit Report America, eDirect Software, WuLongsource, and Wuyi Source; 1016363 Alberta Ltd., also d/b/a eDirect Software; 1524948 Alberta Ltd., also d/b/a Terra Marketing Group, SwipeBids.com, and SwipeAuctions.com; Circle Media Bids Limited, also d/b/a SwipeBids.com, SwipeAuctions.com, and Selloffauctions.com; Coastwest Holdings Limited; Farend Services Ltd.; JDW Media, LLC; Net Soft Media, LLC, also d/b/a SwipeBids.com; Sphere Media, LLC, also d/b/a SwipeBids.com and SwipeAuctions.com; and True Net, LLC, also d/b/a Selloffauctions.com, Defendants.

(United States District Court for the Western District of Washington)
Case No. 2:11-cv-00828
FTC File No. 102 3012

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Court Orders Internet Marketers of Acai Berry Weight-Loss Pills and “Colon Cleansers” to Stop Deceptive Advertising and Unfair Billing Practices

August 19, 2010 By admin

At the request of the Federal Trade Commission, a U.S. district court has ordered the marketers of acai berry supplements, “colon cleansers,” and other products to temporarily halt an Internet sales scheme that allegedly scammed consumers out of million or more in 2009 alone through deceptive advertising and unfair billing practices. The FTC will seek a permanent prohibition. Since 2007, victimized consumers have flooded law enforcement agencies and the Better Business Bureau with more than 2,800 complaints about the company.

Acai berry supplements, derived from acai palm trees that are native to Central and South America, have become popular in recent years. Last year, the Better Business Bureau named fake “free” trial offers – including those for acai supplements offered by the defendants in this case – as one of the “Top 10 Scams and Rip Offs of 2009.”

“Too many ‘free’ offers come with strings attached,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “In this case, the defendants promised buyers a ‘risk free’ trial and then illegally billed their credit cards again and again – and again. We estimate that about a million people have fallen victim to this scam. As if that weren’t enough, there were fake endorsements from celebrities like Oprah Winfrey and Rachael Ray for a product that didn’t work in the first place.”

The court order halts the allegedly illegal conduct of Central Coast Nutraceuticals, Inc., imposes an asset freeze, and appoints a temporary receiver over CCN and several related companies, while the FTC moves forward with its case to stop the company’s bogus health claims and other deceptive and unfair conduct.

The FTC charged CCN, two individuals, and four related companies with multiple violations, including deceptively advertising AcaiPure, an acai berry supplement, as a weight-loss product, and Colopure, a colon cleansing supplement, as an aid for preventing cancer.

The FTC complaint alleges that to sell AcaiPure, the marketers made dramatic claims on their website, including:

“WARNING! AcaiPure Is Fast Weight Loss That Works. It Was Not Created For Those People Who Only Want To Lose A Few Measly Pounds. AcaiPure was created to help you achieve the incredible body you have always wanted …USE WITH CAUTION! Major weight loss in short periods of time may occur.”
In pitching Colopure, the defendants cited frightening statistics about colon
cancer, while promising that their product would get rid of consumers’ “excess weight and toxic buildup.”

The marketers also deceived consumers about their purported “free” or “risk free” trial offers, and about the charges and refund terms consumers could expect, according to the FTC’s complaint. The FTC also alleges that the marketers made numerous additional unauthorized charges to consumers’ credit and debit card accounts.
The alleged deceptive practices include:

  • Falsely claiming that using AcaiPure could lead to rapid and substantial weight loss. Consumers were told that “[m]ost consumers taking AcaiPure report weight loss anywhere from 10-25 pounds in the first month.”
  • Making unproven claims that AcaiPure’s weight-loss claims are backed by “double-blind, placebo-controlled weight loss studies.”
  • Deceptively claiming that Colopure could help prevent colon cancer because it would “cleanse your entire system,” “detoxify your organs,” and break down and remove “toxic waste matter which may have been stuck in the folds and wrinkles of your digestive system for years and years.”
  • Falsely claiming that celebrities including Oprah Winfrey and Rachael Ray have endorsed products marketed by Central Coast Nutraceuticals, Inc. In marketing AcaiPure, the defendants declared on their homepage, “Acai Berry rated #1 SUPERFOOD by Rachael Ray.” A photo of Oprah appeared on the homepage, next to a quote that read in part, “Studies have shown that this little berry is one of the most nutritious and powerful foods in the world!” In fact, in declarations to the FTC, both celebrities denied endorsing AcaiPure.
  • Deceptively claiming that the marketers will provide full refunds to all consumers who request them, and that consumers who paid a nominal fee for a “free” trial supply of supplements would incur no risks or obligations. In fact, many consumers found it all but impossible to avoid paying full price for the products, typically .95 to .95.
  • Failing to adequately disclose that consumers would be automatically enrolled in a membership program and charged for additional monthly supplies of a product.
  • Failing to adequately disclose that consumers would be automatically charged for items other than the trial product unless they opted out.
  • Failing to adequately disclose the terms and conditions of trial programs, membership programs, and additional charges.
  • Making numerous unauthorized charges to consumers’ credit and debit card accounts.
  • Debiting consumers’ bank accounts on an automatic, recurring basis, without obtaining proper preauthorization. The unauthorized debits violated the FTC Act as well as the Electronic Fund Transfer Act and Regulation E, according to the complaint.

“Visa is committed to ensuring that consumers trust digital currency when they shop online by protecting them from deceptive merchant marketing practices,” said Martin Elliott, Senior Business Leader, Payment System Risk, Visa Inc. “Deceptive merchant practices hurt the economy by eroding trust in e-commerce and undermining the vast majority of ethical merchants who deal and compete fairly. We have tightened enforcement of our rules against banks whose merchants generate excessive levels of cardholder disputes because of deceptive marketing. We also make it a priority to partner with law enforcement and agencies like the Federal Trade Commission and support their investigations such as this case.”
The FTC would like to thank the Better Business Bureau of Central, Northern & Western Arizona and Visa, Inc. for their invaluable assistance in this investigation.

The Commission vote authorizing the staff to file the complaint and seek a temporary restraining order was 5-0. The FTC filed its complaint and requested a temporary restraining order against the defendants from the U.S. District Court for the Northern District of Illinois, Eastern Division. On August 6, 2010, the court granted the request for the temporary restraining order.
The complaint also names as defendants Graham D. Gibson and Michael A. McKenzy, and four companies affiliated with Central Coast Nutraceuticals, Inc. – iLife Health and Wellness LLC; Simply Naturals LLC; Health and Beauty Solutions LLC; and Fit for Life LLC.

NOTE: The Commission files a complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.

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Deceptive Marketers Banned from Selling Mortgage Relief Services; One Defendant Ordered to Pay $11.5 Million

July 29, 2010 By admin

Eight marketers are banned from selling mortgage modification or foreclosure relief services under settlements with the Federal Trade Commission. The FTC alleged that the marketers charged homeowners up-front fees and falsely claimed they could get their mortgage loans modified or prevent foreclosure on their homes. The settlements in three separate actions are part of the FTC’s ongoing efforts against scams that target financially distressed consumers.

The FTC settled with the following defendants:
Federal Loan Modification Law Center. Steven Oscherowitz settled FTC charges that he and others advertised and sold a so-called “Federal Loan Modification program.” They charged up to ,000, much of which they required up-front, but Federal Loan Modification often failed to live up to the promised results, according to the FTC’s complaint. (4/6/2009 release http://www.ftc.gov/opa/2009/04/hud.shtm). The settlement order against Oscherowitz permanently bans him from selling mortgage relief services and from telemarketing any good or service. Under the order, Oscherowitz also is prohibited from misrepresenting any good or service, selling or otherwise benefitting from customers’ personal information, and failing to dispose of customer information properly. The order imposes an .5 million judgment against Oscherowitz, which represents the amount consumers paid to the defendants while he was involved in the alleged scheme. Any money collected to satisfy the judgment will be paid to injured consumers if practicable, or to the U.S. Treasury as disgorgement of ill-gotten gains. Two individual and three corporate defendants already have settled charges against them in this case, and the FTC continues to pursue its case against five other defendants.

Loss Mitigation Services. Dean Shafer, Marion Anthony “Tony” Perry, and Bernadette Perry, also known as Bernadette Carr and Bernadette Carr-Perry, settled allegations that they falsely promised that a loan modification was assured or virtually assured if consumers paid an advance fee of up to ,500. Shafer and the Perrys, who were principals of Loss Mitigation Services, Inc. (LMS) and Synergy Financial Management Corporation, doing business as Direct Lender or DirectLender.com (Direct Lender), also allegedly misrepresented that the companies were a department of, or affiliated with, the consumer’s lender or mortgage servicer. In addition, Shafer and the Perrys falsely claimed that consumers would receive refunds if LMS or Direct Lender failed to secure a loan modification. In many cases, the defendants failed to obtain loan modifications for consumers, and some consumers lost their homes while waiting for the promised results. (7/15/2009 release http://www.ftc.gov/opa/2009/07/loanlies.shtm.) Under the settlement orders, Shafer and the Perrys are banned from selling mortgage relief services. The orders also impose a .2 million judgment that is suspended due to their inability to pay. In addition to the orders against Shafer and the Perrys, the FTC obtained a default order against LMS and Direct Lender, banning them from selling mortgage relief services and ordering them to pay .2 million.

Hope Now Modifications. Brothers Salvatore and Nicholas Puglia, Hope Now Modifications LLC, and Hope Now Financial Services Corporation settled FTC charges that they falsely claimed that they could obtain mortgage loan modifications in all or virtually all cases and would refund consumers’ money if they failed, and that they were affiliated with, or part of, the HOPE NOW Alliance, a free federal homeowner assistance program. (3/24/2009 release http://www.ftc.gov/opa/2009/03/newhope.shtm). In addition to banning the defendants from selling mortgage relief services, the settlement order against them permanently bars them from misrepresenting any good or service, violating the Telemarketing Sales Rule, selling or otherwise benefitting from their customers’ personal information, and failing to dispose of their customer information properly. The order also imposes a judgment of almost .3 million, which will be suspended when the defendants surrender all of the funds in their bank accounts, which were frozen by the court.

The Commission votes to authorize staff to file the stipulated final orders in Federal Loan Modification Law Center and Loss Mitigation Services were 5-0. The orders were entered by the U.S. District Court for the Central District of California on July 12, 2010, and July 14, 2010, respectively. The Commission vote to authorize staff to file the stipulated final order in Hope Now Modifications was 5-0. The order was entered by the U.S. District Court for the District of New Jersey on July 12, 2010.

NOTE: Stipulated court orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the full force of law when signed by the judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

FMD Consumer Blog

Filed Under: Consumer Economic News Tagged With: , , , , , , , , , , ,

Marketers of “Rapid Debt Reduction” Program To Pay $1.5 Million for Falsely Claiming They Could Lower Consumers’ Interest Rates

July 26, 2010 By admin

Defendants Permanently Banned from Marketing Debt Relief Services

The marketers of a “Rapid Debt Reduction” program who promised to lower interest rates on credit cards – for an up-front fee of up to 9 – have settled Federal Trade Commission charges that they misled consumers. Under a court order settling the FTC’s case, the pitchmen have been banned from marketing debt-relief services and have agreed to pay .5 million that will be used to refund defrauded consumers.

Filed as part of the “Operation Short Charge” law enforcement sweep, the FTC’s complaint alleged that Mutual Consolidated Savings (MCS) and its affiliates and principals used cold calls, pre-recorded “robocalls,” and the Internet to push a phony “Rapid Debt Reduction” program to consumers in the United States and Canada. The defendants convinced consumers to pay 0 to 9 for the program, claiming they would reduce credit card interest rates, save consumers thousands of dollars, and enable them to pay off their debt three to five times faster than they could under their current payment schedule. The FTC also alleged that the defendants failed to honor their money-back guarantee.

In addition, according to the FTC, the MCS defendants called consumers whose telephone numbers were on the Do Not Call Registry, failed to honor consumers’ requests that they not be called again, transmitted fake Caller ID information, failed to identify themselves during telephone pitches, and made illegal robocalls.

The order settling the FTC’s charges bans the defendants from working in the debt relief industry and prohibits them from misleading consumers or helping anyone else mislead consumers about any material facts regarding goods or services they are selling. In addition, they must comply with the agency’s Telemarketing Sales Rule, including not calling consumers on the Do Not Call Registry.

The settlement order also requires the defendants to pay approximately .5 million – all of their available assets – that will be distributed to injured customers in the United States and Canada. If they misrepresented their financial condition, the defendants will have to pay the full amount of the alleged consumer injury, .5 million.

The FTC vote approving the complaint and proposed settlement order was 5-0. The settlement order was filed on June 14, 2010 in the U.S. District Court for the Western District of Washington at Tacoma and signed by the judge on July 19, 2010. It settles the FTC’s charges against MCS Programs, LLC; United Savings Center, Inc.; and USC Programs, LLC; and their principals, Paul Morris Thompson and Miranda Lynn Cavender.

Law Enforcement Coordination

In investigating and bringing its case against Mutual Consolidated Savings, the FTC received assistance from the Canadian Competition Bureau. Both the Competition Bureau and the FTC are members of the Vancouver Strategic Alliance, a law enforcement task force located in Vancouver, British Columbia, Canada. In carrying out the terms of the court order in Mutual Consolidated Savings, the FTC received assistance from the Police Department of Tacoma, Washington.

NOTE: Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Stipulated orders have the force of law when signed by the judge.

Copies of the complaint and final order are available from the FTC’s website at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click: http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

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Filed Under: Consumer Economic News Tagged With: , , , , , , , , , , , , , ,

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