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Court Orders Judgment of Nearly $515,000 Against Mortgage Relief Pitchman

A federal district court in Southern California has ordered a judgment of nearly $515,000 against Mark Nagy Atalla, a defendant in a 2013 Federal Trade Commission action targeting deceptive mortgage and debt relief pitches. The court imposed the judgment after finding Atalla had hid assets and misrepresented his financial condition to the agency. The judgment originally was suspended in Atalla’s settlement order with the Commission, based on his supposed inability to pay.

“The court’s order in this case makes a very clear point,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “When you sign a settlement order with the Federal Trade Commission, you’d better be up-front about your assets. If you’re not, we won’t hesitate to collect suspended monetary judgments.”

According to the FTC’s complaint, filed in December 2013, Atalla and his two companies violated the FTC Act and the Mortgage Assistance Relief Services Rule (known as the MARS Rule or Regulation O) when they promised to substantially lower consumers’ monthly mortgage payments in exchange for an up-front fee ranging from $1,495 to $4,495. The complaint charged that in addition to misrepresenting the likelihood that consumers would obtain a mortgage modification, the defendants falsely represented that consumers who did not receive a modification would receive full refunds, falsely represented that they were affiliated with the U.S. government, and falsely claimed to provide legal representation to consumers.

Under the stipulated order settling the FTC’s charges, in addition to being banned from participating in the debt relief and mortgage relief industries, Atalla was subject to a suspended judgment of $514,910, provided he turned over several assets. The court order announced today lifts the suspension and requires Atalla to pay the full judgment, minus $650 he previously paid, plus interest for failing to disclose material assets and making misrepresentations on his financial statements.

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 2,000 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. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

At FTC’s Request, Court Shuts Down New York-Based Tech Support Scam Business

(CORRECTED)

At the request of the Federal Trade Commission, a federal court has shut down a company that scammed computer users by tricking them into paying hundreds of dollars for technical support services they did not need, as well as software that was otherwise available for free.

According to the FTC’s complaint and other court documents filed by the agency, Pairsys, Inc., cold-called consumers masquerading as representatives of Microsoft or Facebook, and also purchased deceptive ads online that led consumers to believe they were calling the technical support line for legitimate companies.

“The defendants behind Pairsys targeted seniors and other vulnerable populations, preying on their lack of computer knowledge to sell ‘security’ software and programs that had no value at all,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “We are pleased that the court has shut down the company for now, and we look forward to getting consumers’ money back in their pockets.”

Whether consumers were cold-called by the company or drawn in by deceptive ads, the FTC’s complaint notes that what followed was a deceptive and high-pressure sales pitch conducted by scammers in an overseas call center. The scammers would convince a consumer to allow them to have remote control over the individual’s computer, in order to analyze the supposed issues.

Once they had access to a consumer’s computer, the FTC alleges, the scammers would lead the consumer to believe that benign portions of the computer’s operating system were in fact signs of viruses and malware infecting the consumer’s computer. In many cases, they implied that the computer was severely compromised and had to be “repaired” immediately.

At that point, consumers were pressured into paying for bogus warranty programs and software that was freely available, usually at a cost of $149 to $249, though in some cases, the defendants charged as much as $600 for the supposed products. The FTC’s filings in the case allege that the company made nearly $2.5 million since early 2012.

The defendants have agreed to the terms of a preliminary injunction issued by the court that prohibits the defendants in the case from making misrepresentations to consumers about what company they represent or whether consumers have viruses or spyware on their computer. They are also banned from deceptive telemarketing practices, and may not sell or rent their customer lists to any third party. The injunction requires that their websites and telephone numbers must be shut down and disconnected, and their assets be frozen.

The defendants in the case, Pairsys, Inc., Uttam Saha and Tiya Bhattacharya, are accused by the FTC of violating both the FTC Act and the Telemarketing Sales Rule. In its complaint, the FTC asks the court to permanently shut down the company and require the defendants to return their ill-gotten gains. The FTC previously brought cases against a number of tech support scammers in 2012 and has received settlements and judgments totaling more than $5 million in those cases.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of New York. The stipulated preliminary injunction was entered by the court on Oct. 9. 2014.

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 case will be decided by the court.

FTC Staff Advises New York State Public Service Commission To Increase Competition in Proposal to Transform Electric Distribution System

The Federal Trade Commission staff submitted a reply comment in response to certain comments filed with the New York State Public Service Commission (NY PSC) regarding the NY PSC staff’s proposal to transform the function of the electric distribution system that serves residential, commercial, and industrial electricity customers in New York.

The comment, submitted by staff of the FTC’s Office of the General Counsel, Office of Policy Planning, and Bureau of Economics, recommends revisions to the NY PSC’s staff’s “straw proposal” on issues in the Reforming the Energy Vision project.

Under the NY PSC staff’s proposal, the NY PSC would authorize the establishment of entities known as Distributed System Platform (DSP) operators, which would be responsible for balancing electricity supply and demand on local, lower-voltage distribution lines. The NY PSC staff anticipates that this would foster the deployment of more innovative types of electricity resources, such as customer-owned solar arrays, energy storage units, and demand reductions offered by customers. These innovations, known as “distributed energy resources” (DERs), would benefit customers through lower electric system costs, increased reliability, improved resiliency, and lower environmental impacts.

The revisions recommended by FTC staff would address a key concern regarding competition in the electric distribution system: distribution utilities that serve as their own DSP operators have the incentive and ability to raise the costs and risks for rival, independent DERs.

The FTC staff comment recommends the use of a competitive procurement process to select the entities that will serve as DSP operators. This would allow a variety of bidders to show how they could keep administrative costs low, remove incentives to discriminate against independent DERs, and provide other benefits to electricity customers.

The FTC staff comment also encourages the NY PSC to use a competitive procurement approach to appoint independent market monitors to evaluate the performance of DSP operators, and suggests ways to improve the performance of the electric distribution system. In the event a distribution utility ends up serving as its own DSP operator, the comment recommends that the NY PSC consider disclosures to potential DER investors to avoid deception of customers and third parties contemplating new or expanded DER investments, as well as performance-based incentives to avoid discrimination.

The Commission vote authorizing the staff comment was 4-0-1, with Commissioner Julie Brill abstaining. (FTC File No. V140012; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702).

FTC Publishes Agenda for Every Community Fraud Workshop

How fraud affects different populations and what scams prey on specific groups will be the topic of the Federal Trade Commission’s “Fraud Affects Every Community” workshop on Oct. 29th in Washington. Chairwoman Edith Ramirez will deliver opening remarks.

A complete agenda of presenters and speakers is now available, and includes consumer advocates, regulators, fraud prevention experts, academics and researchers who will discuss the issues.

The workshop will take place at the FTC Headquarters in Washington, and registration begins at 8:00 a.m. EST. The Chairwoman’s opening remarks begin at 8:30 a.m., and following lunch, Commissioner Terrell McSweeny will deliver remarks at 1:30 p.m.

The workshop will examine the marketplace experiences of people in various communities, identify areas of concern among them, and seek to find actionable remedies through cooperation, law enforcement, industry fraud-prevention initiatives, community outreach and education.

The event will be webcast, and agency staff will live-tweet highlights from its @FTC Twitter account in English, and @LaFTC account in Spanish. The event hashtag will be: #FTCFAEC.

To expedite entry to the event, attendees may pre-register by sending an email to [email protected] that includes your name and the name of your organization.

Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted to Lara Kittleson via email at [email protected] or by calling 202-326-3388. Requests should be made in advance, and include a detailed description of the accommodations needed and contact information.

FTC Takes Action to Stop Phantom Debt Scam That Targeted Spanish-Speaking Consumers Nationwide

At the Federal Trade Commission’s request, a U.S. district court in Miami has temporarily shut down a fraudulent phantom debt collection operation that deceived and abused thousands of Spanish-speaking consumers across the country in an attempt to collect money they did not even owe.

According to the FTC, the defendants behind Centro Natural Corp. and Sumore L.L.C bilked consumers out of at least two million dollars. The FTC is seeking a court order permanently stopping the defendants’ scam.

In its complaint, the FTC charged that the defendants cold-called consumers and threatened them with harsh consequences, such as arrest, legal actions, and immigration status investigations, if they failed to make large payments on bogus debts. The defendants’ telemarketers also pressured and deceived consumers into paying for unwanted products by telling consumers it would “settle” their debt.

“These defendants deserve a shameful Triple Crown for fraud. They posed as government officials, used abusive debt collection practices, and ignored the National Do Not Call Registry,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We’re shining a light on fraud affecting every community, and we’re pleased that this scheme targeting Latinos has been stopped.”

According to the FTC’s complaint, since at least 2011, the defendants have held themselves out as court or government officials or lawyers. They demanded that consumers pay them to “settle” phantom debts that typically ranged between $3,000 and $9,000.

The FTC alleges that the defendants often told consumers that they could settle their debts by paying defendants hundreds of dollars. If consumers refused to pay, the defendants often continued to call and threaten them, sometimes using profane language. The defendants also kept calling consumers who asked them not to call again, regularly cold-called consumers whose phone numbers are on the Do Not Call Registry, and failed to pay fees for the Do Not Call Registry.

The complaint charges the defendants with violating the FTC Act, the Fair Debt Collection Practices Act, the FTC’s Telemarketing Sales Rule, and failing to pay for, or abide by, the rules of the Do Not Call Registry.

The Commission vote authorizing staff to file the federal court complaint against defendants Centro Natural Corp., Sumore, L.L.C., Carolina Orellana, Damian Biondi, Javier Sumbre, and Jessica Anzola, and relief defendant Bionore, Inc. was 5-0. The complaint was filed in the U.S. District Court for the Southern District of Florida on October 20, 2014. The court issued a temporary restraining order against the defendants the same day.

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.

Defendants in Massive Spam Text Message, Robocalling and Mobile Cramming Scheme to Pay $10 Million to Settle FTC Charges

A series of defendants will pay approximately $10 million to the Federal Trade Commission to settle charges that they operated a massive scam that sent unwanted text messages to millions of consumers, many of whom later received illegal robocalls, phony “free” merchandise offers, and unauthorized charges crammed on their mobile phone bills.

The settlement marks the completion of a major effort by the FTC to crack down on the senders of unwanted text messages offering consumers “free” gift cards to retailers such as Best Buy, Walmart and Target. The messages contained links to websites that led consumers through a process that the FTC alleges was designed to get consumers’ personal information for sale to marketers, their mobile phone numbers to cram unwanted charges on their bill, and to drive them to paid subscriptions for which the scammers received affiliate referral fees.

“The operators of this scam bombarded consumers for months with deceptive text messages offering ‘free’ items, but the costs to consumers were very real – including the misuse of their personal information to cram unwanted charges on their phone bills,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “I am pleased that these scammers will be forced to turn over millions of the dollars they took from consumers and banned from repeating these actions in the future.”

The settlement resolves the FTC’s allegations against three groups of defendants:

The first set of defendants is required to pay the FTC $7.8 million. The FTC alleged that this group of defendants was responsible for millions of illegal text messages, made deceptive claims about “free” merchandise, was responsible for unauthorized charges on mobile phone bills, and assisted and facilitated the sending of illegal robocalls. Under the terms of the settlement, these defendants will be banned from sending consumers unwanted text messages, as well as from placing charges of any kind onto a consumer’s telephone bill, whether landline or mobile. The settlement also bans the defendants from misrepresenting whether a product is free through a text message or webpage, and also requires the defendants to ensure that any affiliates working for them abide by the same provisions. In addition, the settlement requires the defendants to obtain consumers’ express informed consent before billing them and bans them from participating in illegal telemarketing. The defendants in this settlement are Acquinity Interactive, LLC; 7657030 Canada Inc., Garry Jonas, Gregory Van Horn, Revenue Path E-Consulting Pvt, Ltd.; Revenuepath Ltd.; and Sarita Somani.

The second set of defendants is required to pay the FTC $1.4 million. The FTC alleged that this set of defendants was responsible for cramming unauthorized charges on consumers’ mobile phone bills. Under the terms of the settlement, the defendants will be banned from placing charges of any kind on consumers’ telephone bills, as well as being banned from making any misrepresentations to consumers about a product or service, including the cost or a consumer’s obligation to pay. In addition, the defendants will be required to obtain consumers’ express informed consent before billing them for any good or service. The defendants in this settlement are Burton Katz, individually and also doing business as Polling Associates Inc. and Boomerang International, LLC, and Jonathan Smyth, individually and also doing business as Polling Associates Inc.

In the third settlement, an $8 million judgment is being suspended due to the defendants’ inability to pay, after they turn over available assets. The FTC alleged that this set of defendants was responsible for making millions of illegal robocalls. Under the settlement, the defendants are required to pay the FTC $100,000, as well as the surrender value of a life insurance policy and proceeds from the sale of: a 2013 Cadillac Escalade, two motorcycles, and a real estate holding in Southern California. The settlement also bans the defendants from illegally telemarketing consumers through robocalling. The defendants in this settlement are Firebrand Group S.L., LLC, Worldwide Commerce Associates, LLC, and Matthew Beucler.

In addition to these settlements, the Commission dropped charges against two defendants in the cases, Joshua Greenberg and Scott Modist.

The Commission vote approving the proposed stipulated final orders was 5-0. Judge Robert N. Scola, Jr. of the U.S. District for the Southern District of Florida entered the stipulated final orders on Oct. 16, 2014

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

Federal Trade Commission, Consumer Financial Protection Bureau to Host Roundtable on “Debt Collection & the Latino Community” Tomorrow

The Federal Trade Commission and the Consumer Financial Protection Bureau will co-host a joint roundtable tomorrow in Long Beach, California, titled “Debt Collection & the Latino Community.” Participants will examine how debt collection and credit reporting issues affect Latino consumers, especially those with limited English proficiency (LEP).

The roundtable will bring together consumer advocates, industry representatives, state and federal regulators, and academics to exchange information on a range of issues related to debt collection and the Latino community. Opening remarks will be provided by FTC Chairwoman Edith Ramirez, CFPB Associate Director for External Affairs Zixta Martinez, and California State Senator Ricardo Lara.

“You have the right to fair treatment by debt collectors, no matter who you are or how well you speak English,” said FTC Chairwoman Edith Ramirez. “I’m pleased that the CFPB is joining us to examine how debt collection and credit reporting issues affect the Latino community. The FTC has stepped up its debt collection enforcement efforts, filing 19 cases since 2010, representing over $415 million in judgments, and will continue to conduct vigorous law enforcement where needed on behalf of consumers.”

“Millions of consumers are affected by debt collection, and they deserve to be treated fairly and with dignity,” said CFPB Director Richard Cordray. “This roundtable will enable us to better understand how debt collection and credit reporting issues affect Latinos — especially those with limited English proficiency. We want to hear how we can better protect consumers, bring greater accountability to this industry, and help increase awareness among consumers of their debt collection and credit reporting rights.”

The roundtable is free and open to the public. It will be held at California State University, Long Beach, in the Grand Ballroom at the University Student Union. It will not be held at The Pointe, as originally planned. The address for the University is 1250 Bellflower Boulevard, Long Beach, California, 90840. Directions to the Grand Ballroom are available on the roundtable event page.

The event page also includes links to the roundtable agenda, information about the speakers, and other important information. Pre-registration for the roundtable is not required. Attendees may register at the entrance to the Grand Ballroom tomorrow.

The roundtable also will be webcast. There is no need to register to watch the webcast. Simply go to www.ftc.gov at 9:00 a.m. PST tomorrow and look for the link to the webcast.

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. The CFPB works directly with consumers to help them avoid financial problems by giving them the resources they need to better understand consumer financial products and services. The Bureau provides complaint-handling services to consumers in more than 180 languages and to consumers who are deaf, have hearing loss, or have speech disabilities via the Bureau’s toll-free telephone number (855) 411-2372 or online at consumerfinance.gov. The CFPB’s Spanish language website CFPB en Español can be accessed at: www.consumerfinance.gov/es

More than 20 Current and Former FTC Officials Will Participate in Agency’s 100th Anniversary Symposium on Nov. 7

More than 20 current and former Federal Trade Commission officials will take part in a public symposium on Nov. 7, 2014 to celebrate the FTC’s 100th anniversary in Washington, D.C. The symposium will feature panel discussions examining the Commission’s history of protecting consumers and promoting competition, as well as the agency’s future.

Among those participating in the daylong event will be current and former FTC Chairmen, Commissioners and Directors, as well as legal scholars. They will hold a series of panel discussions covering FTC topics such as enforcement, research and advocacy, remedies, and business guidance and consumer education.

The symposium will conclude with a roundtable discussion, moderated by current Chairwoman Edith Ramirez, and featuring seven former FTC Chairmen:

Jon Leibowitz (2009-2013)
William E. Kovacic (2008-2009)
Deborah P. Majoras (2004-2008)
Timothy Muris (2001-2004)
Daniel Oliver (1986-1989)
James C. Miller III (1981-1985)
Calvin J. Collier (1976-1977)

The year 2014 marks 100 years since President Woodrow Wilson signed the Federal Trade Commission Act, which established the Commission and still serves as the keystone of its efforts to protect American consumers.

FTC Action Results in Court Order Requiring Work-At-Home Scammers to Pay More Than $25 Million for Consumer Refunds

A federal district judge has ordered a business opportunity company and its president to pay more than $25 million in refunds to consumers who were conned with bogus claims that they could earn substantial income working at home. In granting the FTC’s motion for summary judgment, the court found that more than 99.8 percent of the 110,000 consumers affected by the scheme earned no money.

The Department of Justice brought the case on the FTC’s behalf in 2012 as part of “Operation Lost Opportunity,” an effort by the Consumer Protection Working Group of the Financial Fraud Enforcement Task Force to stop scams falsely promising jobs and opportunities to be your own boss to unemployed or underemployed consumers.

“The court’s order shows there are serious consequences for business opportunity marketers who invent earnings claims and fabricate stories about eager customers,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “As long as scammers keep making false claims, we’ll be working with our law enforcement partners to stop them.”

The court found that the Zaken Corp. and Tiran Zaken violated the FTC Act and the FTC’s Business Opportunity Rule, which requires business opportunity sellers to provide specific information to help consumers evaluate a business opportunity. The defendants had claimed that, for a fee of $148 or more, their “QuickSell” program would help consumers find businesses with excess inventory to sell, and that they would find a buyer for the inventory and pay consumers half the sales price. They also had falsely claimed consumers would earn at least $4,000 or more in the first 30 days and, on average, $4,280 per deal.

Once consumers bought the program, they were inundated with ads to buy more business “tools” that cost hundreds or thousands of dollars. Consumers were encouraged to spend an extra $2,300 if they were serious about making money. Those who made the additional investment received only a directory of defunct companies’ telephone numbers.

On September 18, 2014, the U.S. District Court for the Central District of California permanently banned the defendants from advertising or selling work-at-home or other business opportunities and entered a $25.4 million judgment for consumer redress against them. The court issued a final order for permanent injunction on October 21, 2014.

Federal Trade Commission Appoints Ashkan Soltani as Chief Technologist

Federal Trade Commission Chairwoman Edith Ramirez has appointed Ashkan Soltani as the agency’s Chief Technologist, succeeding Dr. Latanya Sweeney, who is returning to Harvard University, where she founded and directs Harvard’s Data Privacy Lab.

Soltani will join the FTC in November and advise the Commission on evolving technology and policy issues. He is a technology consultant and researcher whose work has focused on privacy and security issues for more than 20 years. Soltani has previously served as a technical expert for the Commission, and worked at the FTC between 2010 and 2011 as a staff technologist.

“Technology and online and mobile platforms are continuing to evolve at a rapid pace and will remain a key focus for the FTC as more and more consumers adopt mobile devices and tablets,” said FTC Chairwoman Edith Ramirez. “I am pleased to welcome Ashkan to our talented team where he will play a vital role in continuing our important work on behalf of American consumers.”

“I am very grateful to Latanya Sweeney for her outstanding work and public service on behalf of consumers, and particularly for her leadership in strengthening the Commission’s efforts to better protect sensitive consumer information,” Ramirez said.

Soltani has worked as a technical expert for multiple state attorneys general. He has also worked as an investigative reporter for The Washington Post, sharing with his co-authors in a 2014 Pulitzer Prize for Public Service, and The Wall Street Journal, and as a researcher for The New York Times. Earlier in his career, Soltani was employed as a manager and consultant for two security technology companies including Sophos.

Soltani earned a master’s degree in Information Management and Systems from the University of California, Berkeley, and a bachelor’s degree in Cognitive Science from the University of California, San Diego.

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