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FTC Testifies before Senate Banking, Housing, and Urban Affairs Subcommittee on Debt Collection and the Fair Debt Collection Practices Act

The Federal Trade Commission told a U.S. Senate subcommittee that it continues to crack down on unlawful debt collection practices through an active program of vigorous law enforcement, education and public outreach, and research and policy initiatives.

Testifying on behalf of the FTC before the Senate Committee on Banking, Housing, and Urban Affairs, Subcommittee on Financial Institutions and Consumer Protection, James Reilly Dolan, Acting Associate Director for the FTC’s Division of Financial Practices, said that challenging unlawful debt collection practices continues to be one of the FTC’s highest priorities. Dolan noted that the FTC receives more complaints about debt collection than any other single industry, and that while lawful debt collection helps keep credit more readily available and affordable, unlawful debt collection victimizes consumers and places law-abiding collectors at an unfair competitive disadvantage.

The testimony highlighted some of the FTC’s recent work to ensure that debt collectors comply with the Fair Debt Collection Practices Act (“FDCPA”) and FTC Act. It noted that since January 1, 2013, the FTC has brought 15 enforcement actions against debt collectors and obtained more than $56 million in judgments, and has engaged in a number of education, outreach, research, and policy initiatives. The cases included a settlement filed last week with Expert Global Solutions, Inc., commonly known as NCO, in which the defendants agreed to pay a $3.2 million civil penalty, the largest civil penalty the agency has obtained in a case alleging violations of the FDCPA.

The testimony also described enforcement actions in which the FTC has halted companies’ exceptionally egregious collection tactics. In many of these cases, the FTC has sought and obtained strong preliminary relief, such as temporary restraining orders, asset freezes, and appointment of receivers. For instance, the FTC has focused on shutting down so-called “phantom” debt collectors, which engage in wholesale fraud by attempting to collect on debts that either do not exist or are not owed to the phantom debt collectors.

The testimony also described some of the FTC’s research and policy initiatives concerning debt collection, including a July 2010 report that concluded that the system for resolving consumer debt collection disputes is broken, and a January 2013 report examining the results of the first empirical study of debt buyers. That report found there was room for improvement in the information debt buyers have when they contact consumers and try to collect on debts.

In addition, the testimony noted the FTC’s collaboration with the Consumer Financial Protection Bureau (“CFPB”) on debt collection issues, and coordination on enforcement. For example, in June 2013, the two agencies co-hosted a workshop about how consumer information is handled in the debt collection process.

The Commission vote approving the testimony and its inclusion in the formal record was 4-0.

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.

FTC, Partners To Kick Off First Military Consumer Protection Day July 17

The Federal Trade Commission is teaming up with other government agencies and organizations to mark the first Military Consumer Protection Day (MCPD) on July 17 and kick off a year-round campaign to empower military and veterans’ communities with resources to deal with managing money, protecting personal information, and avoiding scams.

The FTC, Department of Defense, Consumer Financial Protection Bureau, and Military Saves lead the effort. Two dozen other federal and state agencies, consumer advocates, and industry groups also are partners.

“Military Consumer Protection Day gives us an opportunity to focus on the servicemembers, veterans, and families who sacrifice so much for our country,” said Jessica Rich, FTC’s Bureau of Consumer Protection Director. “They are targets for fraud because they relocate frequently, and many are living on their own and earning a steady paycheck for the first time.”

In 2012, the Commission received more than 62,200 complaints from military consumers. Identity theft topped the list with nearly 24,800 complaints. Other top complaint categories from the military community included debt collection; imposter scams; sweepstakes/prizes/lottery scams; and banks and lenders.

Commanders, personnel finance managers, military members, veterans, community leaders, and others can visit www.military.ncpw.gov to download or order copies of materials from MCPD partners; put together a customizable tool kit for outreach events throughout the year; subscribe to the blog; and learn more about how to get involved.

Marketers of Unproven Bed Bug and Head Lice Treatments Settle FTC Charges

Two marketers of unproven cedar oil-based remedies for bed bugs and head lice have agreed to enter into settlements with the Federal Trade Commission that prohibit the allegedly deceptive claims, and require pre-approval from the Food and Drug Administration for any future treatment claims about head lice products.

The settlements resolve deceptive advertising charges the FTC filed last year against Dave Glassel and the companies he controlled, including Chemical Free Solutions, LLC, alleging that they made overhyped claims that their BEST Yet! line of cedar-oil-based liquid products would treat and prevent bed bug and head lice infestations.

According to the FTC, the defendants falsely claimed that their natural, BEST Yet! bed bug and head lice products were invented for the U.S. Army, that their bed bug product was acknowledged by the U.S.D.A. as the #1 choice of bio-based pesticides, and that the Environmental Protection Agency had warned consumers to avoid chemical solutions for treating bed bug infestations.

Under the agreed-upon settlement orders, the defendants are prohibited from claiming that their BEST Yet! products by themselves can stop or prevent a bed bug infestation, or are more effective at doing so than other products, unless they have competent and scientific evidence to make the claims. The defendants also are barred from claiming that their products can effectively treat head lice infestations unless those claims are non-misleading and they obtain FDA approval prior to making those claims. The defendants are further prohibited from misrepresenting the results of scientific tests or studies, and from claiming that a product or service they sell is endorsed by a government agency or by any other third-party entity when it is not.

The orders impose a $4.6 million judgment against Glassel who is facing bankruptcy, and a $185,206 judgment against Chemical Free Solutions, LLC, which will be suspended due to the company’s inability to pay. If it is later determined that the financial information the company provided the FTC was false, the full judgment amount will become due immediately.

The FTC will continue to pursue its case against the remaining three defendants, Springtech 77376, LLC, Cedar Oil Technologies Corp., and Cedarcide Industries, Inc. Consumers concerned about bed bugs also should see the FTC publication, “Battling Bed Bugs,” which urges caution about advertisements that offer quick solutions, and provides other related advice to consumers.

The Commission vote approving the proposed consent decrees with Dave Glassel and Chemical Free Solutions, LLC was 3-1. Chairwoman Ramirez and Commissioner Brill issued a joint statement. Commissioner Maureen K. Ohlhausen, who voted no, issued a dissenting statement. Commissioner Wright issued a separate statement.

NOTE: The consent decrees are subject to court approval.Consentdecrees have the force of law when signed by the District Court judge.

FTC Releases Draft Strategic Plan for Fiscal Years 2014-2018

The Federal Trade Commission has approved the release of the agency’s draft Strategic Plan for Fiscal Years 2014-2018 for stakeholder review and comment, as required under the GPRA Modernization Act of 2010 (GPRAMA), using guidance issued by the Office of Management and Budget. Every four years, each government agency is required to prepare and submit an updated strategic plan covering activities for at least the following five years. The FTC’s last updated strategic plan was prepared in FY 2009.

This strategic plan presents strategic goals, objectives, strategies, and performance goals for the next five years. It details how the plan will be implemented in the areas of consumer protection, maintaining competition, and organizational performance, on an objective-by-objective basis. The plan also explains external factors affecting achievement of the goals and evaluations and research efforts. Finally, it includes an overview of the planning process.

The Commission vote to issue the draft plan was 4-0. It is available on the FTC’s website at http://www.ftc.gov/opp/gpra/index.htm. Comments on the draft Plan are requested by August 16, 2013 and can be sent to [email protected] or Valerie Green, Deputy Performance Improvement Officer, H-703, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

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 call1-877-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.

Operators of Credit Card Interest Rate Reduction Scheme Barred from Telemarketing, Will Turn Over Funds Frozen by Court

The Arizona-based defendants behind an alleged fraudulent credit card interest rate reduction scam will be permanently barred from the telemarketing business, and must turn over all of their remaining funds, in order to settle Federal Trade Commission charges.

As part of the FTC settlement, the defendants behind National Card Monitor LLC are banned from all telemarketing, and from marketing or selling “credit related products or services.” The settlement order also bars the defendants from making any misrepresentations in the marketing or sale of financial products, including debt relief services.

According to the FTC, starting in early 2011, National Card Monitor cold-called consumers nationwide and falsely claimed it could get one or more low-rate credit cards for consumers, onto which they could then transfer their current balances. During the call, National’s telemarketers requested an advance fee of between $499 and $599 from consumers, assuring them that they would get a full refund if they did not get a new card.

The FTC contends National Card Monitor was not registered with the National Do Not Call Registry, never paid to access the Registry, and typically called consumers whose numbers were on the Registry.

In addition to the telemarketing ban, the order bars the defendants from misrepresenting any material fact about any product or service, and imposes a judgment of $2,329,409, which represents the amount of consumer harm they caused. The judgment will be suspended upon the payment of all frozen funds remaining after payment of final receivership expenses. The full judgment will come due if the defendants are found to have misrepresented their financial situation.

The Commission vote approving the stipulated final order was 4-0. It was filed in the U.S. District Court for the District of Arizona where the complaint naming National Card Monitor LLC, also doing business as Nationwide Card Monitor, and James Eric Cox was filed. The judge signed the order on July 15, 2013.

The FTC would like to thank the U.S. Postal Inspection Service; the Mesa, Arizona, Police Department; the Arizona Attorney General’s Office; and the Better Business Bureaus of Central, Northern, and Western Arizona for their help in bringing this case.

Information for Consumers

The FTC has information for consumers on advance-fee schemes. One consumer alert provides information on how consumers can identify and protect themselves from such fraud, and a second explains what consumers should do if they get prerecorded telemarketing calls pitching advance-fee products
To report violations of the National Do Not Call Registry or to register your phone number, visit DoNotCall.gov or call 1-888-382-1222.

FTC Staff Makes Recommendations to Arizona Corporation Commission On Expanding Retail Electric Competition

Federal Trade Commission staff submitted a comment in response to a request from the Arizona Corporation Commission (ACC) for comments on retail electric competition in Arizona.

The FTC staff comment agrees with the ACC that it is timely for Arizona to consider retail competition that would enable consumers to select from specialized power suppliers using metering innovations now widely available in the state. Retail choice can help consumers match their preferences for bill savings, increased reliability, renewable power, and energy management services. For example, consumers can lower their bills by shifting power use away from periods when the power system depends on more costly generation resources or faces challenges to its reliability, and they can choose how much power to consume from renewable generation sources.

The FTC staff comment recommends that the ACC “evaluate the promising prospect that retail customer choice will help customers expand and fine-tune their choice of electricity service and contribute to balancing power supply and demand.”

The Commission vote approving the comment was 4-0. (FTC File No. V130010; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702.)

FTC Approves Changes to Energy Guide Labels for Appliances to Reflect New Tests for Measuring Energy Costs

The Federal Trade Commission has approved new EnergyGuide labels for refrigerators and clothes washers, and updated comparative energy consumption information on labels for other appliances, to help consumers compare products in light of new Department of Energy (DOE) tests for measuring energy costs.

Under the Energy Labeling Rule, manufacturers must attach yellow EnergyGuide labels to certain products, stating an annual operating cost and an energy consumption rating, and a range for comparing the highest and lowest energy consumption for all similar models. EnergyGuide labels appear on clothes washers, dishwashers, refrigerators, freezers, water heaters, room air conditioners, central air conditioners, furnaces, boilers, heat pumps, pool heaters, and televisions. The new EnergyGuide labels for refrigerators and clothes washers will help consumers identify which models have been tested under significantly revised DOE test procedures that manufacturers will begin using next year and make proper comparisons about energy costs.

For more information about EnergyGuide labels, read Shopping for Home Appliances? Use the EnergyGuide Label.

The Commission vote approving the Federal Register Notice was 4-0. It is available on the FTC’s website and as a link to this press release and will be published in the Federal Register soon. The amendments to the Rule will become effective on November 15, 2013. (FTC File No. R611004; the staff contact is Hampton Newsome, Bureau of Consumer Protection, 202-326-2889)

FTC Settles ‘Rachel’ Robocall Enforcement Case

The Federal Trade Commission has settled with a set of defendants associated with the A+ Financial Center scheme. They were charged in last year’s joint law enforcement sweep against five companies that made millions of illegal pre-recorded robocalls claiming to be from “Rachel” and “Cardholder Services” and pitching credit card interest rate reduction services.

In the five complaints announced in November 2012, the FTC charged the companies and their principals with misleading consumers about their services, calling phone numbers on the Do Not Call Registry, illegally collecting up-front fees, and making illegal robocalls. According to the FTC, the A+ Financial Center defendants told consumers that for an up-front fee of between $495 and $1,595, they would lower their credit card interest rate, often promising rates as low as six percent or even zero percent. But after collecting the fee, the defendants did little if anything to help consumers lower their credit card interest rates, or obtain the promised long-term savings.

In settling the FTC’s charges, the defendants are banned from making robocalls, continuing to pitch unsecured debt relief services, misrepresenting the attributes of any financial product or service, and engaging in abusive telemarketing practices such as calling numbers on the Do Not Call Registry. The order also prohibits the defendants from misrepresenting the attributes of any goods or services, and from misrepresenting their relationship with any bank, credit card issuer, credit reporting agency, other lender, or government entity. It also requires them to have reliable evidence to support any claims they make to consumers.

In addition, the proposed order prohibits the A+ defendants from disclosing or benefiting from their customer lists, and prohibits them from collecting or trying to collect money from any consumer who bought their service. Finally, it imposes a judgment of $9,238,155, which will be suspended after defendants transfer all of their assets (except $25,000), including a 2007 Mercedes Benz CL, a 1999 boat valued at approximately $17,000, and a 2002 boat worth about $45,000.

The case against A+ Financial Center, LLC was filed in the U.S. District Court for the Southern District of Florida against the following defendants: A+ Financial Center, LLC, also doing business as Accelerated Financial Centers, LLC; Accelerated Accounting Services LLC; Christopher L. Miano, individually and as the managing member of Accelerated Accounting Services LLC; and Dana M. Miano, individually and as the managing member of A+ Financial Center, LLC.

The Commission vote approving the proposed settlement was 4-0.

Information for Consumers

The FTC has tips for consumers, as well as two new consumer education videos explaining robocalls and describing what consumers should do when they receive one. See ftc.gov/robocalls for more information.

NOTE: Consent judgments have the force of law when approved and signed by the District Court judge.

(FTC File No. 122-3197, Case No. 2:12-CV-14373-DLG (S.D. Fla.))

FTC Extends Public Comment Deadline on Proposed Telemarketing Sales Rule Changes Through August 8, 2013

The Federal Trade Commission has extended the deadline through August 8, 2013 for public comments regarding recently announced proposed changes to the agency’s Telemarketing Sales Rule (TSR). The proposed changes concern banning certain payment methods favored in fraudulent telemarketing transactions. In a press release issued May 21, 2013, the FTC announced July 29, 2013 as the close of the public comment period.

A slightly modified version of the original notice of proposed rulemaking was published in the Federal Register on July 9. The revised notice contains non-substantive changes that remove quoted excerpts of current and proposed TSR provisions, which were included in the original version of the notice to provide readers with a better understanding of the proposed changes. The FTC has extended the deadline to the public comment period for 30 days after the notice was published in the Federal Register, until August 8. Comments can be submitted electronically.

The Commission vote to extend the public comment period was 4-0. (FTC File No. R411001; the staff contact is Karen Hobbs, 202-326-3587)

FTC Mails Refund Checks to Consumers Who Bought Skechers’ Shape-Ups and Other “Toning” Shoes

An administrator working for the Federal Trade Commission is mailing 509,175 checks to consumers who bought toning shoes from Skechers USA, Inc. that the company promoted through allegedly deceptive advertisements.

The checks must be cashed on or before October 10, 2013. The amount consumers will receive is based on the portion of their claims that was approved. The deadline for filing a refund request has expired.

As part of its efforts to stem overhyped health claims, last year the FTC alleged that Skechers deceptively advertised its toning shoes, including making unfounded claims that its Shape-ups shoes would help people lose weight, and strengthen and tone their buttocks, legs and abdominal muscles. Besides Shape-ups, the FTC alleged that Skechers also made deceptive claims about its Resistance Runner, Toners, and Tone-ups shoes.

Under the terms of the FTC settlement, the funds were distributed through a court-approved class action lawsuit. BMC Group, the court approved settlement administrator, will begin mailing checks on July 12, 2013 to eligible consumers who submitted a valid claim for a refund.

The FTC never requires consumers to pay money or provide information before redress checks can be cashed.

Consumers should carefully evaluate advertising claims for work-out gear and exercise equipment. For more information see: Tips for Buying Exercise Equipment.

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