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FTC Approves Final Revised Energy Labeling Rule for Home Heating and Cooling Equipment

The Federal Trade Commission is issuing changes to its Energy Labeling Rule, which will add regional information to the familiar yellow EnergyGuide label on residential furnaces and central air conditioners. The additional information on the new labels, including a map, will help consumers and businesses install equipment appropriate for their location under new Department of Energy (DOE) regional efficiency standards.

The new DOE regional standards are mandated by the Energy Policy and Conservation Act, which also directs the FTC to create disclosures related to those standards. Unlike existing DOE standards, which impose uniform, national efficiency levels for heating and cooling equipment, the new standards vary by region for certain products. The FTC’s new labeling rules will not be required until the compliance date for the DOE regional standards. Currently, the DOE compliance date for non-weatherized gas furnaces and mobile home gas furnaces is scheduled for May 1, 2013, and the date for central air conditioner regional standards is January 1, 2015. However, a pending federal court settlement relating to the regional standards for furnaces may delay the May 2013 compliance date for those standards.

The final Rule requires the EnergyGuide label on product packaging, at the point of sale, and on websites and the products themselves.

The Commission vote approving the Notice amending the Energy Labeling Rule was 4-0-1, with Commissioner Wright not participating. 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. (FTC File No. R611004; the staff contact is Hampton Newsome, Bureau of Consumer Protection, 202-326-2889)

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 Staff Makes Recommendations to New York Public Service Commission on Competition and Consumer Protection Measures in Retail Electricity Markets

Federal Trade Commission staff submitted a comment in response to a request from the New York State Public Service Commission (NY PSC) for comments on competition and consumer protection rules in New York’s retail electricity markets. The FTC staff comment emphasizes that carefully designed consumer protection policies often can achieve their goals without reducing or distorting competition.

The comment encourages the NY PSC to consider policies that will accommodate beneficial new technology, as policies tailored to existing, relatively undifferentiated electricity supply services will likely become obsolete in the next decade. The comment also notes that disclosures can enable consumers to make better choices if they not only disclose pertinent facts but also present them in a way that consumers find easy to understand. The comment recommends that the NY PSC consider employing experts in consumer education and communications and using rigorous consumer testing in developing disclosures.

The Commission vote approving the comment was 5-0. (FTC File No. V130000; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702.)

FTC Staff: Tennessee Supreme Court Should Decline to Adopt Proposals that Unnecessarily Restrict Truthful Attorney Advertising

Federal Trade Commission staff, in response to a request for public comment from the Supreme Court of Tennessee, has provided comment on proposed amendments to the Tennessee Rules of Professional Conduct regarding attorney advertising.

The FTC staff comment recommends that the Court decline to adopt proposals that are likely to unnecessarily restrict truthful and non-misleading information available to consumers of legal services in the state. It cites competition and consumer protection principles to aid the Court in reviewing the proposals, and addresses restrictions in proposed amendments that would:

prohibit the use of actors, models, generally recognizable spokespersons, and certain background sounds;
impose high substantiation burdens that may prohibit useful, non-deceptive advertising;
limit advertising by attorneys if they do not also maintain an office in Tennessee; and
require pre-screening and evaluation of all attorney advertisements by the Board of Professional Responsibility.

The Commission vote approving the staff comment was 5-0. It was sent to the Supreme Court of Tennessee on January 24, 2013. A copy of the staff comment can be found on the FTC’s website and as a link to this press release. (FTC File No.V130001; the staff contact is Jessica Hoke, Office of Policy Planning, 202-326-2409.)

FTC Staff Warns 11 Jonesboro, Arkansas, Used Car Dealers for Not Displaying ‘Buyers Guides’

The Federal Trade Commission’s Southwest Region Office has warned 11 used car dealerships in Jonesboro, Arkansas, that their sales practices violate the FTC’s Used Car Rule, which requires used car dealers to display a “Buyers Guide” detailing warranty and other important information on the cars they sell.

FTC staff inspections in Jonesboro found that eight dealers failed to display Buyers Guides on almost all used cars offered for sale, and three dealers failed to display the guides on a significant number of used cars. Ten dealers properly displayed the guides on all or nearly all of the used cars offered for sale. The FTC sent warning letters urging the 11 dealers to come into compliance by properly displaying the guides in a clear and conspicuous location on all used cars.

“We are glad to see that a significant number of used car dealers in Jonesboro, Arkansas, are in substantial compliance with the Used Car Rule by properly displaying Buyers Guides on their used cars offered for sale. We believe these Rule requirements are important to consumers in determining to purchase a used car,” said Deanya Kueckelhan, Director of the FTC’s Southwest Region. “We hope the rest of the Jonesboro’s used car dealerships will be in full compliance shortly.”

The inspections were part of the FTC’s ongoing efforts to enforce the Rule, in conjunction with state and local officials. The FTC has brought more than 80 actions since the Rule took effect in 1985, with civil penalties totaling more than $1 million. Hundreds of state actions also have been brought to enforce the Rule.

The Used Car Rule requires that Buyers Guides be displayed at all times on each vehicle offered for sale, stating:

Whether the vehicle comes with a warranty and, if so, whether it is a “full” or limited warranty;
Which systems are covered by the warranty and the duration of the warranty period;
If it is a limited warranty, what percentage of the cost for covered parts and labor the dealer will pay for;
Whether the car is sold with no written or implied warranty or, in other words, the car is sold “As Is;” or
Whether the car is sold with no written warranty, but with implied warranties. (Some states and Washington, D.C. do not allow dealers to sell cars without implied warranties.)

The Rule also provides that the Buyers Guide becomes a part of the sales contract and overrides any contrary provisions contained in the contract. It also contains important warnings and suggestions for consumers, such as asking the dealer if they can have a mechanic inspect the car they are considering. The Guide warns consumers not to rely on spoken promises, which may be impossible to enforce. Instead, consumers should ask the dealer to put any promises in writing on the Guide and in the sales contract.

On December 4, 2012, the FTC announced that it is seeking public comment on proposed changes to the Buyers Guide. The FTC is also issuing a final rule that makes technical corrections and revises the Spanish translation of the Guide. The FTC last reviewed and amended the Used Car Rule in 1995.

The FTC appreciates the assistance of Legal Aid of Arkansas in this matter.

For useful information, read Buying a Used Car and Tips on Used Car Buying. For used car dealers, the FTC offers A Dealer’s Guide to the Used Car Rule.

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.

Court Bans Operators of Allegedly Deceptive Timeshare Scheme From the Timeshare Business, Orders $6.3 Million Judgment

As the result of a Federal Trade Commission action, the operators of a scheme that allegedly deceived consumers who were trying to sell their timeshare properties are permanently banned from the timeshare resale business, and from all telemarketing, and one of them has been ordered to pay more than $6 million. The FTC’s case against National Solutions LLC is part of its ongoing effort to stop timeshare scams and protect consumers from fraud and deception in the marketplace.

In July 2011, the FTC charged Leandro Velazquez, Edgar Gonzalez, Samuel Velazquez, Joel Velazquez, and others with violating the FTC Act and the FTC’s Telemarketing Sales Rule by misrepresenting that they had buyers willing to pay a specific price for consumers’ timeshare properties, that they would refund their up-front fee when the property was sold, and that the FTC would review and approve proposed sales. At the FTC’s request, the court halted the operation, pending litigation.

According to the FTC, the defendants charged consumers up to $3,150 as an “earnest money deposit” to commit them to the sale or for sale-related expenses, and promised to refund the money when the sale closed. Customers often were not contacted again, their properties were never sold, and their refund demands were ignored or denied. Contrary to the defendants’ alleged assertions, the FTC does not review or approve timeshare sales.

The court entered a final judgment against Leandro Velazquez and approved settlement agreements with Edgar Gonzalez, Samuel Velazquez, and Joel Velazquez. In addition to banning Leandro Velazquez from all telemarketing and from participating in the timeshare resale business, the court order prohibits him from collecting money from customers, selling or otherwise benefitting from consumers’ personal information, failing to properly dispose of customer information, and misrepresenting material facts about any goods or services. The order also imposes a judgment of almost $6.3 million against Leandro Velazquez. The three settlement agreements include the same bans and impose the same monetary judgment, which is suspended based on their inability to pay. The full judgment will become due immediately if those defendants are found to have misrepresented their financial condition.

Litigation continues against and Kiomary Cruz and the corporate defendants.

To avoid pitfalls when selling a timeshare unit, read the FTC’s Timeshares and Vacation Plans.

The Commission vote, including Commissioner J. Thomas Rosch, approving the proposed settlement orders was 5-0. The final order against Leandro Velazquez and the settlement orders with other defendants were entered by the U.S. District Court for the Middle District of Florida, Orlando Division.

NOTE: Settlement orders are for settlement purposes only and do not constitute an admission by the defendants that the law has been violated. Settlement orders have the force of law when approved and signed by a District Court judge.

FTC Seeks $22 Million from Wife and Parents of Ringleader Behind Alleged Utah-based Internet Billing Scheme I Works

The Federal Trade Commission has asked a federal court for permission to charge three persons and five companies they control with improperly receiving at least $22 million from a scheme that allegedly bilked consumers out of more than $275 million with deceptive “trial” memberships for bogus government-grant and money-making schemes.

In December 2010, the FTC charged the I Works operation, controlled by Jeremy Johnson and nine other individuals, with violating federal law. The court subsequently froze the assets of Johnson and 61 corporations and appointed a court-supervised receiver to help ensure that money can be returned to consumers if the case is resolved in the FTC’s favor.

In the proposed amended complaint announced today, the FTC asked the court’s permission to name eight relief defendants who are not charged with participating in the I Works scheme but allegedly received ill-gotten gains from it that the FTC seeks to recover: Johnson’s wife, Sharla Johnson; his parents, Kerry and Barbara Johnson; Orange Cat Investments LLC; Zibby LLC; Zibby Flight Service LLC; KV Electric Inc.; and the KB Family Limited Partnership.

Sharla Johnson allegedly received at least $5 million in funds and property, including a multi-million-dollar, 20,000-square-foot mansion in St. George, Utah, subsequently used to secure a $3.1 million home equity line of credit.

Kerry Johnson allegedly received at least $1.6 million in funds and property, including about $1 million worth of silver coins and bars.

Barbara Johnson allegedly received at least $77,500.

Orange Cat Investments allegedly received at least $5.1 million in funds and assets.

Zibby allegedly received more than $13 million.

Zibby Flight Service allegedly received at least $2.5 million.

KV Electric allegedly received more than $800,000.

KB Family Limited Partnership allegedly received at least $1.75 million in funds and property, including some of the proceeds of the $3.1 million line of credit secured by the Johnson residence.

The Commission vote authorizing the staff to file the amended complaint was 5-0. The FTC filed a motion seeking court approval to file the amended complaint in the U.S. District Court for the District of Nevada.

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 defendant has actually violated the law.

FTC Asks Court to Shut Down $70 Million Cramming Operation

The Federal Trade Commission has asked a U.S. district court to halt an operation that allegedly placed more than $70 million in bogus charges on consumers’ phone bills – charges for services the consumers never ordered, did not authorize, and often did not know they had. The agency also asked the court to freeze the operation’s assets while the FTC moves forward with the case.

As part of its continuing crackdown on fraud and deception, the FTC filed a complaint against American eVoice, Ltd., eight other companies, Steven Sann, and three other people for “cramming” unauthorized charges onto consumers’ phone bills. The complaint also alleges that the Missoula, Montana-area defendants transferred the proceeds from their illegal cramming operation to a purported non-profit, Bibliologic, Ltd., controlled by Steven Sann.

Hundreds of consumers complained that charges from $9.95 to $24.95 per month appeared out of the blue on their phone bills without their authorization. The FTC alleged that defendants told phone companies and third party “billing aggregators” that the consumers had authorized the charges by filling out forms on the internet. Since January 2008, according to the complaint, the defendants have billed consumers for more than $70 million.

The FTC alleged that the defendants violated the Federal Trade Commission Act by:

unfairly billing consumers for services they did not authorize; and
deceptively representing that consumers were obligated to pay for the services.

The FTC also alleged that defendants channeled their illegal proceeds to Bibliologic, and that the purported non-profit organization has no right to the funds and must disgorge them to the FTC.

The complaint names as defendants Steven Sann; Terry Lane (aka Terry Sann); Nathan Sann; Robert Braach; American eVoice, Ltd.; Emerica Media Corp.; FoneRight, Inc.; Global Voice Mail, Ltd.; HearYou2, Inc.; Network Assurance, Inc.; SecuratDat, Inc.; Techmax Solutions, Inc.; and Voice Mail Professionals, Inc. The complaint also names Bibliologic, Ltd. as a relief defendant.

The FTC would like to acknowledge the assistance provided by the Better Business Bureau of Eastern Washington, North Idaho, and Montana; the Montana Department of Justice; and the Federal Communications Commission for invaluable assistance in investigating this case.

The Commission vote, including Commissioner J. Thomas Rosch, authorizing the staff to file the complaint was 5-0. The FTC filed the complaint and the request for a preliminary injunction in the U.S. District Court for the District of Montana, Missoula Division, on January 8, 2012.

For consumer information about cramming, see Mystery Charges on Your Phone Bill.

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 defendant has actually violated the law.

FTC Puts an End to Bleach Non-Compete Agreement That Whitewashed Competition in North Carolina, South Carolina, and Southern Virginia

The Federal Trade Commission will require bleach producer and seller Oltrin Solutions, LLC to release its competitor, JCI Jones Chemicals, Inc. from an agreement not to sell bleach in North Carolina and South Carolina. This non-compete agreement was part of a 2010 transaction between the two firms that the FTC alleges violated antitrust laws. The FTC’s settlement with Oltrin and JCI will restore competition between these two producers and sellers of bulk bleach, which is primarily used to disinfect water.

Oltrin is a limited liability company headquartered in Hamlet, North Carolina. Formed in 2007, it is owned jointly by Trinity Manufacturing, Inc. and TriOlin LLC, a subsidiary of Olin Corporation, the largest North American bleach producer. Oltrin buys and resells all of the bleach produced for merchant sale at the Trinity-operated plant in Hamlet.

JCI is a privately held company headquartered in Sarasota, Florida. It is one of the world’s leading producers and distributors of water treatment chemicals, and produces bleach and other chemicals at 11 plants throughout the United States. Before the 2010 transaction with Oltrin, JCI produced bleach at its plant in Charlotte, North Carolina.

Bulk bleach is primarily used by municipal and industrial customers to disinfect water. According to the FTC’s complaint, bulk sales of bleach typically consist of purchases of 4,500 or 4,800 gallons. The geographic market for such sales is limited by the expense of transporting it. In this case, the FTC has defined the relevant geographic market as no broader than North Carolina, South Carolina, and southern Virginia, and potentially limited to North Carolina and South Carolina. All of these areas are within 300 miles of JCI’s former bleach production plant in Charlotte, North Carolina.

According to the FTC, in March 2010, Oltrin agreed to pay JCI $5.5 million for, among other things, a list of bulk bleach customers from JCI’s Charlotte plant, along with an agreement that JCI would not sell bulk bleach in North Carolina or South Carolina for six years. The FTC contends that the deal between the two firms eliminated substantial competition between Oltrin and JCI in the relevant geographic market; substantially increased the market concentration for bulk bleach sales in the relevant geographic market; and increased Oltrin’s ability to raise bulk bleach prices.

The proposed consent order is designed to restore the competition lost through the 2010 transaction. It requires Oltrin to release JCI from the non-compete agreement, transfer a minimum volume of its bulk bleach contracts back to JCI, and provide a short-term backup supply agreement that will facilitate JCI’s re-entry into the bulk bleach market in North Carolina and South Carolina.

In addition to these provisions, the proposed order requires that Oltrin and JCI notify the FTC before entering into any future transactions in the bulk bleach market, and that Oltrin notify any customers from which it has received bids since the 2010 agreement that JCI is once again in the bulk bleach business in the relevant geographic market.

The Commission vote approving the complaint and proposed settlement order was 5-0. The order will be subject to public comment for 30 days, until February 21, 2013, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Comments can be submitted electronically.

NOTE: The Commission issues an administrative 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 issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $16,000.

Business ‘Coaching’ Marketers Agree to Settle FTC Charges

Most of the defendants in a massive business “coaching” scheme that allegedly took more than $100 million from consumers have agreed to settle Federal Trade Commission charges that they misrepresented the earning potential of the coaching program they sold, misrepresented their goods and services, and failed to fully disclose and honor their refund policy, in violation of federal law. The settlements, which ban the defendants from marketing and selling business coaching programs and require them to give up assets including two homes and eight cars, are part of the FTC’s continuing efforts to stop scams that target financially strapped consumers.

According to an FTC complaint filed in February 2011 against 40 defendants, including 22 interrelated companies, Ivy Capital Inc. and its co-defendants claimed their program would help consumers develop their own Internet businesses. Most consumers paid between $2,000 and $20,000 for the program and related products and services but got very little in return and found it difficult to get their money back if they canceled. The court halted the defendants’ businesses and froze their assets pending trial.

In addition to banning the defendants from selling business coaching programs, the settlement orders announced today permanently prohibit the defendants from misrepresenting material facts about products and services and misrepresenting or failing to fully disclose any refund policy. The settlement orders also prohibit them from requiring consumers to keep refunds confidential and from requiring that consumers not publicly disparage the defendants in order to obtain refunds. The defendants also are barred from violating the Telemarketing Sales Rule and from selling or otherwise benefitting from customers’ personal information.

The settlement orders impose a $130 million judgment against corporate defendants Ivy Capital, Inc., Ivy Capital LLC, Fortune Learning System LLC, Vianet Inc., 3 Day MBA LLC, Global Finance Group LLC, Virtual Profit LLC, ICI Development Inc., Logic Solutions LLC, Oxford Debt Holdings LLC, Revsynergy LLC, Sell It Vizions LLC, Zyzac Commerce Solutions, Inc., Fortune Learning, LLC, and The Shipper, LLC, doing business as Wholesalematch.com. The judgment will be suspended when these defendants have surrendered all of their assets. The full judgment will become due immediately if they are found to have misrepresented their financial condition.

The settlement orders against individual defendants Kyle G. Kirschbaum, John H. Harrison, Steven E. Lyman, Christopher M. Zelig, Steven J. Sonnenberg, and James G. Hanchett also impose a $130 million judgment. The judgment will be suspended when these defendants surrender certain assets. The full judgment will become due immediately if they are found to have misrepresented their financial condition.

The settlement order against Joshua F. Wickman and Enrich Wealth Group LLC (EWG) imposes a $46 million judgment that will be suspended when they have surrendered $68,884 from Wickman’s bank account and EWG’s assets. The full judgments will become due immediately if they are found to have misrepresented their financial condition.

The settlement orders also impose judgments against relief defendants who profited from the scheme but did not participate in it: Cherrytree Holdings, LLC (more than $674,000), S&T Time, LLC (more than $801,000), Virtucon, LLC (more than $113,000), Curva, LLC (more than $679,000), Kierston Kirschbaum (more than $681,000), Melyna Harrison (more than $812,000), and Tracy Lyman (more than $572,000). The judgments will be suspended when they surrender certain assets. The full judgments will become due immediately if the relief defendants are found to have misrepresented their financial condition.

Under the settlement orders, Kyle and Kierston Kirschbaum and their personal LLC, Cherrytree Holdings, will surrender to the FTC personal bank accounts with a total value of exceeding $213,000, a residential property with equity of approximately $100,000, a 2006 BMW 750Li sedan, and a 2007 Cadillac Escalade. Steve and Tracy Lyman and their personal LLC, S&T Time, will surrender personal bank accounts with a total value of more than $143,000, a residential property with equity of about $174,000, a 2009 Mercedes CIS sedan, and a 2009 Cadillac Escalade. John and Melyna Harrison and their personal LLC, Virtucon, will surrender personal bank accounts with a total value exceeding $24,000, a 2007 Infiniti G35, a 2007 Land Rover Range Rover Sport, and a 2008 Chevrolet van. Hanchett will surrender a 2007 Cadillac Escalade.

Litigation continues against the two remaining defendants, Benjamin Hoskins and Dream Financial, and three relief defendants, Leanne Hoskins, Oxford Financial LLC, and Mowab, Inc. Five other defendants defaulted.

The Commission vote authorizing staff to file the consent judgments was 4-0-1, with Commissioner Ohlhausen not participating. The judgments were entered by the U.S. District Court for the District of Nevada on December 20, 2012.

Consumers seeking more information about Ivy Capital should call the FTC information line at 202-326-3771.

To learn more about these kinds of scams, go to the FTC’s Business Opportunity Scams and read articles including the FTC’s Bogus Business Opportunities, Government Job Scams, Work-at-Home Businesses, and Mystery Shopper Scams. Business opportunity sellers should visit the FTC’s Franchises, Business Opportunities, and Investments and read Selling a Work-at-Home or Other Business Opportunity? Revised Rule May Apply to You, or watch The Business Opportunity Rule video.

NOTE: These consent judgments are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when approved and signed by the District Court judge.

(FTC File No. X110017)

FTC Settlement Obtains Permanent Ban Against Abusive Debt Collection Operation

The remaining defendants in the Federal Trade Commission’s case against Rumson, Bolling & Associates have agreed to a settlement that permanently bans them from the debt collection business.

Part of the FTC’s continuing efforts to curb illegal debt collection practices, the settlement resolves FTC allegations that three debt collection companies, their owner, David M. Hynes II, and the companies’ principals subjected consumers to abusive debt collection practices and deceived their small business clients. Under the settlement, defendants will pay $700,000. In a separate settlement, the FTC also obtained over $400,000 in judgments against three other companies that Hynes controlled, which were alleged to have received funds from the defendants’ activities.

The defendants were based in Van Nuys, California, but collected debts nationwide. The FTC’s complaint alleged that the defendants used multiple illegal debt collection practices. Among other things, the agency alleged that the defendants berated consumers with obscene and profane language, threatened them with physical harm, improperly disclosed consumers’ debts to their employers, co-workers, neighbors, and other third parties, and falsely threatened consumers with lawsuits, arrest, seizure of their property, or wage garnishment. Several consumers reported that defendants even threatened to dig up the bodies of consumers’ deceased relatives for alleged non-payment of funeral bills.

The FTC also alleged that the defendants deceived their small business clients. Using the slogan “no recovery, no fee,” the defendants promised that they would collect their clients’ past-due accounts on a contingency basis. The FTC alleged that, in many cases, the defendants collected money for a client, then kept all of the money or more than they were entitled to keep. In some cases, the defendants asked clients for additional fees, purportedly for legal expenses in filing a lawsuit that would “guarantee” the successful collection of a debt. However, in many cases, the defendants failed to file the promised lawsuits and the clients never received any money in satisfaction of the debt.

These practices allegedly violated both the Fair Debt Collection Practices Act, which bars deceptive, abusive, and unfair debt collection practices, and the FTC Act, which more generally bars deceptive and unfair commercial practices.

Under the settlement, defendants David M. Hynes II, Lorena Quiroz-Hynes, Forensic Case Management Services, Inc. (doing business as Rumson, Bolling & Associates, FCMS, Inc., Commercial Recovery Solutions, Inc., and Commercial Investigations, Inc.), Specialized Recovery, Inc. (doing business as Joseph, Steven & Associates and Specialized Debt Recovery), and Commercial Receivables Acquisition, Inc. (doing business as Commercial Recovery Authority, Inc. and The Forwarding Company) agreed to a $33.8 million judgment, which will be suspended due to inability to pay after they turn over $700,000. In addition, under the same settlement, defendants James S. Hynes and Heather True agreed to judgments of $43,822 and $233,973, respectively, which will be suspended due to their inability to pay. If it is determined that the financial information the defendants gave the FTC was untruthful, the full amount of the judgments will become due.

In a separate settlement, three companies that David Hynes controlled – Vesper Collins, LLC; Ramillies, LLC; and Innsbruck, LLC – agreed to turn over $403,487 to the FTC. The FTC named these companies as relief defendants, alleging that they did not participate in the defendants’ wrongdoing but still profited from it. In addition, the FTC has filed for a default judgment against another company owned and operated by Hynes, Kester Archwood, LLC.

For consumer information about dealing with debt collectors, see Debt Collection FAQs: A Guide for Consumers.

The Commission, including Commissioner J. Thomas Rosch, voted 5-0 in favor of authorizing the staff to file the consent agreements with the court.

NOTE: The consent agreements are for settlement purposes only and do not constitute an admission by the defendants that the law has been violated. Consent agreements have the force of law when approved and signed by the District Court judge.

(FTC File No. X110017)

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