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FTC Approves Final Order Restoring Competition for Adult Cardiology Services in Reno, Nevada

Following a public comment period, the Federal Trade Commission has approved a final order restoring competition for adult cardiology services in Reno, Nevada. Under the order, Renown Health, the largest provider of acute care hospital services in northern Nevada, released its cardiologist employees from “non-compete” contract clauses, allowing up to 10 of them to join competing cardiology practices in the Reno area. The order settled FTC charges that Renown’s recent acquisition of two local cardiology groups reduced competition for adult cardiology services in the Reno area.

The Commission vote approving the final order and letters to members of the public who commented on it was 5-0. (FTC File No. 111-0101; the staff contact is Erika Wodinsky, FTC Western Region, San Francisco, 415-848-5100; see press release dated August 6, 2012.)

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Shuts Down Robocall Operation That Allegedly Claimed to Help Consumers Get FTC Consumer Refunds

At the request of the Federal Trade Commission, a federal district court temporarily shut down a robocall operation that allegedly impersonated the agency in an attempt to trick consumers into turning over their bank account information and other sensitive personal data, pending resolution of the FTC’s case. The FTC seeks to permanently stop the scheme.

In a complaint filed in federal court, the FTC charged that the operation run by The Cuban Exchange, Inc., also doing business as CrediSure America and MyiPad.us, and its principal, Suhaylee Rivera, deceptively claimed they could help consumers obtain refunds from the agency, in an effort to trick them into providing their personal information and bank account numbers.

According to the FTC, the company falsely told consumers it has helped “more than 13,000” people get refunds. It also “spoofed” the FTC’s Consumer Response toll-free phone number, so that the FTC’s number appeared on consumers’ Caller ID devices. The defendants also allegedly used a website address – ftcrefund.com – designed to confuse consumers into thinking the operation had a connection with the FTC. The website has since been shut down.

“When the Federal Trade Commission returns money to consumers who have been ripped off, it doesn’t use robocalls, and it certainly doesn’t ask them to provide personal financial information,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “To anyone breaking the law by making illegal robocalls, transmitting phony Caller ID information, or impersonating a federal agency, we have two words for you: Stop now. The real Federal Trade Commission will come after you.”

The case is the 100th brought by the FTC over the past nine years alleging violations related to the national Do Not Call (DNC) Registry, which was launched in 2003. The FTC alleged that, in addition to making illegal telemarketing robocalls, the defendants also called consumers whose phone numbers are on the Registry.

The FTC charged that the defendants made illegal robocalls that played a prerecorded message telling consumers to visit the website ftcrefund.com. During the message, the- defendants also allegedly give consumers a phony “seizure ID number.” The message uses the same “seizure ID number” for all consumers the defendants contact. When calling consumers, the defendants allegedly transmit the toll-free phone number for the FTC’s Consumer Response Center, 877-382-4357, often broadcast to the public as 877-FTC-HELP, to consumers’ Caller ID devices, misrepresenting that the call is coming from the FTC.

According to the FTC, consumers who visit the ftcrefund.com, website, or an identical website, credisure.net, are told that, “CrediSure has the proper knowledge and open door [sic] to expedite refunds you may not even know were owed to you. CrediSure works as a tireless collector and fiercely fights for its clients [sic] refunds to be paid first.” Consumers are then told they will get a refund from the FTC in “five to seven business days, as opposed to the standard 8 to 10 weeks,” and instructs them how to enter their “Seizure ID” number and “depository information” to get the process started. Consumers are told that the defendants will take 5.55 percent of the refund as a fee for the service of speeding up the refund process. They also allegedly falsely claim that, “Over 13,000 clients have received refunds through CrediSure America.”

Consumers who enter their “Seizure ID” number on the website are directed to a page on the site that provides them with information including the supposed name of the FTC case, the amount to be refunded, the fee the defendants will charge, and the supposed total amount of the refund the consumer will receive. To get the “refund,” consumers must provide their address, phone number, bank name (including the name listed on the account), account number, routing number, and a check number, supposedly so refunds can be deposited directly into their accounts. The FTC, however, does not provide refunds by direct deposit, but only by check.

Based on this alleged conduct, the complaint charges the defendants with a making a range of misrepresentations, including:

That they are affiliated with or endorsed by the FTC;
That they can obtain refunds/redress from the FTC on behalf of consumers;
That they can reduce FTC refund/redress wait time to five to seven business days from 8 to 10 weeks;
That they know the consumer is entitled to a refund or redress from the FTC; and
That they have helped more than 13,000 clients get refunds/redress from the FTC.

The complaint also charges the defendants with violating the agency’s Telemarketing Sales Rule (TSR) by misrepresenting their affiliation with, or endorsement or sponsorship by, the FTC, and by making material misrepresentations about the services they provide to consumers.
The complaint also charges the defendants with violating the TSR by calling consumers whose phone numbers are on the DNC Registry, failing to transmit accurate Caller ID information, making illegal pre-recorded telemarketing calls, failing to make required disclosures such as the identity of the seller and purpose of the call, and failing to pay the required fees to access the DNC Registry.

The Commission vote to issue the complaint was 5-0. It was filed in the U.S. District Court for the Eastern District of New York, and names as defendants The Cuban Exchange, Inc., doing business as CrediSure America and MyiPad.us; and Suhaylee Rivera, individually and as an officer or director of The Cuban Exchange, Inc.

Information for Consumers

The FTC recently issued 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. For official information about the FTC’s refund process, consumers should visit Getting Your Money Back: Consumer Refunds.

Complaints from consumers affected by this alleged scam were essential to helping FTC learn about it and stop it quickly. The agency advises consumers contacted by anyone claiming they can help expedite FTC refunds or redress payments to contact the FTC’s Consumer Response Center toll-free at 1-877-FTC-HELP.

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 complaints are not a finding or ruling that the defendants have actually violated the law. The cases will be decided by the court.

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 File No.: 132-3046)

At FTC’s Request, Federal Court Finds Defendants in Contempt for Continuing to Pitch Bogus Credit Repair Services in Violation of Prior Court Order

Responding to charges by the Federal Trade Commission, a U.S. district court has found a credit repair operation in contempt for violating a previous court order that required the defendants to stop promoting bogus credit repair products and services to consumers. The court ordered the defendants to pay $6.4 million to the FTC within 30 days and permanently shut down their credit repair business.

The contempt order covers Kevin Hargrave and Latrese Hargrave and the companies they control – BFS Empowerment Financial Services Inc., Help My Credit Now Credit Services Inc., and Kevtrese Enterprises Inc.

The court found that despite entry of a January 2010 order that barred the Florida-based defendants from deceptively marketing credit repair services, the defendants continued to violate the FTC Act and the Credit Repair Organizations Act by claiming that they could permanently remove negative information from consumers’ credit reports, even when the information was accurate. The court also found the defendants in contempt for charging a $250 “enrollment fee,” in violation of the advance fee prohibition of the prior order.

The civil contempt order was issued on November 19, 2012, by Judge Marcia Morales Howard of the U.S. District Court for the Middle District of Florida, Jacksonville Division. The court also issued a modified final order that permanently shuts down the defendants’ credit repair operations and bans them from selling or providing any credit repair products or services, or from assisting others to do so.

The January 2010 order resulted from a complaint the FTC filed against the Hargrave defendants in October 2008 as part of a federal and state law enforcement sweep against credit repair operations that allegedly deceptively marketed their services. According to the complaint, the defendants advertised on the Internet and radio stations and charged $250 to $270 per person and $450 per couple for purported credit repair services, requiring half or all of the charge to be paid in advance. In their advertisements, defendants touted that they “specialize in erasing bad credit!”

FTC File No. 082-3007

FTC Issues Amended Rule on Identity Theft Red Flags

The Federal Trade Commission today announced publication of an Interim Final Rule on identity theft “red flags” that narrows the circumstances under which creditors are covered by the Rule.

Congress directed the FTC, along with several banking agencies to develop regulations requiring “financial institutions” and “creditors” to develop and implement a written identity theft prevention program. By identifying “red flags” for identity theft in advance, businesses can be better equipped to spot suspicious patterns that may arise — and take steps to prevent potential problems from escalating into a costly episode of identity theft.

Under the Rule, Red Flag Programs must have four parts. First, the Program must include reasonable policies and procedures to identify signs – or “red flags” – of identity theft in the day-to-day operations of the business. Second, the Program must be designed to detect the red flags of identity theft identified by the business. Third, the Program must set out the actions the business will take upon detecting red flags. Finally, because identity theft is an ever-changing threat, a business must re-evaluate its Program periodically to reflect new risks from this crime.

The agencies promulgated the Red Flags Rule in 2007. In December 2010, Congress enacted legislation narrowing the definition of “creditors” covered by the Rule. The amended Red Flags Rule now provides that a creditor is covered only if, in the ordinary course of business, it regularly:

Obtains or uses consumer reports in connection with a credit transaction;
Furnishes information to consumer reporting agencies in connection with a credit transaction; or
Advances funds to or on behalf of a person, in certain cases.

The Commission is seeking comment on the Interim Final Rule for 60 days. After the expiration of the 60-day comment period and a review of the comments received, the Interim Final Rule will become final.

The Commission vote approving issuance of the Federal Register notice announcing the Interim Final Rule was 5-0. The notice will be published in the Register shortly and can be found on the FTC’s Web site as a link to this press release.

FTC Staff Opinion: The Methodist Hospital System May Sell Discounted Shortage Drugs to Baytown EMS as an Emergency Humanitarian Gesture; FTC Approves Final Order Settling Charges that Universal Health Services, Inc.s Acquisition of Ascend Health

FTC Staff Opinion: The Methodist Hospital System May Sell Discounted Shortage Drugsto Baytown EMS as an Emergency Humanitarian Gesture

In a letter issued today, the staff of the Federal Trade Commission advised The Methodist Hospital System that its proposal to resell pharmaceuticals it purchased at a discount to Baytown EMS is a permissible emergency humanitarian gesture. Methodist had requested staff’s analysis of the applicability of the Robinson-Patman Act, a U.S. antitrust law that prohibits anti-competitive price discrimination, to the proposal.

Methodist, a non-profit hospital, purchases its pharmaceuticals at a discounted price available to certain non-profit entities. Baytown EMS is an emergency transport service that services Methodist and other neighboring hospitals. Because the nationwide drug shortages have prevented Baytown EMS from maintaining safe inventory levels of certain critical drugs, Methodist proposes to resell limited quantities of those shortage drugs to Baytown EMS. The sole purpose of Methodist’s proposal is to enable Baytown EMS to maintain safe inventory levels of certain critical products currently in shortage. Methodist only proposes to continue these sales during the pendency of the shortages.

Citing a Supreme Court case and a prior Commission advisory opinion, the staff letter to Methodist concludes that Methodist may engage in the proposed sales.

NOTE: This letter sets out the views of the staff of the FTC’s Bureau of Competition, as authorized by the Commission’s Rules of Practice. It has not been reviewed or approved by the Commission. As the Commission’s Rules explain, the staff’s advice is rendered “without prejudice to the right of the Commission later to rescind the advice and, where appropriate, to commence an enforcement proceeding.”

FTC Approves Final Order Settling Charges that Universal Health Services, Inc.’s Acquisition of Ascend Health Corporation Would Have Been Anticompetitive

Following a public comment period, the Federal Trade Commission has approved a final order settling charges that Universal Health Corporation, Inc.’s (UHS) proposed acquisition of Ascend Health Corporation would have been anticompetitive in the market for acute inpatient psychiatric services in the El Paso, Texas/Santa Teresa, New Mexico, area. The order requires UHS to sell an acute inpatient psychiatric facility in that market to an FTC-approved buyer.

The Commission vote approving the final order was 5-0. (FTC File No. 121-0157, Docket No. C-4372; the staff contact is Janelle Filson, Bureau of Competition, 202-326-2882; see press release dated October 5, 2012)

FTC Approves Final Order Settling Charges Against Marketer Brain-Pad, Inc. for Allegedly Deceptive Claims that Its Mouthguards Can Reduce Risk of Concussions

Following a public comment period, the Federal Trade Commission finalized an order settling charges that mouthguard marketer Brain-Pad, Inc. and its President Joseph Manzo made deceptive claims that their mouthguards reduce the risk of concussions from lower-jaw impacts, reduce the risk of concussions generally, and have been clinically proven to work. Brain-Pad mouthguards retail for $10 to $30.

Part of the FTC’s ongoing efforts to protect consumers from over-hyped health claims, the settlement also prohibits Brain-Pad and Manzo from misrepresenting the health benefits of any mouthguard or other athletic equipment designed to protect the brain from injury. The FTC also sent warning letters to 18 other sports equipment manufacturers that may be making allegedly deceptive claims that their mouthguards, headbands, or other devices can reduce the risk of concussions.

Consumers should carefully evaluate health claims made by advertisers. For more information about concussions, see: Concussion and Mild Traumatic Brain Injury.

The Commission vote approving the final order was 4-1, with Commissioner J. Thomas Rosch voting no.

FTC Warns Hotel Operators that Price Quotes that Exclude ‘Resort Fees’ and Other Mandatory Surcharges May Be Deceptive

The Federal Trade Commission has warned 22 hotel operators that their online reservation sites may violate the law by providing a deceptively low estimate of what consumers can expect to pay for their hotel rooms.

The warning letters cited consumer complaints that surfaced at a recent conference the FTC held on “drip pricing,” a pricing technique in which firms advertise only part of a product’s price and reveal other charges as the customer goes through the buying process. According to the FTC letters, “One common complaint consumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsite exercise or pool facilities, or internet access, sometimes referred to as ‘resort fees.’ These mandatory fees can be as high as $30 per night, a sum that could certainly affect consumer purchasing decisions.” The warning letters also state that consumers often did not know they would be required to pay resort fees in addition to the quoted hotel rate.

“Consumers are entitled to know in advance the total cost of their hotel stays,” said Federal Trade Commission Chairman Jon Leibowitz. “So-called ‘drip pricing’ charges, sometimes portrayed as ‘convenience’ or ‘service’ fees, are anything but convenient, and businesses that hide them are doing a huge disservice to American consumers.”

The letters strongly encourage the companies to review their websites and ensure that their ads do not misrepresent the total price consumers can expect to pay.

FTC Seeks Public Comments as Part of Its Review of Guides Advising Businesses How to Avoid Illegal Discrimination in the Provision of Promotional Allowances and Services

As part of the Federal Trade Commission’s systematic review of its rules and guides, the agency is seeking public comments on the guidance it gives manufacturers and wholesalers as to how they can provide advertising allowances and other promotional payments and services to retailers without running afoul of the Robinson-Patman Act.

The Robinson-Patman Act prohibits anticompetitive price discrimination and certain other kinds of business discrimination. The Guides – known as the “Fred Meyer Guides” – explain how suppliers can avoid unlawful discrimination under the Act by providing their advertising allowances and other promotional allowances and services to retailers on “proportionally equal terms.”

The FTC most recently reviewed and amended the Guides in 1990. The current version of the Guides contains 15 sections covering such topics as the definition of “competing sellers,” some acceptable ways of calculating the proportionality of allowances and services, and the circumstances in which different types of retailers might need to be given access to different types of promotional media.

During the public comment period, which continues through January 29, 2013, the FTC is seeking input on a number of specific issues including: 1) whether there is a continuing need for the Guides; 2) whether there have been changes in the case law that should now be reflected in the Guides; 3) how, if at all, the Guides should be revised to account for new developments in commercial practices since 1990, such as the growth of the Internet as a means of promoting products; 4) what costs and benefits the Guides provide to business; and 5) what costs and benefits the Guides ultimately have for consumers.

Public comments can be submitted in paper form or online. Instructions for submitting comments in paper form can be found in the Federal Register notice. Comments can be submitted electronically at: https://ftcpublic.commentworks.com/ftc/fredmeyerguides.

The Commission vote approving the Federal Register notice was 5-0. The notice will be published in the Federal Register shortly, and can be found on the FTC’s website and as a link to this press release. (FTC File No. P123900; the staff contact is Neil W. Averitt, Bureau of Competition, 202-326-2885.)

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., Room 7117, Washington, DC 20001. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

FTC Action Leads to Court Order: Fake ‘Yellow Pages’ Scammers Must Pay $10.2 Million

UPDATE
The FTC has learned that certain organizations, including Factoring International AG, Direct Factoring EOOD, Marketing Administration Ltd., and Marketing Services & Business Administration Ltd., are contacting consumers to collect on Yellow Page Marketing invoices. [example 1 | example 2 | example 3 | example 4] The court order in this case prohibits the collection of payments on Yellow Page Marketing accounts.

Acting on a Federal Trade Commission complaint, a federal court has ordered a European-based operation to pay more than $10.2 million for tricking small businesses and nonprofit organizations into paying for unwanted listings in online business directories. The default judgment permanently bans the defendants from marketing Internet directories and listings in the future, and prohibits them from collecting payments from their previous customers, disclosing or otherwise benefitting from customers’ personal information, and failing to dispose of this information properly.

In July 2011, the FTC filed its complaint against Jan Marks; Yellow Page Marketing B.V., also doing business as Yellow Page B.V. and Yellow Page (Netherlands) B.V.; Yellow Publishing Ltd.; and Yellow Data Services Ltd.. They allegedly ran the scheme from Palma de Mallorca, Spain, using English and Dutch corporations, falsely represented that businesses and nonprofits had a preexisting business relationship with them, and that they were affiliated with a local yellow pages directory. A federal judge temporarily halted the operation and froze the defendants’ assets, pending resolution of the case.

The FTC received several hundred complaints from consumers who received faxes that appeared to be from their local yellow pages directories, confirming listings the consumers already had. Those who returned the faxed forms were billed by Yellow Page Marketing and told to send more than $1,000 to a Park Avenue address in New York City. Consumers who refused to pay were subjected to threatening and intimidating collection tactics. Under the July 2011 temporary restraining order, the FTC intercepted and opened mail that consumers sent to that address, which included nearly 800 checks totaling more than $460,000. The FTC has determined that consumers’ information would be best protected by destroying the checks. In conjunction with this announcement, the FTC is mailing letters to affected consumers, advising them of these facts and providing an FTC Business Alert, “When Yellow Pages Invoices Are Bogus.” The FTC further advises consumers that any attempts to collect on defendants’ invoices are in violation of the court order announced today.

The order was entered by the U.S. District Court for the Northern District of Illinois, Eastern Division. In conjunction with the FTC’s case, the Canadian Competition Bureau secured a judgment against this operation in March, 2012.

FTC Files Amicus Brief Explaining That Pharmaceutical “Product Hopping” Can Be the Basis for an Antitrust Lawsuit

The Federal Trade Commission filed an amicus brief before the U.S. District Court for the Eastern District of Pennsylvania explaining that minor, non-therapeutic changes to a branded pharmaceutical product that harm generic competition can constitute exclusionary conduct that violates U.S. antitrust laws.

Although U.S. courts are properly reluctant to question the innovative value of a new product in most industries, the FTC’s amicus brief states, “The potential for anticompetitive product redesign is particularly acute in the pharmaceutical industry.”

Brand name pharmaceutical companies can try to obstruct generic competitors and preserve monopoly profits on a patented drug by making modest reformulations that offer little or no therapeutic advantages, a tactic known as “product-switching” or “product hopping,” the amicus brief states. Prior to facing generic competition, a brand drug company can, for example, simply withdraw its original product, forcing consumers to switch to the reformulated brand drug and enabling the branded company to keep its market exclusivity and preventing consumers from obtaining the benefits of generic competition.

This “product-hop” may succeed despite the fact that consumers would not likely choose the new product. As the amicus brief states: “In the pharmaceutical industry … the success of a product-switching scheme does not depend on whether consumers prefer the reformulated version of the product over the original, or whether the reformulated version provides any medical benefit.” Instead of making a choice, consumers are denied a real choice.

The FTC filed its amicus brief in conjunction with a private antitrust action against the pharmaceutical firm Warner Chilcott. Plaintiffs in that case allege that Warner Chilcott maintained a monopoly in the market for its antibacterial drug Doryx by suppressing generic competition through three successive insignificant reformulations of the drug.

Warner Chilcott has filed a motion to dismiss the case, essentially arguing that product reformulations are per se legal.

The FTC’s amicus brief, however, asserts: “Applying a per se legal standard, as Warner Chilcott effectively advances here, would entitle brand pharmaceutical companies as a matter of law to manipulate the FDA regulatory process and undermine state and federal laws that encourage generic competition.”

The FTC vote approving the amicus brief filing was 4-1, with Commissioner Rosch voting no. It was filed with the court on November 21, 2012.

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