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The Federal Trade Commission today issued final changes to agency procedure that will streamline the FTC’s investigatory process, make updates to keep pace with electronic evidence discovery, and provide more detail on how the agency evaluates allegations of misconduct by attorneys practicing before the Commission.

The changes concern the procedures in Parts 2 and 4 of the agency’s Rules of Practice, and they reflect public comments received after the changes were proposed earlier this year.  They are part of the FTC’s effort to periodically review and update its rules to ensure that they are efficient, effective, and not unduly burdensome on outside parties.

Investigations.  The final changes to Part 2 will expedite FTC investigations and ensure the agency’s investigatory processes continue to keep pace with electronic discovery.  For example, the changes require parties to meet and confer with FTC staff within 14 days (with certain exceptions) to resolve electronic discovery issues relating to subpoenas and civil investigative demands (CIDs), as well as any other issues.

Other changes include:

• streamlining the process for resolving disputes over FTC subpoenas and CIDs, as well as petitions to limit or quash FTC subpoenas and CIDs;
•  expediting the FTC’s pre-merger review process by giving the agency’s General Counsel the authority to initiate enforcement proceedings when a party fails to comply with the Hart-Scott-Rodino second request process; and
•  relieving parties of their obligations to preserve documents related to an FTC investigation after a year passes with no written communication from Commission staff.  The revision does not remove any obligation that parties may have to preserve documents for investigations by other government agencies, or for litigation.

Attorneys.  The final changes to Section 4.1(e) clarify the agency’s procedures for evaluating allegations of misconduct by attorneys practicing before the Commission.

The Commission vote approving proposed changes to Parts 2 and 4 of the agency’s Rules of Practice, 16 CFR, Parts 2 and 4, was 4-1, with Commissioner J. Thomas Rosch voting no.

Accompanying today’s vote, Chairman Jon Leibowitz issued a statement that the Commission’s revised Rules of Practice “mak[e] us a more effective agency.”  In response to questions about whether the rules should be more stringent about requiring compulsory process, he explained that, “while most competition investigations warrant compulsory process, and its use is strongly encouraged, it makes sense to provide staff with at least some flexibility in choosing which method to deploy in at least some investigations.”  As to internal reporting requirements, he added, “Our staff already meets regularly with individual Commissioners and responds to any inquiries about particular matters. . . .  This best practice, however, is a matter of internal management that does not necessarily need to be enshrined in the Rules of Practice.”

Commissioner Rosch concurred in part and dissented in part for the reasons set forth in his earlier statement on the Commission vote to issue the proposed rules for public comment in January 2012.  That statement supported the Commission’s efforts to modernize the agency’s operating rules and agreed with most of the revisions, yet concluded that the rule changes were insufficient because they did not include mandatory compulsory process in all full-phase investigations and regular reports on the status of pending investigations to all commissioners. 

The final Rules of Practice can be found on the FTC’s website. The Part 2 rule revisions will take effect on November 9, 2012, and will apply to all investigations, unless the Commission or certain Commission officials determine, with respect to a particular investigation pending as of November 9th, that the application of an amended rule to that investigation would not be feasible or would create an injustice. The changes to Rule 4.1 will apply to any alleged attorney misconduct that occurs on or after November 9, 2012.

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.

The operators of a Philadelphia-based telemarketing scheme will pay more than $7.5 million to settle Federal Trade Commission charges that they peddled bogus “platinum” credit cards and illegally debited consumers’ bank accounts.  Under a settlement with the FTC, Blake Rubin, Chase Rubin, and Justin Diaczuk — the individuals allegedly behind the Platinum Trust Card and Express Platinum Card scam — will be permanently banned from telemarketing, and from selling any type of credit card product or service.

As part of the FTC’s ongoing crackdown on schemes that prey on financially strapped consumers, in January 2012 the agency charged the defendants with violating the FTC Act and the FTC’s Telemarketing Sales Rule.  A federal court subsequently halted the operation, froze the defendants’ assets, and appointed a receiver to control the business pending resolution of the case.

According to the FTC, the defendants allegedly called online payday loan applicants and offered a purported general-purpose credit card with a credit limit of up to $9,500, in exchange for an advance fee of up to $99 and a monthly $19 fee.  They allegedly falsely claimed their cards could be used anywhere that accepts Visa, MasterCard, or American Express, and that the cards would help rebuild consumers’ credit ratings because the defendants reported payment history to the major credit bureaus.  The FTC alleged that the “credit cards” could be used only to purchase off-brand, overpriced products at the defendants’ online store.

In addition to imposing the monetary judgment and banning Blake Rubin, Chase Rubin, Justin Diaczuk, Apogee One Enterprises LLC, and Marquee Marketing LLC from telemarketing and credit card marketing, the settlement order permanently prohibits them from misrepresenting material facts about any goods or services, collecting payments from their customers, disclosing or otherwise benefitting from customers’ personal information, and failing to dispose of this information properly.

To learn more about telemarketing scams, read Who’s Calling? Recognize and Report Phone Fraud.

The Commission vote to authorize staff to file the consent order for permanent injunction was 5-0.  The consent order was entered by the U.S. District Court for the Northern District of Illinois, Eastern Division on September 19, 2012.

Note: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation.  A stipulated final order requires approval by the court and has the force of law when signed by the judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 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.

A Chicago funeral home operator has agreed to settle Federal Trade Commission charges that he violated the Funeral Rule, which helps to ensure that people have the information they need to compare prices and buy only the funeral services and goods they want.

In July 2011, at the FTC’s request, the U.S. Department of Justice charged Harry J. Carter III, doing business as Carter Funeral Chapels Ltd. of Chicago, with not providing consumers with itemized price lists, as required by the Funeral Rule.  The complaint was based on inspections by FTC staff posing as consumers seeking to make funeral arrangements.

The FTC conducts undercover inspections every year to ensure that funeral homes are complying with the Funeral Rule, which gives consumers important rights when making funeral arrangements.  The Rule, issued in 1984, requires funeral homes to provide consumers with an itemized price list at the start of an in-person discussion of funeral arrangements, a casket price list before consumers view any caskets, and price information by telephone on request.  It also prohibits funeral homes from requiring consumers to buy any item, such as a casket, as a condition of obtaining any other funeral good or service.

Under the consent order, the defendant is permanently prohibited from violating the Funeral Rule.  The order also imposes a $64,000 civil penalty, which will be suspended due to the defendant’s inability to pay.  The full judgment will become due immediately if the defendant is found to have misrepresented his financial condition.

The FTC educates consumers in English and Spanish about their rights under the Funeral Rule, and provides guidance to businesses in how to comply.  For more information read Paying Final Respects:  Your Rights When Buying Funeral Goods & Services (Rindiendo Honores: Sus Derechos al Momento de Comprar Artículos y Servicios para Funerales), Funerals:  A Consumer Guide (Funerales: Gua para el Consumidor), and Complying with the Funeral Rule.

The Commission vote approving the proposed consent order was 4-1, with Commissioner Rosch voting in the negative.  The order was entered by the U.S. District Court for the Northern District of Illinois on September 11, 2012.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendants that the law has been violated.  Consent decrees have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 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.

Two companies that recommend long-term care facilities for senior citizens have agreed to settle Federal Trade Commission charges that they misled consumers to think that they had researched the facilities and had detailed knowledge about them.  The proposed settlements, which prohibit the respondents from misrepresenting their services in the future, resolve the FTC’s first cases involving Internet-based companies that offer placement assistance for seniors who need institution-based, long-term care.

“Senior citizens need honest information when they’re considering long term care options,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection.  “Companies that claim to know which facilities to recommend to consumers need to be able to back up their claims or they will hear from the FTC.”

According to two administrative complaints issued by the FTC, CarePatrol Inc. and ABCSP Inc. offer consumers free assistance to obtain placements at care facilities for senior citizens, and state that the facilities pay the companies for the placements.  CarePatrol operates via franchises in 12 states; ABCSP, which also does business as “Always Best Care,” operates via a network of franchisees throughout the nation.

            As alleged in one complaint, CarePatrol’s claims include:

• “We Grade Each and Every Facility From ‘A’ to ‘F’ Based on Their Last State Survey.  Our Local Senior Care Consultants also Pre-Screen every home we recommend.”
• “…CarePatrol’s local, Nationally Certified Advisors look beyond the chandeliers and fancy lobbies to monitor each community’s care history and state violations so we can recommend: The Safest Options For Your Loved One.”
• The complaint against ABCSP alleges that its claims include:
• “We provide the best choices to our clients while maintaining the highest standards for living arrangements. . . . we match our clients with the top three or four most appropriate living options based upon individual needs, custom screening and available budgets. . . .”
• “Our Care Coordinators are local and have personally viewed virtually all of the assisted living communities in your area.”

CarePatrol allegedly misrepresented that it monitors or grades the care history and violations of virtually all, or a substantial majority, of assisted living facilities (ALFs) in a consumer’s desired location, that it provides services through a network of senior care consultants located in every state, and that it monitors or grades facilities based on a review of the facilities’ latest state inspection reports.  According to the FTC complaint, in most states listed on CarePatrol’s website, the company has not monitored or graded any facilities; it does not operate through senior care consultants in every state; and in numerous instances, it does not monitor or grade facilities based on the most recent state inspection reports.

ABCSP allegedly misrepresented that its placement recommendations for ALFs and residential care homes in different geographic regions are based on the personal knowledge of its personnel or agents regarding virtually all, or a substantial majority, of the facilities in those regions.  According to the complaint, the company typically does not know which ALFs and residential care homes have contracts with its franchisees, and in numerous regions, its recommendations are not based on the personal knowledge of its personnel or agents.

Both complaints note that there are at least 39,000 ALFs and thousands of smaller, residential care homes in the United States.

Under proposed consent orders that apply for the next 20 years, CarePatrol and ABCSP are barred from making false or unsubstantiated representations about their placement services.

The Commission vote to accept the consent agreement packages containing the proposed consent orders for public comment was 5-0.  The FTC will publish a description of the consent agreement packages in the Federal Register shortly.  The agreements will be subject to public comment for 30 days, beginning today and continuing through October 17, 2012, after which the Commission will decide whether to make the proposed consent orders final.  Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section.  Comments regarding CarePatrol can be submitted electronically by clicking here. Comments regarding ABCSP can be submitted electronically by clicking here.Comments in paper form should be mailed or delivered to:  Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580.  The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

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 complaint is not a finding or ruling that the respondent has actually violated the law.  A consent order is for settlement purposes only and does not constitute an admission by the respondent that the law has been violated.  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 up to $16,000.

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.