FTC Issues Modified Final Order Settling Charges that Perrigo’s Acquisition of Paddock Laboratories Was Anticompetitive in Market for Generic Pharmaceuticals

Following a public comment period, the Federal Trade Commission has issued a modified final order settling charges that Perrigo Company’s $540 million acquisition of Paddock Laboratories, Inc., as proposed, was anticompetitive and would have reduced the number of manufacturers for four products used to treat conditions such as skin disorders, allergic reactions, and nausea. The FTC also alleged that the deal would eliminate future competition for two other products, a generic topical steroid and a generic anti-inflammatory drug. To settle the FTC’s charges, the companies were required to sell six generic drugs to Watson Pharmaceuticals, Inc.

The Commission vote to issue the modified final order and a letter to the member of the public who commented on it was 4-0-1, with Commissioner Maureen K. Ohlhausen not participating. The order can be found on the FTC’s website and as a link to this press release. (FTC File No. 111-0083, Docket No. C-4329; the staff contact is Christine Palumbo, Bureau of Competition, 202-326-3330; see press release dated July 26, 2011.

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.

(FYI 23.2012.wpd)

FTC Seeks Public Input on Jewelry Industry Marketing Guides

Do you have something to say about jewelry and how it’s marketed? If so, the Federal Trade Commission wants to hear from you. As part of its systematic review of all current FTC rules and guides, the Federal Trade Commission is seeking public comment on the agency’s Jewelry Guides.

The Guides (formally, the “Guides for the Jewelry, Precious Metals, and Pewter Industries”) explain to businesses how to avoid making deceptive claims about precious metal, pewter, diamond, gemstone, and pearl products, and when they should make disclosures to avoid unfair or deceptive trade practices. The FTC completed its last comprehensive review of the Guides in 1996, and has modified them four times since.

The FTC invites public comments on any issues or concerns about the Guides. The FTC also seeks comments on several specific issues, including the marketing of lead-glass-filled composite stones (such as “hybrid” or “composite” rubies), use of the word “cultured” in marketing laboratory-created diamonds and gemstones, disclosures relating to freshwater pearls and treatments to pearl products, and content descriptions of alloys and alloy products containing precious metals in amounts less than the minimum thresholds currently reflected in the Guides.

The Commission vote approving the Request for Public Comments was 5-0. 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. Instructions for filing comments appear in the Federal Register Notice. Comments can be filed electronically by clicking here. Comments must be received by August 27, 2012. All comments received will be posted at www.ftc.gov/os/publiccomments.shtm. (FTC File No. G711001; the staff contact is Reenah Kim, Bureau of Consumer Protection, 202-326-2272)

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.

(Jewelry Guides)

Operators of “Debt Advocacy” Firm Settle with FTC, Must Pay More than $750,000

The operators of an allegedly deceptive mortgage modification business will pay more than $750,000 in ill-gotten gains to settle Federal Trade Commission charges.  The settlements also permanently ban the 11 defendants from selling any mortgage assistance relief products.

The FTC’s case against the four operators of the Debt Advocacy Center and another group of seven defendants that allegedly provided “forensic audits” to consumers are part of the agency’s ongoing crackdown on frauds targeting consumers in financial distress.

According to the complaint the FTC filed in November 2009 as part of a law enforcement sweep against mortgage relief scams, the Debt Advocacy Center defendants charged consumers $1,500 in advance and claimed a 90 percent success rate for obtaining mortgage modifications.  These four defendants also allegedly promised a refund of $1,500 or more if they were unable to obtain a loan modification.  The complaint alleged that when consumers did not get the modification, the Debt Advocacy Center told them the $1,500 was only for advice and educational materials and refused to return payments from consumers. At the FTC’s request, the court ordered a halt to the unlawful operations and froze the defendants’ assets, pending resolution of the case.

The FTC later alleged that another group of seven defendants was involved in the operation, offering so-called forensic audits.  The scheme purportedly involved checking a homeowner’s loan documents for law violations that would give them leverage in negotiating with lenders to obtain a loan modification or a “short sale” of a house for an amount that was less than the mortgage balance.  The forensic audit defendants collected $995 in advance for each audit even though an audit was unlikely to aid negotiations with lenders, the complaint alleged.

Under the settlements, all 11 defendants are permanently banned from selling any mortgage assistance relief services.  All the defendants will be prohibited from misrepresenting any relevant facts about the marketing or sale of financial products and will need to provide support for any claims they make about the products.  The four Debt Advocacy Center defendants also will be barred from misrepresenting the relevant facts about any product they market or sell.
Under the proposed settlements:

If it is later determined that the financial information provided to the FTC by these defendants was false, the full amount of their judgments will become due.

The Commission has advice for consumers about mortgage, foreclosure rescue, and debt settlement scams.  For more information see:  Your Home, and the publication Forensic Mortgage Loan Audit Scams: A New Twist on Foreclosure Rescue Fraud.

The Commission voted 4-0 to approve the second amended complaint against the Debt
Advocacy Center and forensic audit defendants, and the four proposed consent orders against Geisen, Jackson, Butler, and Credit Services Alliance, Inc.; Smith, Gromann, and CreditLawGroup, P.A.; The Debt Advocacy Center, LLC and Smith, Gromann & Davidson, P.A.; and Kevin McCormick.

The consent orders and second amended complaint were filed in the U.S. District Court for the Northern District of Ohio Eastern Division on March 7, 2012.  The court entered the second amended complaint on March 7, 2012.  The consent orders for The Debt Advocacy Center, LLC; Smith, Gromann & Davidson, P.A.; Edward J. Davidson; Kevin McCormick; Bradford R. Geisen; Maurice Jackson; Patrick Butler; and Credit Services Alliance, Inc. were entered by the court on May 2, 2012.  Those for Glenn E. Gromann; John W. Smith; and CreditLawGroup, P.A. were entered on June 6, 2012.

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

(FTC File No. X100008)
(Debt Advocacy Center NR)

FTC Charges Bogus Precious Metals Investment Scheme

The Federal Trade Commission charged a telemarketing operation with running a deceptive investment scheme that took in at least $10 million from predominantly elderly consumers, many of whom invested their retirement savings buying precious metals on credit without knowing the significant costs and risks. As part of its ongoing efforts to stop scammers who target the elderly, the FTC seeks to stop the allegedly illegal practices and make the defendants pay refunds to consumers.

According to the FTC’s complaint against Sterling Precious Metals LLC, Matthew Meyer, Francis Ryan Zofay, and Kerry Marshall, the defendants promised consumers they could earn large profits quickly by investing in precious metals with very little risk of loss, without telling customers of the likelihood that they would have to pay more money later or lose their investment. The investments were typically not profitable and carried a high risk of loss.

As alleged in the complaint, the defendants failed to clearly disclose the investments’ total cost, and often failed to disclose that about 80 percent of the purchase would be financed through a loan with interest. The defendants also allegedly misrepresented or failed to clearly disclose fees and commissions, such as a $200 account opening fee and that consumers would be charged as much as 39 percent of their investments in commissions. The defendants also failed to tell consumers they were likely to receive equity calls on their accounts. When a consumer’s equity decreased to a certain level, an equity call was issued, and the consumer had to invest more money or allow the investment to be liquidated at a loss. In some instances, consumers were not told their accounts were liquidated.

The FTC alleges that most of the defendants’ customers lost money. Likewise, consumers lost the equity in their investments through the accumulation of fees and commissions, including storage fees and interest charges on the leveraged portion of their accounts. The FTC charged the defendants with violating the FTC Act and the FTC’s Telemarketing Sales Rule.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Southern District of Florida.

For consumers considering investing in precious metals, the FTC offers advice, including Investing in Gold? What’s the Rush?, Investing in Bullion and Bullion Coins and Investing in Collectible Coins.

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. The case 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. 1223027)

FTC Staff Submits Comment to FERC on Allocation of Capacity on Merchant Electricity Transmission Projects

The Federal Trade Commission staff submitted a comment to the U.S. Federal Energy Regulatory Commission (FERC) providing views on supporting electricity market competition in the review of transmission lines proposed by merchant firms. The FTC staff comment is in response to a FERC workshop on ways to extend open-access, non-discriminatory policies to the allocation of capacity on lines that merchants propose.

Power transmission lines proposed by merchant firms would exist alongside transmission projects that utilities plan and build through regional transmission planning processes. Transmission lines have significant implications for competition and consumers, because
they can provide access to more electricity suppliers, including distant, lower-cost generation. On the other hand, inadequate transmission capacity can prevent resources from competing and give some firms significant market power within the transmission-constrained area, potentially at the expense of consumers.

Workshop participants considered whether FERC could achieve open access and non-discrimination by requiring public notice of a new transmission line, followed by private, bilateral negotiations over access. As an alternative, participants considered whether FERC should use an auction-like “open season” to allocate at least some of a line’s capacity on pre-announced terms.

In the comment, staff from the FTC’s Office of the General Counsel and Bureau of Economics stated that neither of those options would prevent firms from exercising market power. For example, firms could seek to undersize lines in order to withhold power capacity. Instead, the comment stated, FERC could consider setting up a process for reviewing proposals to address these types of concerns and possibly require modifications to plans that are flawed, or reject those that are not in the public interest (because, for example, they preempt better projects).

The Commission vote approving the comment was 5-0. (FTC File No. V120008; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702.)

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 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook and follow us on Twitter.

FTC Puts Conditions on Konkinlijke Ahold’s Acquisition of Genuardi’s Supermarkets

The Federal Trade Commission will require Koninklijke Ahold N.V., the parent company of Giant Food Stores, LLC, to sell a supermarket outside of Philadelphia, Pennsylvania, to settle charges that its proposed acquisition of the Genuardi’s supermarket chain from Safeway Inc. otherwise would be anticompetitive. To preserve competition in the local grocery market, Ahold will sell the supermarket, located in Newtown, Pennsylvania, to McCaffrey’s supermarkets, under an agreement with the FTC.

Ahold owns or has an interest in 2,970 supermarkets and specialty stores in the United States and Europe. It had net sales of $36.8 billion in 2010, and is organized into four retail divisions: Giant Carlisle, Giant Landover, Stop & Shop New York Metro, and Stop & Shop New England.

Safeway is one of the largest food and drug retailers in the country, with more than 1,700 stores nationwide operating under brand names including Safeway, Vons, Randalls, Tom Thumb, Carrs, and Genuardi’s. In 2010, Safeway had net sales of $41 billion. It is exiting the Philadelphia metropolitan market by selling or closing the remaining 24 of 36 Genuardi’s it purchased in February 2001.

According to the FTC’s complaint, Ahold’s acquisition of Genuardi’s from Safeway would violate the FTC Act and Section 7 of the Clayton Act. Specifically, the FTC alleges that it would reduce the number of supermarket competitors in Newtown, Pennsylvania, from three to two, with Giant and Acme being the only remaining retail grocery stores. The Newtown market is already highly concentrated, and would become significantly more so post-acquisition, according to the FTC. The transaction, if completed, would eliminate competition between Giant and Genuardi’s, allowing the combined firm to raise prices unilaterally. The transaction also would increase the likelihood that Giant and Acme would be able to tacitly or expressly work together to raise prices or otherwise reduce competition in a way that would harm local consumers, the FTC alleged.

The proposed order settling the FTC’s charges preserves competition that otherwise would have been eliminated by Ahold’s acquisition of Genuardi’s supermarkets in the Philadelphia metro area. It requires Ahold to sell the Genuardi’s supermarket in Newtown, Pennsylvania, to an FTC-approved buyer. Ahold has agreed to sell the Newtown store to McCaffrey’s, which the FTC considers well-positioned to enter the market to replace the competition that otherwise would have been lost through the transaction. All of the current McCaffrey’s supermarkets are located outside the Newtown area.

Under the proposed order, Ahold and Safeway must sell the Newtown Genuardi’s supermarket to McCaffrey’s no later than 10 days after Ahold acquires the 16 stores covered by the asset purchase agreement. The proposed order also contains other provisions designed to ensure the sale to McCaffrey’s is successful. For example, for one year, Ahold and Safeway are prohibited from interfering with McCaffrey’s hiring or employing anyone currently working at the Newtown Genuardi’s. Also, for 10 years, Ahold must notify the FTC in advance if it plans to acquire a supermarket, or any interest in a supermarket, in Newtown.

The Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 5-0. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through July 16, 2012, after which the Commission will decide whether to make the proposed consent order 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 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.

(FTC File No. 121-0055)
(Ahold.final)

FTC Approves Final Order Settling Charges that Kinder Morgan’s Proposed Acquisition of El Paso Corporation was Anticompetitive in Several Natural Gas Pipeline Markets

Following a public comment period, the Federal Trade Commission has approved a final order settling charges that Kinder Morgan Inc.’s proposed acquisition of El Paso Corporation would have been anticompetitive in several natural gas pipeline transportation and gas processing markets. The final FTC order resolving the charges requires Kinder Morgan to sell three natural gas pipelines and other related assets in the Rocky Mountain region.

The Commission vote approving the final order was 4-0-1, with Commissioner Edith Ramirez recused. (FTC File No. 121-0014; Docket No. C-4355; the staff contact is Philip M. Eisenstat, Bureau of Competition, 202-326-2769; see press release dated May 1, 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.

(FYI 21.2012.wpd)

FTC Suit Halts Bogus Health Insurance Scam

The Federal Trade Commission has halted a telemarketing scam that allegedly tricked consumers who were seeking affordable health insurance into buying worthless medical discount plans. Health Care One LLC and three affiliated companies agreed to settlements that will bar them from any healthcare-related enterprise and from selling goods or services related to healthcare. The settlements also prohibit the defendants from violating the Telemarketing Sales Rule and require them to turn over their ill-gotten gains.

The settlement orders with Health Care One, Americans4Healthcare Inc., Elite Business Solutions, Inc., Mile High Enterprise Inc., and their principals resolve a complaint filed by the FTC in August 2010 as part of an agency crackdown on scams targeting Americans without health insurance.

Health Care One and its affiliates allegedly deceived consumers by marketing medical discount plans as government-endorsed health insurance and claiming they would deliver substantial savings on consumers’ healthcare costs. According to the FTC’s complaint, filed in Central District of California, the companies also falsely claimed that their program was widely accepted by healthcare providers in consumers’ local communities. The Health Care One companies touted their services in television commercials and radio ads. They promised “100% satisfaction” and a money-back guarantee.

However, the FTC alleged that Health Care One’s discount plans were not insurance, were not widely accepted by healthcare providers, and did not provide the promised healthcare savings to consumers.

According to the FTC’s complaint, the companies did not inform consumers that their program was not health insurance until after consumers signed up for the program and paid hundreds of dollars in fees. Consumers who subsequently tried to cancel their enrollment found that the Health Care One companies made it difficult or impossible to obtain refunds.

Shortly after the FTC filed its complaint, the Court issued preliminary injunctions against each of the Health Care One companies to halt their deceptive practices pending trial.

The settlement orders announced today require the defendants to surrender assets including the proceeds from the sale of an Aston Martin, a Maserati, a yacht, and two motorcycles. The orders also prohibit the defendants from making misrepresentations in connection with the sale of any good or service, including falsely representing: that a program is insurance; affiliation with, or endorsement or sponsorship by, the federal government; that purchase of a good or service will result in substantial savings to consumers; any material aspect of the good or service; the total costs associated with the good or service; and any material refund and cancellation policies, including, but not limited to, the likelihood of a consumer obtaining a full or partial refund, or the circumstances in which a full or partial refund will be granted to the consumer. The orders also bar the defendants from violating the Telemarketing Sales Rule, which prohibits misrepresentations in telephone sales and the making of unsolicited automated telemarketing calls.

In addition to the companies, the defendants in the case are Michael Jay Ellman; Robert Daniel Freeman; and Bryan Matthew Loving.

NOTE: These stipulated orders are for settlement purposes only and do not constitute an admission by the defendants that the law has been violated. Stipulated orders have the force of law when signed and approved 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.

FTC Action Halts Alleged “Forensic Audit” Scam that Targeted Consumers in Danger of Losing Their Homes

At the request of the Federal Trade Commission, a U.S. district court has halted an operation that allegedly preyed on financially vulnerable homeowners, convincing them to pay $1,995 or more by holding out bogus promises that they could help them avoid foreclosure and renegotiate their mortgages.

The order issued by the court stops the allegedly illegal conduct, freezes the operation’s assets, and appoints a receiver to run the business while the FTC moves forward with the case.

According to the FTC complaint, the defendants behind the operation claimed on their website that “up to 95% of mortgages may be legally unenforceable due to defects like lost documents, improper notices, appraisal and/or predatory lending.”  Using this claim, several defendants, including Consumer Advocates Group Experts, LLC, virtually guaranteed that they could get mortgage modifications with reduced interest rates and lower monthly mortgage payments for consumers.  

The defendants offered to review consumers’ mortgage loan documents to determine whether their lenders complied with state and federal mortgage lending laws, and made allegedly false claims that the consumers could use the resulting “forensic audits” to avoid foreclosure and negotiate more favorable terms on their mortgages.

The complaint charges the defendants with violating the FTC Act and the Mortgage Assistance Relief Services Rule, known as the MARS Rule, by deceptively telling consumers that they could renegotiate mortgages, making payments substantially more affordable; that they could use the “forensic audits” to negotiate with lenders; and that if they failed to do these things, they would provide a refund.  The complaint also charges the defendants with other MARS Rule violations, including collecting fees for mortgage foreclosure rescue and loan modification services before homeowners accept a written offer from their lender or servicer, and failing to make required disclosures. 

According to the FTC, the Los Angeles, California-based Consumer Advocates Group Experts, LLC, company owner Ryan Zimmerman, and several other companies he controlled charged from $1,995 to $2,590 for the “forensic audits,” assuring consumers in ads on their website www.consumer-advocates-group.com that, “After our examinations, lenders suddenly get religion and become much more cooperative in renegotiating.”

One of numerous supposed consumer testimonials on the site proclaimed: “They did a wonderful job and saved my home.  I received a 3.25% 30 yr fixed … Wells Fargo kept telling me that my loan mod was denied. CAG put together my package in 30 days and got me APPROVED in under 90 days!”

Consumers who wanted to learn more about the defendants’ services were invited to call the toll-free number listed on the defendants’ website, or provide contact information through the site and receive a sales call.  According to the complaint, those who followed up were often told:

  • to stop contacting the lender because it would hinder the negotiation process and, sometimes, to stop making monthly payments;
  • that there was a 100 percent chance that the defendants’ “forensic audits” would uncover violations of federal and state mortgage and credit laws, and that consumers would receive either a loan modification from their lenders or a refund from the defendants; and
  • that the defendants’ negotiations with the consumers’ lenders could lower their mortgage payments by 50 percent.  

The complaint alleges that consumers often did not receive loan modifications or reduced payments and often found out from their lenders that the defendants either never contacted them, or did contact them but failed to follow up.  The complaint also alleges that the defendants routinely failed to answer or return consumers’ telephone calls and emails seeking updates on their mortgage modifications, failed to provide refunds to consumers who requested them, and put consumers at risk of losing their homes and damaging their credit ratings.  Consumers often learned too late that their houses were being foreclosed upon, according to the complaint.
 In addition to Consumer Advocates Group Experts, LLC and Zimmerman, the complaint names Paramount Asset Management Corporation and Advocates for Consumer Affairs Expert, LLC, as defendants in this case.

The FTC has advice for consumers about mortgage modification and foreclosure rescue scams.  For more information see the website Your Home and the publication Forensic Mortgage Loan Audit Scams: A New Twist on Foreclosure Rescue Fraud.

The Commission vote authorizing the staff to file the complaint was 4-0-1, with   Commissioner Maureen K. Ohlhausen not participating.  The FTC filed the complaint and request for a temporary restraining order in the U.S. District Court for the Central District of California on May 30, 2012.  The court granted the FTC’s request the same day.  After a hearing, the court issued a preliminary injunction against the defendants on June 7, 2012.

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.

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. 1123137)
(Consumer Advocates Group NR)

FTC Amends Franchise Rule to Revise Monetary Thresholds for Three Exemptions

The Federal Trade Commission announced it is amending its Franchise Rule to adjust the monetary thresholds used to determine when the sale of a franchise business is exempt from the Rule, which requires franchise sellers to disclose certain information to help prospective buyers weigh risks and benefits before they invest.

The 2007 amendments to the Rule, which took effect July 1, 2008, provide three exemptions based on a monetary threshold. The Rule requires the FTC to adjust the thresholds every four years based on the Consumer Price Index. The inflation adjustments, which will take effect July 1, 2012, will exempt:

  • Sales where the buyer’s initial payment is less that $540 (currently $500).
  • Sales where the initial investment is at least $1,084,900 (now $1 million), excluding the cost of unimproved land and any franchisor (or affiliate) financing; and
  • Sales to large entities, such as airports, hospitals, and universities that have been in business for at least five years and have a net worth of at least $5,424,500 (now $5 million).

The Commission vote approving the Federal Register Notice was 5-0. The Notice 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. P094400; the staff contact is Craig Tregillus, Bureau of Consumer Protection, 202-326-2970)

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.

(Franchise Rule)
(FTC File No. P094400)