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FTC Charges Promissory Note Pitchman With Deceiving Consumers

The Federal Trade Commission has charged Russell Dalbey, the CEO and founder of the company behind the “wealth-building” program “Winning in the Cash Flow Business,” with defrauding consumers, in some cases out of thousands of dollars, with phony claims that they could make large amounts of money quickly and easily by finding, brokering, and earning commissions on seller-financed promissory notes.

The FTC’s complaint against Dalbey and others involved in marketing the program, filed jointly with Colorado Attorney General John W. Suthers, alleges that the defendants misled consumers about how much money they could make using the program and how quickly and easily they could make it.

“‘Winning in the Cash Flow Business’ was a real loser for hundreds of thousands of consumers nationwide,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “When someone is selling a program designed to help people make money, they have to accurately describe how much consumers can expect to make and be truthful about how quickly they will be able to do so. None of that happened in this case, and people who bought the program paid the price.”

Millions of consumers nationwide saw infomercials for the “Winning in the Cash Flow Business” program, which were hosted by TV personality Gary Collins. The program supposedly teaches consumers how to find, broker, and earn commissions on seller-financed promissory notes – privately held mortgages or notes that are often secured by the home or land that is the subject of the loan.

The FTC complaint alleges that consumers spent approximately $40 to $160 on the initial program, and were later encouraged to spend hundreds or thousands of dollars more on additional products or services, such as multi-day seminars, coaching sessions, and promissory note holder lead lists. Few of these consumers made the money that Dalbey promised them. The FTC and the State of Colorado seek a court order to stop Dalbey, his wife, and the corporate entities they control from making the allegedly misleading claims, and to obtain money for consumer refunds.

According to the complaint, since at least 1996, Dalbey has used various corporate entities to market his program. Beginning as early as 2002, he has done so mainly through a 30-minute infomercial. Along with pitches on the Internet and through direct mail, the infomercial claimed that consumers could successfully earn substantial income brokering promissory notes in three easy steps – “Find ‘Em,” “List ‘Em,” and “Make Money.”

“[Y]ou’ll be amazed at just how easy it is to generate a stream of extra income every month. Build financial freedom and a better quality of life in just minutes a day. Or even retire earlier than you ever dreamed possible. Order now and you’ll be ready to profit in minutes,” an infomercial allegedly claimed.

These claims allegedly were supported by “testimonials” from consumers who claimed to have made “$1.2 million in 30 days,” “$79,000 in a few hours,” and “$262,216 part time,” for example. “In less than 30 days, I closed two transactions and I netted 1 point – a little bit over $1.2 million,” a testimonial by “Don B.” from New York stated.

Unfortunately, according to the FTC and Colorado Attorney General, this was far from the typical consumer experience. The complaint charges that Dalbey and the other defendants violated the FTC Act and Colorado law by making false and unsubstantiated claims that consumers are likely to quickly and easily find, list, and broker promissory notes and earn substantial amounts of money; and that defendants’ additional products and services, such as coaching programs, workshops, seminars, note holder leads, and other resources, will meaningfully increase the likelihood that consumers will succeed in the note business.

The complaint also alleges that while Dalbey claimed he has earned substantial money finding, listing, and brokering promissory notes himself, most of his note-related income for the past two decades has come from marketing and selling products and services supposedly to teach consumers how to find and broker such notes. In addition, the complaint alleges that consumer testimonials in the defendants’ advertising are inaccurate and do not reflect the results that customers are likely to achieve if they buy the program. For example, some testimonialists, the complaint charges, stated earnings claims that were total earnings figures accumulated over several years, rather than in one year.

The complaint also charges the defendants with violating the FTC’s Telemarketing Sales Rule by making similar misrepresentations to consumers during sales calls.

Finally, the FTC and Colorado Attorney General charged Marsha Kellogg – one of the consumers who provided a testimonial in an infomercial – with falsely claiming that she earned $79,975.01 from one promissory note transaction using Dalbey’s program, and that her total earnings were more than $134,000. The complaint alleges that Kellogg made this statement even though she earned $50,000 less than what she claimed.

Kellogg has agreed to an order settling the FTC charges against her. The order is the FTC’s first against a consumer charged with making misrepresentations in a product or service testimonial. It prohibits Kellogg from making several types of misrepresentations in the future. In addition, Kellogg has agreed to cooperate with law enforcers in their case against the remaining defendants.

The Commission voted 5-0 to authorize the staff to file the complaint and to approve the order settling the charges against Kellogg. The complaint was filed in the U.S. District Court for the District of Colorado on May 23, 2011, and names Russell T. Dalbey; DEI, LLLP; Dalbey Education Institute, LLC; IPME, LLLP; Catherine L. Dalbey; and Marsha Kellogg.

Information for consumers about how to spot and avoid investment fraud, “get-rich-quick” schemes, and other types of wealth-building scams can be found here, on the FTC’s “Money Matters” website.

UPDATE: In October, the Court entered a stipulated order for preliminary injunction that prohibits Russell Dalbey from making certain claims the plaintiffs allege are misleading. This order will be in effect during the remainder of the litigation. For more information, refer to the order or the press release issued by the Colorado Attorney General.

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. A consent judgement is for settlement purposes only and does not constitute an admission by the defendant that the law has been violated. Consent judgments 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 Web site provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.

(FTC File No. 092-3062, Civ. No. 1:11-cv-01396-CMA –KLM)
(Russell Dalbey.final)

FTC Conditions Irving Oil’s Proposed Acquisition of ExxonMobil Assets in Maine

The Federal Trade Commission will require Irving Oil Terminals Inc. and Irving Oil Limited (collectively, Irving) to relinquish the rights to terminal and pipeline assets in Maine that Irving acquired from ExxonMobil, to maintain competition in gasoline and distillates terminaling services in the South Portland and Bangor/Penobscot Bay areas. The proposed settlement resolves the FTC’s charges that the acquisition is anticompetitive and could result in higher gasoline and diesel prices for consumers.

“We continue to closely monitor deals in the energy sector to ensure that consumers of petroleum products are served by competitive markets,” said FTC Bureau of Competition Director Richard Feinstein. “We expect the relief obtained here to accomplish that goal and protect consumers from higher gas prices.”

As the transaction was originally structured, Irving would have acquired ExxonMobil’s terminals in South Portland and Bangor as well as ExxonMobil’s intrastate pipeline connecting the two terminals. Terminals are critical to the sale and distribution of fuels, and they generally include storage tanks and loading “racks” that pump fuels into tanker trucks for delivery.

The original transaction, according to the FTC’s complaint, would have substantially increased concentration in certain geographic markets in Maine. Irving and ExxonMobil are two of only three firms that can independently offer or provide gasoline terminaling services in the Bangor/Penobscot Bay area, and two of only four in the South Portland area. Similarly, they are two of only four firms that can independently offer distillates terminaling services in the Bangor/Penobscot Bay area, and two of six in the South Portland area.

The FTC’s proposed order settles FTC charges by requiring Irving to give up its acquisition rights to ExxonMobil’s Bangor terminal and intrastate pipeline as well as 50 percent of ExxonMobil’s South Portland terminal to Buckeye Partners, L.P. and its affiliate Buckeye Pipe Line Holdings, L.P. (collectively, Buckeye). The proposed order allows Irving to participate in a joint venture with Buckeye created to acquire ExxonMobil’s South Portland terminal.

The proposed order is intended to ensure that the South Portland terminal will continue to operate independently of, and in competition with, other Maine terminals. To this end, it prevents Irving, without prior approval from the FTC, from acquiring additional shares in, managing, or operating the South Portland terminal. In addition, Irving must notify the FTC before it acquires any additional ownership interests in any petroleum products transportation or storage facilities in Maine. Lastly, the proposed order imposes firewall and monitor provisions to ensure that Irving does not access or use the joint venture’s confidential customer information.

The Commission vote approving the complaint and proposed settlement order was 5-0. The order will be published in the Federal Register subject to public comment for 30 days, until June 27, 2011, after which the Commission will decide whether to make it final. Comments can be submitted electronically here. The FTC thanks the Maine Office of the Attorney General, which also announced a settlement with the companies today, for its invaluable assistance in the matter.

NOTE: The Commission issues 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 issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent order 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 up to $16,000.

Copies of the complaint, consent order, and an analysis to aid public comment are available from the FTC’s website at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. 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, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., 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 File No. 101-0021)

FTC Seeks Input for Revising Its Guidance to Businesses About Disclosures in Online Advertising

The staff of the Federal Trade Commission is updating “Dot Com Disclosures: Information About Online Advertising,” the guidance document that advises businesses how federal advertising law applies to advertising and sales on the Internet. [Download “Dot Com Disclosures” here.] The online world has changed dramatically since the original guidance was published in 2000, and the FTC is seeking public comment about how it should be modified to reflect these changes. [Read staff invitation to submit comments here.]

Since the FTC staff published Dot Com Disclosures, mobile marketing has become a reality, the “App” economy has emerged, the use of “pop-up blockers” has become widespread, and online social networking has emerged and grown popular. In seeking public comment on possible revisions to the guidance document, the staff is interested in the technical and legal issues that marketers, consumer advocates, and others believe should be addressed.

The 2000 guidance emphasizes that the same consumer protection laws apply to marketers whether they operate online or not. It illustrates how online marketers should provide clear and conspicuous disclosures of information that consumers need to make informed online purchasing decisions. It also discusses how the traditional factors used to evaluate whether disclosures are likely to be clear and conspicuous apply in the context of online advertising.

The FTC will seek public comment for 45 days, beginning today and continuing through July 11, 2011. Interested parties can submit written comments electronically or in paper form. [Submit comment electronically by clicking here.] Hard-copy comments should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex I), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC requests 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.

(Dot Com Disclosures NR)

FTC Settlements Put Debt Relief Operations Out of Business

The FTC has settled two actions that charged marketers with deceptively claiming they could reduce consumers’ credit card interest rates. Both operations allegedly made deceptive telemarketing calls, called consumers on the Do Not Call Registry, and used illegal robocalls. The settlements will ban all of the defendants from selling debt relief services.

Advanced Management Services

The FTC charged that Advanced Management Services NW LLC, and several co-defendants called consumers and claimed that they could negotiate with credit card issuers to substantially lower the consumers’ credit card interest rates. They allegedly delivered prerecorded “robocalls” with messages urging consumers to “press one” to speak with someone. Many consumers believed the calls came from their credit card company. The defendants charged consumers up to $1,590 and promised a refund if they failed to deliver at least $2,500 in interest rate savings. But, instead of arranging reduced interest rates, the defendants sent consumers instructions to pay down their credit card debts early to save money on interest. Consumers who demanded refunds allegedly were denied outright, got the run-around, or had a $199 “nonrefundable fee” deducted from their refund.

Under two settlement orders, all of the Advanced Management Services defendants are banned from selling debt relief services. The defendants, who were based in Washington and Texas, are also prohibited from misrepresenting material facts about any good or service, selling or using customers’ personal information, failing to properly dispose of customer information, and collecting payments from their debt relief customers.

The order against PDM International Inc., also doing business as Priority Direct Marketing International Inc., and William D. Fithian, also bans them from telemarketing and from violating the FTC’s Telemarketing Sales Rule, and imposes a $13.8 million judgment. The order against Advanced Management Services NW LLC, also doing business as AMS Financial, Rapid Reduction Systems, and Client Services Group; Rapid Reduction System’s LLC; Ryan David Bishop; and Michael L. Rohlf; imposes an $8.1 million judgment. Both judgments, which represent the total amount of money consumers lost, will be suspended when the defendants have surrendered virtually all of their assets, including several luxury cars, a boat, jet skis, and ATVs. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition.

The FTC acknowledges the assistance of the Better Business Bureau of Eastern Washington, North Idaho, and Montana, and the BBB of Fort Worth, Texas; the U.S. Postal Inspection Service; the Bedford, Texas, Police Department; and the attorneys general of Illinois, Minnesota, North Carolina, North Dakota, Washington, and West Virginia.

Dynamic Financial

In a second case, the FTC alleged that Dynamic Financial Group and other defendants told consumers that, for an up-front fee of up to $1,995, they could save consumers thousands of dollars by reducing their credit card interest rates, and help them pay off their debts faster. The FTC further charged that the defendants promised, falsely, a full refund if consumers did not save a “guaranteed” amount – typically $2,500 or more. However, the defendants allegedly did not negotiate lower interest rates for consumers or failed to provide refunds.

Under five settlement orders in this case, all of the defendants are banned from selling debt relief services. These defendants, who are based in Canada, Florida, and New Jersey, also are prohibited from misrepresenting material facts about any good or service, violating the Telemarketing Sales Rule, collecting payments from their debt relief customers, using or selling customers’ personal information, and failing to properly dispose of customer information.

The order against 2145183 Ontario, Inc., also doing business as Dynamic Financial Resolutions Inc.; The Dynamic Financial Group (U.S.A.) Inc.; R&H Marketing Concepts Inc.; America Freedom Advisors Inc.; Joseph G. Rogister; and Christopher M. Hayden also bans them from robocalling and imposes an $8.3 million judgment that will be suspended due to the defendants’ inability to pay.

The order against Thriller Marketing LLC, Dwayne J. Martins, and John L. Franks Jr. imposes a $4.9 million judgment that will be suspended when Martins has surrendered the proceeds from selling a 2005 BMW 645 and Franks has surrendered the proceeds from selling two business condominiums in Tampa. The order against Frank Porporino Jr. also bans him from robocalling and imposes an $8.3 million judgment that will be suspended when he has surrendered certain assets. In each instance, the full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The orders against Michael Falcone and Sean Rogister also ban them from robocalling and impose judgments of $93,137 and $90,473, respectively, which must be paid immediately.

On April 27, 2011, a default judgment was entered against Alpha Financial Debt Group Inc. That order imposed a $8.68 million judgment and banned the company from robocalling. Litigation will continue against the remaining defendant, Philip N. Constantinidis.

The Commission vote approving the Advanced Management Services proposed consent judgments was 3-1-1, with Commissioner Rosch dissenting and Commissioner Brill recused. The FTC filed the proposed consent judgments in the U.S. District Court for the Eastern District of Washington. The court entered the consent judgments on April 27, 2011, and May 3, 2011. The Commission vote approving the Dynamic Financial proposed consent judgments was 5-0. The FTC filed the proposed consent judgments in the U.S. District Court for the Northern District of Illinois, Eastern Division, where they were entered by the Court on April 27, 2011.

Law enforcement organizations at the international, federal, state, and local levels provided valuable investigative assistance in bringing this action. The FTC would like to thank the following for their help: The U.S. Postal Inspection Service; the Florida Department of Agriculture and Consumer Affairs; and the Toronto Strategic Partnership, which includes as member agencies the Competition Bureau Canada, the Toronto Police Service Fraud Squad – Mass Marketing Section, the Ontario Provincial Police Anti-Rackets Section, the Ontario Ministry of Consumer Services, the Royal Canadian Mounted Police, and the United Kingdom’s Office of Fair Trading. Valuable assistance also was provided by the Better Business Bureaus of Central, Northern & Western Arizona; San Diego; and Metropolitan New York.

Information is available regarding credit repair and repairing your own credit.

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

(FTC File Nos. X100033, X100010)

FTC Offers Tips to Stretch Your Gas Dollars

The Federal Trade Commission is offering tips to help consumers save money at the pump and get better gas mileage.

At the Pump
Check your owner’s manual for the right octane level for your car. Regular octane gas is recommended for most cars. See The Low-Down on High Octane Gasoline.

Shop around. Specialized phone apps and websites can help find the lowest gas prices in your area, and many gas stations advertise regular weekly specials.

Charge it. Consider a credit card that offers cash back for gas purchases – some offer 2 to 5 percent rebates, but read the fine print, because fees, charges, interest rates, and benefits vary.

On the Road
Start driving as soon as the engine is started. Modern engines warm up quickly and stay warm after stopping.

Don’t speed. Gas mileage drops significantly when you drive more than 60 miles per hour. Fueleconomy.gov says each extra 5 mph is like paying 24 cents more per gallon.

Unnecessary idling wastes fuel, costs money, and pollutes the air. Turn off the engine if you anticipate a wait.

Use overdrive gears and cruise control when appropriate to improve fuel economy on the highway.

Minimize the need to brake. Be alert for slow-downs, red lights, and bends and turns.

Avoid jackrabbit starts and stops to increase mileage and prolong the life of your brakes.

Use the air conditioner only when you absolutely need it. AC dramatically reduces fuel economy. Most air conditioners have an “economy” setting for circulating unchilled air. Many also have a “maximum” or “recirculation” setting that reduces the amount of hot outside air that must be chilled.

Combine errands. Several short trips taken from a cold engine start can use twice as much fuel as one trip covering the same distance when the engine is warm.

Remove excess weight from the trunk. An extra 100 pounds can reduce a typical car’s fuel economy by up to 2 percent.

Avoid packing items on top of your car. A loaded roof rack can lower fuel economy by 5 percent.

At the Garage
Keep your engine tuned per your owner’s manual to increase mileage by an average of 4 percent.

Keep tires properly inflated and aligned to increase mileage up to 3 percent, improve handling, and prolong the life of your tires. Check your owner’s manual or the door jamb for the proper inflation (not the tire itself, which shows the maximum pressure), and check the pressure when the tires are cold for an accurate reading.

Change your oil. According to the U.S. Department of Energy (DOE) and Environmental Protection Agency (EPA), using the manufacturer’s recommended grade of motor oil can improve gas mileage. Oil that says “Energy Conserving” (on the American Petroleum Institute performance symbol) has friction-reducing additives that can improve fuel economy.

When Shopping
Be skeptical about gizmos that claim to improve gas mileage. The EPA has found very few that provide any benefits, and some products can damage your engine or greatly increase exhaust emissions. For a list of EPA-tested products, visit www.epa.gov/otaq/consumer/reports.htm.

For more information on energy efficiency at the gas pump and throughout the house, check out Saving Starts @ Home: The Inside Story on Conserving Energy.

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 and follow us on Twitter.

(Gas Saving Tips)

Online Marketers of Bogus “$10,000 Credit Line” Ordered to Pay $3.7 Million, Cited for Contempt

At the request of the Federal Trade Commission, a federal district court judge ordered a deceptive marketing operation to pay more than $3.7 million as part of a contempt action for violating a 2008 court order. The FTC alleged that the defendants targeted consumers who were unemployed or had poor credit, selling a bogus “$10,000 credit line” that was really an online shopping club membership and a “no cost” prepaid debit card with hidden fees.

In 2008, Dale Paul Cleveland, William Richard Wilson, EDebitPay LLC, and three now-defunct companies paid more than $2.2 million to settle FTC charges that they made unauthorized debits from consumers’ bank accounts and deceptively marketed prepaid debit cards and short-term loans. The settlement order permanently barred them from making future misrepresentations or unauthorized debits. But in marketing a “$10,000 credit line,” the FTC alleged that the defendants violated the order and misrepresented that they were offering a general line of credit, when they were actually offering a shopping club membership with a credit line could be used only to buy merchandise from the club. Instead of clearly disclosing what they were actually selling, the defendants buried the truth in fine print. The FTC also charged the defendants with marketing a “no cost” prepaid debt card that carried a variety of fees they failed to disclose.

The court held the defendants in contempt of the 2008 order and imposed a $3.7 million judgment. The contempt order was entered by the U.S. District Court for the Central District of California, on February 4, 2011. The defendants have filed a notice of appeal of the order.

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 1,800 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 and follow us on Twitter.

(EDebitPay)
(FTC File No. X070038)

FTC Stops Marketers in Nationwide Free VacationPrize Scam Targeting Spanish-Speaking Consumers

The Federal Trade Commission, as part of its Hispanic Law Enforcement Initiative, has filed two court actions against five companies and their owners for allegedly tricking consumers into paying fees for vacation packages they supposedly won in contests, and then failing to provide the promised vacations. At the FTC’s request, the court halted the defendants’ allegedly deceptive practices and froze their assets pending further litigation.

VGC Corporation of America

In the first case, the FTC and the State of Florida, Office of the Attorney General allege that the defendants used Spanish-language radio and TV ads nationwide to offer a vacation package they claimed was worth thousands of dollars as a prize to callers who answered a simple trivia question. For instance, the defendants ran television ads proclaiming “Attention! This program has been interrupted. It’s time to win for the first thirty people that dial the number that appears on the screen and can tell me correctly how that famous Mexican comedian (Mario Moreno) was also known … If you know the answer … you are going to go to Disneyland …” Callers were told they had won a prize, and that if they paid a fee of up to $400 they would receive their promised vacation package.

However, according to the complaint, when the “winners” tried to redeem their prize, they were almost uniformly denied. Many consumers who called the defendants to book their vacations were told they were not eligible because they did not meet previously undisclosed conditions, limitations, and restrictions, including age, income or marital-status requirements, or required attendance at a timeshare presentation. Others were told the promised vacations were no longer available or that they had to pay more to redeem their prize. Some consumers could not reach the defendants to claim their prize, and those who did reach them and asked for their money back were told there were no refunds and they were simply out of luck. The FTC charged the defendants with violating the FTC Act. The State of Florida charged them with violating the Florida Deceptive and Unfair Trade Practices Act.

The defendants in this case are VGC Corporation of America, also doing business as All Dream(s) Vacations, All Dreams Travel, Five Star(s) Vacations, 5 Star(s) Vacations, Total Tours, and Travel & Tours Corp.; All Dream Vacations Corp., also doing business as All Dreams Vacations; Violeta Gonzalez, also known as Violeta Rojas; Cesar A. Gonzalez; and Samir Jose Saer Rodriguez, also known as Samir Saer.

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. At the request of the FTC and the State of Florida, the court issued a temporary restraining order against the defendants on May 17, 2011, pending a hearing.

Holiday Vacations Marketing Corp.

The defendants in the second case also targeted Spanish-speaking consumers in a similar scam. According to the FTC’s complaint, when consumers called to accept the “prizes,” the defendants’ telemarketers took their credit or debit card numbers, charged their accounts a fee of up to $400, and mailed them a payment invoice, a vacation brochure, and instructions to call 30 days or more before the desired vacation date to make reservations. The defendants sometimes mailed terms and conditions stating that consumers had to make reservations within 18 months of purchase, pay their own air fare, present two forms of ID at the hotel, and be 21 or older.

The complaint also alleges that consumers often could not reach a live operator to schedule vacations, or managed to make reservations but could not reserve as many nights as they were promised. Some consumers learned, after arrival, that they had to attend timeshare presentations and meet income and marital-status requirements to receive free hotel stays. At least one person, who traveled from Texas to Florida, was charged for the hotel because she could not attend a timeshare presentation scheduled for the day after her departure. Consumers who complained or demanded refunds had trouble reaching anyone by phone, and others were promised a refund that was never provided, according to the complaint.

In addition, the defendants allegedly re-charged consumers’ accounts up to $400 without their authorization, and without disclosing that they would be charged a second time. When consumers reported the unauthorized charges to their banks or credit card companies as fraudulent, the defendants used certified mail to send those consumers a new invoice and brochure that was nearly identical to those sent after the initial charge. The defendants then sent the consumers’ banks or credit card companies a copy of the consumers’ signatures from the certified mail receipt and a copy of a false invoice. This led some banks and card companies to refuse consumer requests to cancel or reduce charges to their accounts.

The FTC charged Holiday Vacations Marketing Corp., Happy Life Carribbean Corp., Happy Life Corporation of America Inc., Victor M. Ramirez, and Dario A. Jimenez Lopez, also known as Diego Lopez and Diego Jimenez, with violating the FTC Act.

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 District of Maryland. At the FTC’s request, the court issued a temporary restraining order against the defendants on May 16, 2011, pending a hearing.

The FTC would like to thank the State of Florida for its invaluable participation, as well as the Florida Department of Agriculture and Consumer Services, the Better Business Bureau Serving Southeast Florida and the Caribbean, and the Commonwealth of Puerto Rico, Department of Consumer Affairs for their assistance with both of these cases.

For more information about travel plans, read Telemarketing Travel Fraud, or play an online game, Gear Up For A Great Trip, also available as Prepárate Para Un Feliz Viaje.

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.

(FTC File No. 1023210, 1123039)

FTC Files Amicus Brief in U.S. Court of Appeals for the Third Circuit in K-Dur Antitrust Litigation Urging Reversal of Pay-for-Delay Ruling

The Federal Trade Commission filed an amicus brief before the U.S. Court of Appeals for the Third Circuit in support of private class action plaintiffs who have challenged the legality of patent settlements between branded and generic manufacturers of the high blood pressure medication K-Dur 20.

The FTC’s brief urges the Third Circuit to reverse the ruling of the lower court, which held that settlements between the patent holder, Schering-Plough Corporation, and the alleged infringers, Upsher Smith and ESI, did not violate antitrust laws. The lower court granted the defendants’ motion for summary judgment.

The patent settlements at issue in the case included payments from Schering-Plough to Upsher Smith and ESI, and resulted in the delayed entry of a generic alternative to K-Dur 20, a type of agreement sometimes called a “pay-for-delay” settlement. In 2001, the FTC also sued Schering, alleging the settlements related to K-Dur 20 were anticompetitive and illegal.

In its amicus brief, the FTC states that the appellate court should reverse the district court’s ruling and remand it for reconsideration. The brief explains that the district court’s decision would allow branded companies to pay generic companies to stay out of the market until patent expiration. It argues that the district court’s approach conflicts not only with basic antitrust principles, but with patent law and the policies of the Hatch-Waxman Act, which Congress enacted to encourage competition by generic drug firms.

According to the brief, pay-for-delay deals are increasing and already cost consumers billions of dollars a year. The brief urges the Third Circuit to resolve the issue by holding that pay-for-delay settlements are presumptively illegal and that they will be condemned unless the companies can show that their agreements do not harm competition.

The FTC vote approving the amicus brief filing was 5-0. It was filed with the court on May 18, 2011. (FTC File No. P082105; the staff contact is Lawrence DeMille-Wagman, Office of the General Counsel, 202-326-2448.)

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, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook and follow us on Twitter.

(FYI 24.2011.wpd)

FTC Seeks Public Comment on Alternative Fuels Rule

The Federal Trade Commission is seeking public comments on the costs, benefits, necessity, and regulatory and economic impact of its Labeling Requirements for Alternative Fuels and Alternative Fueled Vehicles (AFVs), also called the Alternative Fuels Rule.

The FTC is conducting this review as part of the agency’s ongoing, systematic review of all FTC rules and guides. Last year, the FTC announced that it would accelerate the review of the Alternative Fuels Rule to ensure that FTC-required vehicle labels are consistent with the Environmental Protection Agency (EPA) fuel economy labeling requirements.

The FTC first published the Alternative Fuels Rule in 1995 as directed by the Energy Policy Act of 1992. To enable consumers to make informed buying decisions, the Rule requires informative labels on fuel dispensers for non-liquid alternative fuels, such as electricity, compressed natural gas, and hydrogen, and on new and used AFVs that run on liquid and non-liquid fuels. In addition to seeking comments on general questions about the Rule, the FTC seeks comments on whether to 1) consolidate its AFV labels with fuel economy labels required by the EPA and the National Highway Traffic Safety Administration, 2) add new definitions for AFVs contained in recent legislation, and 3) change labeling requirements for used AFVs.

Pending completion of the Rule’s review, the FTC will not enforce FTC labeling requirements for electric vehicles as long as manufacturers follow EPA labeling requirements. This enforcement policy will help eliminate consumer confusion and industry burden caused by inconsistencies between FTC and EPA labeling requirements for electric vehicles. In addition, the FTC will suspend its ongoing review of the Fuel Economy Guide until the Commission completes its Rule review and EPA publishes updated fuel economy labeling requirements. The FTC adopted the Guide in 1975 to prevent deceptive fuel economy advertising and facilitate the use of EPA fuel economy information in new automobile advertising.

Public comments on the Advanced Notice of Proposed Rulemaking announced today will be accepted until July 25, 2011. Instructions for submitting comments are found in the Notice. The Commission vote approving the ANPR was 5-0. (FTC File No. R311002; the staff contact is Hampton Newsome, Division of Enforcement, 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 1,800 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 and follow us on Twitter.

(Alternative Fuels Rule)

FTC Offers Information to Help U.S. Diversity Visa Lottery Applicants

Tips for Consumers

May 20, 2011

The Federal Trade Commission advises people who have participated in the U.S. State Department’s Diversity Visa (DV) Lottery program that, according to the State Department, 2012 lottery results posted in May at www.dvlottery.state.gov are invalid due to a computer programming problem. Anyone who applied to the lottery between October 5, 2010, and November 3, 2010, should visit www.dvlottery.state.gov for more information.

The lottery is one way for citizens of other countries to obtain green cards, which provide the right to live in the United States permanently. The FTC cautions that some fraudulent businesses and lawyers misrepresent their “immigration services” to potential green card applicants and charge exorbitant fees. Other important information for applicants:

Entering the DV Lottery program is free.
The only website to use to enter the DV Lottery is www.dvlottery.state.gov.
Only one entry per person is allowed. If you submit more than one, all your entries will be disqualified.
Selection is random. There is no way to increase your chance of selection.
The State Department does not notify selected applicants by paper mail or e-mail; you must check your application status online at www.dvlottery.state.gov.

For more information, see the FTC’s consumer alert, Diversity Visa Lottery: Read the Rules, Avoid the Rip-Offs.

(Diversity Visa Program)

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