FTC Charges Mortgage Relief Operation with Deceiving Distressed Homeowners

As part of the Federal Trade Commission’s continuing crackdown on scams that target homeowners behind in their mortgage payments or facing foreclosure, the FTC has charged a national operation with marketing bogus loan modification services. The FTC seeks to stop the illegal practices and make the defendants pay refunds to consumers.

According to the FTC’s complaint, the defendants target financially distressed consumers using direct mail, the Internet, and telemarketing, and falsely promise they will get loan modifications to make consumers’ mortgages much more affordable, or fully refund their money if they fail. They make these promises even to homeowners whose lenders have denied them modifications or who have been sent foreclosure notices. The defendants charge up to $2,600 for their supposed services and typically ask for half of the fee up-front, claiming a success rate of up to 100 percent.

As alleged in the complaint, the defendants claim expertise that enables them to prevent foreclosure, and often mislead consumers to believe they are affiliated with, or approved by, consumers’ lenders. They tell consumers not to contact their lenders and to stop making mortgage payments, claiming that falling behind on payments will demonstrate the consumers’ hardship to lenders.

U.S. Mortgage Funding Inc., Debt Remedy Partners Inc., Lower My Debts.com LLC, David Mahler, Jamen Lachs, and John Incandela, Jr., also known as Jonathan Incandela, Jr., allegedly violated the FTC Act and the FTC’s Telemarketing Sales Rule by falsely claiming they would obtain mortgage modifications that would make consumers’ loan payments substantially more affordable. They also allegedly misrepresented affiliation with, or approval by, consumers’ lenders, and falsely claimed they would fully refund consumers’ money if they failed to deliver promised services. In addition, the defendants allegedly violated the Rule by calling numbers listed on the National Do Not Call Registry, and not paying the required annual fee for accessing numbers on the Registry.

The FTC recently issued the Mortgage Assistance Relief Services Rule, which bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they decide is acceptable. Because the defendants’ ads predated the Rule, the FTC did not allege any violations of the Rule in this case.

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

Click here for facts about how consumers can help save their home from foreclosure and avoid scams

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. A complaint is not a finding or ruling that the defendants have 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 1,800 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.

(U.S. Mortgage Funding)
(FTC File No. 1023146)

FTC Report Recommends Improvements in Patent System to Promote Innovation and Benefit Consumers

A new Federal Trade Commission report recommends improvements to two areas of patent law: policies affecting how well a patent gives notice to the public of what technology is protected and remedies for patent infringement. The report, The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition, emphasizes that the patent system and competition policy share the goal of promoting innovation that benefits consumers.

“When the patent system incorporates the principles of competition policy, the patent and antitrust laws work together to achieve their common goal. The recommended changes would benefit consumers by encouraging investments in innovation and promoting competition among patented technologies,” said FTC Commissioner Edith Ramirez.

The report continues the Commission’s policy engagement with the patent system that began with its 2003 report, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy by highlighting the role of courts and the U.S. Patent and Trademark Office in notice and remedies issues.

“This new report provides valuable insights on how courts can reform the patent system to best serve consumers, and it complements the Commission’s 2003 report on improving patent quality. These reports, combined with the hard work by many leaders in Congress to improve a troubled system, will help ensure that patents continue to serve America’s innovators and consumers,” said FTC Chairman Jon Leibowitz.

The new report recognizes that patents play a critical role in encouraging innovation. At the same time, it observes that some strategies by patent holders risk distorting competition and deterring innovation. This is especially true, the report concludes, for activity driven by poor patent notice, and by remedies that do not align the compensation received by patent holders for infringement with the economic value of their patented inventions.

To address these issues, the report first recommends improving policies relevant to the patent notice function through actions by the courts and the Patent and Trademark Office. Clear notice of what a patent covers promotes innovation by encouraging collaboration, technology transfer, and design-around. But poor notice undermines these benefits if potential licensees cannot find relevant patents, or if companies hesitate to invest in technology because the scope of others’ patents are unclear. Poor patent notice also can distort competition by forcing firms to design products and make investments with incomplete knowledge of the cost and availability of different technologies. The report suggests mechanisms to improve the public’s ability to identify relevant patents, to understand the scope of patent claims, and to predict the breadth of claims that are likely to emerge from patent applications.

The FTC’s recommendations to improve patent notice include:

  • making patent claims more definite and improving the utility of descriptions in patents for delineating their boundaries;
  • enhancing the patent examination record as a source for interpreting claim scope; and
  • more fully incorporating consideration of third parties’ ability to predict the potential breadth of evolving claims into the administrative and judicial review of the written descriptions of patent applications.

The report also explains that patent remedies that align compensation of patent holders with the economic value of their patented inventions are important for both innovation and competition. Patent damages that under-compensate patentees for infringement can deter innovation. But overcompensation can lead to higher prices and encourage speculation in patent rights, which also deters innovation.

The report makes recommendations to courts that would ground damages calculations and injunction analysis in economic principles that recognize competition among patented technologies.

The FTC’s recommendations to courts to improve patent remedies law include:

  • capping reasonable royalty damages at the amount a willing licensee would pay, which may be determined by the value of the invention over alternative technologies;
  • increasing the role of district courts in excluding unreliable expert testimony on damages from trial; and
  • incorporating concerns into the injunction analysis about the leverage that an injunction may give a patentee to obtain royalties exceeding the economic value of an invention.

The report is based on eight days of hearings, public comments, and independent research.

The Commission vote approving the report was 5-0. It can be found here on the FTC website.

FTC Staff Submits Comments to FERC on More Efficient Ways To Integrate Alternative Energy Sources Into the Nations Power Generation System

The Federal Trade Commission’s staff submitted a comment as part of a Federal Energy Regulatory Commission (FERC) rulemaking on the integration of alternative sources of energy – such as wind farms, solar cells, and solar thermal installations – into the nation’s electric power grid. The staff comment suggested ways to integrate such alternative sources into the grid more efficiently, to improve the reliability of electric service, and to foster innovation that can lower the costs of meeting environmental policy goals.

According to the comment by the Office of the General Counsel and the Bureau of Economics, certain alternative energy sources differ from traditional sources such as fossil fuels and nuclear power because they are not consistently available. This variable availability adds to the uncertainty of balancing the supply and demand for electricity provided by alternate energy sources. FERC seeks to improve the integration of these energy sources into the power system, while maintaining competition and protecting consumers from higher prices.

The FTC staff’s comment responds to current FERC proposals in three areas:

  • The use of shorter time increments to predict energy demand and schedule supply in the power system;
  • Improved accuracy in using weather forecasting to estimate real-time power generation by alternative energy sources; and
  • Ways for alternative energy sources to supply their own regulation service (a form of transmission service) instead of having to obtain that service from public utility transmission providers.

The comment urges FERC to explain more thoroughly how alternative energy sources can supply generation reserves on their own. According to the comment, such a discussion will support competition in the supply of those reserves. The comment concludes by urging FERC to protect against proposals that would discriminate against alternative energy providers when allocating regulation service costs. Such discriminatory allocations, the staff states, could raise rivals’ costs and lessen competition in the industry.

The Commission vote approving the comment was 5-0. It can be found on the FTC’s website and as a link to this press release. (FTC File No. V100009; the staff contact is John H. Seesel, Associate General Counsel for Energy, Office of the General Counsel, 202-326-2702; see related press release dated April 16, 2010.)

Copies of the document mentioned in this release are available from the FTC’s website at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 10.2011.wpd)

National Consumer Protection Week 2011 Kicks Off Sunday March 6

The Federal Trade Commission and nearly 30 other federal agencies, consumer groups and national advocacy organizations, in conjunction with state, county, and local government agencies, will hold more than 120 events in 25 states and the District of Columbia during National Consumer Protection Week, March 6-12, 2011.  National Consumer Protection Week is a coordinated campaign to focus attention on the importance of consumer information and steer people to free resources about their rights in the marketplace.

The website for the week-long series of events has information about consumer rights, protecting privacy online and off, managing credit and debt, avoiding identity theft, understanding mortgages, and recognizing and reporting frauds and scams, among other timely topics. Visitors can download and print materials and share them with friends and neighbors, or use the National Consumer Protection Week Toolkit to plan a larger community event.  A blog has practical tips by consumer protection experts and invites readers to share their experiences.  Information on both websites is available in English and Spanish.

Details of events during National Consumer Protection Week are at ncpw.gov/events.  The chief executives of several states, cities, and counties across the nation have issued proclamations noting the importance of consumer protection to individual financial health, and urging citizens to use the resources available from participating organizations.  These organizations are holding information fairs as well as events where people can shred documents with sensitive data that they no longer need.

Joining the FTC in the 13th annual celebration of consumer protection and consumer education are:  The AARP, the Better Business Bureau, the Consumer Federation of America, the Federal Citizen Information Center, the Federal Communications Commission, the Federal Deposit Insurance Corporation, the Federal Reserve System, the Internal Revenue Service, the League of United Latin American Citizens, the NAACP, the National Association of Attorneys General, the National Consumers League, the National Council of La Raza, the National Futures Association, the National Urban League, NeighborWorks America, the North American Securities Administrators Association, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Social Security Administration, the U.S. Consumer Product Safety Commission, the U.S. Department of Housing and Urban Development, the U.S. Securities and Exchange Commission, the U.S. Postal Inspection Service, and the U.S. Postal Service.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad.

(FYI NCPW2)

Statement by FTC Chairman Jon Leibowitz Regarding Court Ruling on Red Flags Rule

The U.S. Circuit Court of Appeals for the District of Columbia Circuit today issued its opinion and judgment in the matter of American Bar Association v. FTC. The Court held that, in light of the recent amendments to the Fair Credit Reporting Act, the ABA’s challenge to the FTC Red Flags Rule is moot. The court of appeals vacated the district court’s ruling, and remanded with instructions that the case be dismissed.

“Congress made a very good fix to a very badly written law,” FTC Chairman Jon Leibowitz said. “Not surprisingly, the DC Circuit vindicated the FTC’s position that the ABA’s case should be dismissed. The Commission will continue to carry out Congress’ directive to protect the American people from ID theft. We look forward to working with business and professional organizations to minimize compliance costs while safeguarding the public.”

Congress passed legislation resolving the uncertainty it created when it directed the federal financial institution regulatory agencies and the Federal Trade Commission to develop the Identity Theft Red Flags Rule, which requires many businesses and organizations to have a written Identity Theft Prevention Program designed to detect the warning signs – or “red flags” – of identity theft in their day-to-day operations. The legislation clarifies which entities must comply with the Rule.

The Rule doesn’t require any specific practice or procedures. It gives businesses the flexibility to tailor their written ID theft detection program to the nature of the business and the risks it faces. Businesses with a high risk for identity theft may need more robust procedures – like using other information sources to confirm the identity of new customers or incorporating fraud detection software. Groups with a low risk for identity theft may have a more streamlined program – for example, simply having a plan for how they’ll respond if they find out there has been an incident of identity theft involving their business.

 

FTC Steps Up Efforts Against Scams That Target Financially-Strapped Consumers

The Federal Trade Commission today stepped up its ongoing campaign against scammers who falsely promise guaranteed jobs and opportunities to “be your own boss” to consumers who are struggling with unemployment and diminished incomes as a consequence of the economic downturn.

“Operation Empty Promises,” a multi-agency law enforcement initiative today announced more than 90 enforcement actions, including three new FTC cases and developments in seven other matters, 48 criminal actions by the Department of Justice (many of which involved the assistance of the U.S. Postal Inspection Service), seven additional civil actions by the Postal Inspection Service, and 28 actions by state law enforcement agencies in Alaska, California, Indiana, Kansas, Maryland, Montana, New Jersey, North Carolina, Oregon, Washington, and the District of Columbia.

In a press conference at the FTC, David Vladeck, Director of the FTC’s Bureau of Consumer Protection, was joined by Tony West, Assistant Attorney General for the Civil Division of the Department of Justice; Greg Campbell, Deputy Chief Inspector of the U.S. Postal Inspection Service; North Carolina Attorney General Roy Cooper; and a California consumer who had bought into a program to start his own Internet business.

“The victims of these frauds are our neighbors – people who are trying to make an honest living,” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. “Under pressure to make ends meet, they risked their limited financial resources in response to the promise of a job, an income – a chance at a profitable home-based business. But these turned out to be empty promises – and the people who counted on them ended up with high levels of frustration and even higher levels of debt.”

The FTC has updated consumer education materials to help consumers avoid falling victim to these scams. Screen shots from the websites of some of the operators charged in this law enforcement sweep, as well as video footage of FTC Consumer Protection Director Vladeck and FTC attorney Daniel Hanks, are also available at ftc.gov/bizopps or youtube.com/FTCvideos.

Operation Empty Promises: FTC Law Enforcement Actions

The FTC today announced three new law enforcement actions and developments in seven other matters.

Ivy Capital Inc. and 29 co-defendants* allegedly have taken more than $40 million from people who paid thousands of dollars believing Ivy Capital would help them develop their own Internet businesses and earn up to $10,000 per month. According to the FTC’s complaint, Ivy Capital’s telemarketers asked consumers how much credit they had on their credit cards and then talked them into using a substantial portion of their available credit to purchase a business coaching program. But the promised products and services were worthless, the complaint alleged. Ivy Capital’s “expert” coaches lacked the promised knowledge and experience, its website-building software programs did not work properly, and the lawyers and accountants the defendants said would provide assistance were nonexistent. Consumers paid up to $20,000 for a business coaching program and related products and services but got very little in return.

As alleged in the FTC’s complaint, Ivy Capital’s telemarketers called people who responded to e-mail and advertising about work-at-home or Internet business opportunities from companies such as Jennifer Johnson’s Home Job Placement Program and Brent Austin’s Automated Wealth System. The ads originated from fictional companies Ivy Capital created to generate sales leads – potential customers’ names and phone numbers – for its operation. The complaint further alleged that in calls that could last for more than an hour, Ivy Capital’s telemarketers used high-pressure sales and promised consumers they could make thousands of dollars a week working just 5 to 10 hours. Shortly after signing up for the program, consumers received sales calls from companies affiliated with Ivy Capital offering additional business services, including access to credit, expert tax advice, and other services that could cost thousands of dollars in addition to the original fee. Ivy Capital offered a refund program that, in practice, made it difficult for people to get their money back if they cancelled. According to the FTC complaint, some consumers who repeatedly complained to state and federal agencies were offered refunds, but only if they agreed not to publicly disparage the defendants and kept their refunds confidential.

The Ivy Capital defendants allegedly misrepresented their program’s earning potential, misrepresented the goods and services they would provide, and failed to fully disclose and honor their refund policy, in violation of the FTC Act. They allegedly misrepresented their services, failed to fully disclose their refund policy, called telephone numbers on the Do Not Call Registry, and did not pay the fee for accessing the Registry, in violation of the 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 District of Nevada. On February 22, 2011, the FTC obtained an order that temporarily halted Ivy Capital’s unlawful practices, froze assets, and appointed a receiver to take control of the corporate defendants.

National Sales Group, Anthony J. Newton, Jeremy S. Cooley, and I Life Marketing LLC, also doing business as Executive Sales Network and Certified Sales Jobs, allegedly made false claims to consumers about employment opportunities. According to the FTC’s complaint, they advertised nonexistent sales jobs with good pay and benefits on CareerBuilder.com and other online job boards, and their telemarketers falsely told consumers the company recruited for Fortune 1000 employers and had a unique ability to get them interviewed and hired. The FTC alleged that the defendants charged fees they said covered background checks and other services, and often overcharged, taking $97 from consumers who had agreed to pay $29 or $38. They also charged some consumers recurring fees of $13.71 or more per month without their consent. According to other documents filed in court, the operation has generated more than 17,000 complaints to law enforcement agencies, online forums, and job boards – CareerBuilder.com dropped the company from its website due to complaints – and defrauded consumers of at least $8 million.

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 Northern District of Illinois, Eastern Division. On February 22, 2011, the court temporarily halted the company’s deceptive practices, froze the defendants’ assets, and put the company into receivership. The FTC acknowledges the assistance of the Santa Barbara Police Department, Better Business Bureau of the Tri-Counties, the California Attorney General’s Office, and CareerBuilder.com.

Business Recovery Services LLC and Brian Hessler allegedly telemarketed products and services they falsely claimed would help consumers recover money they had lost to business opportunity and work-at-home operations, selling hundreds of variations of do-it-yourself kits tailored to particular schemes and priced up to $499. The FTC alleged that they violated the Telemarketing Sales Rule by misrepresenting the nature and effectiveness of their services, and accepting advance payments from consumers for recovering money lost in previous telemarketing transactions without waiting seven business days for the consumers to receive the recovered money, as required by the Rule. According to other documents filed in court, consumers lost an estimated total of $1.5 million in this scheme.

The Commission vote authorizing the staff to refer the complaint for civil penalties to the Department of Justice was 5-0. The Department of Justice filed the complaint on behalf of the Commission in U.S. District Court for the District of Arizona in order to bring a permanent halt to these practices. The Department of Justice is also requesting that the court issue a preliminary order to stop the defendants from taking advance fees from consumers for the duration of the case.

Other FTC Cases

In addition to the new cases the FTC is announcing today, the FTC is announcing the shutdown of one operation, and settlements or final court orders to permanently stop six other scams. These actions collectively impose monetary judgments totaling more than $14 million.

Darling Angel Pin Creations Inc., Shelly R. Olson, and Judith C. Mendez allegedly claimed in online and newspaper ads that consumers who bought a starter kit could earn up to $500 per week assembling angel pins, with no experience, special tools, or sewing skills required. Consumers paid up to $45 to get started and sometimes paid hundreds of dollars more for supplies. They could not make any money until the company approved one of their pins, but nearly all pins were rejected regardless of quality. According to the FTC’s complaint, the defendants made false and baseless claims in violation of the FTC Act.

The FTC has obtained a default order against Darling Angel Pin Creations, Inc., that imposes a $3.5 million judgment against the company, and has also agreed to settlements with both Olson and Mendez. The proposed settlement orders would ban Olson and Mendez from selling work-at-home opportunities and prohibit them from misrepresenting any good or service and making claims about the benefits of products without substantiation. The proposed settlement orders would impose a $3.5 million judgment that, according to other documents filed in court, reflects the total amount lost by consumers. The judgment would be suspended when Mendez has paid $2,000 and surrendered the funds in an IRA account, and when Olson has surrendered all funds in her bank accounts. The full judgment would become due immediately if the defendants are found to have misrepresented their financial condition. The Commission vote authorizing the staff to file the proposed consent judgments was 5-0. The documents were filed in the U.S. District Court for the Middle District of Florida, Tampa Division.

Global U.S. Resources, also doing business as American Publishing, American Publications, American Power Publications, ESM Group, and East Shore Marketing Group; and Louis Salatto allegedly misrepresented the earnings potential of their envelope-stuffing operation – one that claims you can earn money by putting circulars into envelopes. According to the FTC’s complaint, consumers who paid a “refundable” fee, typically $40, did not receive the promised income ranging from $1,200 to $4,400 per week. Consumers typically received either nothing or a pamphlet listing other bogus work-at-home opportunities and instructions for marketing them. Those who sought refunds were typically unable to reach anyone at the company and could get refunds only by complaining to a Better Business Bureau or a law enforcement agency.

The court ordered the defendants to pay a $2.2 million judgment that, according to other documents filed in court, reflects the total amount of money lost by more than 50,000 consumers, and banned them from selling work-at-home opportunities. The order also prohibits the defendants from misrepresenting any good or service, and from selling or otherwise benefitting from customers’ personal information, and requires them to properly dispose of customers’ personal information within 30 days. The default order was entered by the U.S. District Court for the District of Connecticut.

The FTC acknowledges the assistance of the U.S. Attorney’s Office for the District of Connecticut, the U.S. Postal Inspection Service, the Office of Attorney General in Connecticut, and the Better Business Bureau serving Connecticut.

U.S. Work Alliance, Inc., doing business as Exam Services; Tyler Franklin Long; and Brenda Long allegedly falsely represented an affiliation with the U.S. Postal Service and claimed postal jobs were available in areas where their ads appeared, in violation of the FTC Act. According to the FTC’s complaint, they also falsely claimed that consumers who used their materials would be more likely to pass the postal exam than others, and that those who passed would be hired. After a trial, the court entered an order requiring U.S. Work Alliance and Tyler Long to pay a $1.6 million judgment that, according to other documents filed in court, reflects the total amount of money lost by consumers. The court order bans the defendants from marketing employment services and prohibits them from making any misrepresentations in advertising their affiliation with or endorsement by any entity, the total cost of services, and the terms of any refund policy. They also are barred from selling or otherwise benefitting from customers’ information, and they must properly dispose of it within 30 days. Brenda Long previously agreed to a consent order, and the claims against her were resolved. The order was entered by the U.S. District Court for the Northern District of Georgia, Atlanta Division.

Preferred Platinum Services Network, LLC, also doing business as Home Based Associate Program, The Postcard Processing Program, and PPSN LLC, and its owners, Philip D. Pestrichello, and Rosalie Florie, allegedly marketed and sold, for a supposed one-time $90 fee, a fraudulent work-at-home opportunity promising consumers they could earn $1 for each postcard they labeled. According to the FTC’s complaint, no consumer earned the promised income, and few, if any, received any income at all. In addition, the defendants did not disclose that each additional batch of postcards would cost consumers an extra fee. The FTC alleged that consumers who tried to cancel their membership or requested a refund were denied. An order entered by the U.S. District Court for the District of New Jersey imposes on the defendants a $1.3 million judgment that, according to other documents filed in court, reflects the amount consumers lost, and bans Pestrichello and Florie from selling work-at-home opportunities. The default order also prohibits the defendants from misrepresenting any good or service and from selling or otherwise benefitting from customers’ personal information, which they must properly dispose of within 30 days.

This case was brought with assistance from the U. S. Attorney’s Office for the Southern District of New York; the Newark, New Jersey Division of the U.S. Postal Inspection Service; the Office of the Attorney General of New Jersey; the Ocean County Department of Consumer Affairs; and the Better Business Bureau of New Jersey. The U.S. Attorney for the Southern District of New York brought criminal charges against Pestrichello and Florie for mail fraud. In December 2010, a federal judge sentenced Pestrichello to 97 months in prison and three years supervised release, and ordered the forfeiture of $1 million and restitution of $88,000. The U.S. Attorney entered into a deferred prosecution agreement with Florie.

Abili-Staff Ltd., Equitron LLC, Pamela Jean Barthuly, and Jorg Wilhelm Becker allegedly sold work-at-home opportunities online, promising that, in exchange for a fee of up to $89.99, consumers would have unlimited, password-protected access to more than 1,000 job listings and get a full refund if they did not get a job. They claimed to be “scam free” and “legitimate,” but according to the FTC’s complaint, Abili-Staff blocked customers from accessing its website before their membership expired, and exaggerated the number of jobs listed. Customers who tried to get a refund got a run-around from the company instead. Under a court order, the defendants are banned from selling work-at-home opportunities and prohibited from misrepresenting any good or service. They also are barred from selling or otherwise benefitting from customers’ personal information, and they must properly dispose of it within 30 days. They will pay about $830,000 of a $3.6 million judgment, the balance of which is suspended due to their inability to pay. The full judgment will be imposed immediately if they are found to have misrepresented their financial condition. According to other documents filed in court, an estimated 75,000 consumers lost a total of more than $3 million in this scheme. The Commission vote authorizing the staff to file the consent judgment was 5-0. The consent judgment was entered by the U.S. District Court for the Western District of Texas, San Antonio Division.

Entertainment Work, Inc., which also operated as Resource Publishing Co. and Resource Publishing of Delaware, and its owners, Jason Arthur Barnes and Racquelle Hart Barnes, allegedly sold trial memberships through a website by falsely telling consumers it listed local jobs as “extras” in movies and television. According to the FTC’s complaint, the website in fact mainly listed jobs that were either out-of-date, unrelated to work as an “extra,” or not local to the consumer. The company also allegedly failed to disclose that consumers would have to pay an extra fee or undertake a burdensome cancellation process to avoid an automatic extension of their trial membership that would cost an extra $80.

Under the settlement agreement, the defendants are banned from marketing employment products or services and prohibited from making misleading claims when advertising or selling any good or service. They also are barred from selling or otherwise benefitting from customers’ personal information, and they must properly dispose of it within 30 days. In addition, they must make appropriate disclosures when selling products through “negative option” transactions, in which the seller interprets consumers’ silence or inaction as permission to charge them. The settlement imposes a judgment of $2.4 million, which reflects the amount consumers paid Entertainment Work. The judgment has been suspended in part based on the defendants’ inability to pay the full amount. The full judgment will be imposed if they are found to have misrepresented their financial condition. The Commission vote authorizing the staff to file the consent judgment was 5-0. The judgment was entered by the U.S. District Court for the Southern District of Florida.

La Asociacion Nacional de Trabajo, also known as L.A.N.D.T., allegedly placed Spanish-language advertising throughout the country and told people who called them that, for a fee of about $25, they could begin earning up to $1,000 per week by working at home assembling products such as keychains. In response to an inquiry by the FTC staff, the company ceased all advertising and sales of its products.

*Ivy Capital Inc. defendants – The defendants are Kyle G. Kirschbaum, John H. Harrison, Steven E. Lyman, Benjamin E. Hoskins, Christopher M. Zelig, Steven J. Sonnenberg, James G. Hanchett, Joshua F. Wickman, Ivy Capital Inc., Fortune Learning System LLC, Fortune Learning LLC, Vianet Inc., Enrich Wealth Group LLC, Business Development Division LLC, Nevada Corporate Division Inc., Nevada Corporate Division LLC, Credit Repair Division Inc., Credit Repair Division LLC, Tax Planning Division LLC, Zyzac Commerce Solutions Inc., 3 Day MBA LLC, The Shipper LLC, doing business as Wholesalematch.com, Global Finance Group LLC and Virtual Profit LLC, Dream Financial, ICI Development Inc., Ivy Capital LLC, Logic Solutions LLC, Oxford Debt Holdings LLC, Revsynergy LLC, and Sell It Vizions LLC. The relief defendants are Cherrytree Holdings LLC, Oxford Financial LLC, S&T Time LLC, Virtucon LLC, Curva LLC, Mowab Inc., Kierston Kirschbaum, Melyna Harrison, Tracy Lyman, and Leanne Hoskins.

NOTE: The Commission authorizes the filing of 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 defendants have actually violated the law. The consent orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A consent order is subject to court approval and has the force of law when signed by the District Court judge.

Click these links for information about business opportunities, job scams, federal and postal job scams, work-at-home schemes, and envelope-stuffing rip-offs.

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 Web site provides free information on a variety of consumer topics. “Like” the FTC onFacebook and “follow” us on Twitter.

(FTC File Nos. 1023218, 1023246, 1123009, X100014, X100047, X080063, X100016, X100021, X100017)
(Operation Empty Promises)

FTC Approves Final Order Settling Charges that Tested Green Environmental Certifications Were Neither Tested, Nor Green

Following a public comment period, the Federal Trade Commission approved a final order resolving allegations that a Washington, DC-based firm, Tested Green, sold environmental certifications to businesses in exchange for money and not based on their environmental attributes; and misrepresented that its certifications were endorsed by two independent associations, which were actually owned and operated by Jeremy Ryan Claeys, the owner of Tested Green.

The final order bars Tested Green and Claeys from making misrepresentations when selling any product or service. The final order further bars Tested Green and Claeys from making any representations about an endorser unless they clearly and prominently disclose any connection they have with the endorser when one exists.

The Commission vote approving the final order was 5-0. It can be found on the FTC’s website and as a link to this press release. (FTC File No. 102-3064; the staff contact is Elsie B. Kappler, Bureau of Consumer Protection, 202-326-2466; see press release dated January 11, 2011). Consumer information about the FTC’s Green Guides for environmental marketing can be found here.

Copies of the document mentioned in this release are available from the FTC’s website at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 9.2011.wpd)

FTC, Federal Reserve Board Propose Changes to Risk-Based Pricing Rule

The Federal Trade Commission and the Federal Reserve Board are seeking public comment on proposed amendments to the Risk-Based Pricing Rule that would require creditors, as of July 21, 2011, to disclose credit score information to consumers when a credit score is used in setting or adjusting credit terms.

Since January 1, 2011, the Rule has required creditors to send consumers a “risk-based pricing” notice when, based on the consumer’s credit report, the creditor provides the consumer with less favorable credit terms than it provides to other consumers. Consumers who receive the notice can obtain a free credit report to check the report’s accuracy. As an alternative to providing the notice, the Rule permits creditors to provide credit applicants with a free credit score and information about their score.

Risk-based pricing refers to the practice of setting or adjusting the price and other terms of credit provided to a particular consumer based on the consumer’s creditworthiness.

The proposed amendments to the Rule would reflect new requirements that were added by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposed amendments would add content to risk-based pricing notices, provide new model notices, and specify certain technical requirements regarding credit score disclosures.

The Commission vote authorizing the publication in the Federal Register of the Notice of Proposed Rulemaking and model notice forms was 5-0. The proposal will be published soon in the Federal Register, and the comment period will end 30 days thereafter. Persons who want to file comments should refer to filing instructions in the Federal Register notice. The FTC staff contacts are Katherine White and Manas Mohapatra, Bureau of Consumer Protection, 202-326-2252.

(Risk-Based Pricing)
(FTC File No. R411009)

FTC Seeks Public Comment on Dow Chemicals Application to Modify Terms of its 2009 Settlement Regarding Dows Acquisition of Rohm & Haas

The Federal Trade Commission is seeking public comment on an application by the Dow Chemical Company to modify the terms of a settlement it reached with the FTC in 2009. The settlement resolved the agency’s concerns about how Dow’s acquisition of Rohm and Haas Company would affect competition in the markets for acrylics and other industrial chemicals that are used to make coated paper products, paints, and adhesive.

The final order settling the case includes a requirement that Dow sell its acrylic latex plant in Torrance, California. According to Dow’s application, however, Arkema Inc, the FTC-approved buyer of the acrylic acid business and the latex polymers business, did not want to buy the entire Torrance site at the time it was sold. Instead, Arkema bought the plant but agreed to a long-term lease with an option to buy only the portion of the property where the plant is located. In its application, Dow says that it has tried unsuccessfully to sell the whole site, as required by the FTC order and that it has not yet obtained the approval it needs to subdivide the site so a portion of it can be sold to a third party.

Dow is now requesting that the order be modified to eliminate its obligation to sell the entire site. If the FTC decides not to modify the order as requested, Dow asks that it be granted a three-year extension of time to complete the divestiture of the Torrance site so it can complete the process of obtaining approval to subdivide the property.

The Commission is accepting public comments on Dow’s application until March 28, 2011, after which it will decide whether to approve the modified order. Written comments should be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580. To file a comment, click on: https://ftcpublic.commentworks.com/ftc/rohmandhaaspetition and follow the instructions at that site. Copies of the application also can be found on the FTC’s website and as a link to this press release. (FTC File No. 081-0214, Docket No. C-4243; the staff contact is Roberta S. Baruch, Bureau of Competition, 202-326-2861; see press release dated January 23, 2009.)

Copies of the document mentioned in this release are available from the FTC’s website at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 8.5.2011.wpd)

FTC Mails Redress Checks to Victims of Foreclosure Rescue Scam

An administrator working for the Federal Trade Commission is mailing 1,455 refund checks to consumers defrauded by a mortgage loan modification and foreclosure rescue scam. The FTC alleged, and the court found, that operators of the scam falsely told consumers they would prevent their homes from being foreclosed and negotiate lower mortgage interest rates, monthly payments, and principal balances. The court also found that homeowners got few, if any, loan modifications, and many people lost their homes to foreclosure after paying up to $5,500.

At the request of the FTC, in April 2010, a federal court issued an $11.4 million contempt order against the defendants, Bryan D’Antonio, The Rodis Law Group, Inc., America’s Law Group, and The Financial Group, Inc., for operating the scam, which violated a 2001 order that banned D’Antonio from telemarketing and misleading consumers about goods or services. The FTC obtained the 2001 order against D’Antonio and his former company, Data Medical Capital, Inc., for operating a work-at-home medical billing opportunity scheme.

Consumers who receive the checks should cash them, and they will have 60 days to do so before the checks become void. Those who submitted a valid claim form will receive about 24 percent of their total claim loss. The FTC never requires consumers to pay money or provide information before redress checks can be cashed. Consumers with questions should call the administrator at 1-888-398-8205 or visit www.ftc.gov/refunds.

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 Web site provides free information on a variety of consumer topics.