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FTC Sends Warning Letters to Marketers of Caffeinated Alcohol Drinks

The Federal Trade Commission today sent warning letters to four marketers of caffeinated alcohol drinks. Citing incidents “suggesting that alcohol containing added caffeine presents unusual risks to health and safety,” the FTC letters warned that marketing of such beverages may constitute an unfair or deceptive practice that violates the FTC Act. Companies receiving letters include:

United Brands Co., which sells Joose and Max caffeinated alcohol beverages. The carbonated malt beverages come in fruity flavors, and one 23.5-ounce can of Joose or Max has about the same alcohol content as four regular or five light beers.
Phusion Products LLC, which sells Four Loko and Four Maxed carbonated malt beverages offered in fruity flavors. Four Loko is sold in 23.5-ounce cans, which have the same alcohol content as four regular or five light beers, as well as added caffeine, taurine, and guarana. Four Maxed is sold in 16-ounce cans, which have the same alcohol content as about three regular beers and contain added caffeine.
Charge Beverages Corporation, which sells Core High Gravity, Core Spiked, and El Jefe carbonated malt beverages sold in fruit flavors, with added caffeine, taurine, guarana, and ginseng. One 23.5-ounce can of Core High Gravity or Core Spiked contains the same alcohol content as four regular or five light beers. A 32-ounce can of grape-flavored El Jefe has the same alcohol content as six regular or seven light beers.
New Century Brewing Company, which sells the caffeinated malt alcohol beverage Moonshot. A 12-ounce bottle of Moonshot contains 5 percent alcohol by volume.

The Food and Drug Administration has simultaneously announced that it is sending letters to the same four companies, warning that, as used in their products, caffeine is an “unsafe food additive” under the Federal Food, Drug, and Cosmetic Act.

“Consumers might mistakenly assume that these beverages are safe because they are widely sold,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “In fact, there is good reason to believe that these caffeinated alcohol drinks pose significant risks to consumer health and safety. Consumers – particularly young, inexperienced drinkers – may not realize how much alcohol they have consumed because caffeine can mask the sense of intoxication.”
The FTC letters strongly urge the companies to review the way they are marketing their caffeinated alcohol drinks and to “take swift and appropriate steps to protect consumers.” The FTC has instructed the companies to notify the agency within 15 days of the actions they have taken.

The Commission vote approving the warning letters was 5-0.

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.

(FTC File No. P104519)
(alcohol caffeine warning letters)

FTC Approves Final Order Settling Deceptive Advertising Charges Against Former POM Wonderful Vice President Mark Dreher

Following a public comment period, the Federal Trade Commission has approved a final order settling charges that Mark Dreher, Ph.D. – who was Vice President of Science and Regulatory Affairs of POM Wonderful LLC from approximately August 2005 to May 2009 – made false and unsubstantiated claims that POM Wonderful 100% Pomegranate Juice and POMx supplements prevent or treat heart disease and prostate cancer.

The FTC Order bars Dreher from making any disease treatment or prevention claim in advertising for a POM Wonderful product unless the claim is not misleading and comports with FDA requirements. The Order further prohibits Dreher from making other health claims for a food, drug, or dietary supplement for human use, including as an expert endorser, without competent and reliable scientific evidence to support the claim. The Order also contains a cooperation clause, and reporting provisions to help the FTC monitor compliance. The FTC’s case against POM Wonderful LLC and others is ongoing.

The Commission vote approving the final order was 5-0. (FTC File No. 0823122; the staff contact is Janet Evans, Bureau of Consumer Protection, 202-326-2125; see press release, complaint, and consent order dated September 27, 2010.)

Copies of the documents 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.

FTC Approves Fidelity National Financials Proposal to Sell Rights to Michigan Title Plant Assets to Data Trace Information Services, Inc.; FTC Approves Agilent Technologies Application to Modify an Agreement Related to its Varian Acquisition

FTC Approves Fidelity National Financial’s Proposal to Sell Rights to Michigan Title Plant Assets to Data Trace Information Services, Inc.

Following a public comment period, the Federal Trade Commission has approved a proposal by Fidelity National Financial, Inc. to sell rights to certain assets used in conducting real estate title searches. Fidelity is required to sell these rights to comply with an FTC Order that settled charges that Fidelity’s 2008 acquisition of three LandAmerica Financial subsidiaries reduced competition in markets for real estate title information services. This proposal resolves Commission concerns that Fidelity would be the only provider of title plant information services in the Detroit, Michigan, metropolitan area.

In the petition, Fidelity National requested FTC approval to sell rights to the Michigan Title Plant Assets to Data Trace Information Services, LLC, an independent title information services provider. The Commission has now approved the application by a vote of 5-0. (FTC File No. 091-0032; the staff contact is Elizabeth A. Piotrowski, Bureau of Competition, 202-326-2623; see press release dated July 16, 2010, at http://www.ftc.gov/opa/2010/07/fidelity.shtm)

FTC Approves Agilent Technologies’ Application to Modify an Agreement Related to its Varian Acquisition

The Federal Trade Commission has approved an application by Agilent Technologies, Inc. to modify one of the contracts that accomplished a divestiture required by a final FTC Order. The Order settled charges that Agilent’s acquisition of Varian, Inc. would reduce competition in the market for high-performance scientific measuring instruments such as gas chromatographs. A public version of the application can be found on the FTC’s website.

The final Order, which was issued on July 2, 2010, required Agilent, among other things, to sell Varian’s scientific measuring instrument business to Bruker Corporation. As part of that divestiture, Agilent and Bruker entered into a transition services agreement under which former Varian employees would, for a limited time, provide labor to Bruker for the production of instruments at the former Varian facility in Melbourne, Australia. In its application, Agilent sought to modify the terms of the transition agreement to allow the former Varian employees to work on Agilent products at times when Bruker did not require their services.

The Commission vote approving Agilent’s application was 5-0. (FTC File No. 091-0135; the staff contact is Daniel P. Ducore, Bureau of Competition, 202-326-2526. See press release dated May 14, 2010 at http://www.ftc.gov/opa/2010/05/agilent.shtm)

Copies of the documents 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.

At FTC’s Request, Court Shutters International Robocall Operation

At the request of the Federal Trade Commission, a federal district court in Chicago has shut down an international robocall ring that allegedly conned consumers out of $995 each with false promises that it would reduce their credit card interest rates, but provided little or nothing in return.

As part of its crackdown on frauds that seek to take advantage of consumers hurt by the recent economic downturn, the FTC charged that the robocall ring made bogus promises that it would provide refunds to consumers if they did not save at least $2,500. When consumers called to complain, however, the robocallers simply disappeared, the FTC charged. The FTC alleges that this company has defrauded nearly 13,000 consumers out of almost $13 million from this scheme.

The agency has brought several other cases in the past year against the marketers of worthless credit card interest rate reduction services.

According to the FTC, since at least 2007, the defendants allegedly used at least 10 different company names, including AFL Financial Services, when pitching the service. The defendants, who are in Toronto, Canada, and the Rochester, New York, area, operated two telemarketing boiler rooms in Orlando, Florida. They employed illegal robocalls to contact consumers, and then claimed that for $995 they would substantially reduce credit card interest rates and enable consumers to get out of debt three to five times faster. They also falsely suggested that the savings from the lower interest rates would pay for the service. In reality, the defendants failed to lower consumers’ interest rates, and consumers did not save the $2,500 promised by the defendants or receive refunds, the FTC alleges.

The FTC complaint charges that the misrepresentations violated the FTC’s Telemarketing Sales Rule and the FTC Act. It also charges that the defendants called consumers whose numbers are on the National Do Not Call Registry and made illegal robocalls.

The Commission vote authorizing the staff to file the complaint was 5-0. It was filed under seal in the U.S. District Court for the Northern District of Illinois, Eastern Division, against Direct Financial Management Inc.; 2194673 Ontario Inc., doing business as (d/b/a) The Elite Financial Group; F&F Payment Processing Inc.; Bajada Management Group Inc.; David D. Richards; Baird B. Fisher; Jacqueline M. Fisher; and Joseph B. Foley.

On November 8, 2010, Judge Joan H. Lefkow entered a temporary restraining order with an asset freeze, halting the defendants’ operations pending trial and appointing a receiver over the two United States corporate defendants. In filing its complaint, the FTC is seeking to stop permanently the defendants’ allegedly illegal conduct and return their ill-gotten gains to defrauded consumers.

The FTC brought this case in cooperation with the Ministry of the Attorney General of Ontario, Civil Remedies for Illicit Activities Office. The Ministry simultaneously filed a separate lawsuit in Ontario seeking assets for consumer redress to victims in the United States and Canada.

The FTC also worked cooperatively with the Florida Department of Agriculture and Consumer Services, and the Toronto Strategic Partnership in bringing this case. The Toronto Strategic Partnership members include 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.

The FTC thanks Bank of America and the Better Business Bureau for their assistance in this case.

Copies of the complaint are available now on the agency’s website and as a link to this press release. 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.

(FTC File No. 102-3061)

FTC Requires Universal Health Services to Sell 15 Psychiatric Facilities as a Condition of Acquiring Rival Psychiatric Solutions

The Federal Trade Commission will require Universal Health Services, Inc., one of the nation’s largest hospital management companies, to sell 15 psychiatric facilities as a condition of its $3.1 billion acquisition of Psychiatric Solutions, Inc. The proposed settlement is the latest example of the FTC’s ongoing efforts to promote competition in health care markets.

According to the FTC, the acquisition as originally proposed would have reduced competition in the provision of acute inpatient psychiatric services in three local markets: Delaware, Puerto Rico, and metropolitan Las Vegas, Nevada.

Acute inpatient psychiatric services are intensive hospital services provided to patients who pose a danger to themselves or others, or are unable to perform basic life functions, due to an acute psychiatric episode. Facilities owned by Universal Health and Psychiatric Solutions are the leading providers of these critical services in each of the three divestiture markets. The acquisition of Psychiatric Solutions would have significantly increased Universal Health’s market power in these areas, increasing its ability to impose price increases and reducing its incentives to improve services.

The FTC complaint charged that the acquisition as originally proposed would have violated federal antitrust laws by combining the two largest competitors in each of the three markets. The proposed settlement preserves competition in the relevant areas by requiring the sale of 15 facilities, including two inpatient hospitals in Las Vegas; one inpatient hospital in Delaware; and one inpatient hospital and eleven affiliated outpatient clinics in Puerto Rico. The clinics and other facilities must be sold to FTC-approved buyers.

The Commission vote approving the complaint and proposed consent order was 5-0. The order will be published in the Federal Register subject to public comment for 30 days, until December 15, 2010, after which the Commission will decide whether to make it final. Comments can be submitted electronically at the following link: https://ftcpublic.commentworks.com/ftc/psychiatricsolutions.

The FTC would like to thank the offices of the attorneys general in Delaware and Nevada and the Department of Justice of Puerto Rico for their assistance in this 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 Web site 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 383, 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” at http://www.ftc.gov/competitioncounts.

(FTC File No. 101-0142)

FTC Puts Conditions on Simon Property Group’s Acquisition of Prime Outlets

The Federal Trade Commission is requiring Simon Property Group, Inc. to divest property and modify tenant leases as part of a settlement designed to preserve outlet center competition in parts of southwest Ohio, Chicago, Illinois, and Orlando, Florida, in the wake of Simon’s purchase of Prime Outlets Acquisition Company, LLC.

Under the proposed settlement, Simon will sell either its Cincinnati Premium Outlet center located in Monroe, Ohio, or its Prime Outlets-Jeffersonville outlet center in Jeffersonville, Ohio. In addition, Simon has agreed to remove radius restrictions for tenants with stores in its outlet malls serving the Chicago and Orlando markets. This allows competing outlet centers or outlet mall developers wanting to enter those markets to sign leases with tenants that otherwise would have been prevented from doing so due to the radius restrictions.

On December 8, 2009, Simon, a real estate investment trust, and Prime signed an agreement under which Simon would acquire all of Prime’s 22 outlet centers for approximately $2.3 billion.

The settlement announced today resolves FTC competitive concerns that the transaction raised in several local markets. According to a complaint simultaneously filed by the FTC, without the settlement provisions, Simon’s acquisition of Prime would have illegally reduced outlet center competition by:

eliminating direct and substantial competition between Simon and Prime in southwest Ohio; Chicago, Illinois; and Orlando, Florida;
giving Simon a monopoly in outlet centers serving the Southwest Ohio market; and
allowing Simon to prevent or limit new outlet center entry and competition in the Chicago and Orlando local markets.

In Chicago and Orlando, new entry is likely to prevent any increase in rents to outlet mall tenants. However, many of Simon’s leases include radius restrictions that prevent the tenants from opening other stores in outlet malls within a specified distance. As a result of these restrictions, an outlet mall developer wanting to open a new outlet center serving either Chicago or Orlando would find it difficult to sign key tenants to leases.

The Commission vote approving the complaint and proposed consent order was 5-0. The order will be published in the Federal Register shortly, and will be subject to public comment for 30 days, until December 10, 2010, after which the Commission will decide whether to make it final. Comments can be submitted electronically at the following link: https://ftcpublic.commentworks.com/ftc/simonproperty.

(FTC File No. 101-0061)

FTC Staff: Proposed Alabama Rule Would Likely Limit the Availability and Increase Cost of Pain Management Services for Alabama Consumers

In a comment to the Alabama State Board of Medical Examiners, Federal Trade Commission staff said that the Board’s proposed rule – which would require that interventional pain management services be provided exclusively by doctors – appears overly restrictive and likely detrimental to Alabama patients. The proposed rule would prohibit certified registered nurse anesthetists (CRNAs) from performing, under physician supervision, many pain management procedures that CRNAs currently are allowed to provide under physician supervision, such as providing palliative care.

The comment explained that the proposed rule would reduce the availability and raise the prices of chronic pain management services. In particular, the proposed rule could be especially burdensome for some of the most vulnerable citizens of Alabama. For example, CRNAs disproportionately serve smaller, rural hospitals, and hospice and palliative care patients may depend on CRNAs for chronic care. FTC staff noted that the proposed rule provided no evidence that the current practice harms patients, and studies have found that CRNAs provide pain-management services safely.

The Commission vote approving the staff comment was 5-0. It was sent to the State Board of Medical Examiners on November 3, 2010. Copies of the comment can be found now on the FTC’s website and as a link to this press release. (FTC File No. V110000; the staff contact is Daniel J. Gilman, Office of Policy Planning, 202-326-3136.)

(FYI 48.2010.wpd)

FTC Extends Comment Period for Proposed Policy Statement Clarifying How to Collect Decedents Debts

The Federal Trade Commission is extending the public comment period, until December 1, 2010, on a proposed policy statement clarifying when the FTC will take action under the Fair Debt Collection Practices Act and the FTC Act against companies who contact the relatives of deceased consumers to collect the decedent’s debts.

On October 8, 2010, the FTC published in the Federal Register a proposed policy statement clarifying how the FTC will enforce federal law regarding:

Whom debt collectors are allowed to contact to discuss a decedent’s debt;
How collectors can contact and identify the right party to discuss a decedent’s debt; and
How collectors should avoid giving relatives the misleading impression that they are personally obligated to pay the debt from their own assets, rather than from the decedent’s estate.

In its Federal Register Notice, the FTC asked that interested parties submit public comments by November 8, 2010. To give interested parties more time to present their views and supporting information, the FTC will extend the public comment period until December 1, 2010, and will publish a new Federal Register Notice shortly.

The Commission vote to extend the comment period was 5-0.

New Business Center Can Help Boost Compliance with FTC Law

The Federal Trade Commission has a new Business Center at Business.ftc.gov that gives business owners, attorneys, and marketing professionals the tools they need to understand and comply with the consumer protection laws, rules, and guides the FTC enforces.

The Business Center provides practical, plain-language guidance about advertising, credit, telemarketing, privacy, and a host of other topics. A series of short videos explain the bottom line about what businesses need to know to comply, and the Business Center blog gives readers the latest compliance tips and information.

A new video encourages businesses to use and share the free resources in the Business Center to enhance compliance and build their customers’ trust. Companies can use the compliance tips in their newsletters and blogs, share the resources with their social and professional networks, use the videos for in-house trainings or presentations, and

order free materials to hand out at conferences or community events.

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 Business Center)

FTC Gets $3.6 Million Judgment Against Companies that Allegedly Debited Money from Consumers’ Bank Accounts Without Permission

At the request of the Federal Trade Commission, a federal court has entered a judgment of more than $3.6 million against a payment processor and its subsidiary that allegedly debited consumers’ bank accounts illegally on behalf of deceptive telemarketers. According to a 2007 complaint filed by the FTC and seven states, Your Money Access, LLC and its subsidiary, YMA Company, LLC, processed unauthorized debits on behalf of deceptive telemarketers and Internet-based schemes that were violating the FTC’s Telemarketing Sales Rule and state consumer protection laws. The companies played a critical role in these schemes by providing access to the banking system and the means to extract money from consumers’ bank accounts. The FTC alleged that in many instances the merchants either failed to deliver the promised products or services or sent consumers relatively worthless items.

A default judgment entered in October 2008 barred Your Money Access and YMA Company from payment processing for any client whose business practices are deceptive, unfair, or abusive within the meaning of the FTC Act, the Telemarketing Sales Rule, and state consumer protection laws.

The states joining the FTC’s complaint were Illinois, Iowa, Nevada, North Carolina, North Dakota, Ohio, and Vermont.

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