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FTC Presents Criminal Liaison Award to Assistant United States Attorney Ellyn Lindsay

The Federal Trade Commission has honored Assistant United States Attorney Ellyn Lindsay with its fourth Annual Criminal Liaison Award for her work to combat consumer fraud. With assistance from the FTC, other U.S. law enforcement agencies, and Canadian authorities, Lindsay successfully prosecuted telemarketers operating from abroad who prey on older Americans.

At an awards ceremony held in Los Angeles on May 27, 2010 with United States Attorney André Birotte, FTC Commissioner Edith Ramirez said, “This award formally recognizes the hard work and dedication of prosecutors like Ellyn Lindsay who advance the core purpose of the FTC’s criminal liaison program – coordination and successful prosecution of the worst-of-the-worst fraud artists who prey upon American consumers.”

A California native, Lindsay has been an Assistant U.S. Attorney for more than two decades. She began her career prosecuting drug cases, and later made fraud her specialty.

The FTC often refers cases to criminal prosecutors. The agency created its Criminal Liaison Unit in 2002 to coordinate criminal referrals for FTC cases, which are brought under civil authority. These cases include repeat offenders, egregious behavior, or other evidence that criminal conduct is involved. Since its inception, the FTC’s Criminal Liaison Unit has contributed to hundreds of prosecutions of fraudulent telemarketers, sellers of bogus cancer cures, sweepstakes scammers, and others.

The Federal Trade Commission works for the consumer 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, click http://www.ftccomplaintassistant.gov or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related 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. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

FTC Approves Whole Foods Markets Divestiture of Three Stores and Wild Oats Intellectual Property, Denies Sale of Wild Oats Intellectual Property to Topco Associates; FTC Comments on Information Privacy and Innovation in the Internet Economy in Response

FTC Approves Whole Foods Market’s Divestiture of Three Stores and Wild Oats Intellectual Property, Denies Sale of Wild Oats Intellectual Property to Topco Associates

The Federal Trade Commission has acted upon several applications filed by the Whole Foods Divestiture Trustee to sell assets under a March 5, 2009 consent order designed to help restore the competition lost by Whole Foods Market Inc.’s 2007 acquisition of Wild Oats Market, Inc. The Trustee’s applications proposed to sell three former Whole Foods stores, as well as the Wild Oats and Alfalfa’s brand names. Alfalfa’s is a chain that Wild Oats previously bought but did not re-brand under its own name.

Under the 2009 consent order, the FTC appointed The Food Partners as the Divestiture Trustee to divest certain Wild Oats stores and the intellectual property associated with the Wild Oats brand, including the use of the Wild Oats and Alfalfa’s names. The Divestiture Trustee requested FTC approval to sell the former Wild Oats stores in Kansas City, Missouri, to Healthy Investments, LLC; in Boulder, in Colorado, to A-M Holdings, LLC; and in Portland, Maine to Trader Joe’s East. The FTC has now approved the sale of each store to the respective acquirer.

The Divestiture Trustee also requested approval to sell the Wild Oats’ intellectual property to Topco Associates LLC or Luberski, Inc., and to sell the Alfalfa’s Markets’ intellectual property to A-M or Topco. The FTC has now approved the sale of the Wild Oats’ intellectual property to Luberski, Inc., and the Alfalfa’s Markets’ intellectual property to A-M Holdings, and denied the sale of the Wild Oats and Alfalfa’s intellectual property to Topco.

The FTC vote approving each proposed divestiture and denying the sale of the Wild Oats and Alfalfa’s intellectual property to Topco was 3-0-2, with Commissioner Edith Ramirez not participating and Commissioner Julie Brill not participating. (FTC Docket No. 9324; the staff contact is Daniel P. Ducore, Bureau of Competition, 202-326-2526; see press release dated March 6, 2009, at: http://www.ftc.gov/opa/2009/03/wholefoods.shtm.)

FTC Comments on Information Privacy and Innovation in the Internet Economy in Response to Department of Commerce Inquiry

The Federal Trade Commission submitted a written comment on information privacy and innovation in the Internet economy in a comment submitted to the Department of Commerce, which has requested public comment as part of an inquiry on the subject.

The FTC comment emphasizes that online privacy has been one of the agency’s highest consumer protection priorities for more than a decade, and that failure to adequately protect personal data on the Internet could undermine the benefits the Internet has to offer by decreasing consumer confidence in online services. The comment highlights the different components of the FTC’s privacy program – including almost 30 law enforcement cases challenging business practices that allegedly failed to adequately secure consumers’ personal information, efforts to educate consumers and businesses about privacy and online security, policy initiatives such as promoting self-regulation in online behavioral advertising, and the FTC’s participation in international privacy initiatives.

The comment also describes a series of privacy roundtables hosted by the FTC and outlines some of the major themes that emerged from the roundtable discussions. As part of the FTC’s ongoing effort to re-examine approaches to privacy, the agency plans to publish privacy proposals later this year for public comment.

The Commission vote approving the comment was 5-0.

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.

(FYI 25.2.2010.wpd)

Minnesota Health Care Provider Group Settles FTC Price Fixing Charges

A group of doctors and hospitals in southwestern Minnesota has agreed to a settlement with the Federal Trade Commission that prohibits anticompetitive tactics the group allegedly used to increase health insurance reimbursement rates.

Under a proposed settlement order, the Minnesota Rural Health Cooperative, or MRHC, will be prohibited from using coercion in its negotiations with health insurers.

The MRHC is made up of approximately 25 hospitals and 70 doctors, representing most of the hospitals and half of the primary care physicians in southwestern Minnesota. According to the FTC’s complaint, when members join the MRHC, they agree that the group’s board of directors will negotiate and contract with health insurers on their behalf and that they will abide by the MRHC contracts.

The FTC’s complaint charges that the MRHC eliminated competition between its individual doctors and hospitals by orchestrating illegal agreements to fix the prices at which they contract with health insurance plans. The complaint also alleges that the MRHC refused to deal with health plans that did not go along with its inflated reimbursement rates. Price-fixing agreements among competing sellers are illegal under U.S. antitrust laws.

The FTC complaint also alleges that the MRHC used coercive tactics during negotiations. In particular, the complaint alleges that the MRHC threatened to terminate contracts with health insurance plans in order to pressure them into increasing payments for physician and hospital services. In one case, for example, MRHC allegedly coerced a health plan into paying MRHC members 27 percent more than it was paying non-MRHC providers. The complaint states that the group told health plans that it “expected our group to be accepted or rejected as a group,” and informed plans that they could not negotiate individual deals with members of the group.

The proposed settlement order bars the MRHC from using coercive tactics to extract favorable contract terms from health plans. In addition, the order requires the MRHC to offer to renegotiate all current contracts with health plans and to submit any revised contracts for state approval.

During the FTC’s investigation, the Minnesota legislature enacted legislation under which state officials review and approve contracts negotiated by health care provider cooperatives. If approved, jointly negotiated contracts may be beyond the reach of the antitrust laws. The FTC settlement does not prohibit the MRHC from negotiating contracts on behalf of its members.

The FTC vote approving the complaint and proposed settlement order was 5-0. The order will be subject to public comment for 30 days, until July 19, 2010, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://public.commentworks.com/ftc/mnhealth.

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 agreement 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 in public comment can be found on 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, DC 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. 051-0199)
(MN Rural Health.final.wpd)

Federal Trade Commission Complaint Charges Conspiracy to Thwart Competition in Teeth-Whitening Services

The Federal Trade Commission today initiated an action against the state dental board in North Carolina, alleging that it is harming competition by blocking non-dentists from providing teeth-whitening services in the state. The FTC charged that the North Carolina Board of Dental Examiners (the “Dental Board”) has impermissibly ordered non-dentists to stop providing teeth-whitening services, which has made it harder to obtain these services and more expensive for North Carolina consumers.

According to the FTC’s administrative complaint, teeth-whitening services are much less expensive when performed by non-dentists than when performed by dentists. A non-dentist typically charges between $100 and $150 per whitening session, while a dentist typically charges between $300 and $700, with some dental procedures costing as much as $1,000.

Whitening services provided by non-dentists are often available at salons, retail stores and mall kiosks. Dentists in North Carolina offer whitening services in their offices, and also provide take-home kits.

The Dental Board is a state agency created to regulate the practice of dentistry in North Carolina. It consists of eight members, including six licensed dentists, who collectively control the operation of the Dental Board. Any person who wants to practice dentistry in the state must be licensed by the Dental Board. The Dental Board also may ask a state court to deem a particular conduct an unauthorized practice of dentistry and issue an injunction.

Instead of seeking court orders to block non-dentists from providing teeth-whitening services, which the Dental Board believes constitute unauthorized practice of dentistry under North Carolina law, the Dental Board has unilaterally ordered non-dentists to stop providing whitening services. The Dental Board’s actions, according to the FTC, are improper and harm competition.

“Without active supervision by a disinterested state authority, a regulatory board whose members have a financial interest in the industry it is charged with regulating cannot exclude its competitors from the marketplace,” said Richard Feinstein, Director of the FTC’s Bureau of Competition. “The North Carolina Dental Board does not have authority to decide on its own to limit the whitening services available to North Carolina residents, and its actions have decreased competition and harmed consumers.”

According to the FTC’s complaint, the Dental Board sent 42 letters instructing teeth-whitening providers that they were practicing dentistry illegally and ordering them to stop. In at least six cases, the Dental Board threatened or discouraged non-dentists who were considering opening teeth-whitening businesses. The Dental Board also sent at least 11 letters to third parties – mall owners and property management companies – stating that teeth-whitening services offered in malls are illegal.

The FTC’s complaint alleges that as a result of the Dental Board’s actions, the availability of teeth-whitening service in North Carolina has been significantly diminished. The complaint charges that the Dental Board’s conduct is an anticompetitive conspiracy among the dentist members of the Dental Board in violation of federal law. The FTC seeks to stop the Dental Board’s illegal conduct so that North Carolina consumers can benefit from competition between dentists and non-dentists for teeth-whitening services.

The Commission vote approving the administrative complaint was 4-0-1, with Commissioner Julie Brill recused. It was issued today, and a public version will be available shortly on the FTC’s website and as a link to this press release.

NOTE: The Commission issues or 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 named parties have violated the law.
The administrative complaint marks the beginning of a proceeding in which the allegations will be ruled upon after a formal hearing by an administrative law judge.

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” at http://www.ftc.gov/competitioncounts.

(FTC File No. 081-0137)
(NC Dental.final)

FTC Settlement Orders Ban More Than A Dozen Marketers from Selling Mortgage Relief Services; Repeat Offender Ordered to Pay $11.4 Million for Contempt

As part of the agency’s continuing crackdown on scams that prey on financially distressed homeowners, the Federal Trade Commission announced legal actions against more than a dozen marketers accused of pitching bogus mortgage modification or foreclosure relief services.

FTC settlement orders ban 16 marketers from the mortgage modification or foreclosure relief business. The promoter of a similar scam has been ordered to pay $11.4 million for flouting a previous court order. And, in a new action, the FTC has charged another online marketing operation with masquerading as a government mortgage assistance program.

The FTC settled with the following defendants, all of whom charged consumers up-front fees and made false promises that they could get their loans modified or prevent foreclosure:

Making Home Affordable. The FTC alleged that the defendants impersonated MakingHomeAffordable.gov, a federal government Web site that helps eligible homeowners refinance or modify their mortgages. Defendants Sean Cantkier, Michael Haller, Alan LeStourgeon, Greg Rivera, Lisa Roye, and Jeffrey Altmire bought advertising links on the results pages of Internet search engines, and consumers looking for “making home affordable” were diverted to commercial Web sites that pitched loan modification services or sold consumers’ personal information to marketers of such services. (7/10/2009 release http://www.ftc.gov/opa/2009/07/homeafford.shtm) The defendants will have to give up their ill-gotten gains, ranging from $1,523 to $29,179. Separately, the Commission authorized and the court approved the addition of two counts to the complaint against Scot Lady and dismissed Kean Lee Lim as a defendant. The documents were filed in the U.S. District Court for the District of Columbia.

Federal Loan Modification Law Center. Defendants Nabile (“Bill”) Anz, Federal Loan Modification Law Center LLP, Anz & Associates PLC, Venture Legal Support PLC, and Jeffrey Broughton settled FTC charges that they hawked their so-called “Federal Loan Modification program” in a national advertising campaign targeting financially distressed homeowners. They charged up to $3,000, much of which they required up-front, but Federal Loan Modification often failed to live up to the promised results, according to the FTC’s complaint. (06/26/2009 release http://www.ftc.gov/opa/2009/06/fedloanmod.shtm) In addition to the ban on selling mortgage relief services, the settlement order against Anz, Federal Loan Modification Law Center, Anz & Associates, and Venture Legal Support imposes a $10.8 million judgment, and the order against Broughton imposes a $11.1 million judgment. The judgments are suspended based on their inability to pay. The full judgments will become due immediately if they are found to have misrepresented their financial condition or receive any money from the remaining defendants. The order was filed in the U.S. District Court for the Central District of California. The FTC continues to pursue its case against five other defendants.

Apply2Save. Derek R. Oberholtzer, Apply2Save Inc., and Sleeping Giant Media Works, Inc. allegedly charged consumers up to $995 in advance for promised mortgage loan modification services. Once they were paid, they often failed to answer or return consumers’ telephone calls and sometimes falsely blamed delays on lenders, even though they had made little or no effort to contact lenders, the FTC charged. Most consumers who got loan modifications or avoided foreclosure did so only through their own efforts. (7/15/2009 release http://www.ftc.gov/opa/2009/07/loanlies.shtm) The defendants have filed for bankruptcy. The order imposes a judgment of more than $4 million, which is suspended based on their inability to pay. The full judgment will become due immediately if they are found to have misrepresented their financial condition. The order was filed in the U.S. District Court for the District of Idaho.

New Hope Modifications. Brian Mammoccio and Donna Fisher have settled charges that they falsely claimed they could obtain mortgage loan modifications for consumers in all or virtually all cases, falsely promised a money-back guarantee, and masqueraded as part of the federally-endorsed HOPE NOW Alliance mortgage assistance network. According to the FTC complaint, in many cases, after consumers paid up-front fees, the defendants failed to return their phone calls, or falsely told them that negotiations were proceeding smoothly. In many instances, consumers learned from their lenders that the defendants had not contacted them. (3/24/2009 release http://www.ftc.gov/opa/2009/03/newhope.shtm)

In addition to the ban on selling mortgage relief services, the settlement order imposes a judgment of almost $3.9 million, which will be suspended when the defendants surrender their assets as specified in the order. The full judgment will become due immediately if they are found to have misrepresented their financial condition. The order was filed in the U.S. District Court for the District of New Jersey.

The $11.4 million contempt order against Bryan D’Antonio and three companies he controls, The Rodis Law Group Inc., America’s Law Group Inc., and The Financial Group Inc., came at the request of the FTC, which charged that operators of the scam had falsely claimed they would stop foreclosures and negotiate lower mortgage interest rates, monthly payments, and principal balances. Promoters of the scam claimed a 100 percent success rate and wrongly advised consumers to pay them instead of making mortgage payments. The FTC alleged that homeowners got few, if any, loan modifications, and many people lost their homes to foreclosure after paying them up to $5,500. The operators also falsely claimed that attorneys would check consumers’ loan documents for fraud and other lending violations that they would use as leverage in negotiating loan modifications, according to the complaint.

In May 2009, the FTC charged the defendants with violating 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. D’Antonio also pleaded guilty to mail fraud for his involvement in that scam and served almost three years in prison. In addition to the financial sanctions against D’Antonio and the three companies, the court barred him from making misleading statements about refunds, exchanges, and total costs or quantity. The FTC has collected more than $1 million from the defendants’ available assets thus far, and will refer the remainder of the $11.4 million judgment to the Department of the Treasury for collection. The FTC has set up a consumer information line at 1-888-398-8205.

Fedmortgageloans.com. The FTC has charged Dominant Leads LLC, MAD TJ Holdings LLC, James Rambadt, Thomas Hayes, and James Kane with misrepresenting that the mortgage assistance and debt relief programs they are marketing are affiliated with the federal or state government, and that consumers may be eligible for a federal or state loan modification or debt relief program. Some of the defendants’ Web sites use logos similar to the federal government’s MakingHomeAffordable.gov logo, and many of their sites feature official government agency seals or logos and links to federal government Web sites. When consumers seeking mortgage assistance or debt relief services call the toll-free numbers on the defendants’ Web sites, they are connected to other companies that sell supposed mortgage assistance relief or debt relief services for a fee. The FTC seeks to stop the defendants’ illegal practices and make them forfeit their ill-gotten gains. The complaint was filed in the U.S. District Court for the District of Columbia on June 16, 2010.

The Commission votes were unanimous in these actions.

The Federal Trade Commission is a member of the interagency Financial Fraud Enforcement Task Force. For more information on the task force, go to www.stopfraud.gov.

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. Stipulated court orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the full force of law when signed by the judge.

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

(FTC File No. 0923147, X090041, X090061, X090069, X090084, X090033, 1023152)

FTC Testifies on the Impact of Two Recent Supreme Court Cases on Antitrust Enforcement in Regulated Industries

For Your Information

June 15, 2010

In testimony today before the House Judiciary Committee’s Subcommittee on Courts and Competition Policy, the Federal Trade Commission described the impact of two recent Supreme Court cases – Verizon v. Trinko and Credit Suisse v. Billing – on antitrust enforcement in regulated industries. Howard Shelanski, the Deputy Director for Antitrust in the FTC’s Bureau of Economics, presented the testimony, which argued that federal courts should not be able to use the Trinko and Credit Suisse decisions to limit public antitrust enforcement actions brought by the FTC or U.S. Department of Justice in regulated industries where regulation has not protected competition.

The FTC vote approving the testimony was 5-0. It can be found on the FTC’s website and as a link to this press release at: http://www.ftc.gov/os/fedreg/testimony/100615antitrusttestimony.pdf. (FTC File No. P859912; the staff contact is Howard Shelanski, Bureau of Economics, 202-326-2784)

(FYI 24.2010.wpd)

Contact Information

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202-326-2180

FTC Chairman Addresses American Medical Association

In a speech to the American Medical Association in Chicago, Federal Trade Commission Chairman Jon Leibowitz announced that the FTC will hold a public workshop this fall on health care competition policy, payment reform, and the new models for delivering health care that seek to incentivize high-quality, cost-effective care.

The new health care reform law establishes pilot programs for Medicare called “accountable care organizations” or ACOs as possible devices to improve quality and lower the cost of health care. The FTC workshop will focus on how ACOs could affect competition in commercial health care markets, so that ACOs could benefit consumers who are not eligible for Medicare as well as Medicare beneficiaries.

The Chairman’s speech can be found on the FTC’s website and as a link to this press release at: http://www.ftc.gov/speeches/leibowitz/100614amaspeech.pdf. A workshop website currently is being developed and will be posted on the FTC’s website.

Copies of the documents mentioned in this release are available from the FTC’s Web site 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 23.2010.wpd)

DADvice: Stuff Dads Really Say

This Father’s Day, the Federal Trade Commission, the nation’s consumer protection agency, has compiled some of Dear Old Dad’s favorite sayings, and posted them at www.ftc.gov/dad. What words of wisdom can you take from these quotable quotes?

“I had to walk to school. Barefoot. In the snow. Uphill both ways.” The geography of this never made a lot of sense, but Dad’s right about one thing. Most things worth having – including financial security – take time, perseverance, and hard work. Looking for sound advice on controlling your cash flow, including tips on protecting yourself from the latest financial scams? Visit the FTC’s Money Matters website.

“You’re going out looking like that?” Usually the fuss is about hair styles or skirt lengths, but Dad’s right that how you present yourself in public – including on social networking sites – can affect your future. Post only information you’re comfortable with the whole world knowing because once it’s out there, you can’t take it back. Read Net Cetera for tips on how today’s Dads can talk to kids about being online.

“That’ll go on your permanent record.” Dad knows what he’s talking about. You do have a permanent record, and it’s called a credit report. Employers, landlords, and others consult your credit report to see if you pay your bills on time, so it’s important that what’s in it is accurate. The law gives you the right to three free credit reports a year at annualcreditreport.com. Watch out for look-alike sites that make it sound like they’re free, but then hit you up for monthly fees.

“There’s nothing a little duct tape can’t fix.” That may be true when it comes to home repair, but when your computer goes kablooey, duct tape won’t do. The best fix is prevention. Visit OnGuardOnline for tech tips on protecting your system from viruses, spyware, and other gremlins that can grind your computer to a halt.

“As long as you live under my roof, you’ll follow my rules.” Dads may not like to listen to complaints, but the FTC doesn’t mind. In fact, by filing a complaint with the FTC, you can help us detect patterns of wrongdoing, which can lead to investigations and prosecutions. Watch this video for how to file a complaint with the FTC.

Happy Father’s Day from the FTC!

At FTC’s Request, Court Halts Massive Robocall Operation

The Federal Trade Commission’s work to stop deceptive pre-recorded “robocalls” took another step forward today as a federal court halted a major telemarketing operation that made millions of illegal phone calls pitching worthless extended auto warranties and credit card interest rate-reduction programs. At the request of the FTC, a federal court judge in Chicago has entered an order stopping the operation’s calls, temporarily freezing its assets, and appointing a receiver to take control of the operation.

“Telemarketers need to understand that blasting consumers with ‘robocall’ pitches is no longer legal,” said FTC Midwest Region Director C. Steven Baker. “Unless you have someone’s consent up-front and in writing to receive a robocall, just don’t do it. The rules could not be simpler than that, and we will go after telemarketers who ignore them.”

According to the FTC, SBN Peripherals, Inc., based near Los Angeles, allegedly made more than 370 million calls to consumers nationwide in the past year alone, prompting tens of thousands of complaints to the agency. One telephone service provider told the FTC that during a single day in April 2009 the defendants sent 2.4 million calls to consumers – more than 27 calls per second. The FTC charges the robocalls violated the agency’s Do Not Call Registry Rule.

To make it difficult for consumers to identify the caller, the FTC alleges that SBN’s robocalls often transmitted caller ID information vaguely identifying the caller as “SALES DEPT” and displaying telephone numbers registered to an offshore company it controlled called Asia Pacific Telecom. Asia Pacific, a foreign shell company for SBN, made many of the calls and lists its addresses in locations as disparate as the Northern Mariana Islands, Hong Kong, and the Netherlands, the FTC’s complaint alleges.

According to the FTC, three of Asia Pacific’s telemarketing numbers accounted for more than 25,000 consumer complaints to the agency in the past year. Two of those telephone numbers – 301-882-9986 and 757-990-8981 – generated more complaints to the FTC during the past year than any other robocall number. Many of the calls were made to cell phones, sticking consumers with additional charges.

The operation allegedly used a technology known as “voice broadcasting” to deliver its fraudulent pitches. The FTC charges that the recordings falsely claimed that the caller had urgent information about the consumer’s auto warranty or credit card interest rate. Consumers who pressed “1” for more information were transferred to live telemarketers at a variety of different locations, who used fraudulent practices to sell inferior extended auto service contracts or worthless debt-reduction services.

The company’s calls may be familiar to consumers who have answered the phone, only to be greeted by a recording from “Stacey at Account Holder Services” or “Rachel at Cardholder Services” pitching a purported service to lower their credit card interest rate.

The FTC’s complaint alleges that defendants violated the FTC’s telemarketing rules by:

using robocalls to contact consumers. Under the FTC’s Telemarketing Sales Rule, since September 1, 2009, nearly all such pre-recorded calls have been illegal, unless the seller first obtains the consumer’s written permission;
calling consumers whose telephone numbers are on the National Do Not Call Registry;
“abandoning” pre-recorded calls (not connecting to a live person when a consumer answers) at a higher rate than permitted under law (three percent of all calls made); and
repeatedly calling consumers who asked to be put on their company-specific do-not-call list.

The FTC alleges SBN delivered robocalls on behalf of at least seven entities that the agency or state attorneys general previously sued for engaging in fraudulent sales practices. SBN also allegedly made illegal “extended auto warranty robocalls” on behalf of another company owned by Fereidoun “Fred” Khalilian, a repeat telemarketing offender against whom the FTC obtained a new court order last week (see press release at: http://www.ftc.gov/opa/2010/06/dolcegroup.shtm).

In addition to the temporary restraining order and asset freeze announced today, the FTC is seeking a court order permanently barring the allegedly illegal conduct and will seek consumer redress as appropriate.

The Commission vote approving the complaint was 5-0. It was filed under seal on May 25, 2010 in the U.S. District Court for the Northern District of Illinois, Eastern Division. The court issued a temporary restraining order against the defendants on May 26, 2010.

The FTC filed the complaint announced today against Asia Pacific Telecom, Inc., doing business as (d/b/a) Asia Pacific Networks; Repo B.V.; SBN Peripherals, Inc., d/b/a SBN Dials; Johan Hendrik Smit Duyzentkunst; and Janneke Bakker-Smit Duyzentkunst.

The Commission would like to acknowledge the assistance that telecommunications carriers AT&T and Verizon Wireless provided in the investigation of the case. The FTC reminds consumers that if they get a robocall they did not authorize, they can file a complaint by going to: www.donotcall.gov or by calling 1-888-382-1222. The FTC’s Do Not Call Registry for telemarketers accepts both land lines and cell phone numbers.

Copies of the complaint are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer 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, click: http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related 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. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

(FTC File No. 102-0360; Civ. No. 10 C 3168)

Court Puts Brakes on Company That Deceptively Pitched Extended Auto Warranties

At the Federal Trade Commission’s request, a federal court has halted a Florida-based telemarketing operation that the FTC alleged was deceptively promoting so-called “extended auto warranties” to consumers nationwide.

The court has issued a temporary restraining order against Fereidoun “Fred” Khalilian and his company, The Dolce Group Worldwide, LLC, d/b/a My Car Solutions. Khalilian is well-known to the FTC from a 2001 settlement that banned him from all travel-related telemarketing and required him to pay $185,000 in consumer redress for making deceptive pitches for travel packages.

The Commission filed a complaint against Khalilian and Dolce Group on June 2, 2010, alleging that since at least 2009, they have marketed purported “extended” auto warranties by blasting prerecorded phone messages, or robocalls, to consumers, warning them that their car’s warranty is about to expire and instructing them to “press one” to talk with a representative. According to the complaint, consumers are then transferred to the defendants’ telemarketers who identify themselves as from the “service contract department,” and state that they will “verify” information about the consumers’ cars and “confirm” other information, including their zip code.

These telemarketers then transfer consumers to a “senior specialist” who allegedly makes more misrepresentations about the company’s affiliation with the consumer’s car manufacturer or dealer. The “senior specialists” often go to great lengths to convince consumers that they are affiliated with car companies or dealers, the FTC charges, making claims such as, “I’m from Honda,” or “I’m from your authorized Honda dealer.”

According to the FTC’s complaint, only after consumers buy the supposed warranties do they discover that My Car Solutions is not affiliated with their car manufacturer. When they receive their warranties in the mail, they also learn that, contrary to what the marketers promised, the warranties do not cover “the entire engine,” do not provide “bumper-to-bumper” coverage, and exclude certain “pre-existing conditions.” Consumers who try to get their money back – typically between $1,300 and $2,485 per warranty – find it nearly impossible, due to the company’s stonewalling.

The complaint charges the defendants with violating the FTC Act by falsely representing:

that they are calling on behalf of consumers’ car dealers or manufacturers;
that they know that consumers’ original auto warranties are about to expire;
that they are offering extensions of consumers’ original auto warranties; and
that the products they sell provide complete and/or specified coverage for automobile repair.

The FTC’s complaint seeks to permanently stop the defendants’ allegedly illegal conduct. Some of the defendants’ calls were made by Asia Pacific Telecom, Inc., another company the FTC recently took action against (see press release at: http:///www.ftc.gov/opa/2010/06/asiapacific.shtm).

The Commission vote approving the complaint was 5-0. It was filed on June 2, 2010, in the U.S. District Court for Southern District of Florida and the court issued a temporary restraining order against the defendants the same day halting their conduct. Named in the FTC’s complaint were Fereidoun “Fred” Khalilian and The Dolce Group Worldwide, LLC, doing business as My Car Solutions, iCost Direct, and Insurance Cost Direct, all based in Miami, Florida.

Copies of the complaint are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer 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, click: http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related 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. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

(FTC File No. 1023173; Civ. No. 10-21788-Civ.-Cooke/Bandstra)
(Dolce Group.final.wpd)

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