FTC Order Sets Conditions for Panasonic’s Acquisition of Sanyo

Major consumer electronics manufacturers Panasonic Corporation and Sanyo Electric Co., Ltd. have agreed to sell assets related to Sanyo’s portable nickel metal hydride (NiMH) battery business, including a premier manufacturing plant in Japan, as part of an agreement with the Federal Trade Commission that will preserve competition and allow the companies to proceed with Panasonic’s proposed $9 billion acquisition of Sanyo. NiMH batteries power two-way radios, among other products, which are used by police and fire departments nationwide.

Under a proposed FTC consent order, the portable NiMH battery assets will be sold to FDK Corporation, a subsidiary of Fujitsu Ltd. The sale of the assets resolves competitive concerns that were raised by the transaction, which combines the world’s two largest manufacturers and sellers of these batteries. No competitive concerns were raised by other overlaps between the companies.

“Our nation’s police and fire departments rely on portable nickel metal hydride batteries to power the two-way radios that they use every day as part of their public safety missions,” said Richard Feinstein, Director of the FTC’s Bureau of Competition. “The consent order announced today protects consumers by preserving competition in the market for these critical batteries.”

According to the FTC’s complaint, Panasonic’s acquisition of Sanyo, as originally proposed, would have reduced competition in the worldwide market for portable NiMH batteries. NiMH batteries are one of three types of rechargeable batteries. While each type of battery is used to power electronic devices, portable NiMH batteries comprise their own market, because current consumers of the batteries cannot substitute between them without buying new devices.

The Commission investigation of the Panasonic/Sanyo transaction also included a thorough review of the deal’s potential competitive impact in the hybrid electric vehicle (HEV) battery market. Although Panasonic and Sanyo have been the most significant suppliers of the NiMH batteries used in most current-generation HEVs, improvements in Li-ion technology have made Li-ion HEV batteries a superior alternative to NiMH HEV batteries. Besides Panasonic and Sanyo, there are a number of firms already supplying Li-ion HEV batteries to automakers for future HEVs. To the extent that NiMH HEV batteries are used in future HEVs, they will compete directly against Li-ion HEV batteries. In the HEV battery market, the proposed transaction does not raise competitive concerns.

The Commission’s proposed consent order is designed to remedy the loss of competition by requiring the companies to divest Sanyo’s assets related to the manufacture and sale of portable NiMH batteries to FDK within 15 days of Panasonic’s acquisition of Sanyo. This time may be extended 30 days to provide the European Commission time to approve the divestiture.

The order requires Panasonic and Sanyo to divest a major portable NiMH battery manufacturing facility in Takasaki, Japan that produces about 30 percent of all such batteries worldwide. The order also requires Sanyo to supply FDK with certain sizes of portable NiMH batteries that are not produced at the Takasaki plant, but that account for a small part of Sanyo’s overall portable NiMH battery sales. Finally, the order requires Sanyo to provide FDK with access to certain Sanyo employees who are needed to successfully run the Takasaki plant, and to transfer all licences, patents, and intellectual property related to its portable NiMH batteries to FDK.

The FTC has appointed an interim monitor in this matter to oversee the divestitures, and the companies must file periodic reports with the Commission until the divestitures are completed. If the portable NiMH battery assets are not fully divested within six months, the FTC may appoint a trustee to complete the divestiture.

International Cooperation

During the FTC’s investigation, staff communicated and cooperated with their enforcement counterparts in Canada, the European Commission (EC), and Japan that also reviewed this proposed transaction. This cooperation was conducted pursuant to the respective bilateral cooperation agreements with these jurisdictions and, in the case of the EC, the 2002 Best Practices on Cooperation in Merger Investigations.

The Commission vote approving the proposed consent order was 4-0. The order will be subject to public comment for 30 days, until December 24, 2009, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://public.commentworks.com/ftc/0910050.

NOTE: 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. 091-0050)

Federal and State Agencies Target Mortgage Relief Scams

Federal Trade Commission Chairman Jon Leibowitz, joined by U.S. Senator Harry Reid, Nevada Attorney General Catherine Cortez Masto, and Assistant Attorney General Tony West of the Civil Division of the U.S. Department of Justice, today announced Operation Stolen Hope as part of a continuing federal-state crackdown on mortgage foreclosure rescue and loan modification scams. The operation involves 118 actions by 26 federal and state agencies. The FTC actions were announced in Nevada, where one in every 23 homes is facing foreclosure.

“These operators targeted consumers who were on the brink of financial disaster, and instead of holding them back, they pushed them over,” FTC Chairman Jon Leibowitz said. “If you’re worried about keeping your home, avoid any company that asks for a large fee in advance, guarantees that they’ll stop a foreclosure or modify a loan, or tells you to stop paying your mortgage company and to pay them instead.”

The FTC announced six lawsuits, bringing to 28 the number of mortgage relief cases the Commission has brought since the housing crisis began. Twenty-five state attorneys general and other state and local agencies announced 112 similar actions.

In today’s announced FTC actions, the defendants falsely claimed that they would obtain mortgage modifications that would make consumers’ monthly mortgage payments substantially more affordable. After charging large up-front fees, they often did little or nothing to help homeowners renegotiate their mortgages. According to the FTC’s complaints, some of the defendants falsely claimed a high success rate and promised to give consumers refunds if they failed to modify their mortgages, and others misrepresented that they were affiliated with the federal government or consumers’ mortgage lenders or servicers. Each of the cases allege violations of the FTC Act. In addition, several cases allege violations of the Telemarketing Sales Rule (TSR) or the Credit Repair Organizations Act (CROA). In each case, the FTC is asking the court to stop the defendants’ deceptive claims and make them forfeit their ill-gotten gains. In five of the cases, the court already issued a temporary restraining order and froze the defendants’ assets.

Crossland Credit Consulting Corp. and its co-defendants allegedly operated deceptive mortgage refinancing, credit repair, and loan modification schemes. According to the FTC complaint, they falsely promised to use proceeds from mortgage refinances to promptly pay off consumers’ original loans, but often pocketed the money instead. They misrepresented that they would repair consumers’ credit records by removing truthful negative items from their credit reports so they could obtain mortgage loans, and charged advance fees for those services in violation of both the CROA and the TSR. They also falsely claimed that they would modify consumers’ mortgages to obtain substantially lower interest rates and monthly payments. The court immediately barred the practices and froze the defendants’ assets pending a hearing.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Southern District of Florida. At the FTC’s request, the court ordered a halt to the unlawful operations, pending resolution of the case.

Crowder Law Group and its co-defendants allegedly misrepresented themselves as a federal government agency or affiliate. Their personalized postcards to consumers stated, “You may qualify under the new government bailout to refinance your current mortgage . . . ” Some postcards described the defendants’ programs as federal programs and were signed by an attorney in the consumer’s state. The defendants charged a $2,000 fee. The court immediately barred the practices and froze the defendants’ assets pending a hearing. Some of the defendants have stipulated to a preliminary injunction with an asset freeze.

The Commission vote to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Middle District of Florida.

The Debt Advocacy Center charged consumers $1,500 in advance and promised a refund of $1,500 or more if they failed to successfully obtain a loan modification, according to the FTC complaint. The Commission alleged that when consumers did not get a loan modification, The Debt Advocacy Center told them that the $1,500 was only for advice and educational materials and refused to return payments from consumers. The Debt Advocacy Center also claimed a 90 percent success rate and allegedly debited consumers’ bank accounts and charged their credit cards without authorization. In April 2009, The Debt Advocacy Center received a letter from the FTC warning that its ads may violate federal law, but it did little to change its practices. At the FTC’s request, the court ordered a halt to the unlawful operations and froze the defendants’ assets, pending resolution of the case.

The Commission vote to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Ohio, Eastern Division.

On its Web site and in unsolicited telephone calls to distressed homeowners, First Universal Lending and its principals allegedly said they would negotiate mortgage modifications that would reduce homeowners’ monthly mortgage payments. The FTC complaint alleged that they charged consumers huge up-front fees, sometimes as much as $7,000, and told them if they stopped paying their mortgages it would help them in negotiations with lenders. In many cases, they failed to obtain loan modifications for consumers. At the FTC’s request, the court ordered a halt to the unlawful operations and froze the defendants’ assets, pending resolution of the case.

The Commission vote to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the District of Florida, West Palm Beach Division.

Kirkland Young and its manager allegedly misrepresented themselves as consumers’ mortgage lenders or servicers or their affiliate. The company left telephone messages for consumers stating that they wanted to approve the consumers for a loan modification. By telephone, they discussed specific interest rates and monthly payments and promised that they would stop foreclosure. The complaint alleges that they failed to keep their promises to obtain loan modifications to make payments more affordable. At the FTC’s request, the court ordered a halt to the unlawful operations and froze the defendants’ assets, pending resolution of the case.

The Commission vote to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Southern District of Florida.

Truman Foreclosure Assistance and its co-defendants charged fees ranging from $1,500 to $3,000, a substantial portion of which was due up-front. According to the FTC complaint, they falsely claimed a 99 percent success rate and stated that hiring them entailed little risk because their services were backed with a “100% Money Back Guarantee,” which they allegedly refused to honor in several instances.

The Commission vote to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Southern District of Florida.

The FTC also announced an amended complaint charging additional defendants in a previously filed mortgage relief services case:

The FTC filed a proposed amended complaint in its action pending against Dinamica Financiera, LLC, adding as defendants Oficinas Legales de Eric-Douglas Johnson, Inc. and former attorney Eric Douglas Johnson, which continued the defendants’ operations after the court entered a preliminary injunction on June 3, 2009. At the time defendant Eric Douglas Johnson joined the operation, California law permitted attorneys to accept up-front fees for mortgage modification services. The original complaint, filed in May 2009, alleged that the defendants falsely promised Spanish-speaking consumers who were behind in their mortgage payments that they would stop foreclosure. (See May 27, 2009 press release http://www.ftc.gov/opa/2009/05/mortgagerescue.shtm).

The Commission vote authorizing the staff to file the proposed amended complaint was 4-0. The complaint and proposed amended complaint were filed in the U.S. District Court for the Central District of California.

In addition to these cases, the FTC has reached settlements in three previously-filed cases against mortgage relief scams and a partial settlement in another case.

First, the Commission has obtained an agreed upon federal court order barring deceptive practices by Peter J. Porcelli, Safe Harbour Foundation of Florida, Inc., Silverstone Lending, LLC, and Silverstone Financial, LLC, who allegedly lured homeowners into high-cost, short-term loans secured by an additional mortgage on their homes, in violation of federal law and a previous court order against them. (see February 28, 2008 press release http://www.ftc.gov/opa/2008/02/rescue.shtm). The settlement also resolves a contempt action against those defendants.

The settlement order bars the settling defendants from engaging in specific lending practices in violation of the Home Ownership and Equity Protection Act (HOEPA), including making a HOEPA loan without regard to a consumer’s repayment ability. In addition, they are barred from lending practices in violation of HOEPA and Regulation Z’s disclosure and misrepresentation provisions. The order imposes a $2.79 million judgment that will be suspended based on the defendants’ inability to pay. The full judgments against them will become due immediately if they are found to have misrepresented their financial condition. A separate settlement order against co-defendant Southeast Advertising, Inc. applies the same prohibitions and bars the company from accepting the assignment of a loan with any of the characteristics described in the orders. The Commission vote to authorize staff to file each of the stipulated final orders was 4-0. The orders were filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

Second, the FTC has obtained a stipulated order that bans Thomas Ryan from offering mortgage relief services. The FTC alleged that his Web sites – bailout.hud-gov.us and bailout.dohgov.us, which featured an official looking seal and the names of federal homeowner relief plans – misled homeowners that he was the U.S. government. (See April 6, 2009 press release http://www.ftc.gov/opa/2009/04/hud.shtm). The settlement order also bars Ryan from making misrepresentations about financial related or any other goods and services. The Commission vote to authorize staff to file the stipulated final order was 4-0. The order was entered in the U.S. District Court for the District of Columbia.

Third, the Commission has agreed to settlements in its case against Freedom Foreclosure Prevention Services, LLC that, pending court approval, would ban Jeffrey Segal and Michael Workman from working in the loan modification industry and bar them from misrepresenting material facts in selling any goods or services. The settlements also would impose suspended judgments of $5,462,432, based on the defendants’ inability to pay. Segal and Workman allegedly ran a bogus mortgage foreclosure relief operation that misrepresented both the “loss mitigation” services it offered and the earnings potential of the business opportunity it sold. (See June 22, 2009 press release http://www.ftc.gov/opa/2009/06/freedom.shtm). The Commission vote to authorize staff to file each of the stipulated final orders was 4-0, with Commissioner J. Thomas Rosch concurring in part and dissenting in part. A copy of his statement is available at [http://www.ftc.gov/os/2009/11/091124roschstmt.pdf]. The orders were filed in the U.S. District Court for the District of Arizona.

Fourth, the FTC has obtained a partial settlement that, pending court approval, will prohibit the allegedly deceptive practices of Brian Blanchard, sole owner of B Home Associates, LLC d/b/a Expert Foreclosure, and Michael Grieco, both of whom are part owners of Home Assure, LLC. The settlement orders prohibit Blanchard and Grieco from misrepresenting material facts about any goods or services and selling or otherwise disclosing personal information about anyone who paid them. The orders impose suspended judgments of $3,849,919.84 and $3,721,807.84 on Blanchard and Grieco. They falsely promised consumers that they could stop foreclosures, regardless of how much money consumers owed, charged up to $2,500 in advance, and promised a full refund if they failed. The action continues against other defendants who have not settled. (See April 6, 2009 press release http://www.ftc.gov/opa/2009/04/hud.shtm). The Commission vote to authorize staff to file each of the stipulated final orders was 4-0. The orders were filed in the U.S. District Court for the Middle District of Florida.

The FTC asks people to report foreclosure rescue and mortgage modification scams to FTC.gov or by calling 1-877-FTC-HELP. The FTC makes those complaints available to federal, state, and local law enforcement through the Consumer Sentinel Network.

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. 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 1,700 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.

(Project Stolen Hope)
(FTC File Nos. 0923169, 0923192, 0923130, 0923143, 0923173, 0923162, X090050, X080022, X020103, X090030, X090055, X090036, X090026)

FTC Announces Agenda for December 15 Forum to Explore Food Marketing to Children

The Federal Trade Commission announced the agenda and speakers for its December 15, 2009 public forum titled “Sizing Up Food Marketing and Childhood Obesity.”

The forum participants will present new research on the impact of various food advertising techniques on children and discuss the statutory and constitutional issues surrounding governmental regulation of food marketing. Panelists also will address the food and entertainment industries’ self-regulatory efforts and implementation of the recommendations in the FTC’s 2008 report, “Marketing Food to Children and Adolescents: A Review of Industry Expenditures, Activities, and Self-Regulation.” http://www.ftc.gov/os/2008/07/P064504foodmktingreport.pdf In addition, the Interagency Working Group on Food Marketed to Children – comprised of representatives from the FTC, Food and Drug Administration, Centers for Disease Control and Prevention, and U.S. Department of Agriculture – will report on the status of recommended nutritional standards for foods marketed to children, followed by a Town Hall discussion.

An agenda for the forum is available here http://ftc.gov/bcp/workshops/sizingup/Agenda.pdf. Updated information will be posted as it becomes available.

Pre-registration:

The forum is free and open to the public. It takes place at the FTC’s Satellite Building Conference Center, 601 New Jersey Avenue, N.W. Washington, DC. Pre-registration is not necessary, but is encouraged so the FTC may better plan this event. Please note that pre-registration will not guarantee a seat at the event; seating will be available on a first-come, first-served basis. Those pre-registering should send their name, affiliation, and e-mail address to [email protected]. The FTC will use pre-registration information to estimate the likely audience for the forum, and may use the e-mail address to contact registrants with information about the forum.

Note: When you pre-register, the FTC collects your name, affiliation, and e-mail address. We will use this information for administrative purposes related to the forum only and will dispose of it after the forum ends. Under the Freedom of Information Act (FOIA) or other laws, we may be required to disclose the information you provide to outside organizations. For additional information, including routine uses permitted by the Privacy Act, see the FTC Privacy Policy. The FTC Act and other laws the FTC enforces allow this information to be collected for the purposes described above.

Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted via e-mail to [email protected] or by calling Carrie McGlothlin at 202-326-3388. Requests should be made in advance. Please include a detailed description of the accommodation needed, and provide contact information.

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 1,700 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 Extends Public Comment Period in Free Credit Report Rule Proceeding To December 7, 2009

For Release

The Commission today announced an extension of the public comment period for the recently issued proposal to amend the “Free Credit Report Rule” (formally the Free Annual File Disclosures Rule). The Commission posted the proposed rule on the FTC’s Web site on October 7, 2009, and stated that public comments were due no later than November 30, 2009. In response to a recent request that the comment period be extended, the Commission has determined to extend the comment period until December 7, 2009. The Federal Register notice, which is available now on the FTC’s Web site as a link to this press release, provides information on how, and in what form, comments should be submitted.

The Commission vote approving the issuance of Federal Register notice announcing the extension of the public comment period was 4-0.

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.

(FTC File No. R411005)

Contact Information

MEDIA CONTACT:
Office of Public Affairs
202-326-2180

FTC Settlements Bar Deceptive Online Marketing of “Free” Internet Auction Kits

An online marketer of purportedly “free” Internet auction kits, which automatically charged unwitting consumers $59.95 a month for enrollment in an “online supplier” program for Internet auctions, has agreed to settle Federal Trade Commission charges that its actions violated federal law. The separate proposed court settlements with the company and two of its former executives bar them from similar deceptive conduct in the future, and require them to make specific disclosures to ensure consumers are aware of any recurring-fee plans (also known as “continuity plans” or “negative option plans”) for which they are signing up or being charged. The proposed court settlements also require the settling defendants to pay a total of what could be more than $1 million.

According to the FTC’s complaint, Commerce Planet operated a Web site offering consumers a free “online auction kit” that included information about how to start a business selling products on online auction sites such as eBay. Commerce Planet claimed the kit would provide consumers with “an easily managed online business that has the potential to supplement, or even replace” their current source of income. Although Commerce Planet allegedly told consumers they would be charged as little as $1.95 shipping and handling for this “free” trial offer, consumers had to provide their credit card information, and many were unwittingly signed up for the company’s $59.95 per month “Online Supplier” program. The FTC contends that over an 18-month period Commerce Planet did not clearly and conspicuously disclose that, by registering for the “free offer,” consumers also were agreeing to be enrolled in the “Online Supplier” program and would be charged a “membership fee” of up to $59.95 per month unless they canceled within a few days of ordering.

The terms and conditions of the program, including information about the recurring $59.99 fee, were difficult to find on Commerce Planet’s Web site. They appeared on a separate page from the trial offer that could only be accessed by a link, or on the payment page, but below the bottom of the visible screen. Most consumers did not even realize they had been enrolled in “Online Suppler” until their credit cards were repeatedly charged, after which many requested refunds. Most consumers had difficulty getting a refund, frequently calling the company multiple times, and sometimes had to contact an attorney or ask their credit card companies to reverse the charges.

The FTC’s complaint charged Commerce Planet with violating federal law by: 1) failing to disclose that consumers who ordered their online auction kit would be signed up for a continuity
program; and 2) unfairly charging consumers for the “Online Supplier” program without getting their express informed consent to do so.

The proposed court orders settle charges against Commerce Planet, former Commerce Planet CEO Michael Hill, and Aaron Gravitz, the former president of Legacy Media LLC, a wholly owned subsidiary of Commerce Planet. The orders prohibit the settling defendants from misrepresenting any material facts associated with the sale of a product or service, including specific representations that are common in negative-option offers. The FTC’s case against the fourth defendant, former Commerce Planet president Charles Gugliuzza, will proceed in federal court.

The settling defendants must make specific disclosures before requesting payment for any product or service and before making any offer with a continuity plan feature. They must first get consumers’ express informed consent before charging them for any goods or services, and must document the consumers’ consent in all transactions involving a continuity plan feature. Finally, the proposed orders require the defendants to provide information about their refund policies, honor their refund policies, monitor their sales agents, and track their agents’ billing information.

The orders include judgments of $19.7 million against each settling defendant, which have been suspended due to their inability to pay. Under the orders, however, Commerce Planet will pay $100,000, Gravitz will pay $192,000, and Hill will pay $230,000, plus future proceeds from loans that may bring his total payments to over $900,000.

The Commission vote authorizing the staff to file the complaint and proposed stipulated final orders against Commerce Planet, Hill, and Gravitz, as well as the complaint against Gugliuzza, was 4-0. The complaint was filed in the U.S. District Court for the Central District of California on November 10, 2009, and the stipulated orders were lodged with the court on November 16, 2009. The orders have not yet been signed by the court.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has 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. Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Consent orders have the force of law when signed by the judge.

Copies of documents related to this case 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, DC 20580. 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 at http://www.ftccomplaintassistant.gov 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 1,500 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. 072-3129; Civ. No. SACV-09-01324 CJC (RNBx))
(Commerce Planet.wpd)

FTC Charges Online Check Writing Marketers with Contempt

The Federal Trade Commission has filed a civil contempt action charging an Internet-based check creation and delivery service and its operators with violating a 2009 court order. The FTC is asking the court to impose a daily fine or imprisonment if the allegedly unlawful conduct is not stopped, and to make the defendants compensate affected consumers and give up their ill-gotten gains.

According to papers the FTC filed with the court, the contempt defendants violated the court order by enabling consumers to create and e-mail checks via the Internet without any verification of users’ identities or their authority to draw funds on the financial accounts they use, leaving unsuspecting consumers’ financial accounts vulnerable to fraud. They also failed to provide contact information for their Web site, FreeQuickWire.com, and failed to investigate and respond to complaints of unauthorized use of financial account information.

In the case that led to the 2009 order, three of the contempt defendants, Thomas Villwock, James M. Danforth, and G7 Productivity Systems, Inc., operated a similar Web site, Qchex.com, that created and delivered checks without verifying that users had authority to access the accounts referenced on the checks. As a result, fraudsters worldwide drew checks on the accounts of unwitting third parties and used the checks mainly for wire transfer schemes. [see Consumer Alert, “Money Transfers Can Be Risky Business,” – http://ftc.gov/bcp/edu/pubs/consumer/alerts/alt034.shtm] The court found the defendants’ operation an unfair practice under the FTC Act and ordered them to pay $535,358, which represented all of their profits from the illegal operation. The court also ordered the defendants to implement specific fraud-prevention safeguards for any check creation and delivery service they offer.

In the current contempt action, the FTC alleges that the contempt defendants are continuing to “ring the dinner bell for fraudsters,” as the court stated in 2009, by failing to perform any of the authentication procedures required by the 2009 court order. The other contempt defendants are iProlog Corporation and FreeQuick Wire Corporation, which Villwock and Danforth control. The court has ordered the contempt defendants to appear in court on February 16, 2010, to explain why the court should not hold them in contempt for violating the 2009 order. The contempt action was filed in the U.S. District Court for the Southern District of California.

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 1,700 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. X060057)
(Neovi)

Federal Regulators Issue Final Model Privacy Notice Form

Eight federal regulatory agencies today released a final model privacy notice form that will make it easier for consumers to understand how financial institutions collect and share information about consumers.  Under the Gramm-Leach-Bliley Act (GLB Act), institutions must notify consumers of their information-sharing practices and inform consumers of their right to opt out of certain sharing practices.  The model form issued today can be used by financial institutions to comply with these requirements.

The Financial Services Regulatory Relief Act of 2006 amended the GLB Act to require the agencies to propose a succinct and comprehensible model form that allows consumers to easily compare the privacy practices of different financial institutions, and has an easy-to-read font.

The agencies conducted extensive consumer research and testing in developing the model form issued today.  Then they solicited public comments and considered those comments in developing a model form that is easier for consumers to understand and use.  The final rule provides that a financial institution that chooses to use the model form obtains a “safe harbor” and will satisfy the disclosure requirements for notices.  The rule also removes, after a transition period, the sample clauses now included in the appendices of the agencies’ privacy rules.

The final model privacy form was developed jointly by the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Securities and Exchange Commission.

A copy of the form and rule are attached.

FTC Issues Performance and Accountability Report (PAR) for Fiscal Year 2009

The Commission has issued its Performance and Accountability Report (PAR) for fiscal year (FY) 2009. The PAR includes the FTC’s Performance Report and its financial statements and audit opinion. It also compares and evaluates actual performance against established measures and targets described in the FTC’s 2006 to 2011 Strategic Plan and the annual Performance Plan required under the Government Performance and Results Act (GPRA). The FY 2009 independent financial audit resulted in the FTC’s thirteenth consecutive unqualified opinion, the highest audit opinion available.

The PAR begins with a “Message from the Chairman” and is presented in four parts: Part I contains management’s discussion and analysis of the agency’s performance and financial activities; Part II contains the Performance Report; Part III contains the agency’s financial statements and independent audit results; and Part IV contains other accompanying information. The PAR can be viewed at www.ftc.gov/par. The Commission vote to issue the Performance and Mission Challenges sections of the FY 2009 PAR was 4-0. (FTC File No. P080100; the staff contact is James Baker 202-326-3168.)

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 52.2009.wpd)

FTC Releases Agenda for First Privacy Roundtable and Announces Date of Second Roundtable

The Federal Trade Commission today released the agenda for its first privacy roundtable, scheduled for December 7, 2009, at the FTC Conference Center in Washington, DC. The Roundtable is the first of three public events designed to explore the privacy challenges posed by technology and business practices that collect and use consumer data. The agenda, available at http://www.ftc.gov/bcp/workshops/privacyroundtables/index.shtml, launches the public dialogue by focusing on the risks and benefits of information-sharing practices, consumer expectations regarding such practices, behavioral advertising, information brokers, and the adequacy of existing legal and self-regulatory frameworks.

The Commission also announced that it will convene its second privacy roundtable on January 28, 2010. The event, hosted by the Berkeley Center for Law and Technology, will take place at the University of California, Berkeley, School of Law Booth Auditorium. The second roundtable will focus on how technology affects consumer privacy, including its role in both raising privacy concerns and enhancing privacy protections. The roundtable will include specific discussions on cloud computing, mobile computing, and social networking. Details regarding the third and final roundtable, which will take place on March 17, 2010, in Washington, DC, will be announced at a later date.

The Privacy Roundtables are free and open to the public. Pre-registration is not required. Members of the public and press who wish to participate but who cannot attend can view a live Webcast.

Individuals and organizations may submit requests to participate as panelists in the second roundtable and may recommend topics for inclusion on the agenda. The requests and recommendations should be submitted electronically to [email protected]. Prospective panelists for the second roundtable should submit a statement detailing their expertise on the issues to be addressed and contact information, no later than December 9, 2009. Panelists will be selected based on expertise and the need to include a broad range of views. Please note that if you already have submitted a request to participate in the first roundtable event, you need not submit another request. All requests already submitted will be considered for all roundtable events.

The Commission also invites interested parties to submit written comments or original research. A list of specific questions to inform the second roundtable discussions is available at the Commission’s website at www.ftc.gov/bcp/workshops/privacyroundtables. Although the comment period will remain open until March 17, 2010, only those comments submitted by December 21, 2009, will be considered prior to the second roundtable.

Comments should refer to “Privacy Roundtables – Comment, Project No. P095416.” To file electronically, follow the instructions and fill out the form at https://public.commentworks.com/ftc/privacyroundtable2 Paper comments should include the above reference both in the text and on the envelope, and should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-135 (Annex P2), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Comments containing confidential material, however, must be filed in paper form, must be clearly labeled “Confidential,” and must comply with Commission Rule 4.9(c). The FTC requests that any paper comments be sent by courier or overnight service, if possible, because postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

Both roundtable venues are accessible to people with disabilities. For the second roundtable, interested parties may obtain additional information about campus access at http://dsp.berkeley.edu/access.html. Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted via e-mail to [email protected] or by calling Carrie McGlothlin at 202-326-3388. Requests should be made in advance. Please include a detailed description of the accommodation needed, and provide contact information.

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 1,700 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 Warns Internet Peddlers that Marketing Unproven H1N1 Flu Products May Be Illegal

The Federal Trade Commission last week sent 10 warning letters to Web site operators who made questionable claims that their products can prevent, treat, or cure the H1N1 flu, commonly known as swine flu. In an ongoing effort that began during the spring, the FTC told the companies – whose products include dietary supplements, air filtration devices, homeopathic remedies, items containing silver, and cleaning agents – that unless they have scientific proof for their claims, they are violating federal law and must drop the claims or face further action.

The FTC conducted its swine flu surf as part of the International Consumer Protection Enforcement Network’s 11th Internet sweep, which took place from September 21 to 25, 2009. As part of this sweep, consumer protection agencies around the world targeted rapidly growing fraudulent and deceptive conduct on the Internet, with special emphasis on conduct exploiting financial crises or natural disasters such as the H1N1 pandemic. Besides sending warning letters to 10 operators, the FTC referred 14 other Web site operators – which it suspects are located outside the United States – to foreign law enforcement authorities.

“As consumers grow increasingly anxious about obtaining the H1N1vaccine for their children and other vulnerable family members, scam artists take advantage by selling them bogus remedies online,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection.

In collaboration with other enforcement agencies, including the U.S. Food and Drug Administration, the FTC will continue to work aggressively to identify, investigate, and take additional regulatory and law enforcement action against individuals or businesses that deceptively promote purported H1N1 products.

The FTC reminds consumers that the only products recommended for treatment of H1N1 flu are prescription antiviral drugs, including oseltamivir (brand name Tamiflu) and zanamivir (brand name Relenza).

The FTC’s Consumer Alert, Rx for Products That Claim to Prevent H1N1? A Healthy Dose of Skepticism, warns the public to be skeptical of claims that products like pills, air filtration devices, and cleaning agents can kill or eliminate the virus. The alert advises consumers to:

  • Know the facts: The H1N1 virus is thought to spread from person to person in the same way that seasonal flu spreads – mainly coughing or sneezing by people with the flu. Sometimes people may become infected by touching something with flu viruses on it and then touching their mouth, nose, or eyes.
  • Keep your hands clean: Public health authorities advise that basic personal hygiene is the best protection against infection. Wash your hands thoroughly. When soap and water are not available, health authorities suggest using alcohol-based disposable hand wipes or gel sanitizers. These products are available in most supermarkets and drugstores.
  • Check travel advisories for affected areas: To lower your risk of infection, the Centers for Disease Control and Prevention (CDC) suggests avoiding travel to affected regions.
  • Seek medical attention: If you think either you may have influenza symptoms, or you may have been in direct contact with someone who has the flu, consult a health care professional immediately.
  • Stay informed: For more information from the federal government about the H1N1 flu, check out flu.gov or visit the CDC at http://www.cdc.gov/h1n1flu/.

Consumers who wish to file a complaint against a company that they believe may be deceptively advertising H1N1 flu products are urged to call 1–877–FTC–HELP (1–877–382– 4357) or visit https://www.ftccomplaintassistant.gov/.

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 1,700 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.