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Maker of Rayon Clothes Barred from Deceptive “Bamboo” Claims

Just because bamboo is green does not mean that companies who purport to make clothing and other textiles from processed bamboo can make unsupported “green” claims. The Federal Trade Commission today announced a settlement with a company that allegedly falsely claimed its rayon products are made of bamboo fiber, retain bamboo’s antimicrobial properties, and are biodegradable.

Under the settlement, the company has agreed that it will not make any future bamboo claims unless they are true and backed by reliable evidence, and that it will no longer claim that the clothing and bath products it sells are made of bamboo fiber – when they actually are made of rayon processed from bamboo plants.

According to the Commission’s complaint, issued in August 2009, The M Group, Inc., d/b/a Bamboosa, and its principals falsely claimed that the company’s products are “100% bamboo fiber,” when they are composed of rayon. Rayon is a man-made fiber created from the cellulose found in plants and trees and dissolved with a harsh chemical that releases hazardous air pollution. Any plant or tree could be used as the cellulose source – including bamboo – but the fiber that is created is rayon.

The complaint also charged Bamboosa with making a number of other deceptive “green” claims. Bamboosa claimed that its products retain bamboo’s antimicrobial properties. However, even if the rayon used in Bamboosa’s clothing and textile products is manufactured using bamboo as the cellulose source, the FTC contends, rayon does not retain any natural antimicrobial properties of the bamboo plant. The rayon manufacturing process eliminates any of these natural bamboo properties.

Bamboosa also allegedly made unqualified claims that its products are biodegradable. The Commission charged that the company’s rayon products are not biodegradable because they will not break down in a reasonably short time after customary disposal. Most clothing and textiles are disposed of either by recycling or in a landfill, where such biodegradation does not occur.

Finally, the complaint charged Bamboosa with violating the Textile Fiber Products Identification Act (Textile Act) and the FTC’s Textile Rules by falsely labeling and advertising its clothing and textile products as bamboo, when they should be labeled and advertised as rayon.

The proposed settlement bars Bamboosa from making any false, misleading, or unsubstantiated claims that any textile product is made of bamboo or bamboo fiber, is antimicrobial or retains the antimicrobial properties of the product from which it is made, or is biodegradable. The settlement also bars Bamboosa from making any claims about the benefits, performance, or efficacy of any clothing or textile product it sells, unless the claims are true, not misleading, and substantiated by reliable evidence. The proposed order also requires Bamboosa to comply with the Textile Act and FTC’s Textile Rules.

Three other companies – Sami Designs, LLC, doing business as (d/b/a) Jonäno; CSE, Inc., d/b/a Mad Mod; and Pure Bamboo, LLC – settled similar FTC complaints in August 2009, agreeing to stop making the false claims and to abide by the Textile Act and the FTC’s Textile Rules.

The Commission vote approving the proposed consent order was 4-0. The order will be subject to public comment for 30 days, until November 23, 2009, after which the Commission will decide whether to make it final. To file a public comment, please click on the following link: https://public.commentworks.com/ftc/D9340/ and follow the instructions at that site.

NOTE: A consent order is for settlement purposes only and does not constitute an admission of a violation of the law. When the Commission issues an 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 proposed consent agreement and order 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. 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 1,700 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 Docket No. D09340)
(Bamboosa.final.wpd)

MoneyGram to Pay $18 Million to Settle FTC Charges That it Allowed its Money Transfer System To Be Used for Fraud

MoneyGram International, Inc., the second-largest money transfer service in the United States, will pay $18 million in consumer redress to settle FTC charges that the company allowed its money transfer system to be used by fraudulent telemarketers to bilk U.S. consumers out of tens of millions of dollars. MoneyGram also will be required to implement a comprehensive anti-fraud and agent-monitoring program.

The FTC charged that between 2004 and 2008, MoneyGram agents helped fraudulent telemarketers and other con artists who tricked U.S. consumers into wiring more than $84 million within the United States and to Canada – after these consumers were falsely told they had won a lottery, were hired for a secret shopper program, or were guaranteed loans. The $84 million in losses is based on consumer complaints to MoneyGram – actual consumer losses likely are much higher.

The FTC charged that MoneyGram knew that its system was being used to defraud people but did very little about it, and that in some cases its agents in Canada actually participated in these schemes. According to the FTC’s complaint, MoneyGram knew, or avoided knowing, that about 131 of its more than 1,200 agents accounted for more than 95 percent of the fraud complaints it received in 2008 regarding money transfers to Canada; a similarly small number of agents was responsible for more than 96 percent of all fraud complaints to the company in 2006.

“Money transfer services have a responsibility to make sure their systems don’t become conduits to rip people off,” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. “In this case, MoneyGram not only ducked this responsibility, but also looked the other way while its agents took part in the scams.”

Minneapolis, Minnesota-based MoneyGram operates through a worldwide network of approximately 180,000 agent locations in 190 countries and territories. In its complaint, the FTC charged that in recent years this network has increasingly been used by telemarketing scammers to prey on U.S. consumers. Con artists prefer to use money transfer services because they can pick up transferred money immediately, the payments are often untraceable, and victimized consumers have no chargeback rights or other recourse.

In 2007, 72 percent of all complaints received by the FTC involving Canadian-based fraud reported using money transfer services to make payments. According to a recent FTC survey cited in the complaint, at least 79 percent of all MoneyGram transfers of $1,000 or more from the United States to Canada over a four-month period in 2007 were fraud-induced. The Commission’s complaint further stated that based on the more than 20,600 fraud complaints MoneyGram itself received, U.S. consumers lost more than $44 million to cross-border money-transfer frauds between 2004 and 2008 alone. When combined with losses reported by U.S. consumers on money transfers within the United States, that number grows to $84 million.

In many of the scams that used MoneyGram’s money transfer system, the con artists used counterfeit checks to induce consumers to send money back by wire transfer. The most prevalent of these scams were lottery or prize schemes in which consumers were told they had won thousands of dollars and just had to pay a fee for “taxes,” “customs,” or “insurance” to a third-party to collect their winnings. Consumers paid the fee using MoneyGram, but received nothing. In another scheme, telemarketers told consumers they were guaranteed loans, regardless of their credit score. All they had to do was pay “insurance,” “paperwork,” or “processing” fees to complete the transaction. Consumers who sent funds using a money transfer service got nothing in return.

In mystery shopping scams, the con artists called U.S. consumers or sent them a piece of direct mail in which they claimed to be hiring consumers to visit stores such as Wal-Mart to evaluate MoneyGram money transfer operations. The con artists sent consumers a cashier’s check, telling them to deposit it in their checking account and then send most of the money back using a money transfer at Wal-Mart. When the counterfeit checks bounced, consumers realized they had lost the money they transferred. By this time, however, the money transfer agents had already received and paid out the money, often either without checking IDs or by using fake drivers license information.

The FTC’s complaint alleges that MoneyGram ignored warnings from law enforcement officials and even its own employees that widespread fraud was being conducted over its network, claiming that proposals to deal with the problem were too costly and were not the company’s responsibility. The company even discouraged its employees from enforcing its own fraud prevention policies or taking action against suspicious or corrupt agents. Some employees who raised concerns were disciplined or fired, the FTC charged.

In addition, at least 65 of MoneyGram’s Canadian agents have been charged by Canadian or U.S. law enforcers with, or are currently being investigated for, colluding in fraud schemes that used the MoneyGram system.

The complaint charges MoneyGram with violating both the FTC Act and the FTC’s Telemarketing Sales Rule by helping sellers or telemarketers who it knew – or consciously avoided knowing – were violating federal law, and for not taking adequate steps to prevent fraud.

The agreed-upon court order settling the FTC’s charges bars MoneyGram from knowingly providing substantial help or support to any sellers or telemarketers that are violating the Telemarketing Sales Rule and requires it to implement a comprehensive anti-fraud program. Under the anti-fraud program, MoneyGram must conduct background checks on prospective agents; educate and train its employees about consumer fraud; institute agent monitoring; and discipline agents who don’t comply with the rules. The order also requires MoneyGram to provide a clear and conspicuous fraud warning on the front of all its money transfer forms. The order’s conduct provisions apply to all MoneyGram money transfers sent worldwide from either the United States or Canada.

The order contains monitoring and discipline provisions that will ensure MoneyGram is properly training, monitoring, and taking actions to address problems related to its agents. To do this, the order requires MoneyGram to develop and maintain a system for receiving consumer complaints and data, and to provide that information to the FTC upon request. MoneyGram also must take all reasonable steps to identify agents that are involved in fraud. It must review its transaction data to identify any unusual or suspicious activity by its agents and fire any agent who it believes may be participating in fraudulent activities. It also must fire or suspend any agent who has not taken appropriate steps to stop fraudulent money transfers.

Finally, MoneyGram will pay the Commission $18 million, which will be used to provide redress to consumers.

Consumer Education

The FTC has a new Consumer Alert, available on its Web site at http://ftc.gov/bcp/edu/pubs/consumer/alerts/alt034.shtm, titled “Money Transfers Can Be Risky Business.” It includes useful information on how consumers can avoid telemarketing and money transfer fraud, including the following tips. Don’t wire money to:

someone you don’t know, in the U.S. or in a foreign country;
someone claiming to be a relative in the midst of a crisis and who wants to keep the
request for money a secret;
someone who says a money transfer is the only form of payment that’s acceptable; or
someone who asks you to deposit a check and send some of the money back.

Consumers interested in the process of redress administration should call 202-326-3755.

The FTC’s case was investigated with the assistance of the Toronto Strategic Partnership, Project Colt, Project Emptor, and the U.S. Postal Inspection Service. Additional assistance was provided by the Durham Regional Police Service, Ontario, Canada, and the Canadian Anti-Fraud Call Centre (PhoneBusters).

The Toronto Strategic Partnership includes the FTC, the U.S. Postal Inspection Service, 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. Project Colt includes the FTC, the Royal Canadian Mounted Police, Surete du Quebec, City of Montreal Police Service, Canada Border Services Agency, Competition Bureau Canada, U.S. Homeland Security, U.S. Postal Inspection Service, and the Federal Bureau of Investigation. Project Emptor includes the FTC, the Business Practices and Consumer Protection Authority of British Columbia, the Royal Canadian Mounted Police, Competition Bureau Canada, the Federal Bureau of Investigation, and the U.S. Postal Inspection Service.

The Commission vote approving the complaint and proposed consent order was 3-0, with Commissioner Pamela Jones Harbour recused. The complaint and order were filed on October 19, 2009, in the U.S. District Court for the Northern District of Illinois, Eastern Division.

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. A stipulated court order is for settlement purposes only and does not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the force of law when signed by the judge.

Copies of the complaint and stipulated order 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 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. 062-3187; Civ. No. 1:09-01-06576)

Iconix Brand Group Settles Charges Its Apparel Web Sites Violated Children’s Online Privacy Protection Act

Iconix Brand Group, Inc. will pay a $250,000 civil penalty to settle Federal Trade Commission charges that it violated the Children’s Online Privacy Protection Act (COPPA) and the FTC’s COPPA Rule by knowingly collecting, using, or disclosing personal information from children online without first obtaining their parents’ permission.

Iconix owns, licenses, and markets – both offline and online – several popular apparel brands that appeal to children and teens, including Mudd, Candie’s, Bongo, and OP. Iconix required consumers on many of its brand-specific Web sites to provide personal information, such as full name, e-mail address, zip code, and in some cases mailing address, gender, and phone number – as well as date of birth – in order to receive brand updates, enter sweepstakes contests, and participate in interactive brand-awareness campaigns and other Web site features. Since 2006, Iconix knowingly collected and stored personal information from approximately 1,000 children without first notifying their parents or obtaining parental consent, according to the FTC’s complaint. On one Web site, MyMuddWorld.com, Iconix also enabled girls to publicly share personal stories and photos online, according to the complaint.

“Companies must provide parents with the opportunity to say ‘no thanks’ to the collection and disclosure of their children’s personal information,” said FTC Chairman Jon Leibowitz. “Children’s privacy is paramount, and Iconix really missed the boat by denying parents control over their kids’ information online.”

COPPA requires operators of Web sites directed to children under 13 years old that collect personal information from them – and operators of general audience Web sites that knowingly collect personal information from children under 13 – to notify parents and obtain their consent before collecting, using, or disclosing any such information. One requirement of the COPPA Rule is that Web site operators post a privacy policy that is clear, understandable, and complete.

The Commission’s complaint also charges Iconix with violating both COPPA and the Federal Trade Commission Act by falsely stating in its privacy policy that it would not seek to collect personal information from children without obtaining prior parental consent, and that it would delete any children’s personal information about which it became aware. According to the FTC complaint, Iconix knowingly collected personal information from children without obtaining prior parental consent and did not delete it.

The settlement order requires Iconix to pay a $250,000 civil penalty. The order also specifically prohibits Iconix from violating any provision of the FTC’s COPPA Rule, and requires the company to delete all personal information collected and maintained in violation of COPPA. The company is required to distribute the order and the FTC’s “How to Comply with the Children’s Online Privacy Protection Rule” to company personnel. The order also contains standard compliance, reporting, and record-keeping provisions to help ensure the company abides by its terms.

To provide resources to parents and their children about COPPA and about children’s privacy in general, the order requires the company to link to the Commission’s www.OnGuardOnline.gov Web site on any Iconix Web site that collects or discloses children’s personal information, and on any Iconix site that offers the opportunity to upload writings or images, to create publicly viewable user profiles, or to interact online with other Iconix site visitors.

The Commission vote approving the complaint and consent order was 4-0. On behalf of FTC, the Department of Justice is filing the complaint today in the U.S. District Court for the Southern District of New York, and submitting the consent order for the court’s approval.

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 defendant has actually violated the law. A consent order is for settlement purposes only and does not constitute an admission of a law violation. Consent orders have the 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.

(Iconix NR.wpd)
(FTC File No. 0923032)

Consumer Data Broker ChoicePoint Failed to Protect Consumers’ Personal Data, Left Key Electronic Monitoring Tool Turned Off for Four Months

ChoicePoint, Inc., one of the nation’s largest data brokers, has agreed to strengthened data security requirements to settle Federal Trade Commission charges that the company failed to implement a comprehensive information security program protecting consumers’ sensitive information, as required by a previous court order. This failure left the door open to a data breach in 2008 that compromised the personal information of 13,750 people and put them at risk of identify theft. ChoicePoint has now agreed to a modified court order that expands its data security assessment and reporting duties and requires the company to pay $275,000.

In April 2008, ChoicePoint (now a subsidiary of Reed Elsevier, Inc.) turned off a key electronic security tool used to monitor access to one of its databases, and for four months failed to detect that the security tool was off, according to the FTC. During that period, an unknown person conducted unauthorized searches of a ChoicePoint database containing sensitive consumer information, including Social Security numbers. The searches continued for 30 days. After discovering the breach, the company brought the matter to the FTC’s attention.

The FTC alleged that if the security software tool had been working, ChoicePoint likely would have detected the intrusions much earlier and minimized the extent of the breach. The FTC also alleged that ChoicePoint’s conduct violated a 2006 court order mandating that the company institute a comprehensive information security program reasonably designed to protect consumers’ sensitive personal information.

Under the agreed-upon modified court order, filed on the FTC’s behalf by the Department of Justice, ChoicePoint is required to report to the FTC – every two months for two years – detailed information about how it is protecting the breached database and certain other databases and records containing personal information.

The FTC’s prior action against ChoicePoint involved a data breach in 2005, which compromised the personal information of more than 163,000 consumers and resulted in at least 800 cases of identity theft. The settlement and resulting 2006 court order in that case required the company to pay $10 million in civil penalties and $5 million in consumer redress. The company also agreed to maintain procedures to ensure that sensitive consumer reports were provided only to legitimate businesses for lawful purposes; to maintain a comprehensive data security program; and to obtain independent assessments of its data security program every other year until 2026. The new court order extends the record-keeping and monitoring requirements of the 2006 order, and gives the FTC the right to request up to two additional biennial assessments of ChoicePoint’s overall data security program.

The Commission vote to approve the modified stipulated order was 4-0. The order was filed in the U.S. District Court for the Northern District of Georgia, and entered by the court on October 14, 2009.

NOTE: This modified stipulated judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent orders have the force of law when signed by a judge.

Copies of the court’s decisions and final orders 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 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.

(ChoicePoint NR.wpd)
(FTC File No. X060016)

Federal Trade Commission to Announce Multi-Million-Dollar Settlement With Major U.S. Firm for Facilitating Cross-Border Fraud

WHO: Director, FTC’s Bureau of Consumer Protection,
David C. Vladeck

Kerry Petryshyn, Inspector, Royal Canadian Mounted Police

Two Cross-Border Fraud Victims

CALL-IN INFORMATION: Reporters interested in this event, but who are unable to attend, can call in using the following information:

Call-in Number: 877-766-1277
Conference ID Number: 36122559

NOTE: In order to join this conference call, all participants will be required to provide the Conference ID number above.

The call-in lines, which are for press only, open at 10:45 am.

Statement of FTC Chairman Jon Leibowitz Regarding the Senate Judiciary Committee’s Passage of the Preserve Access to Affordable Generics Act (S. 369)

By taking this action, the Committee clearly recognizes the very real danger that these sweetheart deals pose to Americans struggling to pay their medical bills. Consumers must wait – sometimes years – for far less expensive generic drugs when branded pharmaceutical companies pay off their generic competitors to stay out of the market. We estimate that stopping these pay-for-delay settlements will save consumers about $3.5 billion per year and advance the cause of affordable health care for all Americans.

Let me commend the Senate Judiciary Committee and the leadership of Senator Kohl, Senator Grassley, and Chairman Leahy for all their efforts.

FTC Order Prevents Anticompetitive Effects from Pfizers Acquisition of Wyeth

The Federal Trade Commission today announced a settlement resolving its extensive investigation of Pfizer Inc.’s proposed $68 billion acquisition of Wyeth and requiring significant divestitures to preserve competition in multiple U.S. markets for animal pharmaceuticals and vaccines. The proposed consent order remedies the anticompetitive effects the Commission believes are likely to result from the transaction in numerous markets for animal health products. After a thorough investigation, the Commission concluded that the transaction does not raise anticompetitive concerns in any human health product markets.

The Commission issued a statement, which can be found as a link to this press release and on the agency’s Web site, explaining that FTC staff thoroughly investigated both numerous potential overlaps where the companies may compete against each other in the human pharmaceutical area, and the transaction’s broader impact on incentives to innovate and marketing practices. The evidence demonstrated that the transaction likely would not harm consumers in any prescription drug market where the companies currently overlap, reduce incentives to innovate, create intellectual property barriers, or allow Pfizer to engage in anticompetitive marketing practices.

“The Commission’s extensive investigation and commitment of resources in this matter reflects its dedication to ensuring that pharmaceutical markets are competitive and that consumers have access to innovative and affordable medications,” the FTC’s statement explained. “Although the Commission, based on the evidence gathered, determined that this transaction did not raise anticompetitive concerns in the markets for human pharmaceuticals, the Commission remains dedicated to ensuring that pharmaceutical markets are competitive. ”

According to the FTC’s complaint, Pfizer’s acquisition of Wyeth would violate federal law by reducing competition in several U.S. markets for the manufacture and sale of animal vaccines and animal pharmaceutical products. A description of each product, its uses, and the market shares held by Pfizer and Wyeth can be found in the Analysis to Aid Public Comment on the FTC consent order at http://www.ftc.gov/os/caselist/0910053/091014pwyethanal.pdf.

The complaint charges that the proposed transaction likely would harm competition in each of the relevant markets by reducing the number of suppliers and leaving veterinarians and other animal health product customers with limited options. Without the competition provided by Pfizer and Wyeth in these markets, customers are more likely to see prices rise, according to the complaint. The complaint further alleges that the entry of new competitors in these markets would not be timely, likely, nor sufficient to offset the loss of competition, and that the transaction would increase the likelihood that Pfizer could act on its own or with other companies to raise prices.

Under the terms of the FTC’s proposed consent order, Pfizer has agreed to sell approximately half of Wyeth’s Fort Dodge U.S. animal health business to Boehringer Ingelheim Vetmedica, Inc., within 10 days of the acquisition. The Fort Dodge assets to be sold include vaccines for cattle, dogs, and cats, and other pharmaceutical products used in treating cattle, dogs, cats, and horses. Pfizer will also sell its horse vaccines to Boehringer Ingelheim.

The order also requires Pfizer to provide some key services to Boehringer Ingelheim on an interim basis to ensure it is able to compete after the deal is completed, and to provide the necessary regulatory approvals, brand names, marketing materials, customer contracts, and other assets needed to market the products in the United States. In addition, Pfizer will return its exclusive distribution rights for a product to treat tapeworms in horses to Virbac S.A., the manufacturer of the product, to restore competition in the market for that product.

Throughout the course of the FTC’s investigation, staff communicated and cooperated with their counterparts in the European Commission’s Competition Directorate (EC), and the competition authorities in Canada, Australia, Mexico, New Zealand, and South Africa that also are reviewing, or already have reviewed, this proposed merger.

The Commission vote approving the proposed consent order was 2-0, with Commissioners Pamela Jones Harbour and William E. Kovacic recused. The order will be subject to public comment for 30 days, until November 16, 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/pfizerwyeth.

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 $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, 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. 091-0053)
(Pfizer-Wyeth.final.wpd)

FTC Director of Division of Advertising Practices to Discuss Revised Endorsements and Testimonials Guides

Mary Engle, Director of the Federal Trade Commission’s Division of Advertising Practices, will be available by phone on Wednesday, October 14, from 11 a.m. to noon to discuss the newly revised Guides Concerning the Use of Endorsements and Testimonials in Advertising and their impact for advertisers and endorsers.

WHO:	Mary Engle, Associate Director for Advertising Practices FTC’s Bureau Consumer Protection
WHEN:	Wednesday, October 14, 11 a.m. to noon
CALL-IN INFORMATION:	The toll-free phone number (in the U.S. and Canada) is (866) 363-9013, the confirmation number is 36122339 and the chairperson is Gail Kingsland. The lines, which are for media only, will open at 10:45 a.m. EST. Please reference the confirmation number when joining the call.
PRESS CONTACT:	FTC Office of Public Affairs 202-326-2180

Statement of FTC Chairman Jon Leibowitz Regarding the Announcement that Arthur D. Levinson Has Resigned from Google’s Board

On October 12, 2009, Google announced that Arthur D. Levinson, the former Chief Executive Officer of Genentech and a member of the corporate boards of both Google and Apple, is stepping down from Google’s board. Earlier in the year, Apple announced that Eric E. Schmidt, CEO of Google, who had also been a director of both firms, was stepping down from the Apple board.

“Google, Apple, and Mr. Levinson should be commended for recognizing that overlapping board members between competing companies raise serious antitrust issues and for their willingness to resolve our concerns without the need for litigation,” said FTC Chairman Jon Leibowitz. “Beyond this matter, we will continue to monitor companies that share board members and take enforcement actions where appropriate.”

Section 8 of the Clayton Act (“interlocking directorates”) prohibits, with certain exceptions, one person from serving as a director or officer of two competing corporations.

FTC Stops Two Deceptive Telemarketing Operations

Two telemarketing operations targeted by the Federal Trade Commission as part of a major law enforcement sweep last year must stop the deceptive tactics they allegedly used to trick consumers into buying overpriced magazine subscriptions and worthless medical discount plans – and must pay a total of $2.06 million in consumer redress.

The FTC filed the two cases in 2008 as part of “Operation Tele-PHONEY,” the largest telemarketing fraud sweep ever coordinated by the agency. With today’s announcement of a settlement in one case and a court order in the other, 11 of the 13 “Tele-PHONEY” cases have been resolved to the benefit of consumers.

In the magazine telemarketing case, the FTC charged that U.S. Magazine Services and its principal misled consumers by understating the monthly charges for its subscriptions. Although the actual monthly charge was disclosed in a later call – often after the consumers provided their billing information – some consumers learned of the charge only after checking their credit card bill or debit account balance. Consumers who subsequently tried to cancel the subscriptions were told that no cancellations were allowed. In addition, the defendants violated the FTC’s Telemarketing Sales Rule by failing to disclose important terms during their sales pitches.

The settlement order resolving the Commission’s charges bars the defendants from making any further misrepresentations when marketing any product or service, charging consumers without their express informed consent, or violating the Telemarketing Sales Rule. The order requires them to disclose important facts before consumers provide their billing information, including payment details and refund and cancellation policies. It also includes a $600,000 judgment against the defendants, to be paid over the next year.

In the other case, the Commission announced a court order and default judgment against Union Consumer Benefits and its owner, Naeem Alvi, who were charged with marketing worthless medical discount packages to elderly consumers throughout the United States. The FTC charged these defendants with using deception to persuade consumers to reveal their bank account information, and often pretending they were calling from the Social Security Administration, Medicare, or the consumers’ banks.

According to the FTC’s complaint, the defendants offered “free” benefits or a medical discount plan that – for a one-time fee – would supposedly save consumers money on medical care and prescriptions. The company then debited $399 from the consumers’ bank accounts, sending them only a package containing a prescription discount card that didn’t work. The FTC also charged the company with calling consumers whose telephone numbers are on the National Do Not Call Registry.

The court order bars the defendants from making misleading statements or misrepresentations about any product or service, including its effectiveness, total cost, conditions or restrictions, or refund policies. The defendants also are barred from misrepresenting that they are affiliated with government programs such as Medicare or Social Security, or consumers’ banks, or that they can provide consumers with substantial discounts on medical care or prescriptions in exchange for a one-time fee.

The court order also bars the defendants from violating the FTC’s Telemarketing Sales Rule, including the provisions of the National Do Not Call Registry, prohibits them from debiting consumers’ accounts without their consent, and imposes a $1.46 million judgment to provide redress to defrauded consumers.

The Commission vote approving the stipulated final judgment and order for permanent injunction against Your Magazine Provider, Inc., also doing business as U.S. Magazine Services and as Periodicals, and Jason W. Ellsworth was 4-0. It was filed in the U.S. District Court for the District of Montana and entered by the court on October 7, 2009.

The Commission filed the proposed default judgment and order for permanent injunction against Union Consumer Benefits defendants 6554962 Canada Inc. and Naeem Alvi in the U.S. District Court for the Northern District of Illinois, and it was entered by the court on August 19, 2009.

NOTE: Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Stipulated final orders require approval by the court and have the force of law when signed by the judge.

Copies of the stipulated order and the default judgment and order for permanent injunction 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 1,700 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.

(Civ. Nos.: CV-08-64-M-DWM (U.S. Magazine Services) and
1:08-cv-02309 (Union Consumer Benefits))

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