Markets Wired

A U.S. district court has shut down several Web sites that scammers have been using to falsely claim that they can help consumers get free government grant money, the Federal Trade Commission announced today.

At the request of the FTC, the court issued an order closing the Web sites of several related companies that falsely promised consumers that their “Easy to Use Program,” Grant Connect, could help people “instantly find the grant that’s right for [them],” while using pictures of President Obama, Vice President Biden, and the American flag to give the false impression that they were connected to the government. The FTC also charged the companies with using bogus testimonials, failing to disclose the actual cost of their product, bundling multiple other products together for sale without adequate disclosures, and debiting consumers’ bank accounts on a recurring basis without permission.

On July 28, 2009, the court entered an order that temporarily halts these companies’ illegal activities. Subsequently, five of the 12 defendants in the case agreed to a preliminary injunction halting these practices until the matter is decided at trial. The court has set a preliminary injunction hearing for the remaining defendants for September 11, 2009. The FTC is seeking to permanently stop these practices and force the companies to return their ill-gotten gains so the funds can be used to reimburse consumers who were defrauded.

According to the FTC, the operators sell many products online, including Grant Connect, which they describe as “a unique, consumer-friendly US government grant program that delivers all of the tools for the consumer to search multiple databases, write grant proposals, and deliver polished plans…” While the companies claim that consumers will be charged only a few dollars at most, they instead bundle other products and services, such as identity theft protection services, credit offers, and purported health benefits plans with their offer, ultimately charging consumers as much as $70 per month.

Using an affiliated network of Web sites, including www.grantconnectoffer.com and others, they make claims such as: “Grant Connect – $15 Billion of Free Money Available;” “Over $10 Billion Issued in 2009 Already;” and “EASY TO USE PROGRAM: Instantly find the Grant that’s right for you!” They also claim that Grant Connect “makes the process FAST and EASY, so all you have to worry about is where to spend your money!” In addition, the Grant Connect site features “testimonials,” including photos of people who supposedly got grants from the company, including one that states, “It’s so easy! I got my first grant for $300,000. All I have to do is search and click.”

To further persuade consumers into purchasing their product, the Grant Connect site has used images of the President and Vice President in an effort to suggest an affiliation with the U.S. government. For a time, the site featured a photo of President Obama and Vice President Biden standing in front of an American flag, next to the Grant Connect logo and a caption that read, “CHANGE Is Here! $15 BILLION in FREE Government MONEY for you!”

Unfortunately for consumers, according to the FTC, Grant Connect provides little more than outdated, useless information and worthless grant writing “tools.” Few, if any, grants are available to consumers who sign up for the program, and those that are require applicants to meet strict eligibility requirements before they are even considered for the grant.

In addition, while the Web sites tell consumers they can get the Grant Connect service for a one-time fee of as little as 99 cents to $2.78, they do not adequately disclose that buyers will be automatically signed up for other products and services costing up to $70 a month. While the Web site contains some disclosure language in small, densely packed type, few consumers realize they will be charged monthly for services such as “SmartHealth Gold medical and lifestyle benefits” and “VComm International and Long Distance Calling Service” unless they cancel these memberships.

The FTC charged the Grant Connect defendants with violating federal law by: 1) making deceptive representations regarding Grant Connect, 2) failing to adequately disclose the material terms and conditions of their offers, and 3) violating the Electronic Funds Transfer Act by debiting consumers’ bank accounts on a recurring basis without their authorization.

The Commission vote authorizing the complaint was 4-0. It was filed in the U.S. District Court for the District of Nevada on July 27, 2009. The complaint names Grant Connect, LLC; Global Gold, Inc.; Horizon Holdings, LLC; O’Connell Gray, LLC; Pink LP, Vantex Group, LLC; Vertek Group, LLC; Rachel A. Cook, manager of Vantex, and Vertek; James J. Gray, managing member of Grant Connect, Horizon Holdings, and O’Connell Gray; Steven R. Henriksen, president and owner of Global Gold; Juliette M. Kimoto, owner of Vertek and General Partner of Pink; and Randy D. O’Connell, managing member of Horizon Holdings and O’Connell Gray.

The five defendants who agreed to the preliminary injunction entered by the court on August 18, 2009, are: Grant Connect, LLC; Horizon Holdings, LLC; O’Connell Gray, LLC; James J. Gray; and Randy D. O’Connell.

The FTC appreciates the assistance of United States Attorney’s Office for the District of Nevada, the Better Business Bureau of Northern Nevada, the Better Business Bureau of Southern Nevada, the Las Vegas Metropolitan Police Department, and Reno Police Department (Financial Crimes/Computer Crimes Department) in this matter.

The FTC has announced several other grant fraud cases as part of the “Operation Short Change” law enforcement sweep targeting economic stimulus frauds, as well as a complaint against a company that promised consumers “guaranteed” $25,000 government grants. Information about these cases can be found on the Commission’s Web site at: http://www.ftc.gov/opa/2009/07/shortchange.shtm and http://www.ftc.gov/opa/2009/07/gwi.shtm.

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. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the Commission’s complaint can be found on the FTC’s Web site and as a link to this press release. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 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. 092-3126; Civ. No. 2:09-CV-01349)
(Grant Connect.final)

The Federal Trade Commission is inviting interested persons to participate in a public forum on November 4, 2009, to discuss proposed debt relief amendments to the Commission’s Telemarketing Sales Rule. The recently proposed rules seek to combat deceptive and abusive telemarketing of debt relief services that purportedly can reduce consumer credit card debt and other unsecured debt. The debt relief forum, which is free and open to the public, will be held at 600 Pennsylvania Avenue, NW, Washington, DC 20850. Seating is limited and will be provided on a first come, first served basis. The Commission will publish an agenda on its Web site prior to the event.

Parties interested in participating as panelists must submit two things: a request to participate and a comment in response to the Notice of Proposed Rulemaking (NPRM) issued by the FTC on July 30, 2009. The NPRM, which was published in the Federal Register yesterday, is available on the FTC’s Web site at http://www.ftc.gov/os/fedreg/2009/august/090819telemarketingsalesrule.pdf.

Requests to participate as panelists in the public forum must be filed separately from public comments, either on paper or via e-mail to: [email protected]. The e-mail should refer to “Telemarketing Sales Rule – Debt Relief Rulemaking Forum – Request to Participate, R411001.” Full instructions for submitting comments are in the supplementary information section of the NPRM. The forum is open to the public; however, seating is limited and will be provided on a first come, first served basis.

Reasonable accommodations for people with disabilities are available upon request. Requests should be submitted via e-mail to [email protected] or by calling 202-326-3224. Requests should include a detailed description of the accommodations needed and a way to contact you if we need more information. Please provide advance notice. (FTC File No. R411001, the staff contact is Allison Brown, Bureau of Consumer Protection, 202-326-3224.)

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.

(TSR Forum FYI.wpd)

A home mortgage lender that sent prescreened offers of credit to consumers without properly informing them of their right to opt out of receiving such offers in the future has agreed to settle Federal Trade Commission charges that it violated federal law. The settlement requires the company to pay a $20,000 civil penalty and bars future violations.

Prescreened offers of credit or insurance typically are mailings sent to selected consumers based on information in their credit report indicating that they meet the offering company’s criteria. The Fair Credit Reporting Act (FCRA) permits lenders or insurers to make prescreened offers if the offer clearly and conspicuously discloses that, among other things, the consumer’s credit report was used to make the offer and that the consumer can opt out of receiving such offers in the future. The FTC’s Prescreen Opt-Out Notice Rule (Prescreen Rule) requires that each written solicitation contain a short and a long notice, and it specifies the format, type size, and content in order to make the notices simple and easy for consumers to see and understand.

According to the FTC’s complaint, the company violated the FCRA and the FTC’s Prescreen Rule by not providing opt-out notices that comply with the Rule. In some instances, for example, the notices did not contain a short notice on the front page of the solicitation as required by the Rule, or the notices did not comply with the Rule’s format requirements.

The settlement requires Metropolitan Home Mortgage, Inc., doing business as Wholesale Home Lenders, to pay a $20,000 civil penalty and bars the company from failing to comply with the Prescreen Rule. The settlement also contains record-keeping and reporting provisions to allow the FTC to monitor compliance with the order.

The Commission vote to authorize staff to refer the complaint and stipulated final order to the U.S. Department of Justice for filing on the FTC’s behalf was 4-0. The documents were filed in the U.S. District Court for the Central District of California, Southern Division.

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 defendant of a law violation. Stipulated orders are subject to court approval and 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 1,500 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. 0823104)
(Wholesale Home Lenders)

The Federal Trade Commission has issued a final rule requiring certain Web-based businesses to notify consumers when the security of their electronic health information is breached.

Congress directed the FTC to issue the rule as part of the American Recovery and Reinvestment Act of 2009. The rule applies to both vendors of personal health records – which provide online repositories that people can use to keep track of their health information – and entities that offer third-party applications for personal health records. These applications could include, for example, devices such as blood pressure cuffs or pedometers whose readings consumers can upload into their personal health records. Consumers may benefit by using these innovations, but only if they are confident that their health information is secure and confidential.

Many entities offering these types of services are not subject to the privacy and security requirements of the Health Insurance Portability and Accountability Act (HIPAA), which applies to health care service providers such as doctors’ offices, hospitals, and insurance companies. The Recovery Act requires the Department of Health and Human Services to conduct a study and report by February 2010, in consultation with the FTC, on potential privacy, security, and breach-notification requirements for vendors of personal health records and related entities that are not subject to HIPAA. In the meantime, the Act requires the Commission to issue a rule requiring these entities to notify consumers if the security of their health information is breached. The Commission announced a proposed rule in April 2009, collected public comments until June 1, and is issuing the Final Rule today.

The Final Rule requires vendors of personal health records and related entities to notify consumers following a breach involving unsecured information. In addition, if a service provider to one of these entities has a breach, it must notify the entity, which in turn must notify consumers. The Final Rule also specifies the timing, method, and content of notification, and in the case of certain breaches involving 500 or more people, requires notice to the media. Entities covered by the rule must notify the FTC, and they may use a standard form, which can be found along with additional information about the rule at www.ftc.gov/healthbreach.

The Commission vote approving the Final Rule was 4-0. The notice will be published in the Federal Register shortly, and is available now on the FTC’s Web site and as a link to this press release.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 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. R911002)
(health info.wpd)