Markets Wired

The Commission has reopened the public comment period for the review of its Rule Concerning the Use of Prenotification Negative Option Plans at the request of an organization and state and local governments seeking additional time. The public comment period has been extended for 60 days, until October 13, 2009. Information on how and where to submit comments can be found in a new Federal Register notice on the Commission’s Web site.

The vote approving the extension of the public comment period was 4-0. (FTC File No. P064202; the staff contacts are Robin R. Spector, Bureau of Consumer Protection, 202-326-3740, and Matthew Wilshire, Bureau of Consumer Protection, 202-326-2976; see press release dated May 11, 2009, at http://www.ftc.gov/opa/2009/05/budget.shtm.)

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 39.2009.wpd)

For a long time, layaway plans have provided an alternative to paying cash or using credit. The retailer holds merchandise in reserve until the consumer pays for it in full. In recent years, Internet layaway sites have provided online shoppers with a similar option.

According to a new consumer alert from the Federal Trade Commission, the nation’s consumer protection agency, it’s important to ask questions about the layaway plan and the refund policy when considering the layaway option. The alert, Layaway: Another Way to Buy, also tells consumers how to check out the business offering the plan.

To learn more, go to http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt173.shtm.

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.

(FYI layaway plans)

Today is the final day of a public event the Federal Trade Commission and the Searle Center on Law, Regulation, and Economic Growth at Northwestern University School of Law are hosting on consumer protection issues in debt collection proceedings. This is the first in a series of FTC roundtable discussions on these topics.

WHAT:	“Protecting Consumers in Debt Collection Litigation and Arbitration: A Roundtable Discussion”
WHEN:	August 6, 2009 – 9 a.m. to 5 p.m., Central Time
WHERE:	Thorne Auditorium, Northwestern Law School 375 E. Chicago Ave. (corner of Lake Shore Drive) Chicago, IL 60611

A live webcast, agenda, and information about the participants are available at http://www.ftc.gov/bcp/workshops/debtcollectround/index.shtm.

Interested parties are also highly encouraged to submit written comments or original research through September 1, 2009. Comments should refer to “Debt Collection Roundtable – Comment, Project No. P094806.” To file electronically, follow the instructions and fill out the form at https://secure.commentworks.com/ftc-debtcollectroundtable1.

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.

In the wake of a Federal Trade Commission complaint against a company that deceptively sold electronics to hundreds of British consumers, the company has agreed to stop its allegedly illegal tactics until the case is decided in federal court.

Using the Web site names www.bestpricedbrands.co.uk and www.bitesizedeals.co.uk, the California company tricked consumers into believing that they were buying from a company operating in the United Kingdom and were protected by manufacturer warranties that were valid there, according to the FTC complaint. When consumers received the cameras, video games, and other electronic goods, they discovered they had been charged unexpected import duties, were left with invalid warranties, and would be charged draconian cancellation and refund fees if they attempted to send the merchandise back, the complaint stated.

This is the first case the FTC has brought against a U.S. company exclusively doing business abroad. The U.S. SAFE WEB Act of 2006 gave the FTC the authority to sue U.S. companies deceiving foreign consumers, and was part of a strategy to prevent the United States from becoming a haven for fraud.

The Pasadena, California-based defendants charged in the case are Balls of Kryptonite, doing business as Best Priced Brands and Bite Size Deals, and its owner, Jaivin Karnani. Due in part to the defendants’ deceptive use of Web sites ending in “.uk”, the complaint alleges that consumers in the United Kingdom were duped into purchasing goods that carried no manufacturer warranties, were misled about their rights to return or exchange goods under U.K. regulations, were denied the option of cancelling orders, and were sent goods that were different from those depicted on the defendants’ Web sites – and in some cases were unusable.

The FTC also charged the defendants with deceiving consumers about their participation
in a program in which U.S. companies assure customers in the European Union that they secure the customers’ personal information, as required by European law. Known as the EU/U.S. Safe Harbor program, it is administered by U.S. Department of Commerce. The complaint alleges that although the defendants claimed to participate in the EU/U.S. Safe Harbor program, they did not.

European consumers who want to know whether a U.S. company believes it is complying
with European law by participating in the Safe Harbor program can go to http://export.gov/safeharbor to see if the company has self-certified.

The FTC was assisted in its investigation by the U.K. Office of Fair Trading, one of the FTC’s principal international law enforcement partners. Many consumers in the United Kingdom registered complaints with the FTC by using the Web site www.econsumer.gov. Established by consumer protection agencies from 25 countries, this Web site collects consumers’ complaints about problems in other countries, and facilitates international enforcement cooperation by making the complaints available to international consumer protection agencies through the FTC’s Consumer Sentinel Network.

The Commission vote authorizing the complaint was 4-0. The complaint was filed with
the request for a temporary restraining order on July 20, 2009, in the U.S. District Court for the Central District of California.

On July 31, 2009, the court entered a temporary restraining order in which the defendants agreed to halt their deceptive representations and provide an accounting of their assets.

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 or respondent has actually violated the law. The stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation.

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. 092-3081)
(Best Priced Brands NR.wpd)

The Federal Trade Commission extended its crackdown in the billion-dollar prepaid calling card industry, asking a U.S. district court to permanently halt the illegal practices of a major calling card distributor and its principals. The FTC has charged Diamond Phone Card, Inc., a distributor of prepaid calling cards based in Elmhurst, New York, and its principals with advertising that the calling cards they sold provided more minutes than they actually delivered. The complaint also alleges that the defendants failed to adequately disclose fees that could reduce the value of the calling cards. The FTC is seeking to force the defendants to give up the money they made through their deceptive tactics.

Diamond Phone Card marketed the cards to recent immigrants, many of whom rely on calling cards to stay in touch with family and friends in other countries. The defendants’ advertisements made bold claims about the number of minutes the cards would provide for calls to a wide range of international locations, including the Dominican Republic, El Salvador, Mexico, India, Pakistan, and Guatemala. But the FTC charges that consumers didn’t receive the number of minutes advertised. For example, a calling card claiming to deliver 400 calling minutes to Mexico provided only 106 minutes of calling time, and one claiming to deliver 50 minutes of calling time to Honduras actually delivered only 20 minutes.

The FTC’s complaint also alleges that the defendants failed to properly disclose “maintenance” and other fees. For example, the defendants’ ads trumpeted in large, colorful text the number of calling minutes their cards purportedly would provide. Less obvious to consumers, however, was a 79-cent “maintenance” fee that applied to $2 and $5 cards, and was “disclosed” in nearly illegible print on the very bottom of the advertisement.

This complaint follows two recent FTC actions against distributors of prepaid calling cards. In February 2009, Alternatel, Voice Prepaid, and Mystic Prepaid agreed to pay $2.25 million to resolve FTC allegations that they had deceived consumers. In June 2009, another leading distributor of prepaid cards, Clifton Telecard Alliance, agreed to pay $1.3 million to settle similar FTC charges. The FTC has established a joint federal-state task force to address deceptive advertising and marketing practices in the prepaid calling card industry.

The complaint against Diamond Phone Card, Inc., and the company’s principals, Nasreen Gilani and Samsuddin Panjawani, was filed in U.S. District Court for the Eastern District of New York. The Commission vote to file the complaint was 4-0.

This case was brought with the invaluable assistance of El Salvador’s Defensoría del Consumidor, Colombia’s Superintendencia de Industria y Comercio, the Egypt Consumer Protection Authority, Mexico’s Procuraduría Federal del Consumidor (PROFECO), Panama’s Autoridad de Protección al Consumidor y Defensa de la Competencia (ACODECO), and Peru’s Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual (INDECOPI).

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.

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. 082-3038)
(DiamondPhone)