Getting Rid of Your Old Computer?

Computers are a popular gift during the holiday season. People with a new computer often wonder about the best way to get rid of the old one. OnGuardOnline.gov, the computer safety Web site managed by the Federal Trade Commission, has some tips to make this task easier – and more secure.

Passwords, health information, and other sensitive personal data should be saved elsewhere and erased off the old computer. This protects consumers’ privacy and safeguards them from identity theft. People who use their computers for work should check with their employers regarding the legal requirements businesses must comply with to secure and dispose of data.

To learn more, including how to save and erase data, see “Computer Disposal” at http://www.onguardonline.gov/topics/computer-disposal.aspx.

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 computer disposal)

Commission Appoints Interim Monitor, Approves Interim Monitor Agreement in Matter of Reed Elsevier NV/ChoicePoint, Inc.

The Commission has appointed Mitchell S. Pettit as the interim monitor under the terms of the recently approved consent order concerning ChoicePoint, Inc.’s acquisition by Reed Elsevier, NV. The Commission also approved the interim monitor agreement in this matter. The Commission’s decision and consent order authorizes the FTC to appoint an interim monitor to oversee the divestiture of assets required in this matter. As the monitor appointed by the Commission, Pettit, the founder and CEO of MSP Strategic Communication, Inc., will perform his duties in accordance with the interim monitor agreement, which both ChoicePoint and Reed Elsevier have agreed to.

The vote to appoint the interim monitor and approve the interim monitor agreement was 4-0. A public version of the agreement can be found on the FTC’s Web site and as a link to this press release. (FTC File No. 081-0133; the staff contact is Anne R. Schenof, Bureau of Competition, 202-326-2031; see press release dated September 16, 2008, at http://www.ftc.gov/opa/2008/09/choicepoint.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 60.2008.wpd)

Commission Appoints Interim Monitor, Approves Interim Monitor Agreement in Matter of Reed Elsevier NV/ChoicePoint, Inc.

The Commission has appointed Mitchell S. Pettit as the interim monitor under the terms of the recently approved consent order concerning ChoicePoint, Inc.’s acquisition by Reed Elsevier, NV. The Commission also approved the interim monitor agreement in this matter. The Commission’s decision and consent order authorizes the FTC to appoint an interim monitor to oversee the divestiture of assets required in this matter. As the monitor appointed by the Commission, Pettit, the founder and CEO of MSP Strategic Communication, Inc., will perform his duties in accordance with the interim monitor agreement, which both ChoicePoint and Reed Elsevier have agreed to.

The vote to appoint the interim monitor and approve the interim monitor agreement was 4-0. A public version of the agreement can be found on the FTC’s Web site and as a link to this press release. (FTC File No. 081-0133; the staff contact is Anne R. Schenof, Bureau of Competition, 202-326-2031; see press release dated September 16, 2008, at http://www.ftc.gov/opa/2008/09/choicepoint.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 60.2008.wpd)

Sony BMG Music Settles Charges Its Music Fan Websites Violated the Children’s Online Privacy Protection Act

Sony BMG Music Entertainment (Sony Music) has agreed to pay $1 million as part of a settlement to resolve Federal Trade Commission charges that it violated the Children’s Online Privacy Protection Act (COPPA) and the Commission’s implementing Rule. The Commission’s complaint alleges that, through its music fan Web sites, Sony Music improperly collected, maintained and disclosed personal information from thousands of children under the age of 13, without their parents’ consent. The civil penalty to be paid by Sony Music matches the largest penalty ever in a COPPA case.

Sony BMG Music Entertainment, a subsidiary of Sony Corporation of America, represents hundreds of popular musicians and entertainers, including numerous artists popular with children and teenagers. The company operates over 1,000 Web sites for its musical artists and labels. Sony Music requires users to submit a broad range of personal information, together with date of birth, in order to register for these sites. On 196 of these sites, Sony Music knowingly collected personal information from at least 30,000 underage children without first obtaining their parents’ consent, in violation of COPPA. Many of these sites also enable children to create personal fan pages, review artists’ albums, upload photos or videos, post comments on message boards and in online forums, and engage in private messaging. In this way, children were able to interact with Sony Music fans of all ages, including adults.

“Sites with social networking features, like any Web sites, need to get parental consent before collecting kids’ personal information,” said FTC Chairman William E. Kovacic. “Sony Music is paying the penalty for falling down on its COPPA obligations.”

COPPA prohibits unfair or deceptive acts or practices in connection with the collection, use, or disclosure of personally identifiable information from and about children under 13 on the Internet. The law requires operators to notify parents and obtain their consent before collecting, using, or disclosing children’s personal information.

The FTC’s complaint alleges that Sony Music violated COPPA by failing to provide sufficient notice on the Sony Music Web sites of what information the company collects online from children, how it uses such information, and its disclosure practices; failing to provide direct notice to parents of Sony Music’s information practices; failing to obtain verifiable parental consent; and, failing to provide a reasonable means for parents to review the personal information collected from their children and to refuse to permit its further use or maintenance.

The FTC’s complaint also charges Sony Music with violating Section 5 of the Federal Trade Commission Act by falsely stating in its privacy policy that users who indicate that they are under 13 on its Web site registration pages will be restricted from participating in Sony Music’s web page activities. In fact, Sony Music accepted registrations from children who entered a date of birth indicating that they were under 13.

The Commission’s consent order calls for Sony Music to pay a $1 million civil penalty. In addition, the order specifically prohibits Sony Music from violating any provision of the Rule, and requires it to delete all personal information collected and maintained in violation of the Rule. 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 children’s privacy in general, and social networking sites in particular, the order requires Sony Music to link to certain FTC consumer education materials for the next five years. The company must include a link to the children’s privacy section of the Commission’s www.ftc.gov Web site on any site it operates that is subject to COPPA. In addition, Sony Music must include links to the social networking section of the Commission’s www.onguardonline.gov web site on any of its sites that offer users the opportunity to create publicly viewable profiles.

The Commission vote approving the complaint and consent order was 4-0. On December 10, 2008, the Department of Justice, on behalf of the FTC, filed the complaint in the U.S. District Court for the Southern District of New York and submitted the consent decree 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.

NOTE: Consent orders are for settlement purposes only and do not necessarily constitute an admission by the defendant 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 1,500 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. 082-3071)
(SonyMusic.wpd)

Two Marketers of Cosmetic Contact Lenses to Pay More Than $40,000 for Violating Contact Lens Rule

Two Internet marketers of non-corrective, cosmetic contact lenses have agreed to settle Federal Trade Commission charges that they violated federal law by selling lenses without a prescription.

Under the Contact Lens Rule, which is administered by the FTC, sellers are required to verify that a consumer has a valid prescription for all contact lenses, including cosmetic lenses. Improper use of contact lenses, whether they are corrective or not, can cause corneal ulcers, corneal abrasions, vision impairment, and blindness.

Under the terms of the first settlement, See Right Vision, also doing business as Vision Contact Lenses, was ordered to pay a civil penalty of $27,000. The terms of the second settlement required Contact Lens Heaven to pay a civil penalty of $233,498, but because of the company’s inability to pay, all but $15,000 has been suspended.

The courts’ orders also prohibit the defendants from selling contact lenses without obtaining or verifying prescriptions directly from the prescribers, from failing to maintain records of prescriptions and verifications, and from violating the Contact Lens Rule. Both settlements also contain various record keeping provisions to assist the FTC in monitoring the defendants’ compliance.

The court orders also resolve the Commission’s charges against the following individual defendants: Ioanna Xenou-Karoumpa, based in Plantation, Florida (Contact Lens Heaven, Inc.; www.contactsland.com and www.contactlensheaven.com); and Chapin N. Wright II, based in Wellesley Hills, Massachusetts (See Right Vision and Vision Contact Lenses; www.colorfulcontactlenses.com, and www.visioncontactlenses.com).

In its continuing initiative to enforce the Contact Lens Rule, on October 31, 2008 FTC staff sent warning letters to eight sellers of non-corrective, cosmetic contact lenses who appeared to be providing contact lenses to consumers without valid prescriptions.

Under the Contact Lens Rule, sellers of both corrective and non-corrective cosmetic contact lenses must have a copy of a valid contact lens prescription or verify it with the prescriber before dispensing contact lenses to consumers. Failure to do so can result in civil penalties of up to $11,000 per violation.

The warning letters include guidance for sellers on their obligations under the Rule, directing them to “The Contact Lens Rule: A Guide for Prescribers and Sellers,” and “Complying with the Contact Lens Rule.” Consumers can learn more about cosmetic contact lenses in “Avoiding an Eyesore: What to Know Before You Buy Cosmetic Contacts,” and about their rights under federal law in “The Eyes Have It – Get Your Prescription.”

The Commission vote authorizing the staff to file both complaints and agreed-upon final orders was 4-0. These documents were entered in U.S. District Court for the Southern District of Florida on December 3, 2008 (Contact Lens Heaven, Inc.), and the U.S. District Court for the District of Massachusetts on October 31, 2008 (See Right Vision).

NOTE: These consent decrees are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A consent decree is subject to court approval and has the force of law when signed by the judge. Copies of the complaints and proposed consent decrees 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 1,500 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.

(Contact lens NR.wpd)
(FTC File No. 0823020 and FTC File No. 0823006)
(U.S. v. See Right Vision, No. 0:08-cv-61713-WJZ)
(U.S. v. Contact Lens Heaven, No. 1:08-cv-11793-GAO)

Two Marketers of Cosmetic Contact Lenses to Pay More Than $40,000 for Violating Contact Lens Rule

Two Internet marketers of non-corrective, cosmetic contact lenses have agreed to settle Federal Trade Commission charges that they violated federal law by selling lenses without a prescription.

Under the Contact Lens Rule, which is administered by the FTC, sellers are required to verify that a consumer has a valid prescription for all contact lenses, including cosmetic lenses. Improper use of contact lenses, whether they are corrective or not, can cause corneal ulcers, corneal abrasions, vision impairment, and blindness.

Under the terms of the first settlement, See Right Vision, also doing business as Vision Contact Lenses, was ordered to pay a civil penalty of $27,000. The terms of the second settlement required Contact Lens Heaven to pay a civil penalty of $233,498, but because of the company’s inability to pay, all but $15,000 has been suspended.

The courts’ orders also prohibit the defendants from selling contact lenses without obtaining or verifying prescriptions directly from the prescribers, from failing to maintain records of prescriptions and verifications, and from violating the Contact Lens Rule. Both settlements also contain various record keeping provisions to assist the FTC in monitoring the defendants’ compliance.

The court orders also resolve the Commission’s charges against the following individual defendants: Ioanna Xenou-Karoumpa, based in Plantation, Florida (Contact Lens Heaven, Inc.; www.contactsland.com and www.contactlensheaven.com); and Chapin N. Wright II, based in Wellesley Hills, Massachusetts (See Right Vision and Vision Contact Lenses; www.colorfulcontactlenses.com, and www.visioncontactlenses.com).

In its continuing initiative to enforce the Contact Lens Rule, on October 31, 2008 FTC staff sent warning letters to eight sellers of non-corrective, cosmetic contact lenses who appeared to be providing contact lenses to consumers without valid prescriptions.

Under the Contact Lens Rule, sellers of both corrective and non-corrective cosmetic contact lenses must have a copy of a valid contact lens prescription or verify it with the prescriber before dispensing contact lenses to consumers. Failure to do so can result in civil penalties of up to $11,000 per violation.

The warning letters include guidance for sellers on their obligations under the Rule, directing them to “The Contact Lens Rule: A Guide for Prescribers and Sellers,” and “Complying with the Contact Lens Rule.” Consumers can learn more about cosmetic contact lenses in “Avoiding an Eyesore: What to Know Before You Buy Cosmetic Contacts,” and about their rights under federal law in “The Eyes Have It – Get Your Prescription.”

The Commission vote authorizing the staff to file both complaints and agreed-upon final orders was 4-0. These documents were entered in U.S. District Court for the Southern District of Florida on December 3, 2008 (Contact Lens Heaven, Inc.), and the U.S. District Court for the District of Massachusetts on October 31, 2008 (See Right Vision).

NOTE: These consent decrees are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A consent decree is subject to court approval and has the force of law when signed by the judge. Copies of the complaints and proposed consent decrees 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 1,500 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.

(Contact lens NR.wpd)
(FTC File No. 0823020 and FTC File No. 0823006)
(U.S. v. See Right Vision, No. 0:08-cv-61713-WJZ)
(U.S. v. Contact Lens Heaven, No. 1:08-cv-11793-GAO)

Operation Tele-PHONEY Defendant Settles Commission Charges

The Federal Trade Commission has successfully settled the second of 13 complaints brought as part of the multi-agency “Operation Tele-PHONEY” law enforcement sweep in May 2008 against deceptive telemarketers and the companies they operated throughout the United States.

In the settlement announced today, defendant Robert James Fischbach, who allegedly deceptively marketed advance-fee credit cards to consumers nationwide, has been prohibited from making the misrepresentations alleged in the complaint, and more broadly from violating the FTC Act and Telemarketing Sales Rule (TSR). The order also imposes a monetary judgment of more than $2.4 million, most of which has been suspended due to his inability to pay.

The FTC sued Fischbach and his two companies, Integrity Financial Enterprises, LLC, also doing business as (d/b/a) Infinite Financial and National Benefit Exchange; and National Benefit Exchange, Inc. According to the Commission’s complaint, defendant Fischbach and his companies, all based in Florida, used telemarketing to sell an advance-fee “credit card” that they claimed could be used like a Visa or MasterCard, but which actually could be used only to buy products from the defendants’ Web site or catalog. The defendants charged consumers who accepted the cards an up-front fee of between $200 and $300, and promised them they would receive a credit card with a credit limit of $2,500 to $7,500, as well as a $1,000 cash advance limit. The defendants also misled consumers into believing that they would honor consumers’ requests to cancel or change their orders to avoid the debiting of the advance fee from their bank accounts, but they never did so.

The court granted the Commission’s request for a temporary restraining order and asset freeze against Fischbach and the corporate defendants on May 13, 2008. The court also entered a stipulated preliminary injunction order against Fischbach and the corporate defendants on May 28, 2008.

The final court order entered against Fischbach contains both conduct and monetary relief. First, it permanently prohibits him from making any of the misrepresentations alleged in the complaint, including that consumers are being provided with a general-purpose credit card, that they can cancel their orders before their accounts are debited, and that such cancellation requests will be honored. More generally, the order prohibits Fischbach from making misrepresentations about any good or service, prohibits him from violating the TSR, prohibits him from selling any of his customer lists, requires him to cooperate with the FTC, and includes monitoring provisions to ensure his compliance with the terms of the order.

The order also contains a $2,461,574 judgment against Fischbach, representing the total amount of harm his illegal conduct caused consumers. Almost all of the judgment has been suspended based on his inability to pay, but Fischbach must surrender his rights to several thousand dollars of assets already frozen by the court. In addition, the full amount of the judgment will become due if Fischbach is later found to have misrepresented his or his companies’ financial condition to the FTC.

The Commission vote authorizing the staff to file the stipulated final judgment and order for permanent injunction against defendant Robert James Fischbach was 4-0. The documents were filed in the U.S. District Court for the Middle District of Florida, Tampa Division, on December 4, 2008, and approved by the Court on December 5, 2008.

The court action announced today settles the FTC’s charges against defendant Fischbach. On October 20, 2008, the court entered a default judgment against Fischbach’s companies. The default judgment requires the corporate defendants to pay $2,461,574 and to forfeit all of their assets, which total $15,895.94.

Combined with actions brought by other enforcement agencies, the “Tele-PHONEY” sweep encompassed more than 180 cases that included both civil and criminal actions in the United States and Canada. The FTC’s first settlement resulting from a “Tele-PHONEY” complaint came in September, when the agency secured a court order requiring another advance-fee telemarketer to turn over $1 million for consumer redress (see press release at http://www.ftc.gov/opa/2008/05/telephoney.shtm).

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

Copies of the stipulated final judgment 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 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. X080033; Civ. No. 8:08-cv-914-T-27 MSS)
(Integrity Financial.final.wpd)

Court Halts Bogus Computer Scans

At the request of the Federal Trade Commission, a U.S. district court has issued a temporary halt to a massive “scareware” scheme, which falsely claimed that scans had detected viruses, spyware, and illegal pornography on consumers’ computers. According to the FTC, the scheme has tricked more than one million consumers into buying computer security products such as WinFixer, WinAntivirus, DriveCleaner, ErrorSafe, and XP Antivirus. The court also froze the assets of those responsible for the scheme, to preserve the possibility of providing consumers with monetary redress.

According to the FTC’s complaint, the defendants used an elaborate ruse that duped Internet advertising networks and popular Web sites into carrying their advertisements. The defendants falsely claimed that they were placing Internet advertisements on behalf of legitimate companies and organizations. But due to hidden programming code that the defendants inserted into the advertisements, consumers who visited Web sites where these ads were placed did not receive them. Instead, consumers received exploitive advertisements that took them to one of the defendants’ Web sites. These sites would then claim to scan the consumers’ computers for security and privacy issues. The “scans” would find a host of purported problems with the consumers’ computers and urge them to buy the defendants’ computer security products for $39.95 or more. However, the scans were entirely false.

According to the complaint, the two companies charged in the case – Innovative Marketing, Inc. and ByteHosting Internet Services, LLC – operate using a variety of aliases and maintain offices in various countries. Innovative Marketing is a company incorporated in Belize that maintains offices in Kiev, Ukraine. ByteHosting Internet Services is based in Cincinnati, Ohio.

The complaint alleges that these two companies, along with individuals Daniel Sundin, Sam Jain, Marc D’Souza, Kristy Ross, and James Reno, violated the FTC Act by misrepresenting that they conducted scans of consumers’ computers and detected a variety of security or privacy issues, including viruses, spyware, system errors, and pornography. The complaint also names a sixth individual, Maurice D’Souza, as a relief defendant who received proceeds from the scheme.

On December 2, 2008 the FTC requested and received a temporary restraining order from the U.S. District Court for the District of Maryland. Under its terms, the defendants are barred from falsely representing that they have run any type of computer analysis, or that they have detected security or privacy problems on a consumer’s computer. They also are barred from using domain names obtained with false or incomplete information, placing advertisements purportedly on behalf of a third party without that party’s consent, or otherwise attempting to conceal their own identities. The order also mandates that companies hosting the defendants’ Web sites and providing domain-registration services take the necessary steps to keep consumers from accessing these Web sites.

The FTC seeks to permanently bar the defendants from engaging in “scareware” marketing. The FTC also asks the court to order the defendants to provide monetary redress to consumers or otherwise give up their ill-gotten gains.

As part of an ongoing effort to warn the public about the risks posed by scareware and other types of Internet fraud, the FTC has produced a new alert for consumers. To learn more, see the alert “‘Free Security Scan’ Could Cost Time and Money ” at http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt121.shtm.

The Commission vote authorizing the staff to file the complaint against the defendants was 4-0. The complaint was filed on December 2, 2008 in the U.S. District Court for the District of Maryland.

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. A complaint is not a finding or ruling that the defendants have actually violated the law.

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. 072-3137)
(Winsoftware NR.wpd)

Court Halts Bogus Computer Scans

At the request of the Federal Trade Commission, a U.S. district court has issued a temporary halt to a massive “scareware” scheme, which falsely claimed that scans had detected viruses, spyware, and illegal pornography on consumers’ computers. According to the FTC, the scheme has tricked more than one million consumers into buying computer security products such as WinFixer, WinAntivirus, DriveCleaner, ErrorSafe, and XP Antivirus. The court also froze the assets of those responsible for the scheme, to preserve the possibility of providing consumers with monetary redress.

According to the FTC’s complaint, the defendants used an elaborate ruse that duped Internet advertising networks and popular Web sites into carrying their advertisements. The defendants falsely claimed that they were placing Internet advertisements on behalf of legitimate companies and organizations. But due to hidden programming code that the defendants inserted into the advertisements, consumers who visited Web sites where these ads were placed did not receive them. Instead, consumers received exploitive advertisements that took them to one of the defendants’ Web sites. These sites would then claim to scan the consumers’ computers for security and privacy issues. The “scans” would find a host of purported problems with the consumers’ computers and urge them to buy the defendants’ computer security products for $39.95 or more. However, the scans were entirely false.

According to the complaint, the two companies charged in the case – Innovative Marketing, Inc. and ByteHosting Internet Services, LLC – operate using a variety of aliases and maintain offices in various countries. Innovative Marketing is a company incorporated in Belize that maintains offices in Kiev, Ukraine. ByteHosting Internet Services is based in Cincinnati, Ohio.

The complaint alleges that these two companies, along with individuals Daniel Sundin, Sam Jain, Marc D’Souza, Kristy Ross, and James Reno, violated the FTC Act by misrepresenting that they conducted scans of consumers’ computers and detected a variety of security or privacy issues, including viruses, spyware, system errors, and pornography. The complaint also names a sixth individual, Maurice D’Souza, as a relief defendant who received proceeds from the scheme.

On December 2, 2008 the FTC requested and received a temporary restraining order from the U.S. District Court for the District of Maryland. Under its terms, the defendants are barred from falsely representing that they have run any type of computer analysis, or that they have detected security or privacy problems on a consumer’s computer. They also are barred from using domain names obtained with false or incomplete information, placing advertisements purportedly on behalf of a third party without that party’s consent, or otherwise attempting to conceal their own identities. The order also mandates that companies hosting the defendants’ Web sites and providing domain-registration services take the necessary steps to keep consumers from accessing these Web sites.

The FTC seeks to permanently bar the defendants from engaging in “scareware” marketing. The FTC also asks the court to order the defendants to provide monetary redress to consumers or otherwise give up their ill-gotten gains.

As part of an ongoing effort to warn the public about the risks posed by scareware and other types of Internet fraud, the FTC has produced a new alert for consumers. To learn more, see the alert “‘Free Security Scan’ Could Cost Time and Money ” at http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt121.shtm.

The Commission vote authorizing the staff to file the complaint against the defendants was 4-0. The complaint was filed on December 2, 2008 in the U.S. District Court for the District of Maryland.

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. A complaint is not a finding or ruling that the defendants have actually violated the law.

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. 072-3137)
(Winsoftware NR.wpd)

Statement of FTC’s Bureau of Competition Regarding Announcement That Herff Jones and American Achievement Group Have Terminated Their Acquisition Agreement

Herff Jones and American Achievement Group Holding Corp., the parent company of American Achievement Corporation (AAC), announced on December 5, 2008, that their acquisition agreement has been mutually terminated because the parties did not obtain the required regulatory approvals necessary to complete the transaction.

“Staff of the Bureau of Competition had been investigating the proposed transaction for months and had informed Herff Jones and AAC that we had serious concerns about the likely anticompetitive harm that would have resulted if the transaction was completed,” said David P. Wales, Acting Director of the FTC’s Bureau of Competition. “Staff gathered an impressive amount of testimonial, documentary, and economic expert evidence that this transaction was anticompetitive and would likely have resulted in higher prices and diminished service for commemorative products, including class rings. The abandonment of the deal means that consumers will continue to benefit from the important competition between Herff Jones and AAC for these products.”

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(Class Rings.final.wpd)