FTC Testifies on the Call Center Consumers Right to Know Act

The Federal Trade Commission provided testimony today before the U.S. House of Representatives’ Committee on Energy and Commerce, Subcommittee on Commerce, Trade, and Consumer Protection regarding H.R. 1776, legislation entitled the “Call Center Consumer’s Right to Know Act.” Lois Greisman, Associate Director of the Division of Marketing Practices, Bureau of Consumer Protection, testified on behalf of the FTC.

The Commission’s testimony began by discussing the agency’s law enforcement experience with call centers, which is based primarily on its enforcement of the Telemarketing Sales Rule (TSR) and the privacy protections provided by the National Do Not Call (DNC) Registry. The testimony next provided a history of the Commission’s telemarketing fraud law enforcement program, dating back to 1991, and of the agency’s enforcement of the DNC Registry which was put into place in 2003 to strengthen consumers’ privacy protections.

As an example of the agency’s telemarketing fraud enforcement program, the testimony described “Operation Tele-PHONEY,” the largest law enforcement sweep of the telemarketing industry ever conducted by the FTC. In May 2008, the FTC and other agencies announced they had brought more than 180 civil and criminal law enforcement actions targeting illegal telemarketing due to the sweep and interagency cooperation. The testimony also described how the FTC refers cases for criminal prosecution and how it pursues third parties that facilitate telemarketing fraud.

The testimony then discussed H.R. 1776, which would require call center employees to disclose, in telephone calls with consumers, the physical location of the call center. The Commission provided comments on the draft legislation relating to its scope and enforcement and expressed its willingness to work with the Committee as the legislation progresses.

The Commission vote to approve the testimony and place a copy on the public record was 4-0. The written statement presented at the hearing represents the views of the FTC.

Copies of the Commission’s testimony 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. P034412)
(Call Center Testimony.final.wpd)

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FTC Testifies on the Call Center Consumers Right to Know Act

The Federal Trade Commission provided testimony today before the U.S. House of Representatives’ Committee on Energy and Commerce, Subcommittee on Commerce, Trade, and Consumer Protection regarding H.R. 1776, legislation entitled the “Call Center Consumer’s Right to Know Act.” Lois Greisman, Associate Director of the Division of Marketing Practices, Bureau of Consumer Protection, testified on behalf of the FTC.

The Commission’s testimony began by discussing the agency’s law enforcement experience with call centers, which is based primarily on its enforcement of the Telemarketing Sales Rule (TSR) and the privacy protections provided by the National Do Not Call (DNC) Registry. The testimony next provided a history of the Commission’s telemarketing fraud law enforcement program, dating back to 1991, and of the agency’s enforcement of the DNC Registry which was put into place in 2003 to strengthen consumers’ privacy protections.

As an example of the agency’s telemarketing fraud enforcement program, the testimony described “Operation Tele-PHONEY,” the largest law enforcement sweep of the telemarketing industry ever conducted by the FTC. In May 2008, the FTC and other agencies announced they had brought more than 180 civil and criminal law enforcement actions targeting illegal telemarketing due to the sweep and interagency cooperation. The testimony also described how the FTC refers cases for criminal prosecution and how it pursues third parties that facilitate telemarketing fraud.

The testimony then discussed H.R. 1776, which would require call center employees to disclose, in telephone calls with consumers, the physical location of the call center. The Commission provided comments on the draft legislation relating to its scope and enforcement and expressed its willingness to work with the Committee as the legislation progresses.

The Commission vote to approve the testimony and place a copy on the public record was 4-0. The written statement presented at the hearing represents the views of the FTC.

Copies of the Commission’s testimony 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. P034412)
(Call Center Testimony.final.wpd)

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FTC’s AmeriDebt Lawsuit Resolved: Almost $13 Million Returned to 287,000 Consumers Harmed by Debt Management Scam

The Federal Trade Commission announced today that the agency returned approximately $12.7 million to consumers this week from a settlement with Andris Pukke and his companies, AmeriDebt, Inc. and DebtWorks, Inc. This consumer redress concludes the largest credit counseling/debt management deception case brought by the FTC. In addition, more than $7 million will be returned to consumers as a result of class-action settlements with the defendants and related credit counseling agencies.

Using the defendants’ records, about 287,000 AmeriDebt consumers have been mailed redress checks. The FTC and individual consumers alleged that AmeriDebt, DebtWorks, and related credit counseling agencies engaged in deceptive practices in promoting and offering credit counseling and debt management plans (DMPs).

Consumers who qualified for redress, a total of about 460,000 consumers, obtained a DMP from one of 11 credit counseling agencies serviced by DebtWorks between January 31, 1998 and October 7, 2004. The agencies were AmeriDebt, Inc., Debticated Consumer Counseling, Inc., A Better Way Credit Counseling, Inc., Credicure, Inc., Mason Credit Counseling, Inc., Nexum Credit Counseling, Inc., Neway, Inc., The Credit Network, Inc., Visual Credit Counseling, Inc., Preactive, Inc., and Debtscape, Inc.

Since May 2006, a court-appointed receiver has been working diligently to identify all possible assets that can be liquidated for consumers’ benefit. The receiver obtained a contempt order against Pukke in March 2007 on the grounds that he had been hiding assets from the receiver. The receiver has been locating and liquidating a wide range of complex assets, including overseas property and property held by family and friends of Pukke.

AmeriDebt consumers with questions should call the redress administrator at 888-309-3816. Consumers who obtained a DMP from another agency in the list above should call 888-385-3082.

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.

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FTC’s AmeriDebt Lawsuit Resolved: Almost $13 Million Returned to 287,000 Consumers Harmed by Debt Management Scam

The Federal Trade Commission announced today that the agency returned approximately $12.7 million to consumers this week from a settlement with Andris Pukke and his companies, AmeriDebt, Inc. and DebtWorks, Inc. This consumer redress concludes the largest credit counseling/debt management deception case brought by the FTC. In addition, more than $7 million will be returned to consumers as a result of class-action settlements with the defendants and related credit counseling agencies.

Using the defendants’ records, about 287,000 AmeriDebt consumers have been mailed redress checks. The FTC and individual consumers alleged that AmeriDebt, DebtWorks, and related credit counseling agencies engaged in deceptive practices in promoting and offering credit counseling and debt management plans (DMPs).

Consumers who qualified for redress, a total of about 460,000 consumers, obtained a DMP from one of 11 credit counseling agencies serviced by DebtWorks between January 31, 1998 and October 7, 2004. The agencies were AmeriDebt, Inc., Debticated Consumer Counseling, Inc., A Better Way Credit Counseling, Inc., Credicure, Inc., Mason Credit Counseling, Inc., Nexum Credit Counseling, Inc., Neway, Inc., The Credit Network, Inc., Visual Credit Counseling, Inc., Preactive, Inc., and Debtscape, Inc.

Since May 2006, a court-appointed receiver has been working diligently to identify all possible assets that can be liquidated for consumers’ benefit. The receiver obtained a contempt order against Pukke in March 2007 on the grounds that he had been hiding assets from the receiver. The receiver has been locating and liquidating a wide range of complex assets, including overseas property and property held by family and friends of Pukke.

AmeriDebt consumers with questions should call the redress administrator at 888-309-3816. Consumers who obtained a DMP from another agency in the list above should call 888-385-3082.

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.

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FTC Issues Administrative Challenge to Polypore International, Inc.’s Consummated Acquisition of Microporous Products L.P. and Other Anticompetitive Conduct

Conduct Allegedly Harms Competition in North American Markets for Battery Separators

The Federal Trade Commission has unanimously approved an administrative complaint challenging Polypore International Inc.’s (Polypore) consummated acquisition of rival battery separator manufacturer Microporous Products L.P. (Microporous), and other conduct by Polypore, as anticompetitive and in violation of the federal antitrust laws. Polypore competed with the former Microporous through its Daramic business unit.

Polypore acquired Microporous in February 2008. According to the complaint, the consummated transaction led to decreased competition and higher prices in several North American markets for battery separators, a key component in flooded lead-acid batteries. The four markets include: 1) deep-cycle separators for batteries used primarily in golf carts; 2) motive separators for batteries used primarily in forklifts; 3) automotive separators used in car batteries; and 4) uninterruptible power supply (UPS) separators used in batteries that provide backup power in the event of power outages.

The complaint also charges Polypore with engaging in an unfair method of competition by entering into an agreement in 2001 with a potential competitor in order to prevent the company from entering the market for polyethylene (PE) battery separators that Polypore manufactures and sells. In addition, the complaint alleges that Polypore attempted through various anticompetitive means to maintain monopoly power in multiple battery separator markets.

“The lawsuit filed today should send a clear message that consummation of a merger will not in any way slow or deter us from challenging transactions that raise serious antitrust issues,” said David P. Wales, Acting Director of the FTC’s Bureau of Competition. “Polypore’s actions deprived consumers of the benefits of competition in these markets, and we intend to aggressively pursue all available remedies to restore that competition and prevent further harm.”

In issuing the complaint, the Commission is seeking to remedy the alleged anticompetitive impact of the merger and other conduct by Polypore through various means. Among other actions, the FTC seeks the restoration of Microporous as a viable competitor, its divestiture by Polypore, the rescission of contracts that Polypore entered into after acquiring Microporous, the assignment or sale of all intellectual property and know-how associated with the relevant markets to a viable competitor, the prohibition of any integration activities between the two companies that have not already taken place, and an order requiring Polypore to cease its unlawful conduct, and preventing its recurrence.

Parties to the Transaction

Polypore makes a broad range of battery separator membranes, and today, markets, develops, and supplies more than half of the world’s demand for PE battery separators to the flooded lead-acid battery industry. The company operates several manufacturing facilities, that combined have a total annual capacity to make approximately 600 million square meters of battery separator products. Polypore has U.S. manufacturing plants in Owensboro, Kentucky, and Corydon, Indiana. It also has facilities in Selestat, France; Norderstedt, Germany; and Potenza, Italy; a controlling interest in a joint venture in China with Nippon Sheet Glass, and newly expanded operations in Thailand. Upon acquiring Microporous, Polypore added production lines in Piney Flats, Tennessee and Feistritz, Austria.

The former Microporous was headquartered in Piney Flats, Tennessee, and had manufacturing plants in both Tennessee and Austria. Before being acquired by Polypore, private-equity firm Industrial Growth Partners II L.P. owned the acquired company, and 170 employees worked for Microporous. Its products include rubber separators, PE-rubber separators, and PE separators.

The Relevant Product Markets

Each of the relevant product markets defined in the complaint are types of battery separators – membranes that are placed between the positive and negative plates of flooded lead-acid batteries. The separators are essentially porous electric insulators that prevent electrical short circuits while allowing ionic current to flow through the separators and between the positively and negatively charged lead plates of the battery.

Deep-cycle separators are made of either rubber or a blend of rubber and PE, and are a necessary component that enables the batteries to be frequently exhausted and then recharged. They are used primarily in golf carts and floor scrubber batteries. Motive separators are made of PE, a blend of rubber and PE, or sometimes polyvinylchloride (PVC), and are used mainly in forklift batteries. Automotive separators are made of PE and are used in cars for starter, lighter, and ignition (SLI) power. UPS separators are made of PE, as well as a blend of rubber and PE. They are used in batteries that supply uninterruptible power to critical data centers and buildings in the event of a power outage. The complaint also alleges an alternative market for all PE battery separators.

The Complaint

The complaint issued today states that Polypore’s acquisition of Microporous violated
Section 5 of the FTC Act and Section 7 of the Clayton Act, as amended, and that through its conduct and agreement with other firms, Polypore monopolized the North American market for deep-cycle, motive, and UPS battery separators, and otherwise restrained trade in the North American market for automotive separators. The complaint further states that Polypore and Microporous are the only deep-cycle battery manufacturers in the world. Each of the relevant markets is highly concentrated, according to the complaint, and entry is difficult, as producers outside North America cannot compete economically with Polypore.

Specifically, the complaint states that Polypore’s acquisition of Microporous left only two flooded-lead acid battery separator companies in North America, Polypore and Entek International, LLC (Entek) and that Entek operates only in the automotive separator market. In addition, before the acquisition Polypore and Microporous were competitors in each relevant market, and Microporous was uniquely situated to compete with Polypore for North American customers due to its location and the breadth of product offerings.

The complaint contends that Polypore and Microporous were direct competitors in the deep-cycle battery separator market and that the acquisition was a merger to monopoly in that market. Similarly, the companies were direct competitors in the motive separator market, and because they were the only firms in the North American market, the merger also led to a monopoly in that market. Polypore and Entek are direct competitors and the only companies selling SLI separators in North America, and competition between them continues. However, at the time of the acquisition, Microporous was preparing to enter the automotive separator market, a market in which Microporous had successfully manufactured and sold products in the past, and the merger eliminated this actual and potential competition.

The complaint also states that Polypore and Microporous were the only two firms competing in the North American UPS market, and that this competition was eliminated by Polypore’s acquisition of Microporous. Polypore, Entek, and Microporous also were the only manufacturers of PE separators in North America at the time of the acquisition.

Finally, the complaint states that by entering into a multi-year joint marketing agreement with Hollingsworth & Vose, a firm that makes absorbed-glass-mat battery separators, in 2001, Polypore engaged in an unfair method of competition by preventing its partner from entering the PE separator market. It also alleges that Polypore attempted through anticompetitive means to maintain monopoly power in multiple battery separator markets.

The Commission vote approving the issuance of the administrative complaint was 4-0. The complaint was issued on September 10, 2008.

NOTE: The Commission issues or 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 named parties have violated the law.

The administrative complaint marks the beginning of a proceeding in which the allegations will be ruled upon after a formal hearing by an administrative law judge.

Copies of the administrative complaint are available from the FTC’s web site at http://www.ftc.gov and 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 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.

(Polypore.final)
(FTC File No. 081-0131)

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FTC Extends Public Comment Period in Petroleum Industry Market Manipulation NPRM Proceeding To October 17, 2008; Announces Details for Public Workshop

– The Commission today announced an extension of the public comment period for the recently issued Notice of Proposed Rulemaking (NPRM) on petroleum industry market manipulation. The Commission posted the NPRM on the FTC’s Web site on August 13, 2008. The NPRM announced that public comments on the proposed rule were due no later than September 18, 2008. In response to a request to extend the comment period received on September 5, 2008, the Commission has determined to extend the comment period until October 17, 2008. The Federal Register notice, which is available now on the FTC’s Web site and as a link to this press release, provides information on how, and in what form, comments should be submitted.

The Commission today also approved the issuance of a Federal Register notice formally announcing details of a public workshop in the petroleum industry market manipulation rulemaking. The workshop will take place in Washington, DC, on November 6, 2008. Those desiring to participate in the workshop as panelists must submit a request to participate by October 6, 2008, and must also submit a comment in response to the NPRM. Details about the workshop are available in the Federal Register notice, now available on the FTC’s Web site and as a link to this press release.

The Commission vote approving the issuance of Federal Register notices announcing the extension of the public comment period and formally announcing the workshop was 4-0. (FTC File No. P082900; the staff contact for the workshop is Catherine C. Harrington-McBride, Bureau of Consumer Protection, 202-326-2452; see related press release dated August 26, 2008).

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 43.5.2008.wpd)

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FTC Extends Public Comment Period in Petroleum Industry Market Manipulation NPRM Proceeding To October 17, 2008; Announces Details for Public Workshop

– The Commission today announced an extension of the public comment period for the recently issued Notice of Proposed Rulemaking (NPRM) on petroleum industry market manipulation. The Commission posted the NPRM on the FTC’s Web site on August 13, 2008. The NPRM announced that public comments on the proposed rule were due no later than September 18, 2008. In response to a request to extend the comment period received on September 5, 2008, the Commission has determined to extend the comment period until October 17, 2008. The Federal Register notice, which is available now on the FTC’s Web site and as a link to this press release, provides information on how, and in what form, comments should be submitted.

The Commission today also approved the issuance of a Federal Register notice formally announcing details of a public workshop in the petroleum industry market manipulation rulemaking. The workshop will take place in Washington, DC, on November 6, 2008. Those desiring to participate in the workshop as panelists must submit a request to participate by October 6, 2008, and must also submit a comment in response to the NPRM. Details about the workshop are available in the Federal Register notice, now available on the FTC’s Web site and as a link to this press release.

The Commission vote approving the issuance of Federal Register notices announcing the extension of the public comment period and formally announcing the workshop was 4-0. (FTC File No. P082900; the staff contact for the workshop is Catherine C. Harrington-McBride, Bureau of Consumer Protection, 202-326-2452; see related press release dated August 26, 2008).

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 43.5.2008.wpd)

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FTC Testifies on Prepaid Phone Card Fraud

The Federal Trade Commission today told the U.S. Senate Committee on Commerce, Science, and Transportation that while the FTC will continue its aggressive law enforcement and consumer education programs in the prepaid calling card arena, pending legislation would benefit consumers by providing “an additional remedy to those already available to the Commission.”

FTC Chairman William E. Kovacic told the Committee that the Commission has been bringing law enforcement actions involving deceptively marketed prepaid phone cards since the 1990s. “This spring, the FTC filed two cases against major distributors of prepaid calling cards.” The FTC alleged that the defendants marketed their cards to recent immigrants, misrepresented the number of calling minutes provided by their cards, and failed to disclose adequately fees and charges associated with their cards. The testimony notes that the FTC conducted tests on the cards before it filed the suits. In the first lawsuit, the cards delivered, on average, less than 43 percent of the advertised calling minutes. In the second suit, the cards delivered, on average, only 50.4 percent of the minutes advertised.

The testimony also notes that the agency works closely with other law enforcement partners on the issue of deceptively marketed prepaid calling cards. “In the fall of 2007, the FTC established a joint federal-state task force concerning deceptive marketing practices in the prepaid calling card industry. The task force members include representatives from the offices of more than 35 state attorneys general and other state and local agencies, and the Federal Communications Commission. Working cooperatively allows us to share information and facilitate law enforcement activity in the prepaid calling card area,” the testimony states.

“The FTC Act’s prohibitions on deceptive and unfair practices provide the Commission with a powerful tool to bring enforcement actions against the distributors of prepaid calling cards,” according to the testimony. “‘The Prepaid Calling Card Consumer Protection Act’ is directed at the conduct of prepaid calling card service providers – carriers – as well as distributors, and therefore would implicitly give the FTC jurisdiction over common carriers engaged in the deceptive practices prohibited by the proposed legislation. Consumers would benefit greatly from legislation giving the FTC jurisdiction over such practices by the telecommunication carriers.” The testimony notes that the legislation also would give the FTC authority to seek civil penalties for violations, thus providing an additional remedy to those already available to the Commission.

The testimony states, “The Commission recognizes that the agency and the Committee share the same goals: stopping unscrupulous calling card companies from defrauding vulnerable consumers . . . [and] looks forward to working with the Committee regarding the language of the legislation as the Committee moves forward.”

The Commission vote to approve the testimony was 4-0.

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.

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FTC Obtains Court Order Against Husband-Wife Credit Repair Team

The Federal Trade Commission charged two credit repair marketers with violating federal law by collecting advance payment for credit repair services and falsely promising to remove derogatory information from consumers’ credit reports – even if the information is accurate and not obsolete. At the Commission’s request, a federal court halted the defendants’ allegedly unlawful business practices and froze their assets pending further litigation. The FTC seeks to bar the defendants from further violations and make them forfeit their ill-gotten gains.

According to the FTC’s complaint, the defendants marketed their “services” to consumers throughout the nation via an Internet Web site, www.lhcreditrepair.com, classified ads in USA Today, Thrifty Nickel, Common Cents, and www.americanclassifieds.com, and online listings such as www.kellysearch.com and www.aboutus.org. Statements on their Web site include, “Have you had a bankruptcy? We will repair your credit so that this past event does not haunt your future.” Consumers who called the defendants in response to their ads were told, “Anything that hurts you, we’re going to get it off of [your credit report].”

The complaint states that the defendants often led consumers to believe that accurate information on their credit reports might somehow be considered inaccurate and subject to removal. Even when consumers told them that the information was accurate, the defendants led consumers to believe that it could be removed. The defendants allegedly claimed they had special knowledge and expertise that enabled them to permanently remove negative information, including late payments, charge-offs, collections, tax liens, repossessions, foreclosures, bankruptcies, and judgments, even when the information was accurate and not outdated.

According to the complaint, the defendants offer four levels of service ranging from $250 to $1,150 per person. They require an advance fee they call a deposit, which varies in amount, depending upon the program selected. On their Web site’s home page they claim, without qualification, that “[a]fter we have cleared your files we will stay with you for life, at no additional charge, to catch any other bad files that might show up.” Subsequent Web pages indicate, however, that only one of the four service levels includes the “for life” feature.

The defendants are Rudolph Joseph Strobel, a/k/a Lee Harrison, and Leanna Ruth Harrison, both doing business as Lee Harrison Credit Restoration, Credit Restoration, and Lee Harrison Associates Credit Restoration (LHCR), all located in Naples, Texas. They are charged with violating the Credit Repair Organizations Act (CROA) and the FTC Act by falsely representing that they can improve consumers’ credit reports by permanently removing negative information, even when the information is accurate and not obsolete. The defendants are also charged with violating the CROA by requiring advance payment for credit repair services; and by failing to provide, before contracts are signed, the written “Consumer Credit File Rights Under State and Federal Law.” In addition, they are charged with violating the CROA by failing to include in their consumer contract a full and detailed description of the services to be performed, including all guarantees of performance and an estimate of the date by which the services will be performed; and failing to include a conspicuous statement about the consumer’s right to cancel the contract without penalty or obligation within three business days after the contract is signed.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Eastern District of Texas, Marshall Division.

Additional credit repair information is available in “Credit Repair: How to Help Yourself,” at www.ftc.gov/bcp/edu/pubs/consumer/credit/scre13.shtm. The FTC advises that only time, a conscious effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. If you find errors or mistakes, federal law gives you the right to have them corrected – free of charge. Federal law requires that the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – provide you with a free copy of your credit report once every 12 months, if you ask for it. To order your free report, visit annualcreditreport.com, call 1-877-322-8228, or complete and mail the Annual Credit Report Request Form.

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 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.

(Lee Harrison Credit Restoration)
(FTC File No. 0823141)

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FTC Obtains Court Order Against Husband-Wife Credit Repair Team

The Federal Trade Commission charged two credit repair marketers with violating federal law by collecting advance payment for credit repair services and falsely promising to remove derogatory information from consumers’ credit reports – even if the information is accurate and not obsolete. At the Commission’s request, a federal court halted the defendants’ allegedly unlawful business practices and froze their assets pending further litigation. The FTC seeks to bar the defendants from further violations and make them forfeit their ill-gotten gains.

According to the FTC’s complaint, the defendants marketed their “services” to consumers throughout the nation via an Internet Web site, www.lhcreditrepair.com, classified ads in USA Today, Thrifty Nickel, Common Cents, and www.americanclassifieds.com, and online listings such as www.kellysearch.com and www.aboutus.org. Statements on their Web site include, “Have you had a bankruptcy? We will repair your credit so that this past event does not haunt your future.” Consumers who called the defendants in response to their ads were told, “Anything that hurts you, we’re going to get it off of [your credit report].”

The complaint states that the defendants often led consumers to believe that accurate information on their credit reports might somehow be considered inaccurate and subject to removal. Even when consumers told them that the information was accurate, the defendants led consumers to believe that it could be removed. The defendants allegedly claimed they had special knowledge and expertise that enabled them to permanently remove negative information, including late payments, charge-offs, collections, tax liens, repossessions, foreclosures, bankruptcies, and judgments, even when the information was accurate and not outdated.

According to the complaint, the defendants offer four levels of service ranging from $250 to $1,150 per person. They require an advance fee they call a deposit, which varies in amount, depending upon the program selected. On their Web site’s home page they claim, without qualification, that “[a]fter we have cleared your files we will stay with you for life, at no additional charge, to catch any other bad files that might show up.” Subsequent Web pages indicate, however, that only one of the four service levels includes the “for life” feature.

The defendants are Rudolph Joseph Strobel, a/k/a Lee Harrison, and Leanna Ruth Harrison, both doing business as Lee Harrison Credit Restoration, Credit Restoration, and Lee Harrison Associates Credit Restoration (LHCR), all located in Naples, Texas. They are charged with violating the Credit Repair Organizations Act (CROA) and the FTC Act by falsely representing that they can improve consumers’ credit reports by permanently removing negative information, even when the information is accurate and not obsolete. The defendants are also charged with violating the CROA by requiring advance payment for credit repair services; and by failing to provide, before contracts are signed, the written “Consumer Credit File Rights Under State and Federal Law.” In addition, they are charged with violating the CROA by failing to include in their consumer contract a full and detailed description of the services to be performed, including all guarantees of performance and an estimate of the date by which the services will be performed; and failing to include a conspicuous statement about the consumer’s right to cancel the contract without penalty or obligation within three business days after the contract is signed.

The Commission vote to authorize staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the Eastern District of Texas, Marshall Division.

Additional credit repair information is available in “Credit Repair: How to Help Yourself,” at www.ftc.gov/bcp/edu/pubs/consumer/credit/scre13.shtm. The FTC advises that only time, a conscious effort, and a personal debt repayment plan can improve your credit report. The first step is to learn what information is in your credit report. If you find errors or mistakes, federal law gives you the right to have them corrected – free of charge. Federal law requires that the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – provide you with a free copy of your credit report once every 12 months, if you ask for it. To order your free report, visit annualcreditreport.com, call 1-877-322-8228, or complete and mail the Annual Credit Report Request Form.

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 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.

(Lee Harrison Credit Restoration)
(FTC File No. 0823141)

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