Markets Wired

The Federal Trade Commission staff will host a workshop on September 25, 2008, to learn about the growth of for-profit debt relief entities and examine how the for-profit debt relief model is affecting consumers and businesses. Consumer advocates, industry representatives, and state and federal regulators will discuss a range of issues, including the history and expansion of the industry, the advertising and marketing of debt relief services, the role of third-party lead generators and other service providers, legal developments in the regulation of the industry, and ways to address consumer protection issues and education needs.

In preparation for the workshop, FTC staff welcomes original research, surveys, and academic papers regarding for-profit consumer debt relief services. These materials are due by August 15. More information on the workshop will be available soon, including information about participating as a panelist.

The workshop is free and open to the public; it will be held at the FTC’s Satellite Building Conference Center, 601 New Jersey Avenue, NW, Washington, DC.

The Federal Trade Commission today announced that it has successfully secured the proceeds of repeat offender Richard Neiswonger’s $100,000 performance bond. Last year, in a civil contempt case brought by the Commission, a U.S. district judge found Neiswonger in contempt for violating the terms of a 1997 permanent injunction by deceptively marketing business opportunities and failing to provide proof of his bond to the Commission, among other things. Until now, the company that issued the bond had refused to pay the Commission in full.

Case Background

In May 2007, the FTC announced a court order holding Neiswonger in contempt and banning him from telemarketing or selling any type of business opportunity program to consumers (see press release at http://www.ftc.gov/opa/2007/05/neiswonger.shtm). The civil contempt order, issued by Senior U.S. District Judge Stephen N. Limbaugh of the U.S. District Court for the Eastern District of Missouri, found that Neiswonger, his business partner William S. Reed, and their firm, Asset Protection Group, Inc., had violated the terms of a 1997 permanent injunction obtained by the Commission that: 1) prohibited them from promoting any program through misrepresentations of material facts; 2) prohibited them from promoting any program without disclosing all material facts to consumers; and 3) required written proof of a $100,000 performance bond to the Commission before marketing any program.

After the imposition of the contempt order, the Commission filed a claim to secure the proceeds of Neiswonger’s $100,000 performance bond, which Neiswonger had not disclosed to the Commission and ultimately failed to renew. When Platte River Insurance Company, the surety that provided the bond to Neiswonger, failed to pay the Commission, the FTC authorized the staff to refer a complaint to the U.S. Department of Justice seeking to secure the bond. Platte River subsequently agreed to pay the full amount to the Commission, and the money has now been paid in full.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click: http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

(FTC File Nos.: 962 3134; X970012; Civil Action No.: 4:96CV02225 SNL)
(Platte River.wpd)

Two defendants have agreed to settle Federal Trade Commission charges for allegedly victimizing Spanish-speaking consumers nationwide by posing as debt collectors seeking money the consumers did not owe. They and the corporate defendants they controlled have been barred from further violations of federal law involving debt collection.

According to the FTC’s complaint, Maria Oceguera, her daughter Dulce Rickards (aka Dulce Ugalde and Dulce Ruiz), and others sold an English-language course, “Inglés con Ritmo.” They advertised the course as free except for a shipping and handling fee. Several years after the defendants stopped selling the course, they tried to collect money, typically $900, from consumers who had purchased or inquired about the course. An overwhelming majority of the consumers who were contacted owed nothing, and yet the defendants routinely engaged in a variety of deceptive debt collection practices. At the FTC’s request, in 2007 a federal judge stopped the operation and froze the defendants’ assets.

Under the settlement, the defendants are barred from violating the FTC Act by misrepresenting that they’re collecting on a valid debt, that they’re attorneys or represent attorneys, that they will take action they cannot take legally or do not intend to take, and that nonpayment of an alleged obligation will result in arrest, imprisonment, or loss of property or wages. The settlement prohibits the defendants from misrepresenting the consequences of paying or not paying a debt, making misrepresentations in order to collect a debt, and misrepresenting or omitting any fact material to a person’s decision to buy or use a product or service.

The defendants are banned from violating the Fair Debt Collection Practices Act (FDCPA) by using falsehood or deception to collect a debt, indicating that they’re attorneys or represent attorneys, and representing that nonpayment will result in arrest, imprisonment, or loss of property or wages unless the action is lawful and they intend to pursue such action. They are also prohibited from threatening to take an action unless it’s lawful and they intend to do so, and from using a business name other than the collector’s real name.

Oceguera and Rickards are also barred from violating the FDCPA by collecting an amount not expressly authorized by the agreement creating the debt or permitted by law;harassing consumers, including causing a telephone to ring or conversing with consumers to annoy or abuse them; and failing to notify consumers of their right to dispute and obtain verification of their debts and to obtain the name of the original creditor.

In addition, the court ordered the same permanent injunctive relief against the companies controlled by Oceguera and Rickards: Tono Publishing; Promo Music; and Tono Records, dba Tono Music; and Professional Legal Services.

The settlement with Oceguera and Rickards includes a $1,186,754 judgment, all but $50,934 of which is suspended based on their inability to pay. The full judgment will be imposed if they are found to have misrepresented their financial condition. The settlement also contains standard record-keeping provisions to allow the FTC to monitor compliance with the order.

By a 4-0 vote, the Commission approved the filing of the consent decree in the U.S. District Court for the Central District of California. On May 1, the court approved the FTC’s settlement with Oceguera and Rickards. On May 27, the court entered a separate final judgment and order for permanent injunction against the corporate defendants.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A consent decree requires approval by the court and has the force of law when signed by the judge.

Copies of the consent decree and order 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 works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.shtm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.

(Tono Music)
(FTC File No. X070034)

Under a federal court order entered on May 29, a home-buying consulting business that offers credit repair and home-buying consulting services will pay $10,000 to settle Federal Trade Commission charges, including illegally charging an advance fee for credit repair and falsely claiming that it can remove negative information from consumers’ credit reports, even if the information is accurate and timely. Home Buyers Consulting Network, Inc. d/b/a Home Buyers Network, Good Credit Company, GoodCredit.com, and 0downhomebuyers.com, and Douglas Andersen Moore a/k/a Douglas A. Moore are barred from further violations of the Credit Repair Organizations Act and the FTC Act. The order contains a $573,000 civil penalty that will be suspended, and, for consumer restitution, a $40,000 judgment that will be suspended upon payment of $10,000. The full civil penalty and judgment amounts will be imposed if the defendants are found to have misrepresented their financial condition.

At the Commission’s request, the U.S. Department of Justice filed the FTC’s complaint and proposed settlement in federal court. The order was entered in the U.S. District Court for the Southern District of New York.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

(HomeBuyersNetwork)
(FTC File No. 0623231)

Under a federal court order entered on May 29, a home-buying consulting business that offers credit repair and home-buying consulting services will pay $10,000 to settle Federal Trade Commission charges, including illegally charging an advance fee for credit repair and falsely claiming that it can remove negative information from consumers’ credit reports, even if the information is accurate and timely. Home Buyers Consulting Network, Inc. d/b/a Home Buyers Network, Good Credit Company, GoodCredit.com, and 0downhomebuyers.com, and Douglas Andersen Moore a/k/a Douglas A. Moore are barred from further violations of the Credit Repair Organizations Act and the FTC Act. The order contains a $573,000 civil penalty that will be suspended, and, for consumer restitution, a $40,000 judgment that will be suspended upon payment of $10,000. The full civil penalty and judgment amounts will be imposed if the defendants are found to have misrepresented their financial condition.

At the Commission’s request, the U.S. Department of Justice filed the FTC’s complaint and proposed settlement in federal court. The order was entered in the U.S. District Court for the Southern District of New York.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

(HomeBuyersNetwork)
(FTC File No. 0623231)

Dennis J. Saccurato and his businesses, Sparta Chem, Inc. and Compu-Kleen Inc. of Elmwood Park, have agreed to a settlement with the Federal Trade Commission in which, among other things, they admit that they are in contempt for violating a court order barring them from making fraudulent representations to induce sales of cleaning supplies and shipping and billing for supplies that businesses didn’t order.

In 1996, the FTC charged the defendants with telemarketing fraud. Among other things, the FTC alleged that they made false and misleading representations to get product orders or to obtain information they used later to claim that merchandise was ordered, then shipped merchandise at inflated prices and charged fees that consumers hadn’t authorized. A court settlement required them to comply with the Telemarketing Sales Rule and barred them from further abusive practices. The proposed settlement announced today resolves contempt charges filed by the FTC against the defendants in 2007, in which they were charged with violating the terms of the settlement.

Under the proposed settlement, the defendants, all based in New Jersey, must, for eight years, digitally record all telephone calls to or from any and all customers in their entirety and preserve the recordings. They also must promptly transmit intelligible copies of all such recordings to the FTC upon request, and to customers upon their request.

The settlement also bars the defendants from threatening to refer a charge to a collection agency unless, two weeks beforehand, they provide the customer with recordings of all calls that have taken place between them and the customer regarding the charge. In addition, the settlement requires them to accept all unopened merchandise that’s returned within 90 days of a customer’s receipt of a product or invoice, whichever is later, and it bars them from imposing any costs or fees for such returns.

The settlement includes a $2.3 million judgment, which is suspended based on the defendants’ inability to pay. The full judgment will be imposed if they’re found to have misrepresented their financial condition. The settlement also imposes record-keeping provisions to allow the FTC to monitor compliance with its order.

By a 4-0 vote, the Commission approved the filing of the supplemental stipulated order in the U.S. District Court for the District of New Jersey.

NOTE: This stipulated final order is for settlement purposes only. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the order 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 works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.shtm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.

(Sparta Chem)
(FTC File No. X960071)

Dennis J. Saccurato and his businesses, Sparta Chem, Inc. and Compu-Kleen Inc. of Elmwood Park, have agreed to a settlement with the Federal Trade Commission in which, among other things, they admit that they are in contempt for violating a court order barring them from making fraudulent representations to induce sales of cleaning supplies and shipping and billing for supplies that businesses didn’t order.

In 1996, the FTC charged the defendants with telemarketing fraud. Among other things, the FTC alleged that they made false and misleading representations to get product orders or to obtain information they used later to claim that merchandise was ordered, then shipped merchandise at inflated prices and charged fees that consumers hadn’t authorized. A court settlement required them to comply with the Telemarketing Sales Rule and barred them from further abusive practices. The proposed settlement announced today resolves contempt charges filed by the FTC against the defendants in 2007, in which they were charged with violating the terms of the settlement.

Under the proposed settlement, the defendants, all based in New Jersey, must, for eight years, digitally record all telephone calls to or from any and all customers in their entirety and preserve the recordings. They also must promptly transmit intelligible copies of all such recordings to the FTC upon request, and to customers upon their request.

The settlement also bars the defendants from threatening to refer a charge to a collection agency unless, two weeks beforehand, they provide the customer with recordings of all calls that have taken place between them and the customer regarding the charge. In addition, the settlement requires them to accept all unopened merchandise that’s returned within 90 days of a customer’s receipt of a product or invoice, whichever is later, and it bars them from imposing any costs or fees for such returns.

The settlement includes a $2.3 million judgment, which is suspended based on the defendants’ inability to pay. The full judgment will be imposed if they’re found to have misrepresented their financial condition. The settlement also imposes record-keeping provisions to allow the FTC to monitor compliance with its order.

By a 4-0 vote, the Commission approved the filing of the supplemental stipulated order in the U.S. District Court for the District of New Jersey.

NOTE: This stipulated final order is for settlement purposes only. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the order 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 works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.shtm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.

(Sparta Chem)
(FTC File No. X960071)

A U.S. district court has ordered a halt to the illegal operations of a defendant who crammed unauthorized charges for Web site services onto the phone bills of hundreds of thousands of small businesses and non-profit organizations. The Federal Trade Commission charged that the operation violated federal law and, following a trial, District Judge Kenneth M. Hoyt ordered the defendant to permanently halt the unlawful practices and give up more than $4.1 million in ill-gotten gains.

In June 2006, the FTC charged a group of interrelated businesses and individual defendants with cramming unauthorized charges onto the phone bills of small businesses and nonprofit organizations for Web site services that, in many cases, they had not requested and did not know they had. The agency alleged that the operators used telemarketers to make cold calls to small businesses and non-profits, and offered a “free”15-day trial of a Web site design. The consumers were told there was no charge or obligation and that the Web site would be cancelled automatically if it was not approved by the consumers. The defendants made “verification recordings” that implied that the consumer agreed to be billed for the offer after the free trial, when they did not. Whether the consumers agreed or not, their phone bills often were charged. When consumers called to dispute the charges, the operators told them they had “verification recordings” of an employee authorizing the charges.

The complaint alleged that the defendants violated federal law by charging consumers’ telephone bills without obtaining their authorization or consent. The FTC also alleged that the defendants violated federal law by deceptively claiming that if a consumer agreed to a free trial Web site, the site would be cancelled automatically unless the consumer agreed to continue it. The court agreed, and at the request of the FTC, a U.S. District Court judge in Houston, Texas, ordered a halt to the unlawful operations, appointed a receiver to oversee the business operations, and froze the defendants’ assets, pending trial. Defendants WebSource Media, L.L.C., WebSource Media, L.P., BizSitePro, L.L.C., Eversites, L.L.C., Telsource Solutions, Inc., Telsource International, Inc., Marc R. Smith, Kathleen A. Smalley, Keith Hendrick, John O. Ring, and James E. McCubbin, Jr. paid $1.2 million and settled the FTC charges. The decision ends the litigation with defendant Steven L. Kennedy.

The judge’s order bars Kennedy from engaging in the unlawful conduct he participated in to advance the illegal scheme and requires payment of $4.1 million. Specifically, the order bars him from misrepresenting that a free trial will be automatically cancelled if the purchaser does not agree to continue the service; that a verification recording is being made to document the purchaser’s authorization; and that an “authorized purchaser” is obligated to pay any charge, even if the purchaser did not authorize the charges. The order also bars him from billing or receiving money from any authorized purchaser without the “authorized purchaser’s” express, informed consent. Finally, the order prohibits all the defendants from selling, renting, or disclosing in any way the list of their customers.

The Commission vote to file the complaint was 5-0. It was filed in U.S. District Court for the Southern District of Texas, Houston Division.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

 

(Civil Action No. H-06-1980)
(websource kennedy)

A U.S. district court has ordered a halt to the illegal operations of a defendant who crammed unauthorized charges for Web site services onto the phone bills of hundreds of thousands of small businesses and non-profit organizations. The Federal Trade Commission charged that the operation violated federal law and, following a trial, District Judge Kenneth M. Hoyt ordered the defendant to permanently halt the unlawful practices and give up more than $4.1 million in ill-gotten gains.

In June 2006, the FTC charged a group of interrelated businesses and individual defendants with cramming unauthorized charges onto the phone bills of small businesses and nonprofit organizations for Web site services that, in many cases, they had not requested and did not know they had. The agency alleged that the operators used telemarketers to make cold calls to small businesses and non-profits, and offered a “free”15-day trial of a Web site design. The consumers were told there was no charge or obligation and that the Web site would be cancelled automatically if it was not approved by the consumers. The defendants made “verification recordings” that implied that the consumer agreed to be billed for the offer after the free trial, when they did not. Whether the consumers agreed or not, their phone bills often were charged. When consumers called to dispute the charges, the operators told them they had “verification recordings” of an employee authorizing the charges.

The complaint alleged that the defendants violated federal law by charging consumers’ telephone bills without obtaining their authorization or consent. The FTC also alleged that the defendants violated federal law by deceptively claiming that if a consumer agreed to a free trial Web site, the site would be cancelled automatically unless the consumer agreed to continue it. The court agreed, and at the request of the FTC, a U.S. District Court judge in Houston, Texas, ordered a halt to the unlawful operations, appointed a receiver to oversee the business operations, and froze the defendants’ assets, pending trial. Defendants WebSource Media, L.L.C., WebSource Media, L.P., BizSitePro, L.L.C., Eversites, L.L.C., Telsource Solutions, Inc., Telsource International, Inc., Marc R. Smith, Kathleen A. Smalley, Keith Hendrick, John O. Ring, and James E. McCubbin, Jr. paid $1.2 million and settled the FTC charges. The decision ends the litigation with defendant Steven L. Kennedy.

The judge’s order bars Kennedy from engaging in the unlawful conduct he participated in to advance the illegal scheme and requires payment of $4.1 million. Specifically, the order bars him from misrepresenting that a free trial will be automatically cancelled if the purchaser does not agree to continue the service; that a verification recording is being made to document the purchaser’s authorization; and that an “authorized purchaser” is obligated to pay any charge, even if the purchaser did not authorize the charges. The order also bars him from billing or receiving money from any authorized purchaser without the “authorized purchaser’s” express, informed consent. Finally, the order prohibits all the defendants from selling, renting, or disclosing in any way the list of their customers.

The Commission vote to file the complaint was 5-0. It was filed in U.S. District Court for the Southern District of Texas, Houston Division.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

 

(Civil Action No. H-06-1980)
(websource kennedy)