FTC Issues 2008 Fair Debt Collection Practices Report to Congress

For Your Information

Issuance of Commission report to Congress: The Commission has authorized the staff to release publicly the 30th Annual Report to Congress on the Fair Debt Collection Practices Act (FDCPA). This report, which is available now on the FTC’s Web site, summarizes the Commission’s administration and enforcement of the FDCPA during 2007. It presents an overview of the types of consumer complaints received by the Commission, descriptions of the Commission’s debt-collection law enforcement actions, and a summary of the Commission’s consumer and industry education initiatives. The FDCPA prohibits deceptive, unfair, and abusive practices by third-party debt collectors. Section 815 of the FDCPA requires the Commission to submit annual reports to Congress. The Commission vote to issue the report was 5-0. (FTC File No. P084802; the staff contact is Karen Hickey, Bureau of Consumer Protection, 202-326-3224.)

Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

Contact Information

MEDIA CONTACT:
Office of Public Affairs
202-326-2180

FTC to Host Roundtable Discussion on Phishing Education

The Federal Trade Commission’s Bureau of Consumer Protection will host a half-day roundtable discussion on phishing education on Tuesday, April 1, 2008. Phishing is a form of online identity theft that uses deceptive spam to trick consumers into divulging sensitive or personal information, including credit card numbers and other financial data, either through email or a link to a copycat site. The roundtable event will provide an opportunity for experts from business, government, the technology sector, the advocacy community, academia, and the media to discuss new strategies to increase awareness of the issue and decrease risky online behavior.

The event will be held from 9 a.m. until 1 p.m. at the FTC’s conference center, 601 New Jersey Avenue, NW, Washington, DC. Doors will open at 8:30 a.m. It will begin with a guided discussion on the problem and current efforts to fight phishing attacks and educate consumers. A working session where participants will develop plans to increase consumer awareness about phishing will follow.

The event is open to the public. Those planning to attend should email Rosario Méndez at [email protected]. Reasonable accommodations for people with disabilities are available. Submit your request in advance to Carrie McGlothlin via email ([email protected]) or phone (202-326-3388). Please include a detailed description of the accommodation you need and how you can be reached if there are questions.

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://ftc.gov/bcp/consumer.shtm.

FTC Approves Federal Register Notice Seeking Comments on Revised Proposed Business Opportunity Rule

Commission approval of Federal Register notice: The Commission has approved the publication of a Federal Register notice seeking comments on a revised proposal for a new trade regulation rule governing business opportunities. Dating from 1978, the FTC historically has had a single rule covering two distinct types of offerings: franchises and business opportunity ventures. Many of the very familiar national fast-food restaurants and hotels, for example, are franchises, business opportunity ventures include vending machine routes, rack display operations, and medical billing schemes ventures. These ventures, unlike franchises, typically do not involve the right to use a trademark or other commercial symbol. Nevertheless, they do call for the opportunity seller to provide purchasers with locations for machines, or with accounts, or clients, and have been covered by the Franchise Rule.

In April 2006, the Commission proposed a separate Business Opportunity Rule that would cover just business opportunities ventures. Part of the proposal was to expand coverage to business arrangements that were not formerly covered by the Franchise Rule and to streamline disclosure obligations. (Business opportunities formerly covered by the Franchise Rule remain covered under an interim Business Opportunity Rule.) The revised notice announced today modifies the April 2006 proposal for the Business Opportunity Rule. The revised notice of proposed rulemaking (RNPR) will be published soon and is available now on the FTC’s Web site and as a link to this press release.

After evaluating the comments received on the April 2006 notice, the Commission has decided to issue an RNPR that is more narrowly focused than the April 2006 proposal. As proposed now, the Business Opportunity Rule would still cover those schemes currently covered by the interim Business Opportunity Rule, and it would expand coverage to include work-at-home schemes. The revised proposal, however, would not reach multi-level marketing companies or certain companies that may have been swept inadvertently into scope of the April 2006 proposal. The revised proposed rule also streamlines the requirement to disclose material information by eliminating requirements to disclose the number of cancellations and refund requests that a business opportunity seller receives or the litigation history of sales personnel.

The Commission will be accepting comments on the RNPR until May 27, 2008. Thereafter, rebuttal comments can be made by June 16, 2008.

The Commission vote approving publication of the notice was 5-0. (FTC File No. R511993; the staff contact is Monica E. Vaca, Bureau of Consumer Protection, 202-326-2245; see related press release dated April 5, 2006.)

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.

ValueClick to Pay $2.9 Million to Settle FTC Charges

Online advertiser ValueClick, Inc., will pay a record $2.9 million to settle Federal Trade Commission charges that its advertising claims and e-mails were deceptive and violated federal law. The agency also charged that ValueClick and its subsidiaries, Hi-Speed Media and E-Babylon failed to secure consumers’ sensitive financial information, despite their claims to do so. The settlement, filed by the Department of Justice on behalf of the FTC, requires ValueClick to clearly and conspicuously disclose the costs and obligations consumers must incur to receive the products it touts as “free” and bars future violations of the CAN-SPAM Act. The settlement also bars deceptive claims about the security of the consumer information collected at its e-commerce Web sites.

According to the FTC, ValueClick subsidiary Hi-Speed Media used deceptive e-mails, banner ads, and pop-ups to drive consumers to its Web sites. The e-mails and online ads claimed that consumers were eligible for “free” gifts, including laptops, iPods, and high-value gift cards, and included come-ons such as “Free PS3 for survey,” and “CONGRATULATIONS! Select your FREE Plasma TV.” The FTC alleged that consumers lured to ValueClick’s Web sites by these promises were led through a maze of expensive and burdensome third-party offers – including car loans and satellite television subscriptions – which they were required to “participate in” at their own expense, in order to receive the promised “free” merchandise. The FTC charged that ValueClick’s use of deceptively labeled e-mail offering free gifts and its failure to disclose that consumers must expend substantial sums of money to obtain the promised “free” merchandise violates the CAN-SPAM Act and the FTC Act.

The FTC also charged that ValueClick, Hi-Speed Media, and E-Babylon, misrepresented that they secured customers’ sensitive financial information consistent with industry standards. The FTC alleged the companies published online privacy policies claiming they encrypted customer information, but either failed to encrypt the information at all or used a non-standard and insecure form of encryption. The agency also charged that several of the companies’ e-commerce Web sites were vulnerable to SQL injection, a commonly known form of hacker attack, contrary to claims that the companies implemented reasonable security measures.

The settlement bars future violations of the CAN-SPAM Act. It requires ValueClick and Hi-Speed Media to clearly and conspicuously disclose in their ads and on their promotional Web pages that consumers have to spend money or incur other obligations to qualify for “free” merchandise. The settlement also requires them to provide a list of the obligations – such as applying for credit cards, purchasing products, or obtaining a car loan – that consumers must incur to qualify for a free product. In addition, ValueClick and Hi-Speed Media will pay a $2.9 million civil penalty to resolve the Commission’s CAN-SPAM allegations. This is the largest settlement in a case based on the CAN-SPAM Act, enacted in 2003.

The settlement also bars ValueClick, Hi-Speed Media, and E-Babylon from making misrepresentations about the use of encryption or other electronic measures to protect consumers’ information, and about the extent to which they protect personal information. The order also requires the companies to establish and maintain a comprehensive security program, and obtain independent third-party assessments of their programs, for 20 years.

This is the FTC’s third case targeting the use of deceptive promises of free merchandise by Internet-based “lead generation” operations, and the Commission’s 18th case challenging data security practices by a company handling sensitive consumer information.

The Commission vote to approve the stipulated final order was 5-0. It was filed in U.S. District Court for the Central District of California by the Department of Justice at the FTC’s request.

NOTE: Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. A stipulated order is subject to court approval and has the force of law when signed by the judge.

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://ftc.gov/bcp/consumer.shtm.

Federal Trade Commission to Host Workshop on Health Care Clinical Integration

The Federal Trade Commission will host a one-day public workshop on May 29, 2008, to discuss collaborations between health care providers to improve the provision of health care services and reduce costs.

The workshop, titled “Clinical Integration in Health Care: A Check-Up,” will feature health care providers, government officials, health insurers and other payers, employers, attorneys, and others who will provide insight on various aspects of “clinical integration” among health care providers. “Clinical integration” is used to describe certain types of collaboration among otherwise independent health care providers to improve quality and contain costs. The 1996 joint FTC/Department of Justice Statements of Antitrust Enforcement Policy in Health Care expressly recognize the potential benefits of this type of integration, and that more-extensive antitrust analysis of the competitive effects of such arrangements may be warranted where collective negotiation and contracting with payers is reasonably necessary to achieve clinical efficiencies.

The workshop is part of the FTC’s ongoing efforts to study developments in health care delivery and financing that can inform its antitrust analysis, to ensure that consumers are protected from anticompetitive conduct, and that legitimate efficiency-enhancing joint ventures are not discouraged. The Commission’s staff has issued several advisory letters detailing its views on various proposals by physician networks to achieve beneficial integration of their respective practices, either through clinical integration or financial integration. These and other materials relating to the application of antitrust principles to health care markets can be found at http://www.ftc.gov/bc/healthcare.

The workshop, which will be free and open to the public, will be held from 9:00 a.m. until 5:30 p.m. at the FTC’s satellite building conference center, located at 601 New Jersey Avenue, N.W., Washington, DC. A government-issued photo ID is required for entry. Pre-registration is not required.

Reasonable accommodations for people with disabilities are available upon request. Requests for such accommodations should be submitted via e-mail to [email protected] or by
calling Carrie McGlothlin at 202-326-3388. Such requests should include a detailed description of the accommodations needed and a way to contact you if we need more information. Please provide advance notice.

For more information on the workshop, including a detailed agenda, directions to the conference center, and other relevant information, please visit: http://www.ftc.gov/bc/healthcare/checkup/.

Commission Approves Issuance of Final Consent Order in Matter of Multiple Listing Service, Inc.

For Your Information

Commission approval of final consent order: Following a public comment period, the Commission has approved the issuance of a final consent order in the matter of Multiple Listing Service, Inc., as well as a response to the commenter of record. The Commission vote approving the final order was 5-0. (FTC File No. 061-0090; the staff contact is Pat Roach, Bureau of Competition, 202-326-2793; see press release dated December 12, 2007.)

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.

Contact Information

MEDIA CONTACT:
Office of Public Affairs
202-326-2180

Commission Approves Federal Register Notice on Metal Halide Lamp Labeling Requirements

Commission approval of Federal Register notice: The Commission has approved the publication of a notice of proposed rulemaking (NPR) in the Federal Register concerning labeling requirements for metal halide lamp fixtures. As detailed in the notice, which will be published soon and is available now on the FTC’s Web site and as a link to this press release, Section 324(d) of the Energy Independence and Security Act of 2007 (EISA) requires the Commission to develop labeling and reporting requirements for metal halide lamp fixtures by July 1, 2008. The EISA also requires the FTC to conduct a rulemaking within 30 months to examine the effectiveness of the current lighting disclosures required by the Commission. That rulemaking will be initiated at a later date.

The NPR announced today focuses specifically on metal halide fixtures. Metal halide lamps produce a bright white light and offer the best color rendition among high-intensity lighting types. They are used to light large outdoor areas, such as gymnasiums and sports arenas. According to the notice, the FTC is seeking comments from the public on proposed amendments to the Commission’s Appliance Labeling Rule that would specifically address labeling rules for the fixture packaging and ballasts of such metal halide lamps. The notice provides detailed information on how comments may be submitted, and sets a deadline of April 28, 2008 by which comments must be received by the FTC.

The Commission vote approving publication of the notice was 5-0. (FTC File No. R611004; the staff contact is Robert S. Kaye, Bureau of Consumer Protection, 202-326-2215)

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.

Nations Largest Telephone Bill Aggregators Will Pay $1.9 Million and Stop Cramming to Settle FTC Charges

Three companies that placed more than $30 million in bogus collect call charges on consumers’ telephone bills have agreed to pay $1.9 million for consumer redress in a settlement with the Federal Trade Commission that bars them from billing for unauthorized charges and misrepresenting that consumers are obligated to pay for them.

The FTC charged BSG Clearing Solutions North America, LLC, ACI Billing Services, Inc. d/b/a OAN, and Billing Concepts, Inc. (collectively, “BSG”) with placing charges on behalf of co-defendant Nationwide Connections, Inc. (see press releases dated March 15, 2006 and September 26, 2006). The three related companies control more than 85 percent of the billing aggregation market, in which aggregators contract with local telephone companies to bill on behalf of third parties. According to the FTC, BSG began receiving complaints from consumers soon after the Nationwide billing began, including complaints about charges for calls made to telephone lines dedicated to computers and fax machines, and to phones where no one was present.

The settlement would prohibit BSG from misrepresenting that consumers are obligated to pay for telecommunications charges that have not been expressly authorized. It also would be barred from billing or submitting any telecommunications charges for billing on a consumer’s telephone bill unless such charge has been expressly authorized. BSG would be in compliance with the proposed court order’s prohibitions against unauthorized billing if it takes all necessary steps before billing on behalf of new clients and while billing for existing clients to ensure it does not engage in the unauthorized billing of telecommunications charges. The settlement bars BSG from selling or renting consumers’ personal information obtained from Nationwide and requires BSG to create and maintain billing and consumer complaint records for eight years and submit various compliance reports to the FTC for five years.

In December 2007, the court entered a $34,426,696.85 judgment – the total amount that consumers paid for the phony charges – against Nationwide Connections, which a court-appointed receiver is winding down. The FTC has settled with Nationwide’s ringleader, defendant Willoughby Farr, with a $35 million judgment and a ban on all telephone billing (see press release dated March 5, 2008). The Commission’s case against The Billing Resource d/b/a Integretel, another billing aggregator in this massive cramming scheme, and its cases against three remaining individual defendants, are still pending.

The Commission vote to authorize staff to file the stipulated final order was 5-0. The order for permanent injunction will be filed in the U.S. District Court for the Southern District of Florida.

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

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://ftc.gov/bcp/consumer.shtm.

Judgment Entered Against Spyware Scammer

A federal judge has granted the Federal Trade Commission’s request for a default judgment against a software developer who helped scammers infect millions of computers with destructive and intrusive spyware. The judgment bars the defendant from distributing software that interferes with consumers’ computers and requires that he give up his ill-gotten gains.

In November 2006, the FTC charged ERG Ventures, LLC, its principals, and their affiliate, Timothy P. Taylor, with tricking consumers into downloading malicious software by hiding it within seemingly innocuous free programs, including screensavers and video files. Once downloaded, the malware silently activated itself and installed programs that changed consumers’ home pages, tracked their Internet activity, altered browser settings, degraded computer performance, and disabled anti-spyware and anti-virus software. Many of the malware programs installed by the defendants were extremely difficult or impossible for consumers to remove from their computers.

A stipulated final order announced in October 2007 ended the litigation with ERG Ventures, LLC and its principals. The default judgment announced today ends the litigation with the final defendant, Timothy P. Taylor.

The judgment entered against Taylor bars him from distributing software that interferes with consumers’ computers, including software that tracks consumers’ Internet activity or collects other personal information; generates disruptive pop-up advertising; tampers with or disables other installed programs; or installs other advertising software onto consumers’ computers. The judgment also requires Taylor to fully disclose the name and function of all software he installs on consumers’ computers in the future, and to provide consumers with the option to cancel the installation after viewing the disclosure. Taylor has also been ordered to give up all of the income he made from the scheme, which amounts to $4,595.36.

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://ftc.gov/bcp/consumer.shtm.

FTC to Host Workshop on Innovations in Health Care Delivery

The Federal Trade Commission will host a workshop on April 24, 2008, to examine recent trends related to health care delivery. This workshop will bring together representatives of physician and healthcare associations, industry, privacy groups, academia, federal and state government, and other experts.

The workshop participants will engage in several panel discussions on competition and consumer protection issues regarding particular health care delivery innovations. These issues include:

Limited service clinics – These clinics, which are generally located in pharmacies, shopping malls, and retail stores, provide treatment for basic medical conditions by nurse practitioners and/or physician assistants and offer transparent pricing and convenient hours. Although some groups believe these clinics will improve access to care for underserved populations, others have raised questions about quality of care and adequacy of oversight. These concerns have prompted proposals for new state regulation of such clinics, such as attempts to limit the scope of practice of nurse practitioners in limited service clinics, limit their locations, and prohibit corporate ownership of clinics.

Price and quality transparency – Many believe that consumers, armed with more information about the relative prices and quality of competing health care providers, can make better choices, which can lead to higher quality care and lower health care costs. This has led to initiatives to provide consumers with greater information about the price they pay for health care and the quality of physicians, hospitals, and other healthcare providers. Some observers, however, have expressed concern that consumers may be misled by quality ratings if they are designed to steer consumers to the lowest-priced care provider regardless of quality. Further,
increased price transparency may raise some competition concerns.

Health information technology – Electronic health records have the potential to reduce administrative costs and medical errors due to incomplete or faulty paper records. The Department of Health and Human Services has developed an extensive framework to facilitate the adoption of electronic health records by the medical community, including the certification of particular products for creating and maintaining such records. Private companies, such as
popular online consumer sites, have also started offering personal electronic health record services. Electronic access to medical expertise – such as through transfer of diagnostic imaging, real time doctor/patient and doctor/doctor consultation, and remote monitoring – also
has the potential to improve the distribution of medical services. One of the primary consumer protection issues for health information technology is patient privacy and the application of current federal and state privacy protections to electronic health records. Concerns about interoperability of electronic record systems and the impact of state laws on interstate electronic consultation and monitoring also implicate competition concerns.

The workshop, which will be free and open to the public, will be held from 9 a.m. until 5:30 p.m. at the FTC’s satellite building conference center, 601 New Jersey Avenue, NW, Washington, DC. A government-issued photo ID is required for entry. Pre-registration for this workshop is not required, but is encouraged. To pre-register, please email your name and affiliation to: [email protected].

Reasonable accommodations for people with disabilities are available upon request. Requests for such accommodations should be submitted via e-mail to [email protected] or by calling Carrie McGlothlin at 202-326-3388. Such requests should include a detailed description of the accommodations needed and a way to contact you if we need more information. Please provide advance notice.

Anyone may submit comments until May 26, 2008. Interested parties may file comments electronically or in paper form. For more information about the workshop, including instructions on how to file comments, please visit http://www.ftc.gov/bc/healthcare/hcd/index.shtm.

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://ftc.gov/bcp/consumer.shtm.