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Commission Issues Letter in Response to SCIs Motion for Extension of Divestiture Time Period

Issuance of letter regarding motion divestiture time period extension –– The Commission has approved issuance of a letter responding to a motion by Service Corporation International (SCI) in which SCI sought to extend the time allowed to divest several assets obtained through its 2006 acquisition of Alderwoods. On July 3, 2007, SCI filed its final petition for approval to divest the last of the up to 48 funeral homes and 15 cemeteries it was required to sell under the FTC order in this matter by May 29, 2007. SCI had filed the motion for extension of time to complete the required divestitures on May 29, 2007, when it was clear it would not meet the divestiture deadline.

The Commission has now voted to approve a letter to SCI stating that while SCI “has not met its burden under our Rules and applicable legal standards to support the grant of its Motion,” the FTC has determined it will take no action on the motion, instead of denying or approving it. The letter also states that, with several reservations, the FTC will not seek relief for SCI’s late divestitures.

The agency points out in the letter that, “The discussion herein may nonetheless serve to clarify and underscore the Commission’s standards and expectations regarding timely compliance with divestiture requirements, and what is required to make a showing of good cause to justify extending a divestiture deadline under the Commission’s Rules.” Accordingly, the letter presents the details of SCI’s divestitures as required by the FTC’s order, states that SCI has the “burden of demonstrating good cause, and that “granting an extension of time rests in the discretion of the Commission.”

It continues by stating that, while SCI contends in its motion that it had worked diligently and aggressively to accomplish the required divestitures, and claims it had not met the divestiture deadline because of the large number of properties the order required it to divest, “The Commission has never found the number of required divestitures alone to constitute sufficient good cause for extending the time to divest.”

While SCI contends that it failed to divest certain assets on time as a result of conduct by third parties that was beyond its control, “these circumstances are neither extraordinary nor unforseen as to create sufficient ‘good cause’” under the Commission’s Rule for extending the time to divest. The Commission also states that SCI has a history of selling assets similar to those required divested in the order in a timely manner, and had indicated that it “was sufficiently familiar with the Commission’s divestiture process to have anticipated and planned for the kinds of situations and delays that arose in this case . . .”

The letter concludes that while SCI “has not demonstrated that its divestiture efforts prior to the divestiture deadline were sufficient to justify the relief requested,” the Commission has determined it will take no action on the petition at this time, “but reserves the right to take such action as further inquiry or future conditions may indicate is warranted.”

A copy of the letter can be found on the FTC’s Web site and as a link to this press release. The vote approving issuance of the letter was 4-0. (FTC File No. 061-0156; Docket No. C-4174; the staff contact is Elizabeth A. Piotrowski, Bureau of Competition, 202-326-2623; see press release dated November 22, 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.

Scorpio Telemarketers Stung with Court Order for Do Not Call Violations

Under the terms of a court order announced by the Federal Trade Commission today, two individuals and one corporate defendant have been barred from violating the agency’s Telemarketing Sales Rule (TSR) and its Do Not Call (DNC) provisions arising from a telemarketing scheme designed to sell mortgage loans, refinancing services, and other products to U.S. consumers. They were also found liable for $530,000 in damages.

In addition to charging the defendants with calling consumers on the National DNC Registry and failing to pay for access to the list, the case was the first brought by the Commission alleging the transmission of phony caller ID information or none at all. Under the DNC provisions of the TSR telemarketers are required to transmit accurate caller ID information so consumers who do not want to be called in the future can contact them and tell them so.

The Commission’s Complaint

According to the FTC’s complaint, announced in May 2006, Srikanth Venkataraman, formerly of New Jersey and doing business as Scorpio Systems, Ltd., sold mortgage loans, refinancing, and other products and services to U.S. consumers via outbound telemarketing. Scorpio allegedly called numbers on the Do Not Call Registry, failed to transmit its telephone number and name to consumers’ caller identification service, and failed to pay the fee required to access the Registry. The telemarketer transmitted either no caller ID or a phony caller ID number – 234-567-8923 – and, as a result, consumers were unable to contact the telemarketer to stop unwanted calls.

Case History

The Commission’s original complaint was filed at the FTC’s request by the U. S. Department of Justice (DOJ) in U.S. District Court for the District of New Jersey on April 26,2006. In August 2007, the FTC voted to authorize the DOJ to amend the complaint by adding two defendants to the case, Software Transformations, Inc., and Sridhar Bhupatiraju. Software Transformations, Inc., was a successor corporation to Scorpio Systems, Ltd. Sridhar Bhupatiraju is an officer of Software Transformations, Inc. According to the Commission, the defendants named in the amended complaint also participated in telemarketing operations that called numbers on the Do Not Call Registry and failed to pay the fees required to access the Registry.

The Final Court Order

The final court order announced today settles the Commission’s charges against defendants Srikanth Venkataraman, dba Scorpio Systems, Ltd.; Software Transformations, Inc.; and Sridhar Bhupatiraju, individually and as an officer of Software Transformations, Inc. The order prohibits the defendants from violating the TSR in the future, states that they agree not to contest any of the facts alleged in the FTC’s complaint, and are liable for their TSR violations.

The order imposes suspended civil penalty judgments of $530,000 against each of the individual defendants and $160,000 against the corporate defendant – representing the total gross revenues resulting from their telemarketing violations. Based on the defendants’ inability to pay, however, the order requires Venkataraman to pay $15,000, Bhupatiraju to pay $10,000, and Software Transformations to pay $20,000. It also contains a right to reopen the case if the Commission later finds the defendants have misrepresented their financial condition.

The Commission vote authorizing the filing of the stipulated final order in consent of the court action was 4-0. It was filed by the DOJ on behalf of the FTC in the U.S. District Court for the District of New Jersey.

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.

Copies of the stipulated final order 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, D.C. 20580. 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 Challenges Agriums Proposed Acquisition of UAP Holding Corporation

The Federal Trade Commission today issued a complaint charging that Agrium, Inc.’s (Agrium) proposed $2.65 billion acquisition of UAP Holding Corporation (UAP) would be anticompetitive and in violation of federal antitrust laws. The FTC contends the deal would reduce competition in the market for the retail sale of bulk fertilizer and farm stores in several areas of the United States.

Under the terms of a consent order resolving the Commission’s charges, Agrium is required to sell five UAP farm stores in Michigan and two Agrium stores in Maryland and Virginia within 180 days of the acquisition.

“Agrium and UAP are direct competitors in the six overlapping markets defined by the Commission,” said Jeffrey Schmidt, Director of the FTC’s Bureau of Competition. “The consent order announced today will help preserve competition in the market for the sale of fertilizer in these regions after this deal is completed.”

On December 3, 2007, Agrium and UAP announced that their respective boards of directors had approved the sale of all outstanding shares of UAP stock to Agrium for approximately $2.65 billion. As a result of the merger, UAP would become a wholly owned subsidiary of Agrium. Both companies are major North American distributors of fertilizer and operators of retail farm stores. Agrium, based in Calgary, Alberta, is the largest retail farm store operator in the United States, with 433 locations in 31 states operating under the “Crop Production Services” and “Western Farm Service” brands. UAP, based in Colorado, is the second-largest farm store operator in the United States, operating 370 stores nationwide.

The Commission’s Complaint

According to the complaint, Agrium’s acquisition of UAP as proposed would be anticompetitive and violate Section 5 of the FTC Act and Section 7 of the Clayton Act, as amended. The FTC contends that the transaction would substantially lessen competition in the market for the retail sale of bulk fertilizer and, in some cases, related services by farm stores. Both Agrium and UAP own competing farm stores in the relevant geographic area, which includes six markets – three in the central “thumb” of Michigan, two in east/central Michigan, and one on the eastern shore of Maryland. Specifically, the acquisition would impact stores in or near the towns of Croswell, Richmond, Imlay City, Vestaburg, and Standish, Michigan; and Pocomoke City/Girdletree, Maryland.

The Commission contends that bulk fertilizer is a critical product, without which most growers cannot operate profitably and for which there is no close substitute. Farmers typically want one-stop shopping from their farm stores and favor a single provider that can deliver all of the products and services they need. However, while farmers may visit the stores, sales representatives also call on the farmers, with bulk fertilizer delivered to their farms in trucks or spreaders. Typically, because of the high cost of transporting bulk fertilizer long distances and other reasons, it is only sold to farms that are 20-30 miles from the stores, resulting in a series of small relevant geographic markets.

The complaint alleges that new entry by farm stores would not offset the transaction’s anticompetitive effects. Due to the significant sunk costs of establishing new stores and the difficulty of attracting customers in a mature market, entry is highly unlikely. Finally, the complaint states that the transaction would eliminate competition between retail stores owned by Agrium and UAP, increasing the likelihood that Agrium will exercise unilateral market power, and facilitating coordinated interaction among remaining farm stores after the acquisition.

Terms of the Consent Order

The Commission’s consent order is designed to remedy the alleged anticompetitive effects of the acquisition. The order requires Agrium to sell five UAP stores in Michigan and two Agrium stores in Maryland and Virginia within 180 days of acquiring UAP. The order requires the divestiture of Agrium’s store in Keller, Virginia, and that it be sold as a unit with Agrium’s Maryland store, because Agrium’s Keller Virginia store supplies Agrium’s store in the Pocomoke/Girdletree, Maryland region with essential custom-blended fertilizer.

The order defines the scope of the assets to be sold and requires Agrium, for up to a year, to provide the necessary transition services to the buyer of the stores to allow for a smooth transition to the acquirer. The order also provides mechanisms to ensure that each employee at the UAP stores to be sold can be hired by the acquirer, requires that the companies keep private most confidential information related to the divested UAP stores, and requires the companies to provide the Commission with advance notice in writing if they intend to buy any assets in the relevant geographic area that sell agricultural products. Finally, the order provides for the appointment of a divestiture trustee in the event the respondents fail to divest the assets as required under the order.

The order contains an Order to Hold Separate and Maintain Assets that requires the companies to maintain the assets to be divested pending their sale and provides for the appointment of an interim monitor to oversee the assets to be sold in the relevant markets. The Order to Hold Separate describes the interim monitor’s broad oversight of the assets and reporting requirements to the Commission. It also requires the companies to appoint a manager who will run the assets independently and will be given financial incentives to ensure their success.

The Commission vote to accept the complaint, proposed consent order, and Order to Hold Separate and Maintain Assets was 4-0. The FTC will publish an announcement regarding the agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through June 4, 2008, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the documents related to this matter 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.

FTC to Host Town Hall Meeting to Explore the Mobile Marketplace Issues

Media Advisory

May 2, 2008

WHAT:	Two-day Town Hall meeting to explore the evolving mobile commerce marketplace and its implications for consumer protection policy. Industry experts, academics, consumer advocates, privacy professionals and government analysts will discuss topics such as the use of text messaging and related messaging services as instruments of commerce; consumers’ ability to control mobile applications; the adaptation of advertising to mobile devices, including the challenges presented by small screen disclosures; mobile commerce practices targeting children and teens; industry best practices in preventing fraud, disclosing costs, and resolving billing disputes; evolving security threats and solutions; and next-generation products and services. The event is free and open to the public.
WHEN:	May 6 & 7, 2008
WHERE:	FTC Conference Center 601 New Jersey Avenue, NW Washington, DC

A government issued photo ID is required for entry.
A wireless hotspot is available for Internet access at the Conference Center.

A copy of the agenda can be found at: http://www.ftc.gov/bcp/workshops/mobilemarket/agenda.pdf

Reporters and others interested in this event but who are unable to attend, can view the conference via Webcast by accessing the following link at the start of the event:
http://htc-01.media.globix.net/COMP008760MOD1/ftc_web/FTCindex.html.

Contact Information

Contact:

Office of Public Affairs
202-326-2180

FTC Approves Letter to Freddie Mac on its Proposed Settlement with New York Attorney General and the Home Valuation Code of Conduct

The Federal Trade Commission has approved a staff letter to the Federal Home Loan Mortgage Corporation (“Freddie Mac”) on its proposed settlement agreement with the New York Attorney General and the related Home Valuation Code of Conduct.

On March 3, 2008, the New York Attorney General announced settlement agreements with Freddie Mac, the Federal National Mortgage Association (“Fannie Mae”), and the Office of Federal Housing Enterprise Oversight, the office within the Department of Housing and Urban Development that oversees Freddie Mac and Fannie Mae. Pursuant to the agreements, beginning on January 1, 2009, Freddie Mac and Fannie Mae will no longer purchase single-family mortgage loans, other than government-insured loans, from mortgage originators that do not agree to adopt the Home Valuation Code of Conduct with respect to such loans. The code provides for various restrictions, prohibitions, and requirements regarding appraisal reports used to secure mortgage loans.

Based on a request by Freddie Mac for public comments on the code, staff of the Commission’s Office of Policy Planning and the Bureau of Economics prepared the letter, which expresses support for proposals such as those contained in the code to protect the independence of appraisals and the integrity of the lending process, but raises concerns regarding the potential effect of certain provisions in the code on competition and consumers in the appraisal and mortgage lending markets.

The FTC vote approving the letter was 4-0. It was sent to the Federal Home Loan Mortgage Corporation on April 30, 2008.

Copies of the letter can be found as a link to this press release on the Commission’s Web site. (FTC File No. V080011; the staff contact is Maureen Ohlhausen, 202-326-2632)

FTC Seeks Public Comment on Rulemaking to Prohibit Market Manipulation in the Petroleum Industry

Exercising the authority provided by Congress under the Energy Independence and Security Act of 2007 (EISA), the Federal Trade Commission today announced the approval of an Advance Notice of Proposed Rulemaking (ANPR) to solicit public comments on the appropriate way to interpret and enforce the EISA’s provisions related to preventing market manipulation in the petroleum industry.

The ANPR is the first step in a formal rulemaking process that will assist the Commission in determining whether, and in what ways, it should develop a formal rule defining and prohibiting market manipulation in the petroleum industry. The Commission intends to conclude the rulemaking process by the end of the year.

“We understand that consumers are being hurt by high gas prices, and the Commission remains vigilant in using its full authority to prevent unlawful behavior that affects gas prices,” FTC Chairman William E. Kovacic said. “Today’s request for public comments is an important part of our efforts to assess, quickly and thoughtfully, how the Commission’s new market manipulation authority may be used to protect the American people.”

The EISA

In December of last year, Congress passed the EISA, which includes two sections respectively giving the FTC new authority to promulgate regulations prohibiting “market manipulation” and to enforce the statutory prohibition against the provision of “false or misleading” information in the petroleum industry. Specifically, Section 811 states that it is against the law for anyone, in connection with wholesale purchases or sales of crude oil, gasoline, or petroleum distillates, to use any “manipulative or deceptive device or contrivance, in contravention of such rules and regulations as the Federal Trade Commission may prescribe as necessary or appropriate in the public interest or for the protection of United States citizens.” The ANPR seeks public comments about whether and how the Commission should develop a rule under Section 811 that would prohibit such market manipulation.

Section 812 of the new statute prohibits anyone from reporting information to a federal agency related to the wholesale price of crude oil, gasoline, or petroleum distillates (1) that the person “knew, or reasonably should have known,” to be false or misleading; (2) that was legally required to be reported to such federal agency; and (3) as to which “the person intended the false or misleading data to affect data compiled . . . for statistical or analytical purposes” with respect to the market for such products. As the notice points out, the FTC’s authority to enforce Section 812 became effective when the EISA was enacted. Accordingly, the Commission already has the authority to seek relief for Section 812 violations through federal district court actions.

In seeking public comments before proposing a formal rule on market manipulation pursuant to Section 811, the FTC seeks guidance on how best to ensure that the proposed rule “on balance carries out the objectives of the statute by prohibiting practices that constitute manipulative or deceptive devices or contrivances to the benefit of the public interest.” The Commission will combine this guidance with its extensive knowledge of the petroleum industry as well as its expertise in pursuing its dual competition and consumer protection missions to determine whether and how a rule can effectuate the objectives of Section 811 to the benefit of American consumers.

The EISA describes how the Commission could enforce the Act and states that any violation of Subtitle B shall be treated as an “unfair or deceptive act or practice” proscribed by a rule issued pursuant to the FTC Act. Under the EISA, the FTC can take the same range of actions against anyone violating a rule against market manipulation allowed under its independent FTC Act authority, including filing a civil action in federal district court seeking, for example, a temporary restraining order or a preliminary injunction to prevent the violation of any Commission rule developed under the EISA.

The Commission also could seek other relief, such as an asset freeze or the seizure of ill-gotten gains, or monetary redress for consumers. The FTC Act allows the Commission to recover civil penalties of up to $11,000 per violation, and the EISA subjects anyone violating Subtitle B to penalties prescribed by the FTC Act. Moreover, in addition to penalties available under the FTC Act, Subtitle B provides that any supplier violating Section 811 or Section 812 faces a civil penalty of up to $1 million.

Questions for Commenters

The ANPR contains a series of questions and issues for consideration by commenters. They focus primarily on the definition of manipulative or deceptive behavior to help the agency develop a possible rule that would prohibit such conduct.

The notice first contains a proposed definition of market manipulation for the purpose of the Section 811 rulemaking. It seeks comments on whether the definition is “necessary or appropriate in the public interest or for the protection of United States citizens,” as the statute requires. The agency also is seeking comments on how legal precedent established for violations of other rules against manipulation – such as those established by the Commodity Futures Trading Commission (CFTC), the Federal Energy Regulatory Commission (FERC), and the Securities and Exchange Commission (SEC) – may impact the FTC’s development of such a rule, and on whether the rule should require evidence of “intentional, willful, or reckless conduct designed to deceive or defraud by controlling or artificially affecting market practices or market activity.” Next, the ANPR seeks comments on what effect the magnitude of such penalties – up to $1 million per day per violation – might have on market participants’ behavior.

The ANPR also seeks comments concerning potential overlaps between the FTC’s jurisdiction and that of the other agencies on which Congress has bestowed anti-manipulation authority. The ANPR also requests comments on other proposals for formal rule provisions regarding industry practices. Finally, it presents two case studies and questions arising from each on which commenters may wish to offer views.

The Rulemaking Process

As the Commission noted in letters sent to Senator Maria Cantwell and several other U.S. Senators, as well as to Speaker Nancy Pelosi and several other U.S. Representatives, “there is no better way [than through the ANPR process] to generate meaningful comments that will assist in our development of a workable rule for the benefit of the American public.” The ANPR announced today is subject to a 30-day public comment period, after which the FTC will analyze the comments received, draft a proposed rule, and issue a Notice of Proposed Rulemaking (NPR) that also will be subject to a 30-day public comment period. The goal is to complete the rulemaking process by the end of the year.

The Commission vote to issue the ANPR was 4-0. It will be available on the FTC’s Web site and will be published in the Federal Register by May 6. Comments must be received by June 6, 2008. The ANPR describes how and where written and electronic comments should be submitted.

Copies of the Advance Notice of Proposed Rulemaking 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, D.C. 20580. 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 No. P082900)

Court Orders Cross-Border Telemarketers to Pay Nearly $5 Million

At the request of the Federal Trade Commission, the U.S. District Court for the Northern District of Illinois has entered a final order and default judgment against a group of individual and corporate defendants based in Ontario, Canada, for their role in a cross-border telemarketing scheme that cost U.S. consumers millions of dollars.

Under the terms of the final order and judgment, the defendants – collectively known as Pacific Liberty – are barred from violating the FTC Act and the Commission’s Telemarketing Sales Rule (TSR). They are liable as well for approximately five million dollars, the total net sales they made through the cross-border scheme.

The FTC’s complaint charged the defendants with using outbound telemarketing to call U.S. consumers. For an advance fee of $319, which they electronically debited from the consumers’ bank accounts, the defendants promised that they could deliver Visa or MasterCard credit cards, along with free gifts such as cell phones. No consumers who paid the money received either credit cards or “complimentary” gifts.

Instead, consumers received only a “member benefits” package with items such as booklets on how to improve their creditworthiness. Some also received a “member merchandise” card valid only for purchases from a catalog supplied by the defendants. The defendants also called consumers offering them a brand-name personal computer if they agreed to have a fee debited from their bank account. No one received the promised computers. Instead, they received certificates purportedly redeemable for off-brand computers, but the consumers first had to pay additional fees. The FTC is not aware of any consumer who ultimately obtained a computer.

The court order and final judgment announced today state that the principle defendants failed to respond to an FTC motion for summary judgment, as well as to other information requests. According to the order, the Commission submitted considerable additional evidence to support the allegations in the complaint, including that the defendants engaged in deceptive acts or practices, and that they are accordingly liable for them. Specifically, the order states that the defendants: 1) misrepresented that after paying a fee, consumers would, or were highly likely to, receive an unsecured major credit card such as a Visa or Mastercard; and 2) requested and received a fee from consumers before arranging to provide them with such a card. In addition, the court found the defendants or their employees misrepresented or failed to disclose a variety of information to consumers, including that they would receive a specific brand-name computer and the total cost to buy and receive the computer.

The court further found that the corporate defendants operated as a common enterprise while engaging in the deceptive acts or practices alleged in the complaint, that defendants Oleg Oks and Aleksandr Oks participated in and had control of the corporate defendants, and that they were aware of the illegal acts and practices taking place. Accordingly, the court found the defendants violated Section 5 of the FTC Act and the TSR, barred them from violating the Act and Rule, and ordered them to pay $4,997,695.60.

The complaint named the following defendants: Oleg Oks, aka Oleg A. Oks and Oleg Alex Oks; Aleksandr Oks; Philip Nemirovsky; and Boris Pekar. The complaint also charged the following corporations, all based in Ontario, Canada, as defendants: 1530605 Ontario, Inc., also dba Pacific Liberty; 159927 Ontario, Inc., also dba Pacific Liberty Group and Pacific Liberty W Group; 1565205 Ontario, Inc., also dba Pacific Liberty and Pacific Liberty W; 1585392 Ontario, Inc., also dba Liberty Wide Info Services, Liberty Wide Info Services Group, Liberty Wide Services; and Liberty Wide; 1620142 Ontario, Inc., also dba Liberty Sun Info Services and Liberty Sun Info; 1619264 Ontario, Inc., also dba C & B Communications Group; 1629930 Ontario, Inc., also dba Atlantic One Info Services Grp and Atlantic One Info Services Group; and 1485635 Ontario, Inc. (dissolved), also dba Nationwide Credit Service Inc., Nation Wide Information Services Group Inc., and Nationwide Information Services.

This case was brought with the assistance of the U.S. Postal Inspection Service and the Toronto Strategic Partnership. The Toronto Strategic Partnership consists of the FTC, Competition Bureau Canada, the Toronto Police Service – Fraud Squad, the U.S. Postal Inspection Service, the Ontario Ministry of Government Services, the Ontario Provincial Police – Anti-Rackets, the Royal Canadian Mounted Police, and the United Kingdom’s Office of Fair Trading.

In September 2007, the Competition Bureau Canada announced that Oleg Alex Oks and Aleksandr Oks had pleaded guilty to criminal charges of deceptive telemarketing. Oleg Oks was sentenced to a year in jail and two years probation. Aleksandr Oks received a six-month conditional sentence and 12 months probation. Both were barred from telemarketing for 10 years.

The Commission’s complaint was filed under seal in the U.S. District Court for the Northern District of Illinois, Eastern Division, on September 19, 2005, and the court issued a temporary restraining order against the defendants that day. The seal was lifted on September 26, 2005. The FTC subsequently filed a motion for summary judgement against defendants Oleg Oks and Aleksandr Oks and motion for default judgment against the remaining defendants. The order for permanent injunction and final judgment against the defendants was entered in the U.S. District Court for the Northern District of Illinois, Eastern Division, on March 18, 2008.

Copies of the Commission’s documents related to this case can be found as a link to this press release on the FTC’s Web site. 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 No. 052-3004; Civ. No. 05-C-5389)

FTC, Better Business Bureau to Sponsor Advertising Event in Dallas

A one-day “back to basics” workshop on complying with truth-in-advertising laws is being presented in Dallas, Texas, on Thursday, May 29, 2008, by the Federal Trade Commission and Better Business Bureau of Metropolitan Dallas. Green Lights & Red Flags: FTC-BBB Rules of the Road for Advertisers features a roster of national experts discussing the latest developments in advertising law for business owners, marketing executives, and attorneys.

Panel topics include:

Understanding the Rules of the Road – The basics of FTC truth-in-advertising law and the BBB Code of Advertising;
Avoiding a Promotion Commotion – Complying with new standards for rebates, commercial email, gift cards, and other promotional practices;
The Secure Entrepreneur: Data Security & Consumer Privacy – Practical advice on safeguarding your customers’ personal information and honoring your privacy promises;
If the Government Comes to Call – An inside look at county, state and federal consumer protection investigations;
The ABCs of IP – What advertisers need to know about copyrights and trademarks; and
When Your Competitor Crosses the Line – Self-regulation or litigation? Weighing the options when a competitor’s ads are deceptive.

Green Lights & Red Flags is presented in partnership with Southern Methodist University’s Temerlin Advertising Institute and Dedman School of Law, and the Dallas Bar Association’s Franchise & Distribution Law Section. The workshop runs from 8:00 a.m. to 3:30 p.m. at the Cityplace Conference Center Amphitheater, 2711 North Haskell Avenue, in Dallas.

The admission fee of $90 ($100 for walk-in registration and $45 for students), payable to the BBB of Metropolitan Dallas, includes continental breakfast, lunch, and a CD of all workshop materials. Green Lights & Red Flags has been approved for 5.5 hours of Texas CLE credit. For more information, visit www.dallas.bbb.org/greenlights or call the BBB at (214) 740-0306.

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 www.ftc.gov. 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.

FTC Charges Mortgage Foreclosure Rescuers

The Federal Trade Commission has charged Foreclosure Solutions, LLC and Timothy A. Buckley with operating a nationwide mortgage foreclosure “rescue” scam that charged consumers as much as $1,200 to save their homes from foreclosure but failed to do so. The FTC seeks to bar them from further law violations and make them forfeit their ill-gotten gains.

According to the FTC’s complaint, the defendants market their services through direct mail to consumers named in court records of foreclosure actions and through Internet Web sites, including www.program10.com and www.foreclosuresolutionsusa.net. Through the direct mail solicitations, the defendants warn that consumers could lose their home within 10 days, and they promise that they can stop foreclosure proceedings. In one of their letters they claim a 93 percent success rate.

Consumers who call a toll-free number are told that the defendants will provide an attorney and a case manager to help them avoid foreclosure, the complaint alleges. The defendants allegedly state that they have helped thousands of others, and they promise to guarantee in writing that they will save each consumer’s home. In some instances, consumers are permitted to pay about half the fee up-front and the balance within 30 days for an extra $50.

The defendants allegedly send a representative to the consumer’s home to close the sale and collect the up-front fee. In the agreement they require consumers to sign, they attempt to disclaim their guarantee that they will save the consumers’ homes, stating that they will work faithfully but not guarantee the success of their efforts. The defendants also provide consumers with a money-back guarantee, promising a refund if the consumer follows their instructions to save money and avoid lender phone calls. They also require consumers to sign a power of attorney form, authorizing them to represent the consumer in the foreclosure action.

In addition, the complaint alleges that the defendants instruct consumers to open a savings account and to deposit, every month until further notice from the defendants, the consumer’s monthly mortgage payment plus an additional 25 to 35 percent. They claim that the extra payment will be used to negotiate with the lender to reinstate the loan. After consumers have paid for the services, the defendants often don’t answer or return their calls. In otherinstances, the defendants’ representatives allegedly tell consumers that they are working on a solution, that they need more information from the consumer, or that no solution can be found.

According to the complaint, the defendants hire attorneys to respond to the foreclosure complaints filed against consumers. In many instances, the attorneys file the same form response to every complaint, usually without investigating consumers’ individual circumstances that might identify defenses or counterclaims unique to particular consumers. In many instances, the defendants do not stop foreclosure or save consumers’ homes, and many consumers who have contracted for their services lose their homes to foreclosure. Consumers who stop foreclosure through their own efforts sometimes learn that their lenders offer the same settlement terms regardless of whether the consumers negotiate on their own or through the defendants. Others learn that their lenders will negotiate only with them and not with the defendants.

The Ohio-based defendants are charged with falsely representing that they will stop foreclosure in all or virtually all instances, in violation of the FTC Act.

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 Northern District of Ohio, Eastern Division.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

Copies of the 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 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 Testifies on Efforts to Protect Consumers in Subprime Mortgage Market

The Federal Trade Commission testified before the U.S. Senate Committee on Commerce, Science, and Transportation’s Subcommittee on Interstate Commerce, Trade, and Tourism, about the Commission’s continuing efforts to protect subprime mortgage borrowers.

The testimony described the agency’s priorities, including deceptive mortgage advertising, deceptive or unfair servicing practices, discrimination in lending, and foreclosure rescue scams, and it emphasized the following points:

The Commission has been at the forefront of the fight against deceptive subprime lending and servicing practices since 1998, when it filed its case against Capital City Mortgage. The case alleged that the defendant took advantage of African-American consumers in Washington, D.C.
In the past decade, the FTC has brought 22 actions in the mortgage lending industry, with particular attention to entities in the subprime markets. Through these cases, many of which have challenged deceptive advertising and marketing practices, the FTC has returned more than $320 million to consumers.
The Commission is investigating more than a dozen mortgage companies as part of a mortgage advertising law enforcement sweep. Last year, the agency sent more than 200 warning letters to mortgage brokers, mortgage lenders, and media outlets that carry their home mortgage advertisements. FTC staff recently reviewed the current advertising of those who received warning letters and will follow up with law enforcement where appropriate.
With the recent rapid increase in mortgage delinquencies and foreclosures, the FTC has intensified its focus on protecting consumers from scams that promise to rescue them from mortgage foreclosure. The Commission has filed law enforcement actions against defendants allegedly engaged in mortgage foreclosure fraud, and has additional nonpublic matters under investigation.
This month, FTC staff filed a public comment in response to the Federal Reserve Board’s proposed rules to restrict certain mortgage practices. The comment supports the Board’s goals of protecting consumers in the mortgage market from unfair, abusive, or deceptive lending and servicing practices. If the Board’s rules are finalized, the FTC will have the authority to enforce them against nonbank entities under its jurisdiction. The FTC’s enforcement efforts would be more effective if it could obtain civil penalties for violations of these rules.
To empower consumers to better protect themselves from potentially harmful conduct, the FTC’s extensive consumer education efforts include new educational materials, in English and Spanish, about deceptive mortgage advertisements, buying a home, mortgage foreclosure rescue scams, and steps borrowers can take to avoid foreclosure.
The Commission engages in research and policy development to better understand and protect consumers in the mortgage marketplace. Next month, FTC staff economists will host a conference to assess the role of consumer information in the current mortgage crisis, and to discuss strategies for ensuring that mortgage disclosures will be designed to provide the greatest benefit to consumers.

The Commission vote authorizing the presentation of the testimony and its inclusion in
the formal record was 4-0.

Copies of the testimony 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, 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.

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