Court Rules in Favor of FTC in National Urological Group Case; Orders Marketers of Thermalean, Lipodrene, and Spontane-ES to Pay More Than $15 Million

A federal district court has ordered the marketers of three dietary supplements to pay more than $15 million for deceiving consumers about the products’ safety and effectiveness. The court imposed the final monetary judgment and permanent prohibitions against the marketers in December 2008, after granting the Federal Trade Commission’s motion for summary judgment last June.

The court found National Urological Group, Inc. and several other corporate and individual defendants liable for more than $15.8 million in deceptive sales of Thermalean, Lipodrene, and Spontane-ES. Thermalean and Lipodrene are purported weight loss treatments. According to the defendants’ advertisements, they were clinically proven to cause substantial weight loss, including a 19 percent loss in total body weight. Spontane-ES is a purported treatment for erectile dysfunction. According to the defendants’ advertisements, it was clinically proven to safely and effectively treat 90 percent of men with erectile dysfunction. The court permanently barred the defendants (except now-dissolved National Institute for Clinical Weight Loss) from engaging in deceptive conduct in the future and also ordered Terrill Mark Wright, M.D., to pay $15,454 for his deceptive endorsement of Thermalean.

“These defendants are old-fashioned snake oil salesmen who retooled their pitches to cash in on 21st century concerns,” said Lydia B. Parnes, director of the FTC’s Bureau of Consumer Protection. “They led people to believe that the supplements they sold to treat weight loss and erectile dysfunction were safe and effective treatments, when nothing could be further from the truth.”

Of note, the court held the three corporate defendants liable based on their operation as a “common enterprise,” given that the same group of individuals controlled all the companies, shared expenses and advertising for the same products, and worked together to achieve profitability. The court rejected the defendants’ arguments that the advertising was protected commercial speech under the First Amendment or that it was mere puffery. The court held that the FTC’s requirement calling for “competent and reliable scientific evidence” is not unconstitutionally vague, pointing to the FTC’s dietary supplement guides as evidence that an ordinary person could understand the definition of the term as outlined in the guides. The court also rejected the defendants’ argument that the FTC’s challenge to the advertising was precluded by a consent decree that the defendants had entered into with the U.S. Food and Drug Administration.

The final order against the principal defendants – National Urological Group, Inc. as well as Hi-Tech Pharmaceuticals, Inc., National Institute for Clinical Weight Loss, Inc., Jared Wheat, Stephen Smith, and Thomasz Holda – imposes a $15.8 million judgment. The final order against medical endorser Terrill Wright imposes a $15,454 judgment. The orders also place restrictions on the defendants’ future conduct. These orders were issued last month by the U.S. District Court for the Northern District of Georgia. They prohibit the defendants from claiming that their products treat obesity or erectile dysfunction, are clinically tested or scientifically proven to be safe or effective, or have other health or safety benefits, unless the claims, including endorsements, are true, not misleading, and based on reliable scientific evidence. In addition, the defendants are banned from misrepresenting the existence, validity, results, or conclusions of any test or study. The orders also contain standard record-keeping provisions to allow the FTC to monitor compliance.

Copies of the June 2008 decision and December 2008 court orders are available on 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 Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. 022-3165)
(Civil Action No. 1:04-CV-3294-CAP)

Court Rules in Favor of FTC in National Urological Group Case; Orders Marketers of Thermalean, Lipodrene, and Spontane-ES to Pay More Than $15 Million

A federal district court has ordered the marketers of three dietary supplements to pay more than $15 million for deceiving consumers about the products’ safety and effectiveness. The court imposed the final monetary judgment and permanent prohibitions against the marketers in December 2008, after granting the Federal Trade Commission’s motion for summary judgment last June.

The court found National Urological Group, Inc. and several other corporate and individual defendants liable for more than $15.8 million in deceptive sales of Thermalean, Lipodrene, and Spontane-ES. Thermalean and Lipodrene are purported weight loss treatments. According to the defendants’ advertisements, they were clinically proven to cause substantial weight loss, including a 19 percent loss in total body weight. Spontane-ES is a purported treatment for erectile dysfunction. According to the defendants’ advertisements, it was clinically proven to safely and effectively treat 90 percent of men with erectile dysfunction. The court permanently barred the defendants (except now-dissolved National Institute for Clinical Weight Loss) from engaging in deceptive conduct in the future and also ordered Terrill Mark Wright, M.D., to pay $15,454 for his deceptive endorsement of Thermalean.

“These defendants are old-fashioned snake oil salesmen who retooled their pitches to cash in on 21st century concerns,” said Lydia B. Parnes, director of the FTC’s Bureau of Consumer Protection. “They led people to believe that the supplements they sold to treat weight loss and erectile dysfunction were safe and effective treatments, when nothing could be further from the truth.”

Of note, the court held the three corporate defendants liable based on their operation as a “common enterprise,” given that the same group of individuals controlled all the companies, shared expenses and advertising for the same products, and worked together to achieve profitability. The court rejected the defendants’ arguments that the advertising was protected commercial speech under the First Amendment or that it was mere puffery. The court held that the FTC’s requirement calling for “competent and reliable scientific evidence” is not unconstitutionally vague, pointing to the FTC’s dietary supplement guides as evidence that an ordinary person could understand the definition of the term as outlined in the guides. The court also rejected the defendants’ argument that the FTC’s challenge to the advertising was precluded by a consent decree that the defendants had entered into with the U.S. Food and Drug Administration.

The final order against the principal defendants – National Urological Group, Inc. as well as Hi-Tech Pharmaceuticals, Inc., National Institute for Clinical Weight Loss, Inc., Jared Wheat, Stephen Smith, and Thomasz Holda – imposes a $15.8 million judgment. The final order against medical endorser Terrill Wright imposes a $15,454 judgment. The orders also place restrictions on the defendants’ future conduct. These orders were issued last month by the U.S. District Court for the Northern District of Georgia. They prohibit the defendants from claiming that their products treat obesity or erectile dysfunction, are clinically tested or scientifically proven to be safe or effective, or have other health or safety benefits, unless the claims, including endorsements, are true, not misleading, and based on reliable scientific evidence. In addition, the defendants are banned from misrepresenting the existence, validity, results, or conclusions of any test or study. The orders also contain standard record-keeping provisions to allow the FTC to monitor compliance.

Copies of the June 2008 decision and December 2008 court orders are available on 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 Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. 022-3165)
(Civil Action No. 1:04-CV-3294-CAP)

Judge Orders Kevin Trudeau to Pay More Than $37 Million for False Claims About Weight-Loss Book

A federal judge has ordered infomercial marketer Kevin Trudeau to pay more than $37 million for violating a 2004 stipulated order by misrepresenting the content of his book, “The Weight Loss Cure ‘They’ Don’t Want You to Know About.”

In August 2008, Judge Robert W. Gettleman of the U.S. District Court for the Northern District of Illinois had ordered Trudeau to pay more than $5 million and banned him, for three years, from producing or publishing infomercials for products in which he has an interest. The ruling confirmed an earlier contempt finding, the second such finding against Trudeau in the past four years.

Urged by both the FTC and Trudeau to reconsider aspects of its August order, on November 4 Judge Gettleman amended the judgment to $37,616,161, the amount consumers paid in response to the deceptive infomercials. The judge also revised the three-year ban to prohibit Trudeau from “disseminating or assisting others in disseminating” any infomercial for any informational publication in which he has an interest. On December 11, the court denied Trudeau’s request to reconsider or stay this ruling.

The FTC filed its first lawsuit against Trudeau in 1998, charging him with making false and misleading claims in infomercials for products he claimed could cause significant weight loss and cure addictions to heroin, alcohol, and cigarettes, as well as enable users to achieve a photographic memory. A stipulated court order resolving that case barred Trudeau from making false claims for products in the future, ordered him to pay $500,000 in consumer redress, and established a $500,000 performance bond to ensure compliance.

In 2003, the Commission charged Trudeau with violating the 1998 order by falsely claiming in infomercials that a product, Coral Calcium Supreme, could cure cancer. The court subsequently entered a preliminary injunction that ordered him not to make such claims. When Trudeau continued to make cancer-cure claims about Coral Calcium, he was found in contempt. In 2004, Trudeau agreed to an order that resolved the Coral Calcium matter. He was directed to pay $2 million in consumer redress and banned from infomercials, except for informational publications such as books, provided that he “must not misrepresent the content”
of those publications. The 2004 injunction remains in effect.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Trudeau)

David Shonka Named Acting General Counsel of the FTC

Federal Trade Commission Chairman William E. Kovacic announced today that David C. Shonka will serve as Acting General Counsel for the agency. Shonka will replace William Blumenthal, who is leaving the agency to return to private law practice.

“Dave’s work for over three decades has played a leading role in making the Office of General Counsel one of the best law offices in the federal government,” Chairman Kovacic said. “His service to this agency is unsurpassed. The Commission is most fortunate to enlist someone of such outstanding accomplishment and judgment to serve as Acting General Counsel.”

As the Commission’s chief legal officer and adviser, the General Counsel represents the agency in court and provides legal counsel to the Commission and its bureaus and offices. Shonka has served as the FTC’s Principal Deputy General Counsel since April 2008, leading an adjudicative procedures reform project and overseeing a comprehensive re-writing of the Commission’s Part 3 rules. He also chairs the FTC’s E-discovery Steering Committee for government law enforcement investigations.

Shonka joined the General Counsel’s office in 1977 as a staff attorney and later became the Assistant General Counsel for Litigation. He has tried, briefed, or argued several major cases for the Commission, including, among antitrust matters, Indiana Federation of Dentists, Detroit Auto Dealers, Warner Communications, Elders Grain, University Health, H.J. Heinz, and Chicago Bridge, and, among consumer protection cases, Figgie, American National Cellular, and Joe Camel. He also secured the Commission’s first multi-million dollar redress settlement in a consumer protection case.

Shonka graduated from the University of Maine School of Law and earned undergraduate degrees in English and economics from the University of Nebraska.

(Shonka)

David Shonka Named Acting General Counsel of the FTC

Federal Trade Commission Chairman William E. Kovacic announced today that David C. Shonka will serve as Acting General Counsel for the agency. Shonka will replace William Blumenthal, who is leaving the agency to return to private law practice.

“Dave’s work for over three decades has played a leading role in making the Office of General Counsel one of the best law offices in the federal government,” Chairman Kovacic said. “His service to this agency is unsurpassed. The Commission is most fortunate to enlist someone of such outstanding accomplishment and judgment to serve as Acting General Counsel.”

As the Commission’s chief legal officer and adviser, the General Counsel represents the agency in court and provides legal counsel to the Commission and its bureaus and offices. Shonka has served as the FTC’s Principal Deputy General Counsel since April 2008, leading an adjudicative procedures reform project and overseeing a comprehensive re-writing of the Commission’s Part 3 rules. He also chairs the FTC’s E-discovery Steering Committee for government law enforcement investigations.

Shonka joined the General Counsel’s office in 1977 as a staff attorney and later became the Assistant General Counsel for Litigation. He has tried, briefed, or argued several major cases for the Commission, including, among antitrust matters, Indiana Federation of Dentists, Detroit Auto Dealers, Warner Communications, Elders Grain, University Health, H.J. Heinz, and Chicago Bridge, and, among consumer protection cases, Figgie, American National Cellular, and Joe Camel. He also secured the Commission’s first multi-million dollar redress settlement in a consumer protection case.

Shonka graduated from the University of Maine School of Law and earned undergraduate degrees in English and economics from the University of Nebraska.

(Shonka)

FTC Sues to Block Oldcastle Architecturals Proposed Acquisition of the Pavestone Companies

The Federal Trade Commission has filed suit to block Oldcastle Architectural, Inc.’s proposed acquisition of the interests and assets of the rival Pavestone companies, charging that the $540 million acquisition would greatly reduce competition for drycast concrete hardscape products sold to national home centers, such as The Home Depot, Lowe’s, and Wal-Mart in nearly 300 metropolitan areas in 40 states and the District of Columbia.

The FTC’s administrative complaint alleges that a combined Oldcastle/Pavestone would harm consumers by creating a company that would control as much as 90 percent or more of sales to national home centers, and would be the only drycast concrete hardscape manufacturing firm capable of supplying these products from plants throughout the country.

“Consumers purchasing these hardscape products for use in their patios, walkways, gardens, and other outdoor projects benefit from the close competition between Oldcastle and Pavestone,” said Acting Bureau of Competition Director David P. Wales. “The Commission’s action seeks to preserve that competition and ensure consumers are not forced to pay higher prices and purchase lower quality products as a result of this merger.”

Headquartered in Atlanta, Georgia, Oldcastle Architectural, Inc. is wholly owned by Oldcastle, Inc., and is an indirect subsidiary of CRH plc, the international parent of a group of companies engaged in the manufacture and supply of a wide range of building materials. Robert Schlegel, an individual, is the ultimate parent of the Pavestone companies, including Pavestone Company, LP. Pavestone’s headquarters are in Dallas, Texas.

Both Oldcastle and Pavestone manufacture and sell drycast concrete hardscapes, which are landscaping products that include interlocking concrete pavers, segmented retaining wall blocks, and other drycast concrete patio products. They typically are bought by consumers at local home centers for do-it-yourself outdoor projects such as walkways, patios, and garden walls. Drycast concrete hardscapes sold at national home centers are designed to be easy to use, requiring little, if any, expertise or specialized equipment.

According to the FTC, unless blocked, the acquisition would reduce competition in the manufacture and sale of drycast concrete hardscapes to national home centers in nearly 300 metropolitan areas throughout the continental United States. Because drycast concrete products are heavy and expensive to ship, Oldcastle and Pavestone each operate many plants throughout the country to supply local outlets of the national home centers. The FTC asserts that generally it is not cost-effective or competitively viable to transport these products more than 200 miles from a manufacturing plant to national home centers. Thus, Oldcastle and Pavestone typically bid to supply home center stores located within 200 miles of each of their plants, resulting in regional competition among suppliers of drycast concrete hardscape products.

According to the administrative complaint, as the only firms with plants throughout the country, Oldcastle and Pavestone are able to provide a broad range of drycast concrete hardscapes, offer a large number of exclusive and innovative products, and provide an array of support services such as category management, inventory management, marketing aids, and customer training to national home centers. In addition, Oldcastle and Pavestone offer discounts and other marketing and advertising allowances based on national sales volumes. As a result, Oldcastle and Pavestone together account for as much as 90 percent or more of drycast concrete hardscapes sales to national home centers.

The FTC charges the proposed acquisition would result in increased prices and reduced quality, innovation, and services related to these products in the relevant geographic markets. By eliminating the unique competition between Oldcastle and Pavestone, the proposed acquisition would reduce the leverage national home centers now have to negotiate for lower prices and better products, and regional manufacturers would be unable to replicate the current market competition. According to the Commission, the elimination of Pavestone as a competitor would allow Oldcastle unilaterally to increase prices and reduce quality, innovation, and services to national home centers. This ultimately will harm consumers by raising their home improvement costs. The complaint states that entry into the national home center markets would be unlikely to deter or counteract the anticompetitive effects of the transaction.

In its administrative complaint, the Commission also charges that the acquisition would result in anticompetitive effects in the manufacture and sale of drycast concrete pavers and segmented retaining wall blocks to commercial customers, including contractors, dealers, and distributors, in the areas of Dallas, Houston, and San Antonio, Texas. According to the FTC, if allowed to merge, Oldcastle and Pavestone would be the dominant supplier of drycast concrete pavers and segmented retaining wall blocks to these customers, accounting for more than 75 percent of sales in the state of Texas.

According to the administrative complaint, after the acquisition the combined Oldcastle/Pavestone unilaterally would be able to increase prices and reduce quality, innovation, and services to commercial customers in the Dallas, Houston, and San Antonio areas. The complaint states that entry into the Texas commercial markets would be unlikely to deter or counteract the anticompetitive effects of the transaction.

The Commission vote to issue the administrative complaint was 4-0. Also by a vote of
4-0, the Commission has authorized the staff to file a complaint in the U.S. District Court for the
District of Columbia seeking a temporary restraining order and a preliminary injunction to preserve the competitive status quo pending an administrative trial on the merits.

Issuing a complaint is the first step in the administrative trial process. The administrative proceeding is governed by Part 3 of the Commission’s Rules of Practice, as amended by the final interim rule revisions that became effective on January 13, 2009. Pursuant to the amended Rules of Practice, the evidentiary hearing is scheduled to occur on June 15, 2009, and the Commission will issue its final decision within approximately 100 days of the initial decision.

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 a defendant has violated the law.

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 383, 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 File No. 081-0148)
(Oldcastle.final.wpd)

Marketers of Ab Force Weight Loss Device Agree to Pay $7 Million for Consumer Redress

Marketers who made false and deceptive claims that a device would cause consumers to lose weight by applying electronic stimulation to their abdominal muscles have agreed to pay $7 million to settle an action brought by the Federal Trade Commission to obtain consumer redress. Consumers purchased more than 700,000 Ab Force belts and accessories.

The settlement follows a long legal battle that included a finding by an administrative law judge (ALJ) in favor of the FTC; an appeal of the ALJ’s decision to the Commission; and an appeal of the Commission’s decision to the Fourth Circuit Court of Appeals. The FTC filed an administrative complaint in September 2003 alleging that Telebrands Corporation, TV Savings, L.L.C., and their principal Ajit Khubani marketed the Ab Force belt by making the following unsubstantiated claims, that the product: 1) caused loss of weight, inches, or fat; 2) created well-defined abdominal muscles; and 3) was an effective alternative to conventional exercise. The complaint charged that the advertisements were false and deceptive in violation of Sections 5 and 12 of the FTC Act.

In September 2004, the ALJ issued an initial decision holding that the claims made in the ads were false and deceptive. In 2005, the Commission upheld the ALJ’s ruling. The defendants appealed the ruling to the Fourth Circuit Court of Appeals, which upheld the Commission’s decision in August 2006. Because the FTC Act allows the agency to seek consumer redress in U.S. district court after a litigated administrative decision if the underlying conduct is dishonest or fraudulent, the FTC filed an action in 2007 asking the U.S. District Court for the District of New Jersey to order the marketers of Ab Force to provide monetary redress to consumers.

The Commission vote authorizing the staff to file the agreed-upon final settlement was 4-0. It was filed in the U.S. District Court for the District of New Jersey on December 23, 2008.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Telebrands Corp NR.wpd)
(FTC File No. 072-3076)

Marketers of Ab Force Weight Loss Device Agree to Pay $7 Million for Consumer Redress

Marketers who made false and deceptive claims that a device would cause consumers to lose weight by applying electronic stimulation to their abdominal muscles have agreed to pay $7 million to settle an action brought by the Federal Trade Commission to obtain consumer redress. Consumers purchased more than 700,000 Ab Force belts and accessories.

The settlement follows a long legal battle that included a finding by an administrative law judge (ALJ) in favor of the FTC; an appeal of the ALJ’s decision to the Commission; and an appeal of the Commission’s decision to the Fourth Circuit Court of Appeals. The FTC filed an administrative complaint in September 2003 alleging that Telebrands Corporation, TV Savings, L.L.C., and their principal Ajit Khubani marketed the Ab Force belt by making the following unsubstantiated claims, that the product: 1) caused loss of weight, inches, or fat; 2) created well-defined abdominal muscles; and 3) was an effective alternative to conventional exercise. The complaint charged that the advertisements were false and deceptive in violation of Sections 5 and 12 of the FTC Act.

In September 2004, the ALJ issued an initial decision holding that the claims made in the ads were false and deceptive. In 2005, the Commission upheld the ALJ’s ruling. The defendants appealed the ruling to the Fourth Circuit Court of Appeals, which upheld the Commission’s decision in August 2006. Because the FTC Act allows the agency to seek consumer redress in U.S. district court after a litigated administrative decision if the underlying conduct is dishonest or fraudulent, the FTC filed an action in 2007 asking the U.S. District Court for the District of New Jersey to order the marketers of Ab Force to provide monetary redress to consumers.

The Commission vote authorizing the staff to file the agreed-upon final settlement was 4-0. It was filed in the U.S. District Court for the District of New Jersey on December 23, 2008.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Telebrands Corp NR.wpd)
(FTC File No. 072-3076)

FTC Urges Consumers to Cash Restitution Checks Mailed by Wachovia Bank

Wachovia Bank, N.A., has mailed out over $150 million in restitution checks to more than 740,000 consumers who were victims of telemarketing fraud.

On December 11, 2008, the Office of the Comptroller of the Currency (OCC) announced that it had entered into an amended settlement agreement with Wachovia that directed the bank to issue these checks directly to victims. The checks reimburse consumers for funds deducted from their accounts by three payment processors that maintained accounts at Wachovia. See http://www.occ.treas.gov/ftp/release/2008-143.htm and http://www.usdoj.gov/usao/pae/News/Pr/2008/dec/wachoviapayoutrelease.pdf. In addition to the checks, consumers are receiving a claim form they may use to recover bank fees incurred as a result of the allegedly unauthorized debits to their accounts. See http://www.langergrogan.com/WachoviaRestitution.htm. The Wachovia restitution checks are legitimate, and the Federal Trade Commission urges consumers to cash them.

The OCC/Wachovia settlement addresses the use by the payment processors of remotely created checks, or “demand drafts,” processed through Wachovia on behalf of allegedly fraudulent telemarketers. The FTC previously sued two of the three payment processors (Your Money Access, LLC, and FTN Promotions, Inc., dba Suntasia Marketing, Inc. (Suntasia)), and the U.S. Department of Justice sued the third (Payment Processing Center, LLC). The FTC also has sued many of the telemarketers who worked with the three processors, including the following cases: 1) FTC v. Universal Premium Services, Civ. No. CV06-0849 (C.D. Cal.); 2) FTC v. Sun Spectrum Communications Organization, Inc., Civ. No. 03-81105 (S.D. Fla.); 3) FTC v. Xtel Marketing, Inc., Civ. No. 04C7238 (N.D. Ill.); 4) FTC v. 120194 Canada, Ltd., Civ. No. 1:04-cv-07204 (N.D. Ill.); 5) FTC v. Oleg Oks, Civ. No. 05C5389 (N.D. Ill.); and 6) FTC v. Frankly Speaking, Inc., Civ. No. 1:05-cv-60 (M.D. Ga.). The FTC’s press release on the Your Money Access complaint can be found at http://www.ftc.gov/opa/2007/12/yma.shtm, and the release on the Suntasia complaint can be found at http://www.ftc.gov/opa/2007/07/suntasia.shtm.

Wachovia mailed restitution checks to consumers whose accounts the processors debited with Wachovia’s assistance. The OCC/Wachovia agreement does not cover consumers whose accounts the processors debited using banks other than Wachovia. Consumers whose accounts Suntasia debited through other banks, however, will receive restitution as part of the FTC’s settlement with Suntasia (see press release at http://www.ftc.gov/opa/2009/01/suntasia.shtm).

The DOJ, OCC, and private class action counsel have set up a Web site and toll-free phone number to address any concerns and questions consumers may have, including questions regarding the validity of the checks they receive from Wachovia Bank. The Web site address is: http://www.restitutionpayment.com and the toll-free number is 1-866-680-6659. Consumers seeking more information can contact the Claims Administrator at: U.S. Court Settlement Administrator, P.O. Box 37765, Philadelphia, PA 19101-7765.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Wachovia.final.wpd)

FTC Urges Consumers to Cash Restitution Checks Mailed by Wachovia Bank

Wachovia Bank, N.A., has mailed out over $150 million in restitution checks to more than 740,000 consumers who were victims of telemarketing fraud.

On December 11, 2008, the Office of the Comptroller of the Currency (OCC) announced that it had entered into an amended settlement agreement with Wachovia that directed the bank to issue these checks directly to victims. The checks reimburse consumers for funds deducted from their accounts by three payment processors that maintained accounts at Wachovia. See http://www.occ.treas.gov/ftp/release/2008-143.htm and http://www.usdoj.gov/usao/pae/News/Pr/2008/dec/wachoviapayoutrelease.pdf. In addition to the checks, consumers are receiving a claim form they may use to recover bank fees incurred as a result of the allegedly unauthorized debits to their accounts. See http://www.langergrogan.com/WachoviaRestitution.htm. The Wachovia restitution checks are legitimate, and the Federal Trade Commission urges consumers to cash them.

The OCC/Wachovia settlement addresses the use by the payment processors of remotely created checks, or “demand drafts,” processed through Wachovia on behalf of allegedly fraudulent telemarketers. The FTC previously sued two of the three payment processors (Your Money Access, LLC, and FTN Promotions, Inc., dba Suntasia Marketing, Inc. (Suntasia)), and the U.S. Department of Justice sued the third (Payment Processing Center, LLC). The FTC also has sued many of the telemarketers who worked with the three processors, including the following cases: 1) FTC v. Universal Premium Services, Civ. No. CV06-0849 (C.D. Cal.); 2) FTC v. Sun Spectrum Communications Organization, Inc., Civ. No. 03-81105 (S.D. Fla.); 3) FTC v. Xtel Marketing, Inc., Civ. No. 04C7238 (N.D. Ill.); 4) FTC v. 120194 Canada, Ltd., Civ. No. 1:04-cv-07204 (N.D. Ill.); 5) FTC v. Oleg Oks, Civ. No. 05C5389 (N.D. Ill.); and 6) FTC v. Frankly Speaking, Inc., Civ. No. 1:05-cv-60 (M.D. Ga.). The FTC’s press release on the Your Money Access complaint can be found at http://www.ftc.gov/opa/2007/12/yma.shtm, and the release on the Suntasia complaint can be found at http://www.ftc.gov/opa/2007/07/suntasia.shtm.

Wachovia mailed restitution checks to consumers whose accounts the processors debited with Wachovia’s assistance. The OCC/Wachovia agreement does not cover consumers whose accounts the processors debited using banks other than Wachovia. Consumers whose accounts Suntasia debited through other banks, however, will receive restitution as part of the FTC’s settlement with Suntasia (see press release at http://www.ftc.gov/opa/2009/01/suntasia.shtm).

The DOJ, OCC, and private class action counsel have set up a Web site and toll-free phone number to address any concerns and questions consumers may have, including questions regarding the validity of the checks they receive from Wachovia Bank. The Web site address is: http://www.restitutionpayment.com and the toll-free number is 1-866-680-6659. Consumers seeking more information can contact the Claims Administrator at: U.S. Court Settlement Administrator, P.O. Box 37765, Philadelphia, PA 19101-7765.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Wachovia.final.wpd)