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FTC Approves Final Consent Settling Charges that Made in USA Brand, LLC Deceived Consumers

Following a public comment period, the Federal Trade Commission has approved a final consent order settling charges that a company providing a “Made in USA” certification seal to marketers did so without verifying the companies’ Made in USA claims, or disclosing that the companies had certified themselves.

First announced in July 2014, the settlement prohibits Made in USA Brand, LLC’s deceptive claims, and bars the company from providing the marketers it certifies with the means to deceive consumers.

The Commission vote to approve the final order in this case was 5-0. (FTC File No. 142 3121; the staff contact is Frank Gorman, FTC Bureau of Consumer Protection, 202-326-2156)

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 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

TRUSTe Settles FTC Charges it Deceived Consumers Through Its Privacy Seal Program

TRUSTe, Inc., a major provider of privacy certifications for online businesses, has agreed to settle Federal Trade Commission charges that it deceived consumers about its recertification program for company’s privacy practices, as well as perpetuated its misrepresentation as a non-profit entity.

TRUSTe provides seals to businesses that meet specific requirements for consumer privacy programs that it administers. TRUSTe seals assure consumers that businesses’ privacy practices are in compliance with specific privacy standards like the Children’s Online Privacy Protection Act (COPPA) and the U.S.-EU Safe Harbor Framework.

“TRUSTe promised to hold companies accountable for protecting consumer privacy, but it fell short of that pledge,” said FTC Chairwoman Edith Ramirez. “Self-regulation plays an important role in helping to protect consumers. But when companies fail to live up to their promises to consumers, the FTC will not hesitate to take action.”

The FTC’s complaint alleges that from 2006 until January 2013, TRUSTe failed to conduct annual recertifications of companies holding TRUSTe privacy seals in over 1,000 incidences, despite providing information on its website that companies holding TRUSTe Certified Privacy Seals receive recertification every year.

In addition, the FTC’s complaint alleges that since TRUSTe became a for-profit corporation in 2008, the company has failed to require companies using TRUSTe seals to update references to the organization’s non-profit status. Before converting from a non-profit to a for-profit, TRUSTe provided clients model language describing TRUSTe as a non-profit for use in their privacy policies.

The proposed order announced today will help ensure that TRUSTe maintains a high standard of consumer protection going forward. Under the terms of its settlement with the FTC, TRUSTe will be prohibited from making misrepresentations about its certification process or timeline, as well as being barred from misrepresenting its corporate status or whether an entity participates in its program. In addition, TRUSTe must not provide other companies or entities the means to make misrepresentations about these facts, such as through incorrect or inaccurate model language.

The settlement also requires the company in its role as a COPPA safe harbor to provide detailed information about its COPPA-related activities in its annual filing to the FTC, as well as maintaining comprehensive records about its COPPA safe harbor activities for ten years. Each of these provisions represents an increase in the reporting requirements laid out under the COPPA rule for safe harbor programs. The company must also pay $200,000 as part of the settlement.

The Commission vote to accept the proposed consent agreement for public comment was 5-0. Chairwoman Ramirez, Commissioner Brill, and Commissioner McSweeny issued a joint supporting statement and Commissioner Ohlhausen issued a statement partially dissenting. The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through Dec. 17, 2014, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit comments electronically by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section.

NOTE: The Commission issues an administrative 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. 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 up to $16,000.

Settlement with the FTC and Florida Attorney General Stops Operations that Used Robocalls to Fraudulently Pitch Medical Alert Devices to Seniors

A settlement obtained by the Federal Trade Commission and the Office of the Florida Attorney General permanently shuts down an Orlando-based operation that bilked seniors by using pre-recorded robocalls to sell them supposedly free medical alert systems.

The settlement order bans the defendants from making robocalls, prohibits other telemarketing activities, and bars them from making misrepresentations related to the sale of any product or service. The order includes a judgment of nearly $23 million, most of which will be suspended after the defendants surrender assets including cash, cars, and a boat.

”This case is a great example of how federal and state law enforcement can work together to stop fraudulent telemarketing targeting older consumers,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “The FTC will continue to work with its state partners to protect senior citizens from pernicious schemes like this one.”

“We must do everything within our power to protect Florida’s consumers. The scheme we have stopped allegedly targeted Florida’s senior citizens, and we, along with our Federal Trade Commission partners, have held these individuals accountable,” said Attorney General Pam Bondi.

According to the joint agency complaint, announced in January, the defendants violated the FTC Act, the Commission’s Telemarketing Sales Rule (TSR), and Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA) by blasting robocalls to senior citizens falsely stating that they were eligible to receive a free medical alert system that was bought for them by a friend, family member, or acquaintance. Many of the consumers who received the defendants’ calls were elderly, live alone, and have limited or fixed incomes.

Consumers who pressed one (1) on their phones for more information were transferred to a live representative who continued the deception by falsely saying that their medical alert systems are recommended by the American Heart Association, the American Diabetes Association, and the National Institute on Aging. In addition, the telemarketers falsely said that the $34.95 monthly monitoring fee would be charged only after the system has been installed and activated. In reality, consumers were charged immediately, regardless of whether the system was activated or not.

The court order settling the agencies’ charges also imposes a judgment of $22,989,609, the total amount consumers paid for monthly monitoring services for their medical alert devices. The judgment will be suspended as to all of the settling defendants once the individual defendants turn over cash and other assets valued at about $79,000, including $24,000 that was transferred in violation of a court-ordered asset freeze.

Assets that will be sold include a 2008 BMW, a 1984 Hans Christian sailboat, a 2004 Mercedes, and a 2008 Lincoln Navigator. In addition, defendant Joseph Settecase is subject to a second judgment of $39,300, which will not be suspended. This judgment reflects the funds that Settecase retained after selling his Ferrari in violation of the asset freeze and transferring a portion of the proceeds to another defendant.

The defendants subject to the settlement include: 1) Worldwide Info Services, Inc., also doing business as (d/b/a) The Credit Voice; 2) Elite Information Solutions Inc., also d/b/a The Credit Voice; 3) Absolute Solutions Group Inc., also d/b/a The Credit Voice; 4) Global Interactive Technologies, Inc., also d/b/a The Credit Voice Inc.; 5) Global Service Providers, Inc.; 6) Arcagen, Inc., also d/b/a ARI; 7) American Innovative Concepts, Inc.; 8) Unique Information Services Inc.; 9) National Life Network, Inc., and their principals 10) Michael Hilgar; 11) Gary Martin; 12) Joseph Settecase; and 13) Yuluisa Nieves.

One defendant, Live Agent Response 1 LLC, also d/b/a LAR, has not settled, and the FTC and Florida AG are seeking a default judgment against it. In May, the parties stipulated to the dismissal of The Credit Voice, Inc. as a defendant.

The FTC and Florida Attorney General’s Office appreciate the assistance of the following agencies, offices, and organizations in helping to investigate and bring this case: 1) the Indiana Office of the Attorney General; 2) the Minnesota Office of the Attorney General; 3) the Florida Department of Agriculture and Consumer Services; 4) the Better Business Bureau Serving Eastern Missouri and Southern Illinois; 5) the American Heart Association; 6) the American Diabetes Association; 7) the National Institute on Aging; 8) the United States Postal Inspection Service, including its Atlanta, Boston, and Houston divisions; and 9) the Seminole County Sheriff’s Office, Financial Crimes Task Force.

Information for Consumers

The FTC has tips for consumers, as well as two consumer education videos explaining robocalls and describing what consumers should do when they receive one. See ftc.gov/robocalls for more information. In addition, the FTC has a consumer blog post on deceptive medical alert robocalls, which can be found on the agency’s website.

The Commission vote approving the consent judgment was 5-0. It was entered by the U.S. District Court for the Middle District of Florida, Orlando Division, on October 13, 2014.

NOTE: Consent judgments have the force of law when approved and signed by the District Court judge.

Interagency Guidance on Leveraged Lending: Frequently Asked Questions (FAQS)

FIL-53-2014
November 13, 2014

Interagency Guidance on Leveraged Lending: Frequently Asked Questions (FAQS)

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FIL-53-2014 – PDF (PDF Help)

Summary:

The Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency (agencies) are issuing responses to commonly asked questions about the Interagency Guidance on Leveraged Lending (Guidance) issued March 22, 2013. The Guidance is intended to help institutions strengthen risk management frameworks to ensure that leveraged lending activities do not heighten risk in the banking system through the origination and distribution of poorly underwritten and low-quality loans. The responses contained in the FAQs foster industry and examiner understanding and promote consistent application and implementation of the Guidance.

Statement of Applicability to Institutions With Total Assets Under $1 Billion: This Financial Institution Letter applies to all FDIC-supervised banks and savings associations, including community institutions. However, only a limited number of community institutions have exposure to leveraged credits.

Highlights:

The Guidance is intended to ensure that leveraged lending activities of federally regulated financial institutions are conducted in a safe-and-sound manner.
The attached FAQs were developed to respond to commonly asked questions on the implementation of the Guidance and promote consistent application and interpretation. Topics include:
- Definition of a leveraged loan.
- Loans with non-pass risk ratings.
- Trading desk activities.
- Underwriting standards.
- Institution applicability.
- Examiner assessment.
- Differences between the Guidance and the FDIC’s deposit insurance assessment rule.
The agencies expect institutions to originate loans with a sound business premise, a sustainable capital structure, and the capacity to repay the loan or to de-lever to a sustainable level over a reasonable period.
The agencies have criticized institutions that originate or purchase participations in non-pass leveraged loans. Leveraged loans originated with a non-pass risk rating at inception would be inconsistent with safe-and-sound lending standards and the risk management criteria outlined in the Guidance.

FTC Alleges Debt Brokers Illegally Exposed Personal Information of Tens of Thousands of Consumers on the Internet

At the request of the Federal Trade Commission, a federal court has ordered two debt sellers that posted the sensitive personal information of more than 70,000 consumers online to notify the consumers and explain how they can protect themselves against identity theft and other fraud in light of the disclosures.

In two separate cases, the FTC alleges the debt sellers posted consumers’ bank account and credit card numbers, birth dates, contact information, employers’ names, and information about debts the consumers allegedly owed on a public website. The complaints allege that the debt sellers exposed this sensitive information in the course of trying to sell portfolios of past-due payday loan, credit card, and other purported debt.

According to the complaint, the defendants posted their portfolios, in the form of Excel spreadsheets, on the website without encryption, appropriate redaction, or any other protection, meaning any visitor to the website could access and download the spreadsheets, and use the information to exploit consumers. The website where the information was posted caters to the debt collection industry but was open to public viewing. The FTC alleges that the portfolios have been accessed at least over 500 times.

“Debt brokers and collectors who play fast and loose with people’s sensitive personal and financial information are causing tremendous harm,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Companies must treat sensitive consumer information with appropriate care and security, and the FTC will take action when they fail to do so.”

In its complaints, the FTC alleges the disclosures violated the consumers’ privacy, put them at risk of identity theft, and exposed them to “phantom” debt collection, a practice in which unscrupulous debt collectors try to extract payments from consumers when they do not have authority to collect the debts. The FTC noted that the disclosures also publicly branded the consumers as debtors, putting them at risk of other harms, including possible loss of employment or employment opportunities.

The defendants in the two cases include Cornerstone and Company, LLC, of Riverside, Calif., and its owner, Brandon Lambert; and Bayview Solutions, LLC, of St. Petersburg, Fla., and its owner, Aron Tomko.

The FTC’s complaints allege the defendants violated the FTC Act by unfairly exposing consumers’ personal information without their knowledge or consent. The agency is asking the court to stop the defendants from repeating these actions in the future and to require the defendants to provide redress to consumers injured by their actions.

The court entered a preliminary injunction against the defendants in the Cornerstone case on September 10, 2014. The defendants in the Bayview case agreed to the entry of a preliminary injunction in their case, which was entered on Nov. 3, 2014. In addition to requiring the defendants to notify affected consumers, the injunctions require the companies to use reasonable safeguards for consumer information in their possession.

This case is part of the FTC’s continuing crackdown on scams that target consumers from every community in financial distress. Due to the FTC’s action, the spreadsheets containing the consumers’ personal information have been removed from the internet. For more information for consumers on debt collection and related issues, see Dealing with Debt on the FTC’s website.

The Commission votes authorizing the staff to file the complaints were 5-0. The complaints were filed in the U.S. District Court for the District of Columbia.

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 case will be decided by the court.

FTC Approves Final Orders Banning Two Companies From Making Unsubstantiated Slimming Claims for Shapewear Undergarments

Following a public comment period, the Federal Trade Commission has approved two final orders settling charges that two companies, Norm Thompson Outfitters. Inc., and Wacoal America, Inc., misled consumers regarding the ability of their caffeine-infused shapewear undergarments to reshape the wearer’s body and reduce cellulite.

According to the FTC’s complaints, announced in September, the two companies’ marketing claims for their caffeine-infused products were false and not substantiated by scientific evidence.

In settling the charges, the companies are banned from claiming that any garment that contains any drug or cosmetic causes substantial weight or fat loss or a substantial reduction in body size. The companies also are prohibited from making claims that any drug or cosmetic reduces or eliminates cellulite or reduces body fat, unless they are not misleading and can be substantiated by competent and reliable scientific evidence.

The final orders also require the companies to pay $230,000 and $1.3 million, respectively, that the FTC can use to provide refunds to consumers.

The Commission vote approving each final consent order was 5-0. (FTC File Nos. 132-3094 and 132-3095; the staff contact is David Newman, FTC Western Region, San Francisco, 415-848-5123)

FTC Settlement Bars Patent Assertion Entity From Using Deceptive Tactics

A company and its law firm have agreed to settle Federal Trade Commission charges that they used deceptive sales claims and phony legal threats in letters that accused thousands of small businesses around the United States of patent infringement. The settlement would bar the company, MPHJ Technology Investments, LLC, and its law firm from making deceptive representations when asserting patent rights.

The settlement with MPHJ is the first time the FTC has taken action using its consumer protection authority against a patent assertion entity (PAE). PAEs are companies that obtain patent rights and try to generate revenue by licensing to or litigating against those who are or may be using patented technology.

“Patents can promote innovation, but a patent is not a license to engage in deception,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Small businesses and other consumers have the right to expect truthful communications from those who market patent rights.”

According to the FTC’s administrative complaint, MPHJ Technology Investments, LLC, bought patents relating to network computer scanning technology, and then told thousands of small businesses that they were likely infringing the patents and should purchase a license. In more than 9,000 letters sent under the names of numerous MPHJ subsidiaries, the complaint alleges, MPHJ falsely represented that many other companies had already agreed to pay thousands of dollars for licenses.

The administrative complaint also alleges that MPHJ’s law firm, Farney Daniels, P.C., authorized letters on the firm’s letterhead that were sent to more than 4,800 small businesses. These letters warned that the firm would file a patent infringement lawsuit against the recipient if it did not respond to the letter. The letters also referenced a two-week deadline and attached a purported complaint for patent infringement, usually drafted for filing in the federal court closest to the small business receiving the letter. In reality, the complaint alleges, the senders had no intention—and did not make preparations—to initiate lawsuits against the small businesses that did not respond to their letters. No such lawsuits were ever filed.

In the proposed consent order, announced today for public comment, MPHJ, Farney Daniels, and MPHJ’s owner, Jay Mac Rust, agree to refrain from making certain deceptive representations when asserting patent rights, such as false or unsubstantiated representations that a patent has been licensed in substantial numbers or has been licensed at particular prices. The proposed order also would prohibit misrepresentations that a lawsuit will be initiated and about the imminence of such a lawsuit.

The Commission vote to accept the proposed consent order was 5-0.

The FTC will publish a description of the consent agreement package in the Federal Register shortly. The proposed consent order will be subject to public comment for 30 days, beginning today and continuing through December 8, 2014, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation to Comment” part of the “Supplementary Information” section of the Federal Register notice.

FTC Requests Public Comments on SCI’s Application to Approve Sale of Funeral Home in Auburn, California

The Federal Trade Commission is currently accepting public comments on an application by Service Corporation International (SCI) to sell a funeral home located in Auburn, California, as required under the FTC’s May 2014 order settling charges that SCI’s acquisition of Stewart Enterprises, Inc. would likely be anticompetitive. In total, the order requires the combined SCI/Stewart to divest 53 funeral homes and 38 cemeteries, to ensure that competition is maintained in 59 communities throughout the United States.

SCI’s current application replaces a prior petition to the FTC to approve the divestiture of the Lassila Funeral Chapel in Auburn, California to Wagemann Holdings, Inc., which withdrew its offer. The new application petitions the FTC to approve the divestiture of the funeral home to Claney Oatmeyer Semenyuk Inc.. This company has extensive experience in operating funeral homes, which will assure that this property remains a strong and effective competitor in the local market, according to the new application.

The Commission will decide whether to approve the proposed divestiture after expiration of a 30-day public comment period. Public comments may be submitted until December 2, 2014. Written comments should be sent to: FTC Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580. Comments can also be filed electronically regarding the proposed divestiture to Claney Oatmeyer Semenyuk Inc. (FTC File No. 131-0163, Docket No. C-4423; the staff contact is Elizabeth A. Piotrowski, Bureau of Competition, 202-326-2623)

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 antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave., NW, Room CC-5422, Washington, DC 20580. To learn more about the Bureau of Competition, read Competition Counts. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

Blue Rhino, AmeriGas Settle FTC Charges of Restraining Competition

The two leading suppliers of propane exchange tanks, Blue Rhino and AmeriGas Cylinder Exchange, have agreed to settle FTC charges that the companies illegally agreed not to deviate from their plans to reduce the amount of propane in tanks sold to Walmart, a key customer. Under the proposed settlements, each company is barred from agreeing with competitors to modify fill levels or otherwise fix the prices of exchange tanks, and from coordinating communications to customers.

“Simply put, the antitrust laws do not permit private agreements to avoid competition,” said Deborah Feinstein, Director of the FTC’s Bureau of Competition. “Agreements between competitors to limit any dimension of competition can harm consumers through higher prices or lower quality.”

The FTC’s administrative complaint, issued in March 2014, alleges that, together, Blue Rhino and AmeriGas controlled approximately 80 percent of the market for wholesale propane exchange tanks in the United States. In 2008, Blue Rhino and AmeriGas each decided to implement a price increase by reducing the amount of propane in their exchange tanks from 17 pounds to 15 pounds, without a corresponding reduction in the wholesale price. Faced with resistance from Walmart, the two companies colluded by secretly agreeing to coordinate their negotiations with Walmart in order to push it to accept the fill reduction. The agreement between Blue Rhino and AmeriGas to maintain a united front against Walmart had the effect of raising the price per pound of propane sold to Walmart, and likely to the ultimate consumers.

The complaint named as respondents the Overland Park, Kansas-based Ferrellgas Partners, L.P and Ferrellgas, L.P., doing business as Blue Rhino; and UGI Corporation and AmeriGas Partners, L.P., both based in King of Prussia, Pennsylvania and doing business as AmeriGas Cylinder Exchange.

The consent agreements prohibit the companies from soliciting, offering, participating in, or entering or attempting to enter into any type of agreement with any competitor in the propane exchange business to raise, fix, maintain, or stabilize the prices or price levels of propane exchange tanks through any means – including modifying the fill level contained in propane tanks or coordinating communications to customers. The companies also are prohibited from sharing sensitive non-public business information with competitors except in narrowly defined circumstances. The consent agreements also require the companies to maintain antitrust compliance programs. More information about the consent agreements can be found in the analysis to aid public comment for this matter on the FTC’s website.

The Commission vote to accept the proposed consent orders for public comment was 3-1-1, with Commissioner Maureen K. Ohlhausen dissenting and Commissioner Terrell McSweeny not participating. Chairwoman Edith Ramirez and Commissioner Julie Brill issued a joint statement, Commissioner Joshua D. Wright issued a separate statement, and Commissioner Maureen K. Ohlhausen issued a dissenting statement.

The FTC will publish the consent agreements in the Federal Register shortly. The agreements will be subject to public comment for 30 days, beginning today and continuing through December 2, 2014, after which the Commission will decide whether to make the proposed consent orders final. Interested parties can submit written comments electronically or in paper form by following the instructions in the “Accessibility” portion of the Federal Register notice.

NOTE: 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 up to $16,000.

FTC Requires Divestiture as a Condition of Surgery Center Holdings’ Acquisition of Competitor Symbion

The Federal Trade Commission will require Surgery Center Holdings, Inc., known as Surgery Partners, and Symbion Holdings Corporation to divest Symbion’s ownership interest in an ambulatory surgery center in Orange City, Florida, as part of a settlement resolving charges that Surgery Partners’ $792 million purchase of Symbion would be anticompetitive. The action is part of the Commission’s ongoing effort to protect American consumers from higher healthcare costs.

Both companies operate a large number of ambulatory surgery centers located throughout the country that sell and provide outpatient surgical services to commercial health plans and commercially insured patients. The proposed merger would have combined the only two multi-specialty ambulatory surgical centers in the Orange City/Deltona area of Florida, and would have left commercial health plans and commercially insured patients there with only one meaningful alternative to Surgery Partners’ outpatient surgical services.

According to the FTC’s complaint, the merger as originally proposed would likely have eliminated substantial competition to provide outpatient surgical services in the Orange City/Deltona area, enabling the combined firm to increase rates for outpatient surgical services sold and provided to commercial health plans and commercially insured patients. The divestiture will restore the competition that otherwise would be lost as a result of the merger.

Under the terms of the proposed settlement, Surgery Partners agrees to divest Symbion’s ownership interest in the Blue Springs Surgery Center in Orange City, Florida, to a Commission-approved buyer within 60 days of when the Commission issues the final order. The settlement also requires Surgery Partners and Symbion to hold separate the management, and maintain the competitiveness, of the Blue Springs Surgery Center until the divestiture is complete.

The Commission vote to accept the proposed consent order for public comment was 5-0.

The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through December 2, 2014, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.

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Interagency Guidance on Leveraged Lending: Frequently Asked Questions (FAQS)

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