Monday, March 03, 2008
[solving complaints] FTC Chair Leaving With Mixed Reviews, Consumer Help Web Activity Often Earlier Than Agency's
As Deborah Majoras plans to leave her leadership role at the Federal Trade Commission (FTC) this spring, she leaves the Bush administration with yet another big consumer hole to quickly fill.
Majoras, an attorney in private practice before her appointment, will join Procter & Gamble as their General Counsel, a consumer affairs move that is as high voltage as a company can make. Fending off consumer complaints and lawsuits is much easier when your inhouse attorney was in charge of the federal watchdog agency.
Consumer Help Web often resolves many complaints that later make their way to the FTC and other agencies. We've long proposed that government agencies should survey private companies and law firms about consumer issues, just as they do with local and state agencies. Giving details is not as important as sharing that we have just resolved 3 complaints this months on a particular wireless carrier or company that was leaving consumers in the lurch.
Majoras' leaving reminds me of cases the agency brought under her tenure like CortiSlim. The
FTC took action against the weight loss industry in 2007 after years of complaints. Fortunately for consumer, ConsumerHelpWeb.com was helping consumers three years earlier against that very same company.
Just one example of how our complaint resolution service works fast:
In June 2004, Al Di Grazia of Hayward, California wrote us about the very same issues with CortiSlim the FTC later investigated. We immediately contacted the company's senior executives, and Mr. Di Grazia's complaint was quickly resolved.
He even received a check in that time for more than $100. Mr. Di Grazia wrote us days after we resolved his complaint against CortiSlim:
I was not getting anywhere with the other company. After contacting Consumer Help Web, I received my full refund in less than one week. I wanted to let you know that you are great.
There is a place and need for FTC enforcement and combined recalls from federal agencies. There is also a place for consumer advocates like ConsumerHelpWeb.com who can quickly get things done and help those agencies identify trends months, if not years, before they are known and acted upon.
We appreciate Ms. Majoras' past service and while we understand the allure of a private sector paycheck, we remain hopeful that as government agencies collate data and build cases that they will look to the trenches of consumer affairs where action is being taken much earlier.
Labels: complaint letter, CortiSlim, FTC, resolution
Wednesday, February 27, 2008
[scams] FTC Takes Aim At BlueHippo's Finance Scheme
The Federal Trade Commission announced that it has won a settlement from a company called Blue Hippo that financed consumer electronics like computers and televisions for people with bad credit. This is similar to the rent-to-own world, but even worse.
According to the federal agency, Blue Hippo did not deliver goods to some consumers and violated multiple federal laws, including those covering Truth in Lending and the Mail Order Rule.
Court filings show unbelievable sales pitches such as "Do you want to own a computer, but have less than perfect credit? No problem. If you have a checking account, a home phone and can afford a weekly payment of just $35 for only 12 months, BlueHippo Funding says you're approved, guaranteed."
If you are reading this and considering such an offer, stop now. The axiom of "too good to be true" is accurate. If you can't afford it, don't put yourself in debt exceeding your means for instant gratification. You'll just make others wealthier.
Meanwhile, look for our upcoming article on the Mail Order Rule that discusses its growing importance in the age of Internet shopping.
Labels: Blue Hippo, financial, FTC, rent-to-own
Tuesday, February 12, 2008
Weight Loss Lawsuits Continue [healthcare]
The Federal Trade Commission is again chasing the makers of a reported weight-loss drug. This chase is court, however, and reminiscent of last year's actions against Cortislim and Xenadrine.
As American waistlines grow, marketers continue looking for the magic pill that replaces diet and exercise. Now a California company has been accused of marketing weight loss product that the government says are ineffective for weight loss.
The products are sold with the brand names
Zyladex Plus, Questral AC, Questral AC Fat Killer Plus, Rapid Loss 245, and
Rapid Loss Rx.
The federal agency says the marketing claims for these products are unsubstantiated and filed suit in San Francisco last week.
We reported over a year ago that the
government filed complaints against CortiSlim and three other products. At the time, FTC Chair Deborah Platt Majoras said, "You won't find weight loss in a bottle of pills that claims it has the latest scientific breakthrough or miracle ingredient. Paying for fad science is a good way to lose cash, not pounds."
By October 2007,
Cortislim customers had a settlement offer. The deadline for filing for redress in that case was October 27, 2007 (a good reason to subscribe to our blog if you missed it).
Meanwhile, we've contacted representatives for the defendant in this case and will share any comments they make about their products.
Labels: diet, FTC, medical
Wednesday, December 12, 2007
When Do Not Call Means Forever
Remember that nifty "Do Not Call" list you registered for some time ago with tens of millions of your best friends? We're betting you didn't know that there was a time limit involved.
It's true. The original program was only designed as a short-run measure. Now the House of Representatives wants to make it permanent and has overwhelmingly voted to make the status permanent and continue funding operations from telemarketing firms. These are both good measures that are long overdue.
But don't forget that certain calls are exempt. They include calls from businesses with which you have established or continued a relationship, charities, and our favorite, political calls. The CCD, a non-profit group in Washington, is continuing its efforts to compile a do not call list that would be voluntary for politicians. As the 2008 presidential elections come up next year, we can't think of any smarter move you can make since registration is free. Visit StopPoliticalCalls.org to
add your name to the political do not call list.
Labels: do not call, FTC, stop political calls
Wednesday, December 05, 2007
FTC Closes Envelope On Work-At-Home Firms
The Federal Trade Commission has announced the conclusion of cases against firms targeting "work at home" employers. We wrote about the initial
FTC charges earlier this year.
Since then, the federal agency has amended its complaint and judgments have been entered against multiple defendants at an individual and corporate level. The new FTC statement does not accuse any of the entities of wrongdoing, but instead says that monies were received when that they were not entitled to.
We believe that more important than any particular fine or criminal case the agency could have pursued through the Justice Department is the warning sent to the lucrative industry of luring unsuspecting consumers into an arrangement where the consumer not only doesn't make any money, but often is the only party paying any money. With repeated crackdowns, those engaged in improper business activities designed to cheat consumers have clear notice from the federal government that consequences will occur when caught.
Meanwhile, if a work from home or envelope stuffing deal sounds too good to be true, call your state's local employment commission and your local or state consumer protection office to check out the company before doing anything. Deals that sound too good often aren't good.
Labels: FTC, work at home
Wednesday, November 07, 2007
FTC Nails Big Companies On Do Not Call Violations: Craftmatic, ADT and Ameriquest Among Targets
The sound of consumer clapping can be heard since their telephones may be ringing less often today.
The FTC has announced settlements with huge companies -- massive ones, really -- that are among the agency's largest ever.
Want to win a Craftmatic bed? Sure, they look cool, but if you filled out a sweepstakes entry form, the feds say that Craftmatic called and called. The FTC's statement also says that Craftmatic's predictive (automatic) dialer did not connect outbound calls to one of their sales reps in 2 seconds resulting in "millions" of abandoned calls. That is not only awful customer service, but hideously expensive service as well.
Worst of all those alleged violations in our eyes? When consumers (not customers -- consumers who filled out a simple sweepstakes entry) asked to be put on the company's do not call list, their requests were
ignored. That is inexcusable in our books and perhaps one of the main reasons why
Craftmatic settled the claims with a penalty exceeding $4 million.
The other companies did not fare well either. ADT's alarm services group and two of its dealers ignored the do not call registry and are out $2 million. Financial product company Ameriquest was also charged with ignoring the do not call registry among other violations.
Remember, you need to log calls when you tell a company to add you to their do not call registry. Log their name, their number and the time and date. That level of detail is invaluable in helping prove these cases.
A final thought about unwanted telephone calls. While yesterday was Election Day for many local and state races, the big day is coming. Telephone technology is more advanced than it was four years ago so just think about what the 2008 Presidential election (and the primaries leading up to it) will do to the number of automated calls made?
Political calls are conveniently exempt from the do not call registry. A new non-profit is valiantly registering names and numbers to present to campaigns so that
consumers receive only the political calls they want -- or none at all. Register at the above link if you want to be a part of that process and keep your dinner warm.
Labels: ADT, Ameriquest, Craftmatic, do not call, FTC, stop political calls
Thursday, November 01, 2007
FTC Warning: Don't Open Our Mail
The Federal Trade Commission is warning consumers that they are the victims of a
phishing attack. Someone is using email to impersonate the FTC, which is pretty dumb on the intelligence scale.
The federal agency says that the email comes from an address labeled frauddep@ftc.gov. An FTC seal is included in the email, but there are multiple spelling and other errors. There are links and an attachment in the email, both of which could cause your computer to be infected by a virus.
If you received any such email, run your computer's virus checking software to be safe. If you haven't and do, just delete that email. Better safe than sorry this week. If the FTC wants you, I'm sure they'll contact you another way. What makes this so different is that the address
appears to be from the government and the use of the
FTC's logo.
Woe to the company who spoofed the FTC. We expect to be reporting on an arrest any day now.
Labels: email, FTC, spoof
Sunday, October 07, 2007
Spanish Speakers Still Scam Target
The Federal Trade Commission reviewed 300 work-at-home opportunities this week that targeted Spanish speaking candidates. The government agency found that nearly
two-thirds of those ads were "deceptive". One company had such egregious problems that the FTC sought an emergency restraining order, forbidding the company from operations.
“Ads promising big earnings by working from your home can look very attractive to many consumers,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “But, we know that most of the promises never come true and the opportunities never pay off. The FTC is using every tool in its arsenal, including law enforcement, education, and media monitoring, to protect consumers from these types of scams.”
We applaud the FTC's actions because many smart consumers do find themselves wondering if these operations can be true. After all, if a company can afford to keep advertising, then it must be legitimate, goes the reasoning. That is just not true, says Consumer Help Web's George Bounacos.
"Too many operations can quickly slip through the cracks of an overburdened protection system," Bounacos said. "We saw that in the CPSC's struggle against budget cuts ending up in massive recalls. The same difficulties plague the FDA, USDA and other agencies whose job is to protect consumers. Remember the words your parents taught you: if it sounds too good to be true, then it probably isn't."
Bounacos said that Consumer Help Web has worked with consumer regulatory agencies once the consumer agrees to release their information. "We've shared data at the state and federal level because those agencies have too much to focus on. If our complaint letter service uncovers systemic issues, we will ask our consumer for permission to share their information and turn the data over to regulatory authorities."
Consumer Help Web has sent information about lottery schemes originating from Canada and the U.K. among other more sensitive issues.
"Every company makes mistakes," agreed Consumer Help Web President Joan Bounacos. "What makes a company great is how they resolve those mistakes. As for those who target people with deceptive advertising, we resolved as a private organization to help the public sector protection agencies whenever appropriate."
ENVELOPE STUFFING SCHEMEOne of the FTC's latest victories is a law enforcement action against an alleged work-at-home scam. This enterprise advertised envelope stuffing jobs nationwide, including in Spanish-language newspapers. The advertising promised consumers a whopping $17.50 for each envelope they stuffed and guaranteed consumers a weekly paycheck of up to $1,400, or more.
One ad stated:
$1400/week stuffing envelopes @ home!
Easy work, awesome income, FT/PT,
No experience necessary. $200 Cash Hiring Bonus!
However, according to the FTC, after consumers paid a $45 “registration deposit,” most consumers never heard from the company again. Other consumers were ultimately told by the defendants that the only way to earn the promised money was to replicate the fraudulent envelope-stuffing scheme by making the same false claims to other consumers, a so-called Ponzi scheme or multi-level marketing scheme.
The FTC’s complaint names Integrity Marketing Team, Inc., Byron C. Peterson, and Min Sung Kim, doing business as Home Business System, as defendants and charges that they misrepresent that consumers who participated in their envelope stuffing opportunity are likely to earn substantial income, and that they would pay consumers at least $17.50 for each envelope the consumers stuff.
Labels: FTC, Spanish language, work at home
Wednesday, September 26, 2007
FTC Shapes Up CortiSlim While Consumers Gain Refunds
We wrote in January that the Federal Trade Commission was chasing what it called "fad science" and
filed four complaints against weight loss product manufacturers. ConsumerHelpWeb.com had already helped a consumer with a
complaint resolution against CortiSlim, one of those the FTC named, but the FTC wanted a broad sweep through the industry.
The federal agency has won against CortiSlim andCortiStress. Consumers will be refunded as part of this settlement, but as in all such cases, the amount of the resolution depends on how many consumers apply for refunds.
The deadline for applying for a refund is October 27, 2007 -- just one month away -- so be sure to pass this link to your friends and family who may have used CortiSlim or CortiStress. Consumers who purchased either product between August 1, 2003 and May 31, 2006 are eligible for a refund and can apply by downloading a claim form at
www.CortiSlimsettlement.com or by calling 1-800-560-6532 to receive a claim form by mail.
Labels: CortiSlim, CortiStress, FTC, refund
Friday, July 27, 2007
FTC Shutters Telemarketer Selling Buyer, Travel Clubs
The Federal Trade Commission has stopped a Largo, Florida-based telemarketing scheme operated by Suntasia Marketing, Inc that it called "massive".
Suntasia used at least fifteen different business names to defraud consumers across the United States out of tens, and perhaps hundreds, of millions of dollars, the agency said. According to the FTC, when Suntasia’s telemarketers called consumers to offer supposedly “free” trial memberships in discount buyers and travel clubs, they deceived consumers into divulging their bank account information and later charged consumers without authorization for a series of negative option programs. With a negative option agreement, a company takes a consumer’s silence or failure to cancel as acceptance of the offer, and permission to bill them.
“The essence of this massive telemarketing scam was simple: trick people into giving out their checking account numbers, send them a brochure on a travel and buyers club, take money out of their bank accounts for as long as possible, and make it very difficult to cancel and get a refund,” said C. Steven Baker, Director of the FTC’s Midwest Region.
Consumers complained in near-record numbers about Suntasia’s practices.
In total, the FTC collected and reviewed more than 5,000 formal consumer complaints against Suntasia that were submitted to various law enforcement agencies and the Better Business Bureau.
According to the FTC’s complaint, telemarketers typically began their sales pitch by indicating that they were calling in regard to the “banking account” of their “valued customers,” to make consumers believe that Suntasia was affiliated with their banks. The telemarketers explained that the consumers had been chosen to receive a series of “free gifts,” typically a combination of either “$100 in gas coupons,” “$400 in airlines savings vouchers,” or “two free nights of hotel accommodations.” Consumers were told that they could keep these gifts even if they ultimately canceled Suntasia’s negative option program. These gifts turned out to be laden with undisclosed conditions and restrictions that rendered them effectively worthless. Also, the FTC alleges that the defendants honored the “gift” vouchers only if consumers maintained enrollment in their programs, despite the telemarketers’ promises.
After offering the “free gifts,” Suntasia telemarketers quickly attempted to obtain consumers’ account numbers. They indicated that they needed to “verify” this information to confirm consumers’ eligibility to receive the gifts. Having already pretended to be affiliated with consumers’ banks, the telemarketers now purported to already possess consumers’ bank account numbers. They read consumers their publicly available bank routing numbers, and then asked consumers to “verify” the remainder of the account number from the bottom of a check. According to the FTC, many consumers disclosed their account numbers because they believed they were simply verifying information that the telemarketers already had. The FTC also alleges that consumers frequently thought their account number was being “verified” solely to confirm their eligibility to receive the free gifts, not to authorize any future charges to their accounts.
According to the FTC’s court documents, after consumers divulged their bank account number, the telemarketers quickly began recording a “verification,” asking consumers to repeat the account number they had just “provided.” At the end of the recording, Suntasia telemarketers quickly offered consumers two additional negative option programs, commonly referred to as “upsells.” The FTC alleges, however, that these “upsell” offers were presented in such a way that consumers did not realize they were being asked to authorize the purchase of additional products and services.
The FTC maintains that Suntasia never disclosed key information about its negative option programs. For instance, the telemarketers did not tell consumers the date that Suntasia’s charges would be debited from their accounts, or the telephone numbers consumers must call to cancel to avoid being charged. Nor did Suntasia tell consumers that they would be required to call three separate telephone numbers to cancel the initial program and the two “upsells.”
If Suntasia telemarketers did discuss the length of the free trial period, they represented that this period would begin only once consumers received program materials in the mail. The FTC alleges that Suntasia actually started consumers’ free trial periods on the date of the sales call, however, meaning that consumers often had little, if any, time to cancel Suntasia’s programs without being charged. According to the FTC’s complaint, some consumers did not receive any program mailings from Suntasia and thus had no opportunity to cancel before they were charged. In many instances, these consumers received their first notice of the trial memberships when the defendants began charging them. In other instances, consumers received the program mailings only a day or two before their accounts were to be charged. Suntasia did not provide any consumers with the free trial period that was promised in their telemarketing calls.
The package consumers received in the mail also disclosed, for the first time, the telephone number that consumers must call to cancel. Prior to receiving this package, consumers had no way to contact Suntasia to cancel or to ask questions. The FTC alleges that in some instances, Suntasia proceeded to charge the accounts of even those consumers who canceled its programs. In addition, if consumers successfully canceled one program, they were not told that they still may be charged for two other programs, or that they must call different telephone numbers to cancel each of those programs.
The FTC alleges that the defendants misrepresented their affiliation with consumers’ banks or other third parties, that they already had consumers’ account numbers, the starting point and length of the free trial period, that they would honor consumers’ cancellation requests, that consumers may easily cancel their participation in a program, and that consumers are entitled to keep and to use the promised free gifts even if they ultimately cancel the negative option program. The FTC also alleges that the defendants failed to disclose, or to disclose adequately, the following: that the consumer’s account would be charged unless the consumer takes affirmative action to avoid the charge, that consumer’s checking account information would be used to debit their bank accounts, the cost of the programs, the dates the consumers’ account would be charged, the dates that the trial period begins and ends, the specific steps consumers must take in order to cancel, including that consumers must cancel each of the programs by calling a separate telephone number, and the conditions and restrictions on the “free gift” vouchers that severely limit their value and usefulness.
The FTC also alleges that the defendants debited funds from consumers’ accounts without their express verifiable authorization and express informed consent, and that they did not clearly and conspicuously disclose that the purpose of their call was to sell goods or services and the nature of those goods or services, as required by the Telemarketing Sales Rule. The defendants also allegedly illegally purchased leads containing consumers’ unencrypted bank account numbers for use in telemarketing.
A Tampa court entered a temporary restraining order halting the allegedly deceptive scheme, freezing the assets of all defendants, and appointing a temporary receiver over the scheme’s corporate participants. According to the FTC, the scheme is run by nine interrelated companies that employ more than 700 people. The defendants charged are: FTN Promotions, Inc., doing business as Suntasia Inc., Suntasia Marketing, Inc., and Capital Vacations; Guardian Marketing Services Corp, doing business as Guardian Escrow Service; Strategia Marketing, LLC; Co-Compliance, LLC; JPW Consultants, Inc., doing business as Freedom Gold, Variety!, Credit Life, and Freedom Ring ULD; Travel Agents Direct, LLC, doing business as Travel Agents Go Direct, Florida Direct, and Lucid Long Distance; Agent’s Travel Network, Inc., doing business as Florida Passport; Bay Pines Travel, Inc.; Suntasia Properties, Inc.; Byron W. Wolf; Roy A. Eliasson; Alfred H. Wolf; Donald L. Booth; Jeffrey P. Wolf; and John Louis Smith II.
Labels: FTC, scam, Suntasia, telemarketing
Friday, June 01, 2007
ChoicePoint Settles Data Breach Again, This Time With The States
Consumer Help Web readers will remember the media frenzy surrounding the first of a well publicized series of data breaches in 2005. Information services giant ChoicePoint was
one of the first to go public that year with a massive breach that was originally thought to potentially impact 140,000 consumers.
Within days, the
United States Senate was threatening hearings, and MSNBC was following a story regarding the timing of insider trading of the company's stock. The company
made good with the FTC a year later, paying $10 million in penalties and another $5 million in consume redress. The penalties were the largest in the FTC's history, and the government agency issued an order requiring ChoicePoint to implement more stringent security measures.
Now the states have bellied up to the bar. A group of 43 states and the District of Columbia have settled with the company for a combined $500,000. That is a stiff fine, of course, and the company has already paid the federal government more than $15 million, but one wonders what was served by the states jumping into the fray for a few thousand dollars each?
ChoicePoint will have to continue upgrading its security safeguards, which is a good thing, but the "piling on" of the states one year after the company took a credibility, business continuity and financial hit seems excessive. Perhaps the money might have been better spent at ChoicePoint to protect consumer data.
Labels: Choice Point, data breach, FTC
Thursday, April 19, 2007
Merchant Processing Credit Card Firm Sued by Multiple States
The Federal District Court in Oregon has frozen the assets of Beaverton-based Merchant Processing, Inc. (MPI), its owner, and affiliated companies. The court ordered a temporary halt to claims the Federal Trade Commission alleges are deceptive, and appointed a receiver to temporarily take control of the business. The FTC alleges that the defendants used deceptive tactics to sell credit and debit card processing services to thousands of small businesses across the county. The Washington State Attorney General’s Office also has sued the defendants.
In its complaint, the FTC alleges the operation falsely promised that it would save the small businesses money and that it would buy out the merchants’ existing equipment leases, often worth thousands of dollars. The FTC also charged the defendants with failing to disclose fees and concealing pages of fine print from the merchants until after they had already signed contracts. The FTC charged MPI, its owner, Aaron Lee Rian, and affiliated companies Vequity Financial Group and Direct Merchant Processing with violating the FTC Act.
According to the FTC’s complaint, the defendants’ sales representatives call and visit small businesses around the United States and promise they can save them hundreds to thousands of dollars a year in processing fees by offering lower rates than the merchants’ current credit card processing service. They also tell the merchants that the credit card swipe equipment they currently are using is outdated or incompatible with their systems, or that the merchants will need to replace their systems in order to get the special low rate.
Many merchants already are under a contract to lease their card swipe equipment, but the defendants claim they will buy out the merchants’ current leases if they sign a new, usually more expensive, lease. With the claimed lower processing rates, the sales agents promise overall savings despite the higher lease payments. The FTC alleges the defendants’ agents then have the merchants sign third-party equipment leases and processing agreements while concealing pages of fine print. According to the FTC, the sales representatives often don’t leave copies of the agreements with the merchants.
The merchants soon find their fees are not lower, and they end up paying additional fees that they weren’t told about. MPI does not buy out their previous equipment leases, so merchants often end up paying on two leases or spending thousands of dollars to get out of the old lease. Then, to cancel the new, more expensive processing service, the merchants must pay a substantial, previously undisclosed cancellation fee.
The FTC also is seeking preliminary and permanent injunctions halting the deceptive claims and unfair practices, and refunds for the small businesses.
Labels: credit card, FTC, Merchant Processing
Thursday, April 05, 2007
Olive Garden, Red Lobster Parent Company Settles Federal Charges Over Gift Card
Darden Restaurants Inc., which owns restaurant chains Olive Garden, Red Lobster, Smokey Bones, and Bahama Breeze, has agreed to settle Federal Trade Commission charges that it
engaged in deceptive practices in advertising and selling its gift cards. As part of the settlement,
Darden will restore fees that were deducted from consumers’ gift cards and disclose fees or expiration dates in future gift card sales. This is the agency’s second law enforcement action involving allegedly deceptive gift card sales.
“The FTC works to make sure consumers have the facts they need to make smart decisions, no matter what they’re buying,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “When it comes to gift cards, issuers can’t gloss over key information. They must clearly and prominently disclose fees and restrictions that affect the use of their gift cards.”
According to the FTC’s complaint, Darden advertised its gift cards on television and radio, and in its restaurants and Web sites. Darden represented that consumers could redeem the cards to buy goods or services at its restaurants equal to the card’s monetary value. But Darden did not disclose adequately the “dormancy fees” that would be deducted after a certain period of time. For cards sold before February 2004, after 15 months of non-use, a $1.50 dormancy fee was deducted from the card’s balance for each month of inactivity; for cards sold after February 2004, the monthly fee was deducted after 24 months of non-use.
In many instances, the Commission alleges, consumers did not learn of the fee until they attempted to use their gift cards and learned that they had little or no remaining value.
The Commission’s complaint alleges that Darden and co-respondents GMRI Inc. and
Darden GC Corp. inadequately disclosed the fee by noting it in fine print on the back of the card,obscured by miscellaneous other information; marketing a transparent Red Lobster Gift Card with a red lobster on the front that further obscures the disclosure; marketing cards in restaurants without notifying consumers of the fee; and marketing cards on Web sites without disclosing the fee. As of October 2006, Darden stopped charging a dormancy fee on all Darden gift cards.
The proposed settlement requires Darden to disclose any automatic fee or expiration date clearly and prominently in future advertising, at point of sale, and on the card, and prohibits the company from collecting any fee on cards activated before the order is approved by the Commission. The settlement also requires Darden to restore to each card any dormancy fees that were assessed and publicize the restoration program on its Web sites for two years. Darden has already completed the process of restoring all fees on cards. Consumers may simply present their card at any Darden restaurant to receive the card’s value with the dormancy fees restored.
Labels: FTC, gift card, olive garden, red lobster
Wednesday, March 07, 2007
Experian Subsidiary Settles FTC Charges Related To Mock Consumer Site
Consumerinfo.com, doing business as Experian Consumer Direct, will pay $300,000 to settle Federal Trade Commission charges that ads for its “free credit report” offer failed to disclose adequately that consumers who signed up would be automatically enrolled in a credit- monitoring program and charged $79.95. The FTC alleged that the failure to clearly disclose the enrollment and charges violated a previous settlement.
In August 2005, Consumerinfo.com, paid $950,000 to settle FTC charges that it deceptively marketed “free credit reports.” According to the FTC, Consumerinfo offered consumers a free copy of their credit report and added that they would provide “30 FREE days of Credit Check Monitoring.” The FTC alleged that Consumerinfo’s advertising and Web sites failed to explain adequately that after the free trial period for the credit-monitoring service expired, consumers automatically would be charged a $79.95 annual membership, unless they notified the defendant within 30 days to cancel the service. Consumerinfo billed the credit cards that it had told consumers were “required only to establish your account” and, in some cases, automatically renewed memberships by re-billing consumers without notice. In addition to the $950,000 payment, the settlement required Consumerinfo to pay redress to deceived consumers, barred deceptive and misleading claims about “free” offers, and required clear and conspicuous disclosure of terms and conditions of any “free”offer.
The FTC alleges that Consumerinfo.com ran ads after the settlement that violated the disclosure requirement. The settlement requires Consumerinfo to give up $300,000 in ill-gotten gains, and bars it from misrepresenting any affiliation with the annual credit report available to consumers under the Fair Credit Reporting Act.
The stipulated judgment and order named Consumerinfo.com, Inc., doing business as Experian Consumer Direct, Qspace, Inc., and Iplace, Inc.
The Commission vote to accept the supplemental stipulated judgment and order was 5-0. It was filed in United States District Court for the Central District of California in Los Angeles.
NOTE: Stipulated judgments and orders for permanent injunction and monetary relief are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Stipulated judgments have the force of law when signed by the judge.Labels: credit, Experian, FTC
Monday, February 05, 2007
Sony BMG Agrees To FTC Settlement Of Copy Protection Scheme Complaints
Sony BMG Music Entertainment has agreed to settle Federal Trade Commission charges that it violated federal law when it
sold CDs without telling consumers that they contained software that limited the devices on which the music could be played, restricted the number of copies that could be made, and contained technology that monitored their listening habits to send them marketing messages.
According to the FTC, the software also exposed consumers to significant security risks and was unreasonably difficult to uninstall.
The proposed settlement requires Sony BMG to clearly disclose limitations on consumers’ use of music CDs, bars it from using collected information for marketing, prohibits it from installing software without consumer consent, and requires it to provide a reasonable means of uninstalling that software. The settlement also requires that Sony BMG
allow consumers to exchange the CDs through June 31, 2007, and reimburse consumers for up to $150 to repair damage to their computers that they may have suffered in trying to remove the software.
“Installations of secret software that create security risks are intrusive and unlawful,” said FTC Chairman Deborah Platt Majoras. “Consumers’ computers belong to them, and companies must adequately disclose unexpected limitations on the customary use of their products so consumers can make informed decisions regarding whether to purchase and install that content.”
According to the complaint detailing the charges, Sony BMG embedded in its music CDs content protection software, also known as Digital Rights Management software, which installed itself on consumers’ computers to restrict the number of times the audio files could be copied. It also prevented the music from being played on certain portable digital devices.
The music could not be transferred directly to iPods, for example. In addition to restricting the use of the CDs on computers using the Windows Operating System, the software, which was concealed from consumers, created security vulnerabilities that could allow hackers and other third parties to gain access to consumers’ computers.
The FTC alleges that the installation of software without consumer consent that exposed consumers’ computers to security risks was unfair and violated federal law. In addition, the complaint alleges that hiding the software from consumers and failing to provide a means to uninstall it also were unfair practices in violation of federal law.
The agency charged that it was deceptive for Sony BMG to fail to disclose adequately that software would be installed on consumers’ computers, and that the software would limit consumers’ copying and use of the CDs on their computers. The FTC also alleged that it was deceptive, in violation of federal law, to fail to disclose that Sony BMG’s monitoring technology, included on many of its CDs, monitored consumers’ music listening preferences and sent targeted marketing ads to their computers.
The settlement requires clear and prominent disclosure on the packaging of Sony BMG’s future CDs of any limits on copying or restrictions on the use of playback devices. It bars the company from installing content protection software without obtaining consumers’ authorization, and, if Sony BMG conditions consumers’ use of its CDs on installation of the content protection software, it must disclose that requirement on the product packaging.
In addition, t
he settlement bars Sony BMG from using the information on consumers’ listening preferences that it has already gathered through the monitoring technology it installed and bars them from using the information to deliver ads to those consumers. For future CDs containing such technology, the agreement requires that, before transmitting information about consumers, their computers or their use of the CD, Sony BMG must clearly disclose on consumers’ computer screens what the technology will do, and obtain consumers’ consent. If it conditions consumers’ use of its CDs on their agreement to have information collected, Sony BMG must disclose that condition clearly on the CDs’ packaging.
The settlement bars Sony BMG from installing or hiding content protection software that prevents consumers from finding or removing the software, and requires that it provide a reasonable and effective way to uninstall any content protection software. It requires that for two years, Sony BMG provide an uninstall tool and patches to repair the security vulnerabilities created on consumers’ computers by previously installed software. The company is required to advertise these free fixes on its Web site.
As part of the settlement, Sony BMG will allow consumers to exchange CDs containing the concealed software purchased before December 31, 2006 for new CDs that are not content-protected, and will be required to reimburse consumers up to $150 to repair damage that resulted directly from consumers’ attempts to remove the software installed without their consent. Sony BMG is required to publish notices on its Web site describing the exchange and repair reimbursement programs.
Sony BMG also is required to provide financial inducements to retailers to return the CDs that create security problems for consumers’ computers. For CDs already in its stock that are sold to retailers, Sony BMG is required to disclose on the product packaging the restrictions on use and the security vulnerabilities.
Finally, the settlement contains record-keeping and reporting provisions designed to allow the agency to monitor compliance with its order.
The Commission vote to accept the proposed consent agreement was 5-0. 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 March 1, after which the Commission will decide whether to make it final.
Labels: copy protection, Digital Rights Management, FTC, Sony
