Complaint resolution service publishes case studies, recall information and consumer news.

Ten payday lenders, defined as a company that lends money at usually high interest rates against an upcoming paycheck, are facing Federal Trade Commission (FTC) charges regarding advertising and collection tactics.

The Nevada government added to the federal charges, which allege that payday lenders did not disclose important information about the loans and that their collection tactics were “abusive”.  Potential customers were told that they could borrow several hundred dollars for a fee ranging from $35 to $80 provided that the amount was repaid in the next week.   Borrowers had to provide the companies, some of them based in the United Kingdom, with their bank and social security information.

During repayment, special clauses that the government contends were not disclosed to borrowers would cause the loan amount to increase by many times over.  If the borrower terminated the lender’s access to the account, they were subject to what the government called “abusive” collection tactics.  Borrowers were allegedly told they were subject to arrest or property seizure.

he corporate defendants are Cash Today, Ltd., The Heathmill Village, Ltd., Leads Global, Inc., Waterfront Investments, Inc., ACH Cash, Inc., HBS Services, Inc., Lotus Leads, Inc., First4Leads, Inc., Rovinge International, Inc., and The Harris Holdings, Ltd., each also doing business as Cash Today, Route 66 Funding, Global Financial Services International, Ltd., Interim Cash, Ltd., and BIG-INT, Ltd. The individual defendants are Aaron Gershfield, Ivor Gershfield, and Jim Harris.

Tough economic times can sometimes cause consumers to seek alternative income or lending sources.  As always, checking the lender’s reputation with your local consumer affairs office — at either the local or state level — is the best course of action before borrowing from any well-known lender.

Posted under Finance

Four “debt negotiation” companies have settled government charges that they acted improperly by promising consumers debt services they could not provide. The companies will cease operating and pay more than a quarter-million dollars in fines.

The companies involved are National Support Services LLC, Homeland Financial Services LLC, Financial Liberty Services LLC, and United Debt Recovery LLC.

The Federal Trade Commission (FTC) was the lead agency involved in reaching a resolution with the companies.  The settlement allows the companies and individuals to avoid trials or even an admission of guilt.  The government agency will also be permitted to monitor future actions from the accused.

We often warn consumers about aggressive “credit repair” specialists and others who claim to have more authority to help consumers with burdensome debt.  The federal government’s communications group, the FCIC, has great advice detailing your rights and suggestions for getting out of debt.

As consumers greet the continuing collapse of Wall Street and supposedly safe investments, in addition to bank failures, there is no shame and should be no fear in contacting your bank or other creditors.  The information at this site will show you how.

Posted under Finance

After every international disaster, we sadly have to convey warnings from government agencies.  The latest is from the Federal Trade Commission (FTC) related to companies soliciting funds for relief efforts following Hurricanes Gustav and Ike.

The agency publishes a Charity Checklist online fhat all consumers should read before contributing.   With the U.S. at war in two countries and in the midst of a major election season, natural disasters can find fertile ground for consumers who are looking to help others.

This is especially true given today’s CNN report that Galveston (TX) City Manager Steve LeBlanc is telling residents to leave, saying that the storm’s aftermath is worse than the storm.

Posted under Finance

The Federal Trade Commission (FTC) is reminding consumers that September 15 is the last day to apply for refunds if they purchased Airborned Health products between 2001 and 2007.

Consumers who bought the Airborne-branded products Airborne Effervescent Health Formula, Airborne On-the-Go, Airborne Power Pixies, Airborne Nighttime, Airborne Jr., Airborne Gummis, and Airborne Seasonal Relief between May 1, 2001 and November 29, 2007 are eligible for refunds. Consumers who have receipts can apply for a refund for the full amount. Those without receipts can apply for refunds for up to six product purchases, and should visit the Web site for further details.

Find out if you’re eligible at the Airborne Health refund site.

Posted under Health, Products

We’re proponents of “opt-in” marketing — email and other contact a consumer requests.  Unfortunately, as unwanted email continues to flood consumers’ Internet services, the Federal Trade Commission has just tightened up email restrictions.

Four new provisions to the federal government’s CAN-SPAM rule were approved by a 4-0 vote yesterday.  The plain English version of the new provisions:

1)  Someone sending email cannot require payment or additional information beyond the email address for a consumer to demand that their email be removed from the organization’s future efforts.

2)  There are new ways to identify who sent an email if multiple organizations are advertising in that same email.

3)  One for the businesses (and a good one too that we use):  Organizations can provide a mailing address that is a post office box or similar postage handling service to identify the company’s location.

4)  When is a person not a person?  When a “person” is an email recipient.  Email addresses, not people, are protected by CAN-SPAM.

On a related note, the folks at StopPoliticalCalls.org continue to do great work with their free list to tell politicians not to call.  While the country’s attention is naturally focused on the presidential race, there will be many races in local and state governments and candidates who use “robo-calling” to automatically call consumers.  These calls are NOT covered by the federal Do Not Call Registry.

When we last checked in with the folks at the free don’t call me registry, multiple political candiates and members of Congress had taken the organization’s pledge to not call consumers on the list.  Those candidates are in states as diverse as Missouri, North Carolina, Kansas and Idaho.  Even one of the companies supplying the service has agreed to honor consumer wishes.

It’s not too late to register free and make sure your phone number is protected from unwanted political spiels during dinner.

Posted under Privacy

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.

Posted under Customer Service

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, the 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.

Posted under Privacy

The United States Federal Trade Commission (FTC) has filed complaints in four separate cases alleging that weight-loss and weight-control claims were not supported by competent and reliable scientific evidence. Marketers of the four products –Xenadrine EFX, CortiSlim, TrimSpa, and One-A-Day WeightSmart — have settled with the FTC, surrendered cash and other assets worth at least $25 million, and agreed to limit their future advertising claims.

“You won’t find weight loss in a bottle of pills that claims it has the latest scientific breakthrough or miracle ingredient,” said FTC Chairman Deborah Platt Majoras. “Paying for fad science is a good way to lose cash, not pounds.”

Xenadrine EFX

Two marketers of Xenadrine EFX will pay at least $8 million and as much as $12.8 million to settle FTC allegations that Xenadrine EFX’s weight-loss claims were false and unsubstantiated. The funds will be used for consumer redress. In a bankruptcy case not involving the Commission, the defendants have also agreed to pay at least an additional $22.75 million to settle claims brought by creditors and consumers, including personal injury claims for an earlier ephedra-based product.

Xenadrine EFX, which contains, among other ingredients, green tea extract (EGCG), caffeine, and bitter orange (Citrus aurantium), was advertised heavily in print and on television, including in such publications as People, TV Guide, Cosmopolitan, and Men’s Fitness. Xenadrine EFX advertising also appeared in Spanish-language publications.

The FTC’s complaint alleged that the defendants made false or unsubstantiated claims for Xenadrine EFX, including that it was clinically proven to cause rapid and substantial weight loss and clinically proven to be more effective than leading ephedrine-based diet products. According
to the complaint, Robert Chinery commissioned several studies of Xenadrine EFX, none of which showed substantial weight loss. The complaint alleged that in one of these studies, subjects taking Xenadrine EFX lost an average of only 1.5 pounds over the 10-week study, while a control group taking a placebo lost an average of 2.5 pounds over the same period.

The complaint also alleged that Xenadrine EFX advertisements falsely represented that persons appearing in the ads achieved the reported weight loss solely by using Xenadrine EFX. According to the FTC complaint, consumer endorsers lost weight by engaging in rigorous diet and/or exercise programs. In addition, the endorsers were paid from $1,000 to $20,000 in connection with their testimonials; according to the complaint, Xenadrine EFX advertisements failed to disclose those payments.

The stipulated federal court order with Robert Chinery, Jr. and RTC Research & Development, LLC (”RTC”) prohibits certain claims regarding Xenadrine EFX and prohibits all claims regarding the health benefits, performance, efficacy, safety, or side effects of any weight-loss product, dietary supplement, food, drug, or device, unless the representation is true, not misleading, and substantiated by competent and reliable scientific evidence. The settlement also prohibits misrepresentations about any test or study. In addition, the order prohibits misrepresentations of the actual experience of any user or endorser and requires clear and prominent disclosure of any relationship that would materially affect the weight or credibility given to a user testimonial or endorsement. Finally, Robert Chinery and RTC cannot use their settlement with the Commission as a basis for seeking a cash refund of Xenadrine EFX-related income taxes that they previously reported as paid.

CortiSlim and CortiStress

The seven marketers of CortiSlim and CortiStress will surrender, in total, assets worth at least $12 million to settle FTC charges that they made false and unsubstantiated claims that their products can cause weight loss and reduce the risk of, or prevent, serious health conditions. In the final three settlement agreements announced today, the FTC will recover $8.4 million in cash, along with proceeds from the sale of a residence acquired with CortiSlim profits. The settlements also require the two individual defendants to liquidate tax shelters and transfer to the Commission any funds that remain after paying taxes and penalties. In two earlier settlement agreements, the defendants turned over $1.5 million in cash, a boat, a truck, a real estate interest, and proceeds from a tax shelter. The funds recovered from the seven defendants will be used for consumer redress.

The advertising campaign for CortiSlim ran nationwide, including ads on broadcast and cable television, radio, print media, and the Internet. The FTC’s complaint alleged that advertising claims about CortiSlim’s ability to cause rapid, substantial, and permanent weight loss in all users were false or unsubstantiated, as were claims about CortiStress’s ability to reduce the risk of osteoporosis, obesity, diabetes, Alzheimer’s disease, cancer, and cardiovascular disease. The FTC also alleged that CortiSlim and CortiStress infomercials were deceptively formatted to appear as talk shows rather than advertisements.

The final settlements announced today are with Stephen F. Cheng and his company, Window Rock Enterprises, Inc., and with Gregory S. Cynaumon and his company, Infinity Advertising, Inc. All of the settlements bar misrepresentations of any tests or studies and prohibit claims about the performance, effects on weight, or other health benefits of any dietary supplement, food, drug, cosmetic, or device unless the claims are true, not misleading, and substantiated by competent and reliable scientific evidence. The stipulated orders prohibit the use of deceptively formatted television and radio advertisements. In addition, the defendants cannot use their settlement with the Commission as a basis for seeking a cash refund of income taxes that they reported as paid.

TrimSpa

The marketers of TrimSpa will pay $1.5 million to settle FTC allegations that their weight-loss claims were unsubstantiated. According to the FTC’s complaint, the marketers had inadequate scientific evidence to support their advertising claims that TrimSpa causes rapid and substantial weight loss and that one of its ingredients, Hoodia gordonii, enables users to lose substantial amounts of weight by suppressing appetite.

Many ads for “TrimSpa Completely Ephedra Free Formula X32” featured testimonials. Celebrity Anna Nicole Smith claimed to have lost 69 pounds in eight months by using TrimSpa.
Other advertising claims included “Your high speed dream body diet pill” and “It makes losing 30, 50, even 70 pounds (or however many pounds you need to lose) painless.”

TrimSpa ads appeared on television, in magazines, on radio, and in local newspapers. TrimSpa was also promoted on a Web site, at some NASCAR events, and other live events.

The FTC consent agreement requires TrimSpa’s marketers – Goen Technologies Corp., Nutramerica Corp., TrimSpa, Inc., and Alexander Szynalski, also known as Alexander Goen – to pay $1.5 million. The agreement also prohibits the marketers from making any claims about the health benefits, performance, efficacy, safety, or side effects of TrimSpa, Hoodia gordonii, or any dietary supplement, food, drug, or health-related service or program, unless the claims are true, not misleading, and substantiated by competent and reliable scientific evidence.

One-A-Day WeightSmart

The Bayer Corporation will pay a $3.2 million civil penalty to settle FTC allegations that advertisements for One-A-Day WeightSmart multivitamins violated an earlier Commission order requiring all health claims for One-A-Day brand vitamins to be supported by competent and reliable scientific evidence.

Bayer ran a national advertising campaign for One-A-Day WeightSmart, which contains EGCG (epigallocatechin gallate), a green tea extract. Bayer also advertised on television, radio, and the Internet, and in newspapers and magazines, such as RedBook, Family Circle, and TV Guide.

Advertising claims included statements such as:

“Just in! Most women over 30 can gain 10 pounds a decade, due in part to slowing metabolism.… So eat right, exercise, and take One-A-Day WeightSmart. The complete multi-vitamin with EGCG to enhance metabolism.”

“One-A-Day WeightSmart. The first and only complete multivitamin with an ingredient to enhance your metabolism. EGCG, a natural green tea extract, to help you while you manage your weight.”

The complaint alleges that Bayer Corporation marketed One-A-Day WeightSmart with unsubstantiated claims that it

* increases metabolism;
* enhances metabolism through its EGCG content;
* helps prevent some of the weight gain associated with a decline in metabolism in users over age 30; and
* helps users control their weight by enhancing their metabolism.

The FTC alleges that these unsubstantiated claims violate a 1991 Commission order against Bayer’s predecessor, Miles Inc., that require all claims about the benefits of One-A-Day brand products to be substantiated by competent and reliable scientific evidence.

In addition to the $3.2 million civil penalty, Bayer is prohibited from violating the FTC order and from making unsubstantiated representations regarding the benefits, performance, efficacy, safety, or side effects of any dietary supplement, multivitamin, or weight-control product.

The FTC acknowledges the National Advertising Division of the Council of Better Business Bureaus for its referrals of some of these cases.

The Commission vote to accept the Bayer settlement was 5-0. At the Commission’s request, the Department of Justice filed the complaint and proposed consent decree on January 3, 2007, in the U.S. District Court for the District of New Jersey.

The Commission vote to accept the TrimSpa consent agreement, subject to public comment, was 4-0, with Commissioner Rosch recused. The FTC will publish an announcement regarding the agreement in the Federal Register. The agreement will be subject to public comment for 30 days ending February 5, 2007. Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC requests that any comment filed in paper form be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

The Commission votes to authorize staff to file the CortiSlim stipulated final orders were both 5-0. The stipulated final orders for permanent injunction were filed in the U.S. District Court for the Central District of California on October 3, 2006 for Stephen Cheng and Window Rock Enterprises, Inc. and on January 3, 2007 for Gregory Cynaumon and Infinity Advertising, Inc.

The Commission vote to authorize staff to file the Xenadrine EFX stipulated final order was 5-0. The stipulated final order for permanent injunction was filed in the U.S. District Court for the District of New Jersey on December 26, 2006.

NOTE: The proposed consent decree and the stipulated final orders are for settlement purposes only and do not constitute admissions by the settling defendants of law violations. They are subject to court approval and have the force of law when signed by the judge. Likewise, the administrative consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent agreement on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Posted under Recalls

Guidance Software Inc. has agreed to settle Federal Trade Commission charges that its failure to take reasonable security measures to protect sensitive customer data contradicted security promises made on its Web site and violated federal law. According to the FTC, Guidance’s data-security failure allowed hackers to access sensitive credit card information for thousands of consumers. The settlement will require the company to implement a comprehensive information-security program and obtain audits by an independent third-party security professional every other year for 10 years.

Guidance sells software and related training, materials, and services customers use to investigate and respond to computer breaches and other security incidents.

According to the FTC complaint, Guidance failed to implement simple, inexpensive and readily available security measures to protect consumers’ data. In contrast to claims about data security made on Guidance’s Web site, the company created unnecessary risks to credit card information by permanently storing it in clear readable text. In addition, the complaint alleges that Guidance failed to protect the information by:

* failing to assess adequately the vulnerability of its network to commonly known or reasonably foreseeable Web-based attacks, such as structured query language injection attacks;

* failing to implement simple, low-cost, and readily available defenses to such attacks;

* storing in clear, readable text network administrator credentials, such as user name and password, that facilitated access to credit card information stored on the network;

* failing to use readily available security measures to monitor and limit access from the corporate network to the Internet; and

* failing to employ measures to detect unauthorized access to consumers’ credit card information.

The settlement bars misrepresentations about security measures in the future and requires Guidance to establish and maintain a comprehensive information-security program that includes administrative, technical, and physical safeguards. The settlement also requires Guidance to obtain, every two years for the next 10 years, an audit from a qualified, independent, third-party professional to assure that its security program meets the standards of the order. The company also will be subject to standard record keeping and reporting provisions to allow the FTC to monitor compliance.

Posted under Privacy

The Federal Trade Commission is charging the sellers of the “Centro Natural de Salud Obesity Treatment” with making false and unsubstantiated claims that their product causes rapid, substantial, and permanent weight loss. The “treatment” consists of three different pills, taken with breakfast, lunch, and dinner, and a bar of “special soap” to “reduce dress sizes.”

According to the FTC’s complaint, in Spanish-language infomercials and on the Internet the marketers made claims, such as:

“Lose 35 pounds in 2 months”

“Everything you lose, you will never gain back”

“No diets, no skipping dinner, no calorie counting, no side effects”

The defendants, Centro Natural Services, Inc., Xavier Rodriguez, and Rocio Diaz are located in Santa Ana, California. The complaint charges they falsely claimed the Centro Natural de Salud Obesity Treatment causes users: to lose substantial amounts of weight rapidly, without reducing calorie intake; safely to lose as much as a half pound per day for multiple weeks and months; and/or to lose weight permanently. The complaint also charges the defendants had no substantiation for their weight-loss claims.

The FTC is asking the court to order a halt to the defendants’ claims pending trial. It will seek a permanent halt to their operation, and redress for consumers.

Posted under Customer Service