FOR THE CONSUMER
The FTC's monthly newsletter for the Congressional community
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Volume 9 - Number 8
IN THIS ISSUE
HELP FOR HOMEOWNERS. Home Assure LLC will pay $2.4 million to settle FTC charges that it deceived homeowners with promises to save their homes from foreclosure. The defendant typically charged homeowners an up-front fee of up to $2,500 and falsely claimed that its special relationships with lenders would facilitate favorable loan modifications or stop foreclosure. But they did little or nothing to help people avoid foreclosure. The settlement also bans the company from selling mortgage loan modification and foreclosure relief services. Read the press release. In addition, the FTC banned eight marketers from selling mortgage relief services: the agency says Federal Loan Modification Law Center, the Loss Mitigation Services, Hope Now Modifications, and their principals and affiliates charged homeowners upfront fees and falsely claimed to be able to modify their mortgages or prevent foreclosure on their homes. Read the press release.
DATA SECURITY. Rite Aid Corporation has settled charges that it failed to protect the sensitive financial and medical information of their customers and employees. According to the FTC’s complaint, the pharmacy chain failed to appropriately dispose of personal information, adequately train employees, assess compliance with its disposal procedures, and use a reasonable process for addressing risks to personal information. Rite Aid must establish a comprehensive information safety program to be audited independently every two years. Read the press release.
FIRST PROBIOTICS CASE. A subsidiary of Nestlé S.A. has settled FTC charges that it made allegedly deceptive health claims for BOOST Kid Essentials. According to the FTC, Nestlé falsely claimed that probiotics in a special straw could prevent upper respiratory tract infections, protect against the flu and the common cold, and reduce absences from day care or school due to illness. The settlement requires Nestlé to get FDA approval for certain health claims before advertising them. This was the FTC’s first case challenging advertising for probiotics -- live, beneficial bacteria found naturally in many foods and promoted to help digestion and fight harmful bacteria. Read the press release.
DEBT RELIEF SCAM. Mutual Consolidated Savings and its affiliates, the marketers of a “Rapid Debt Reduction” service, settled FTC charges that they misled consumers when they promised to lower interest rates on credit cards for an advance fee of up to $899. The settlement bans the defendants from marketing debt relief services and requires them to pay $1.5 million – all of their available assets – back to the people they cheated. Read the press release.
NEW RULE. The FTC’s Telemarketing Sales Rule will prohibit for-profit companies that sell debt relief services by the telephone from charging a fee before they settle or reduce a customer’s credit card or other unsecured debt. The Rule also applies to calls people make to these firms in response to debt relief advertising. Read the press release.
DIETARY SUPPLEMENTS. The dietary supplement maker Iovate will pay $5.5 million to settle charges it falsely claimed its products could help people lose weight, prevent the common cold, and treat other illnesses. The settlement bars Iovate from making such claims without pre-approval from the FDA. The money will go back to people who bought Accelis, nanoSLIM, and any Cold MD, Germ MD, or Allergy MD product. Read the press release.
WEED-KILLER MONOPOLY. Nufarm Limited, an Australian chemical company, has agreed to sell assets to settle FTC charges that its acquisition of a rival, A.H. Marks Holding Limited, led to higher prices for three herbicides used by farmers, landscapers, and consumers. According to the FTC, the merger gave Nufarm a monopoly over two of the products. For the third product, it faced competition from only one company. The FTC’s proposed order requires Nufarm to sell rights and assets to restore competition in the three markets. Read the press release.
Concludes that the system for resolving consumer debt collection disputes is broken, and recommends significant litigation and arbitration reforms to improve efficiency and fairness to debtors. Read the report.
Senate Commerce, Science and Transportation
Chairman Jon Leibowitz discussed recent FTC enforcement actions regarding data security, identity theft, children’s privacy, intrusive spam, spyware, and telemarketing. The testimony also addressed a recent FTC initiative to reevaluate consumer privacy protection in light of new and emerging technologies and business models, citing recent roundtables hosted by the agency. Read the press release.
House Committee on Energy and Commerce
Subcommittee on Commerce, Trade, and Consumer Protection
David Vladek, Director of the FTC’s Bureau of Consumer Protection, discussed FTC efforts to protect consumer privacy, including 28 actions charging businesses with failing to protect consumers’ personal information and 15 actions charging website operators with collecting information from children without their parents’ consent. Vladek noted the FTC has brought 15 spyware cases and dozens of actions challenging illegal spam, including an action against a rogue Internet Service Provider that resulted in a temporary 30 percent drop in spam worldwide. Read the press release.
Protecting Teens Online
Senate Committee on Commerce, Science and Transportation
Subcommittee on Consumer Protection, Product Safety, and Insurance
Jessica Rich, Deputy Director of the FTC’s Bureau of Consumer Protection, noted in her testimony that teens warrant special online safety considerations. Rich argued that while teens may think less about the consequences of their online actions than adults, they are too old to follow the COPPA requirement of parental permission. Read the press release.
Oversight of Competition Issues
House of Representatives Committee on the Judiciary
Subcommittee on Courts and Competition Policy
In his testimony, Chairman Leibowitz detailed the Commission’s work to promote competition and protect consumers, including stopping “pay-for-day” agreements between branded and generic drug makers. The FTC estimates that such deals cost consumers $3.5 billion a year and that the number of agreements is on the rise. Read the press release.
The Truth About Cell Phones and the Do Not Call Registry. You don’t need to register cell phone numbers on the National Do Not Call Registry to be protected from most telemarketing calls to those numbers.
Debt Relief Services & The Telemarketing Sales Rule: A Guide for Business: The amended Rule applies to for-profit companies that say they can renegotiate your debt or get your interest rates reduced.
A pre-paid phone card allows you to pay in advance for telephone calling time. The cards generally cost from $2 to $20 for local or long-distance calling time; the rate charged per minute determines the amount of calling time you’re buying. Pre-paid phone cards can be very convenient, but some have hidden costs or other problems, like bad connections, access numbers that are almost always busy, and personal identification numbers (PINs) that don’t work.
Some calling cards come with fees that can take a big bite out of the calling time you’ve bought. As a result, the cards don’t deliver the call time they advertise. And because you’ve paid in advance, you may be out of pocket – and out of luck – if you discover a problem. If you’re considering buying a calling card, read the poster, flyer, website, or other advertisement for it – including any fine print – before you buy. Learn more about choosing a pre-paid phone card.
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