FTC Enforcement

July 11, 2017

Four paint companies have agreed to settle FTC charges that they deceptively promoted products as emission-free or containing zero volatile organic compounds, including during and immediately after application. Some promotions also made explicit safety claims regarding babies, children, pregnant women, and other sensitive populations. However, the FTC alleged, the companies had no evidence to support these claims. The four companies, Benjamin Moore & Co., Inc., ICP Construction Inc., YOLO Colorhouse, LLC, and Imperial Paints, LLC, have agreed to orders that would bar them from making unqualified emission-free and VOC-free claims unless, at all times during application and after, both content in and emissions from their paints are actually zero, or emissions are at “trace levels,” as defined in the orders. FTC

July 5, 2017

The FTC mailed 173,000 refund checks totaling more than $49 million to students in compensation for DeVry University’s allegedly misleading ads, which the Commission alleged deceived students about their likelihood of finding jobs in their field of study and the income level they could achieve upon graduation. According to the FTC’s complaint, DeVry deceptively claimed that 90 percent of its graduates actively seeking employment landed jobs in their field within six months of graduation and that graduates had 15 percent higher incomes one year after graduation on average than the graduates of all other colleges or universities. As part of the FTC’s $100 million settlement, the school agreed to pay $49.4 million to the FTC for partial refunds to some students and $50.6 million in debt relief. The debt forgiven included the full balance owed—$30.35 million—on all private unpaid student loans that DeVry issued to undergraduates between September 2008 and September 2015, and $20.25 million in student debts for items such as tuition, books and lab fees. FTC

June 23, 2017

The FTC has charged a North Carolina debt collection operation and its owner with taking money from consumers for fake debts they did not owe. The action is part of the FTC’s crackdown on “phantom” debt collection. According to the FTC, Anthony Swatsworth, ACDI Group LLC, and Solutions to Portfolios LLC bought phony payday loan debts – loans supposedly made by “500FastCash” – from SQ Capital through a debt broker, and continued to collect on those debts even after learning the debts were fake and receiving a full refund for their purchase. Almost immediately after ACDI started collecting on the loans, consumers complained and provided evidence that they had never taken out a 500FastCash loan. Other consumers complained that they did not have an outstanding balance. When the defendants reported the complaints to the broker, the broker returned the defendants’ money and told the defendants to stop collecting on the phony debts. Yet the defendants kept collecting from consumers for at least seven more months. FTC

June 14, 2017

Following a public comment period, the FTC has approved a final order settling charges that outpatient kidney dialysis chain DaVita, Inc.’s $358 million acquisition of competitor Renal Ventures Management LLC would have been anticompetitive. First announced in March 2017, the complaint alleged that the acquisition would lead to significant anticompetitive effects in five New Jersey markets (Brick, Clifton, Somerville, Succasunna, and Trenton), and in two Dallas-area markets (Denton and Frisco). The complaint alleged that without the competition in these markets, and with new entry unlikely to be timely or sufficient, the likely result would be reduced quality and higher prices for dialysis patients. DaVita agreed to divest the seven clinics to PDA-GMF Holdco, LLC, a joint venture between Physicians Dialysis and GMF Capital LLC. FTC

June 6, 2017

As the result of Do Not Call (DNC) litigation brought by the U.S. Department of Justice on behalf of the FTC, as well as the states of California, Illinois, North Carolina, and Ohio, a federal court in Illinois has ordered penalties totaling $280 million and strong injunctive relief against Englewood, Colorado-based satellite television provider Dish Network. The U.S. District Court for the Central District of Illinois found Dish liable for millions of calls that violated the FTC’s Telemarketing Sales Rule (TSR) — including DNC, entity-specific, and abandoned-call violations — the Telephone Consumer Protection Act (TCPA), and state law. The civil penalty award includes $168 million for the federal government, which is a record in a DNC case. The remainder of the civil penalty was awarded to the states. FTC

June 1, 2017

A Federal court has granted a request from the FTC and the State of Georgia to permanently bar the deceptive business practices of an electronics buyback company that misled consumers about the amount of money it would pay them for selling their used smartphones, tablets and other devices. The court also ordered the company’s owner to pay more than $42 million. In granting the request for default judgement, the court agreed with the allegations in the FTC’s complaint that Laptop & Desktop Repair, LLC and its owner Vadim Olegovich Kruchinin earned millions by promising to buy back consumers’ used electronic devices for much more money than the defendants actually provided. After consumers provided basic information on the company’s website about the type and condition of the electronic device they wanted to sell, the defendants would provide consumers with a quote for the amount a seller would receive for the device. Yet once consumers sent in their devices to the defendants, the defendants dropped their offer price to as little as 3 percent to 10 percent of the original quote. FTC

May 31, 2017

Two brothers have agreed to settle FTC charges that in marketing and selling their trampolines, they deceived consumers by directing them to review websites that claimed to be independent but were not, and by failing to disclose that one of the brothers posted online product endorsements without disclosing his financial interest in the sale of the products. Under an administrative consent order announced today, Son “Sonny” Le and Bao “Bobby” Le are barred from engaging in such deceptive behavior in the future and must clearly and conspicuously disclose any material connections between a reviewer or endorser and the product being reviewed. According to the FTC’s complaint, working together and using several fictitious business names, the Les marketed and sold Infinity and Olympus Pro brand trampolines on several websites. These sales websites prominently featured logos from supposedly independent review entities, including “Trampoline Safety of America,” the “Bureau of Trampoline Review,” and “Top Trampoline Review.” FTC

May 26, 2017

Following a public comment period, the FTC has approved a final order and consent agreement in which the American Guild of Organists agreed to eliminate rules that restrict its members from competing for opportunities to perform. Announced in March 2017, the agreement between the FTC and the American Guild of Organists resolves the agency’s complaint that the guild’s rules restrained competition and harmed consumers in violation of the FTC Act. Under the guild’s code of ethics, if a consumer wished to have someone other than an “incumbent musician” play at a venue for a wedding, funeral or other service, the consumer was required to pay both the incumbent and the consumer’s chosen musician. The guild also developed and publicized compensation schedules and formulas, and instructed its chapters and members to develop and use regionally applicable versions to determine charges for their services. FTC

May 25, 2017

The FTC charged the operators of a phony student loan debt relief and credit repair scheme with bilking millions of dollars from consumers by falsely promising to reduce or eliminate their student loan debt and offering them non-existent credit repair services. At the FTC’s request, a federal court has temporarily halted the operation. The agency seeks to permanently stop the alleged illegal practices and obtain refunds for affected consumers. According to the FTC’s complaint, the operators of Strategic Student Solutions and related companies lured student loan borrowers with promises such as “Payments as low as $0 Monthly” or “Save 60 percent or MORE on your monthly payment.” According to the FTC’s complaint, SSS operators told the student loan borrowers they would be enrolled in a loan forgiveness or payment reduction program, and that their monthly payments would be applied to their loans. However, in many cases, consumers discovered that the defendants failed to enroll them in any loan forgiveness or payment reduction programs, and found out that none of their monthly payments were applied to their student loan debt. FTC

May 12, 2017

The FTC, along with federal, state and international law enforcement partners, today announced “Operation Tech Trap,” a nationwide and international crackdown on tech support scams that trick consumers into believing their computers are infected with viruses and malware, and then charge them hundreds of dollars for unnecessary repairs. As part of this coordinated effort, the FTC and its partners are announcing 16 new actions, including complaints, settlements, indictments, and guilty pleas, against deceptive tech support operations. This brings to 29 the number of law enforcement actions brought by Operation Tech Trap partners in the last year to stop tech support scams. FTC