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FTC Enforcement Actions

The Federal Trade Commission (FTC) is a federal agency charged with preventing anticompetitive, deceptive, and unfair business practices. The FTC can bring enforcement actions under U.S. antitrust laws and to stop unfair, deceptive and fraudulent business practices. The FTC does not have any authority to pay financial rewards to whistleblowers; however, conduct that is regulated by the CFTC may also give rise to a claim under a different whistleblower reward program.

Below are summaries of recent FTC settlements or successful enforcement actions. If you believe you have information about fraud which could give rise to a claim under a whistleblower reward program, please contact us to speak with one of our experienced whistleblower attorneys.

May 31, 2019

The FTC has settled with the operators of a worldwide negative option scam that falsely advertised "risk free" products trials, but then charged consumers full price and enrolled them in costly, ongoing plans without their consent.  California-based defendants Triangle Media Corps., Jasper Rain Marketing LLC, and Brian Phillips, had been charged with violating the FTC Act, the Restore Online Shoppers' Confidence Act (ROSCA), and the Electronic Fund Transfer Act (EFTA) through their trickery over the course of five years.  Co-defendants Hardwire Interactive Inc., Global Northern Trading Ltd., and Devin Keer, who helped spread the scheme worldwide, faced the same charges. As part of the settlement, the defendants have been ordered to pay judgments ranging from $48.1 million to $123.1 million, which will be partially suspended upon payment of $400,000 and $3 million, respectively.  FTC

May 6, 2019

The FTC has filed a complaint against a Texas man who raised more than $800,000 through four deceptive crowdfunding campaigns launched between 2015 and 2016. Douglas Monahan allegedly told consumers that contributions to Indiegogo and Kickstarter campaigns benefiting his company, iBackPack of Texas, LLC, would go toward developing, producing, and distributing various tech-enhanced products, including a power bank-equipped backpack and shoulder bag and a magnetic USB cable system. Instead, Monahan improperly spent the money on personal expenses and marketing efforts. Monahan’s fraudulent behavior was eventually reported by hundreds of disgruntled consumers. FTC

April 3, 2019

Srinubabu Gedela and his publishing companies have been ordered to pay over $50.1 million to settle Federal Trade Commission charges for violation of the FTC Act for making false claims about their scientific conferences and academic journals. The government’s complaint alleged that Gedela and his companies advertised that well known researchers would be presenting at the conferences when many of the researchers had never agreed to speak. The defendants also allegedly lied to academics and researchers by claiming that their journals would provide extensive peer review and that they had editorial boards made up of distinguished academics. In addition to paying $50.1 million, the final order restricts the defendants from making misrepresentations in regard to their academic journals and conferences. FTC

March 27, 2019

Office Depot and its affiliated software tech support provider, Support.com, Inc. have agreed to pay $35 million to settle FTC charges of deceiving customers for over a decade in order to sell unnecessary computer repair services. The companies allegedly used a free software called PC Health Check to scan computers for security threats and maintenance needed. However, PC Health Check was programed to display a recommendation for service if the customer had answered yes to one of four questions regarding perceived computer issues. FTC

March 7, 2019

In the largest forfeiture ever obtained in a sweepstakes scam, the FTC and State of Missouri have settled with three men and corporations under their control for a record $30 million, with a suspended monetary judgment of $114 million. Kevin Brandes, William Graham, Charles Floyd Anderson were charged with sending millions of deceptive mailers primarily to elderly recipients. The mailers falsely informed recipients that they were eligible to win as much as $2 million, but failed to disclose the total fees recipients would have to pay to play. In addition to relinquishing $30 million, the three men have also been permanently banned from the business, and a court appointed receiver has been tasked with dissolving the companies. FTC

February 27, 2019

In the largest civil penalty ever obtained by the FTC in a privacy case for children under the age of 13, lip-synch video sharing app Musical.ly, now known as TikTok, has agreed to pay $5.7 million for violating the Children's Online Privacy Protection Act (COPPA). According to the FTC, during the registration process, the app collected personal information from its largely underage users—including full name, contact information, and location—without parental approval. It further refused to delete personal information requested by parents, even though its privacy setting defaulted to public, which allowed unscrupulous adults to view personal information, follow, and send direct messages to underage users within a 50-mile radius of their location. As part of the settlement, Musical.ly must remove all videos made by children under the age of 13. FTC

February 19, 2019

Teva Pharmaceuticals Ltd. has reached a settlement agreement with the Federal Trade Commission resolving three separate antitrust lawsuits.  As part of the settlement, Teva agrees not to engage in so-called reverse-payment settlement agreements that can impede consumer access to generic drugs.  In such “pay-for-delay” settlements, the drug company patent-holder pays the generic drug manufacturer allegedly infringing its patent in exchange for the alleged infringer being in position to be awarded a six-month exclusive right to market the generic drug.  The settlement still requires court approval.  FTC

December 14, 2018

A debt-relief telemarketing operator has been permanently banned from both industries and ordered to pay over $23 million to the FTC and State of Florida for violating the Federal Trade Commission Act, Telemarketing Sales Rule, and Florida Deceptive and Unfair Trade Practices Act. Under the guise of multiple shell companies, Kevin Guice and his associates sold fraudulent debt relief services to more than 10,000 unsuspecting consumers, often by calling phone numbers on the FTC's National Do Not Call Registry. In one scheme, telemarketers falsely claimed to be able to substantially and permanently lower credit card interest rates in exchange for an upfront fee of between $500 to $5,000. In another scheme, telemarketers again falsely claimed to be able to access non-existent government funds to pay off credit card debt in exchange for another upfront fee of between $2,500 to $26,000. Proceeds from the $23 million judgment will be used to pay restitution to consumers harmed by these fraudulent schemes. FTC; FL AG

November 8, 2018

For its continued failure to prevent fraudulent money transfers, MoneyGram International Inc. (MoneyGram) agreed to pay $125 million to settle allegations it violated a 2009 order with the FTC and a 2012 deferred prosecution agreement with the DOJ. Both the 2009 order and 2012 agreement had required the global money transfer business to implement certain fraud prevention measures. Instead, even though some of its locations had reached fraud rates of as high as 50%, MoneyGram allegedly failed to take action, including failing to suspend or terminate locations or employees with high fraud rates, and failing to block individuals that it should have known were committing fraud. The new settlement expands the 2009 order and 2012 agreement to apply worldwide and requires additional fraud prevention measures. DOJ; FTC; USAO MDPA

October 29, 2018

The FTC has settled with an online student loan refinancer, SoFi Lending Corps, for allegedly misrepresenting the amount that student loan borrowers could save by refinancing with their company, sometimes by double the actual amount. In calculating the savings, SoFi allegedly excluded certain borrowers and failed to disclose or disclose clearly the fact that it had made those exclusions, a violation of the FTC Act. It will face civil penalties if it violates the finalized settlement order. FTC
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