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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.

October 16, 2019

The FTC has settled with the marketers and sellers of two aloe vera-based supplements and imposed an $18.7 million judgment against them.  Defendants NatureCity, LLC and Carl and Beth Pradelli had been charged with making unsubstantiated claims to consumers about their products, TrueAloe and AloeCran, including that the products could improve cholesterol and triglyceride levels, reduce chronic pain, and treat various diseases.  FTC

October 2, 2019

Multi-level marketing company Advocare International, L.P., together with its former CEO Brian Connolly and several former Advocare distributors, have entered into a $150 million settlement with the FTC, which charged Advocare with being an unlawful pyramid scheme that pushed distributors to focus on recruiting new distributors rather than retail sales to customers.  Defendants made deceptive earnings claims, and provided others with the means and instrumentalities to do the same.  Defendants are ordered to return monies to distributors and are banned from all future multi-level marketing.  FTC

September 24, 2019

Belize’s Atlantic International Bank Limited (AIBL) has agreed to pay $23 million to the FTC to settle its liability in a real estate fraud scheme targeting U.S. investors.  According to the FTC, co-conspirator Sanctuary Belize (SBE), a massive planned community, sold lots to U.S. investors by making false promises, including claiming the lots were low-risk investments that would appreciate rapidly.  AIBL allegedly assisted in this scheme by visiting SBE’s offices in the U.S. and coaching telemarketers on AIBL banking services that could be sold as part of SBE’s sales pitch.  FTC

September 4, 2019

Google and its subsidiary, YouTube, will pay a record $170 million to the FTC and New York for allegedly violating the Children’s Online Privacy Protection Act (COPPA) Rule, which requires that websites and services directed at children under 13 obtain parental consent prior to collecting personal information.  According to the complaint, YouTube allegedly monitored, tracked, and served targeted ads to children under 13 without parental consent.  FTC, NY AG

August 27, 2019

Career Education Corporation (CEC) and its post-secondary school subsidiaries have agreed to pay the FTC $30 million to settle charges of using illegal means to market its schools.  In addition to calling numbers on the Do Not Call Registry, which violates the Telemarking Sales Rule, CEC also misrepresented to students that its schools were affiliated with or recommended by the military.  FTC

July 22, 2019

Credit reporting company Equifax has agreed to pay up to $700 million to resolve claims related to its 2017 data breach in a global settlement with the FTC, the CFPB, and 50 U.S. states and territories.  The settlement will be entered as a stipulated judgment in civil action pending against Equifax, alleging that Equifax failed to take adequate steps to secure its network and consumer data, despite being warned of network vulnerabilities, resulting in a hack that exposed the private information of almost 150 million people.  The settlement provides that defendant will pay between $300 million and $425 million to compensate affected consumers, in addition to a $100 million penalty to the CFPB and $175 million to the states.  Equifax also agreed to take specified steps to improve information security, subject to review by an independent third party.  FTC; CFPB; AG CA; AG NY; AG PA

July 11, 2019

Reckitt Benckiser Group plc, which marketed and sold the opioid addiction treatment drug Suboxone until 2014 through its then-subsidiary Indivior Inc., will pay a total of $1.4 billion in a global settlement resolving criminal, civil, and administrative claims.  In marketing Suboxone Film, Indivior allegedly made unsupported claims that the drug was less-divertable and less-abusable than other buprenorphine drugs, and steered patients to doctors known to have a history of over-prescribing Suboxone and other opioids.  In addition, Indivior was alleged to have discontinued its tablet Suboxone for pretextual reasons, claiming a concern for pediatric exposure when, in fact, the company was seeking to delay FDA approval of a generic form of tablet Suboxone.  In a non-prosecution agreement, RB Group will forfeit $647 million in proceeds it received from Indivior, will cooperate with ongoing investigations, and will not manufacture or market controlled substances in the U.S. for three years.  In resolution of civil claims with the U.S. and states, including six lawsuits filed by whistleblowers under the False Claims Act, RB Group will pay $700 million to resolve claims that the marketing of Suboxone caused false claims to be submitted to government healthcare programs.  Finally, RB Group has agreed to pay $50 million in a settlement with the Federal Trade Commission to resolve claims that it engaged in unfair competition in seeking to impede generic equivalents of Suboxone.  DOJ; USAO W.D.Va.; FTC; VA

July 1, 2019

Hylan Asset Management, LLC, and its owners, Andrew Shaevel and Joe Purizhansky have been banned from the debt collection industry and ordered to pay $6.75 million.  According to the FTC and the New York Attorney General’s Office, Hylan and its owners knew the debt portfolios they bought and sold contained fake debts, but continued to distribute these portfolios to collection agencies.  FTC; NY AG

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
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