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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 19, 2020

Payment processing company First Data Merchant Services, LLC will pay $40.2 million to resolve FTC charges that it laundered, or assisted laundering of, credit card transactions for scams facilitated by Chi “Vincent” Ko and his company First Pay Solutions LLC, which operated as an independent sales agent for First Data.  Ko allegedly opened hundreds of merchant accounts to process payments for scams that targeted hundreds of thousands of consumers, and First Data knowingly processed payments for those scams.  FTC

April 20, 2020

A company that markets rent-to-own payment plans in retail stores nationwide has agreed to pay $175 million to settle FTC charges of intentionally misleading customers.  By hiding payment terms, Progressive Leasing allegedly led customers to believe the payment plans had no interest when in fact, the company did charge an interest rate that resulted in customers paying as much as double the true price of products.  The settlement proceeds will go toward refunds for affected customers, and under the terms of the proposed settlement, Progressive Leasing will be prohibited from engaging in similar conduct and required to disclose full payment costs to its customers.  FTC

March 10, 2020

DOJ and the FTC have announced that $153 million comprising the first round of restitution payments from a Western Union fraud settlement is set to be disbursed to over 109,000 victims.  In 2017, the money transfer company agreed to pay $586 million to settle allegations of aiding and abetting wire fraud by failing to have effective anti-fraud policies and procedures.  Over 500,000 potential victims were harmed as a result of the fraud schemes, many of them elderly.  DOJ; FTC

March 4, 2020

The Massachusetts-based marketers of an electrical nerve stimulation device have settled FTC false advertising charges by agreeing to pay at least $4 million.  In marketing materials for Quell, NeuroMetrix, Inc. and CEO Shai Gozani allegedly described the device as "clinically proven" and "FDA cleared" for chronic pain relief all over the body, despite lacking scientific evidence or actual FDA approval to support such claims.  In addition to a cease and desist order and the $4 million judgment, NeuroMetrix has also been ordered to turn over another $4.5 million in future foreign licensing payments.  FTC

December 16, 2019

Steven (Kaveh) Shayan and Kevin (Kaveh) Shayan, who operated the website WeTakeSection8.com, have been permanently banned from offering rental listing services and ordered to pay more than $6 million following a complaint filed by the FTC.  The Shayans and their website falsely claimed that their subscription websites provided accurate, up-to-date rental listings that were approved for Section 8 housing vouchers, including properties with which they had exclusive listing agreements,  when, in fact, most of the listed properties were either unavailable or did not accept Section 8 housing vouchers. FTC

December 10, 2019

The University of Phoenix and its parent company, Apollo Education Group, have agreed to resolve FTC charges through a record $191 million settlement, with $50 million to be paid in cash and $141 million in debts owed by affected students to be canceled.  The charges involved ads that gave prospective students the false impression that the university worked with major technology companies to design its curriculum and provide job opportunities.  FTC

November 5, 2019

AT&T has agreed to pay $60 million to settle FTC charges of misleading customers.  From 2011 until 2014, AT&T advertised and sold “unlimited” data plans to millions of smartphone customers, but despite promises of unlimited data, it allegedly “throttled,” or reduced the data speeds, for customers on these plans after as little as 2 GBs of use.  At least 3.5 million customers were affected, all of whom will receive a credit or check for the refund amount owed as part of the settlement.  FTC

October 21, 2019

Devumi, LLC and owner German Calas, Jr., have agreed to a $2.5 million judgment to settle the FTC’s first ever charges against the sale of fake indicators of social media influence, such as followers, subscribers, views, and likes.  The defendants allegedly enabled customers to deceive potential clients about their social media clout by filling tens of thousands of orders for fake LinkedIn followers, Twitter followers, YouTube subscribers, and YouTube views.  Due to the defendants’ inability to pay, upon payment of $250,000, the remaining monetary judgment will be suspended.  FTC

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
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