Entries in FTC (17)


FTC Advises Consumers to Keep Eye Out for Unauthorized Credit Charges 

BananaStock/Thinkstock(WASHINGTON) -- The Federal Trade Commission is warning consumers of a new type of “cramming,” unauthorized fees that were once buried in phone bills but are now showing up on credit card statements.

According to an FTC complaint, Ideal Financial Solutions hit tens of thousands of Americans with fake fees mostly for vague financial services like Debt2Wealth — for close to $30 at a time.

In total, the complaint says the company billed consumers for more than $24 million without their consent.

“It’s smart to steal little amounts at a time because you are hoping consumers just don’t spot it,” said Mandy Walker, a Consumer Reports senior project editor.

The FTC says 20 million people a year fall victim to cramming, which until now had occurred mostly in phone bills.

In this most recent case, the FTC said that many of the consumers targeted had recently applied for a payday loan or cash advance.

When they reportedly spotted the bogus charges on their bills, they called the toll-free number next to fees to complain. The FTC said consumers then entered an infuriating maze of call centers around the world.

Walker suggested consumers inspect their bills line by line and dispute any questionable charges immediately with the credit card company.


Copyright 2013 ABC News Radio


Macy's, Sears, Amazon, Max Studio Fined for 'Bamboozling' Customers

Bloomberg News Photo by Diane Bondareff(NEW YORK) -- Four national retailers have agreed to pay $1.26 million in penalties for falsely labeling clothing and textiles as made of bamboo, when they were actually made of rayon, a synthetic material.

The Federal Trade Commission announced this week that, Leon Max, Inc., Macy's, and Sears, Roebuck and Co. ignored warning letters the commission sent to companies in early 2010.

Accordingly, the four companies agreed to pay penalties totaling $1.26 million to settle charges that they violated the Textile Products Identification Act and the FTC's "Textile Rules" by mislabeling and advertising products as made of bamboo.

The FTC warned that unless a product is made directly with bamboo fiber, often called "mechanically processed bamboo," it can't be called bamboo.

In a guideline issued to companies, the FTC refers to the mislabeling practice as "bamboozling" customers.

Sears, which is the parent company of Kmart, agreed to pay $450,000. Amazon is paying $455,000 while Macy's will pay $250,000, and Leon Max, which produces Max Studio clothing, is paying $80,000.

The FTC said the varying penalties reflect how long the companies continued to sell mislabeled textiles after receiving the warning letter and the number of products sold.

"We cooperated with the FTC in reaching this settlement in lieu of pursuing further litigation," said Sears Holdings Corp. spokesman Howard Riefs in a statement. "We continue to take these regulations seriously."

A spokesman for Macy's declined to comment. Amazon and Max Studio did not return requests for comment.

The FTC said the companies will be required to ensure the labels and ads for bamboo textiles they sell "accurately indicate their fiber content."

For example, the FTC said Macy's allegedly used the terms "bamboo" and "bamboo fiber" on textile labels.

So-called bamboo textiles are often marketed as environmentally friendly, but the process for manufacturing rayon, even when it is made from bamboo, "is far from a 'green' one," the FTC said.

Rayon is sometimes made using "environmentally toxic chemicals in a process that emits hazardous pollutants into the air," the FTC said.

"While different plants, including bamboo, can be used as a source material to create rayon, there's no trace of the original plant in the finished rayon product," the FTC said in a guide for marketers.

Copyright 2013 ABC News Radio


FTC Settles Antitrust Investigation of Google

KIMIHIRO HOSHINO/AFP/Getty Images(WASHINGTON) -- After a high-profile 20-month investigation, the federal government announced Thursday it's dropping an "exhaustive" antitrust probe into Google, the world's largest search engine.

The Federal Trade Commission said it found no evidence the tech giant used unfair tactics to thwart competing sites. Google escaped the investigation without paying a fine, but it will voluntarily change some of its practices to be more open to competitors, the FTC said.

"The changes Google has agreed to make will ensure that consumers continue to reap the benefits of competition in the online marketplace and in the market for innovative wireless devices they enjoy," FTC Chairman Jon Leibowitz said. "This was an incredibly thorough and careful investigation by the commission, and the outcome is a strong and enforceable set of agreements."

The FTC's investigation focused on two main allegations from rival companies: first, that Google favored its own Internet search results while burying links to competing sites; and second, that the company stifled competition by not allowing access to its mobile device patents.

Competitors have accused Google of scraping content and posting it on search results to make it appear as if it were Google's own content. For example, Leibowitz said, Google was accused of posting restaurant reviews from Yelp on Internet searches without prompting the user to click Yelp's site directly -- a claim that, if proved true, would have been "clearly problematic."

As part of the settlement, Google agreed to "refrain from misappropriating online content" this way while also offering online advertisers more flexibility to opt out of showing up in search results.

The company also agreed not to seek injunctions to block rivals from accessing patents that are "essential to key technologies," like smartphones, tablets and other mobile devices. Google shelled out nearly $12.5 billion last year to acquire Motorola Mobility and its 24,000 lucrative patents and applications, according to the FTC.

"We've always accepted that with success comes regulatory scrutiny," wrote Dave Drummond, Google's chief legal officer, in a blog statement. "The conclusion is clear: Google's services are good for users and good for competition."

The commission will continue to monitor Google's business practices, but critics say the FTC findings don't have any teeth: The FTC can't fine Google or jail its executives for future violations. The most the commission says it has authority to do is open another investigation if further concerns arise.

The settlement comes as a win for Google, whose competitors have been pushing for a more stringent antitrust suit.

This is not the first time the tech giant has been under federal scrutiny. In August, the commission said Google violated user privacy agreements by tracking "cookies" for Apple Safari users and sending targeted ads to consumers. Google was forced to pay a $22.5 million fine -- the largest ever from a violation of FTC rules.

The company still faces a similar antitrust investigation in the European Union, which launched its probe in 2010.

Copyright 2012 ABC News Radio


FTC Enlists Consumers to Help Stop ‘Robocalls’

Jupiterimages/Thinkstock(NEW YORK) -- The Federal Trade Commission  is looking for tech-savvy individuals to come up with a product to thwart so-called “robocalls” from harassing helpless citizens.

In fact, the FTC, which oversees the Federal Do Not Call list (which has a whopping 217 million people on it), is so frustrated that it’s offering a $50,000 prize for the best technical solution to stop those unwanted calls.

Between October 2011 and September 2012, the FTC received 2,260,021 robocall-related complaints, said spokesperson Cheryl Hackley.

“We’re trying to tap into the technological expertise and innovation that’s out there of the American public,” said Kari Daffan, a staff attorney with the FTC, adding that there’s “nothing that currently exists in the marketplace.”

Robocalls typically originate overseas and are illegal under the 2009 Telemarketing Sales Rule, which stipulates that a consumer must give written permission to receive a call from that entity.

“That doesn’t happen too much, if ever,” said Daffan. “The vast majority of these calls are just scam artists. They’re just making a buck, and they often do it off of the most vulnerable consumers, like the elderly or those who do have debt.”

Not only will solvers get a cash prize, but they can also retain intellectual property rights to their idea. Companies with more than 10 employees are able to compete for the FTC’s Commission Technology Achievement Award. (No cash prize, alas). The agency, in turn, will have the right to feature the solution’s name, text description and images on its website.

The “FTC Robocall Challenge” opens to the public on Oct. 25 and closes Jan. 17, 2013. The winner will be announced in April.

Copyright 2012 ABC News Radio


FTC Updates Online Privacy Regulations for Kids

Fuse/ThinkstockWASHINGTON) -- Thanks to new rules proposed on Wednesday by the Federal Trade Commission, your child's privacy might be better protected online.

That's the goal of the FTC, which is updating the Children's Online Privacy Protection Act of 1998 (COPPA), which mandates that website and online service operators acquire verifiable parental consent before they use, collect or disclose any personal information about children under 13.

The main reason for the update is because of technology, which has changed dramatically since COPPA became effective in 2000.  Smartphones, Facebook and Twitter, after all, were not in existence back then.

"We're trying to make sure that the COPPA rule protects children online and that the information they provide is keeping up with technology and kids' use of social media," said Mary J. Engle, associate director of advertising practices at the FTC.

The proposed new rules will strengthen COPPA's reach to include mobile devices.  It will also make sure websites and third-party data brokers, advertising networks and downloadable software kits ("plug-ins") get parental permission before gathering personal information from children (currently, COPPA only applies to website operators, not third parties).  The new regulations also expand the meaning of "personally identifiable information" to include IP addresses and cookies, which track data.

Other adjustments in the proposed rules address websites that are used by both children and adults.  Currently, COPPA treats all website visitors as being under 13. The new rule would allow a website that attracts both children and adults to apply privacy protections only to those who say they are under 13.  However, sites that are aimed specifically at children must continue to treat all users as if they are under 13, even if the other users are older.

COPPA is the reason that children under 13 are not allowed on Facebook, although that may be changing if Facebook opens to younger users.  Until that happens, the proposed rules won't directly apply to the Facebook website, though they will apply to websites targeting children that allow them to "like" a certain product or person through Facebook.

The new rules have been in the making for a few years.  In September 2010, the FTC solicited the public for comments on how COPPA might be updated, and a year later released its recommendations.  It then opened that up to the public and received 350 comments.  The agency will now open up another round for public comment until Sept. 10 before making final recommendations by the end of the year.

"We think we need to amend the rule to close some loopholes and make sure that all the different players that are actually collecting children's information are getting parental permission before collecting it," said Engle.

Copyright 2012 ABC News Radio


How to Protect Yourself From Fake Debt Scammers

Eyecandy Images/Thinkstock(WASHINGTON) -- "You will be behind the bars for six months and once you go behind the bars, you will lose your job. Once you are behind the bars, you won't get a single drop of water."

That's the message received by just one of hundreds of thousands of cash-strapped Americans who authorities say have become the targets of a "phantom" debt collection scheme in which victims are bullied and threatened into paying conmen money they do not owe, as reported in an ABC News Nightline investigation.

"They call up and they pretend to be policemen... sometimes they've been from the FBI or the Department of Justice," said Jon Leibowitz, chairman of the Federal Trade Commission. "So it is just a hardcore kind of scam and we're beginning to see more of it."

WATCH FULL REPORT: Phantom Debt Collectors From India Harass Americans, Demand Money

But there are steps consumers can take to make sure their money is safe the next time the phone rings. Check out the tips below and head to the Federal Trade Commission website for more.

Spotting a Potential Conman

Just because the caller says he's an authority figure, that doesn't mean he is. According to the FTC, there are several ways to tell if someone may be trying to pull one over on unsuspecting callers. Keep a lookout for the following red flags:

  • First, does their story make sense? Are they asking you about a debt you don't recognize in the first place?
  • Be suspicious of anyone claiming to be law enforcement. "The police, the FBI, the Justice Department probably never enforces payday loan collection," Leibowitz said. "They're not debt collectors."
  • The caller won't give you ways to reach him such as a mailing address or phone number.
  • The caller asks you for personal financial information -- that a legitimate figure would likely not have to ask for -- or threatens you with legal action if you do not pay.

If You Think You're the Target of a Scam...

  • First things first, the FTC says to ask for the caller's name, company, address and phone number and for a "validation notice" detailing the debt owed. "If a caller refuses to give you all this information, do not pay!" the FTC says.
  • Do not provide any personal information over the phone. If you do, that information could be used by thieves for identity theft.
  • Tell them to stop calling and, if you have an address for them, ask them to stop calling in writing. By law, real debt collectors must stop calling if you request that in writing, the FTC says.
  • The most obvious course of action, Leibowitz said, is to call up your actual creditor. "If a consumer knows they have debt, call the debtor up. The debtor can can you, 'Yes, I called.' or 'No, that was somebody else,'" he said.
  • Report the call to the FTC and state authorities. "Many states have their own debt collection laws" in addition to federal ones, the FTC says. "Your Attorney General's office can help you determine your rights under your state's law."

"The thing we wanted to do first and foremost was we wanted to shut this operation down," Leibowitz said.

CLICK HERE to visit the FTC's website.

Copyright 2012 ABC News Radio


Skechers to Pay $40 Million for False Toning Shoe Claims

Konrad Fiedler/Bloomberg via Getty Images(WASHINGTON) -- Skechers advertised that its toning shoes would help people lose weight, build muscle and get in shape, claims that will now cost the company $40 million in a settlement with U.S. regulators.

The Federal Trade Commission announced Wednesday the company has agreed to the settlement on charges that it "deceived consumers by making unfounded claims" about its Shape-ups, Resistance Runner, Toners and Tone-ups lines of shoes. Consumers who bought the shoes are entitled to refunds.

"Skechers' unfounded claims went beyond stronger and more toned muscles. The company even made claims about weight loss and cardiovascular health," David Vladeck, director of the FTC's Bureau of Consumer Protection, said in a statement. "The FTC's message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims."

The FTC also alleges that Skechers manipulated and "cherry-picked results" from studies to support their claims. In one case, the FTC says Skechers touted the endorsement of chiropractor Dr. Steven Gautreau, but did not disclose that Gautreau was married to a Skechers marketing executive and that Skechers paid him to conduct the study, which the FTC alleges did not support the claims in the ad.

Skechers denies its ads were unsupported and says it "believes its advertising was appropriate."

"While we vigorously deny the allegations made in these legal proceedings and looked forward to vindicating these claims in court, Skechers could not ignore the exorbitant cost and endless distraction of several years spent defending multiple lawsuits in multiple courts across the country," David Weinberg, Skechers' chief financial officer, said in a statement.

The Skechers' settlement comes less than a year after Reebok agreed to pay $25 million to settle charges it misled consumers with false claims about EasyTone walking shoes and RunTone running shoes.

The FTC's settlement with Skechers is part of a broader agreement that resolves an investigation that included the attorney generals from 44 states. Under the settlement Skechers is not allowed to make any claims about its toning shoes involving health or fitness benefits unless they are backed by scientific evidence.

"Hopefully, at least here stateside, this will make big companies think twice before they make these specious advertising claims," Chris Morran, deputy editor at, told ABC News. "The hurt isn't the $40 million penalty, it's the millions Skechers won't be making selling toning shoes. ... The sneakers are going overnight from miracle weight loss, muscle toning shoes to sneakers and that's the bigger hurt."

Skechers' has also been sued by consumers alleging that Shape-ups can cause serious injuries, including stress fractures.

Copyright 2012 ABC News Radio


Children's Apps Need Privacy Policing, Says FTC

Tooga/The Image Bank(WASHINGTON) -- It's been a heck of a week when it comes to app security issues.

Just after Congress took issue with Apple on its address book and app privacy issues, the Federal Trade Commission has issued a report pushing Apple and Google to better police the security in applications for children.

"Companies that operate in the mobile marketplace provide great benefits, but they must step up to the plate and provide easily accessible, basic information, so that parents can make informed decisions about the apps their kids use," FTC Chairman Jon Leibowitz said in a statement.

"Right now, it is almost impossible to figure out which apps collect data and what they do with it. The kids app ecosystem needs to wake up, and we want to work collaboratively with industry to help ensure parents have the information they need," he added.

The 23-page report calls the current privacy disclosures "dis app ointing" (yes, "app" is italicized in the report), and after looking at hundreds of children's apps, including learning and gaming options, the report recommends that the app stores, developers and third parties improve how and what information is provided to parents about the app.

It goes on to suggest concrete ideas of how that can be done:  "App developers should provide this information through simple and short disclosures or icons that are easy to find and understand on the small screen of a mobile device."

The full report can be read here.

Apple already responded to similar security concerns earlier in the week with a statement detailing that it would be taking steps to be more transparent about what personal information is being accessed or stored by applications.

"We're working to make this even better for our customers, and as we have done with location services, any app wishing to access contact data will require explicit user approval in a future software release," Apple wrote.

Apple did not have any further comment in response to the FTC report focusing on children's apps.

Google, on the other hand, has promised to review the report. "We are reviewing the FTC's report," Google spokesperson Randall Sarafa told ABC News. "From the beginning, Android has had an industry-leading permission system, which informs consumers what data an app can access and requires user approval before installation. Additionally, we offer parental controls and best practices for developers to follow when designing apps that handle user data."

Still, as the FTC points out numerous times in the report, the biggest issue is the transparency and understanding of those privacy permissions. Android and iPhone/iPad apps do not have an in-your-face alert that allows parents to know exactly what the privacy policy is and if data could be accessed on the device.

When you download a popular children's game like Angry Birds on the iPhone, it simply provides the link to the privacy policy on the company's website.

On an Android device, there is a helpful list of permissions (location, etc.), but the disclosures are fairly buried and do not always include what the app does with the access. Rovio, the developer of the popular game, did not respond for comment.

A company like Duck Duck Moose, which develops apps like Wheels on the Bus and Itsy Bitsy Spider, does not collect any information from users.

"We do not ask users to provide any information and we do not collect any information about users, their devices or usage of our mobile applications," Caroline Hu Flexer, the co-founder of the company told ABC News. However, while that policy is listed on its website, it is buried in the applications. Hu Flexer said the company would appreciate more flexiblity in the app store to display privacy policies.

Michael Kaiser, executive director of the National Cyber Security Alliance, is calling for the same thing.

"Anything that developers can do to make privacy controls and permission settings more prominent and easier to navigate is helpful to parents and to users in general," he said.

Copyright 2012 ABC News Radio


Infomercial King Kevin Trudeau Loses on $37.6 Million Appeal

Mark Wilson/Getty Images(NEW YORK) -- Infomercial king Kevin Trudeau, who got rich promoting what he claims are natural cures for just about every medical condition, has finally met a malady no amount of echinacea is going to remedy: The 7th U.S. Circuit Court of Appeals has upheld a lower court's decision that Trudeau must pay a $37.6 million fine for not being honest with consumers.

Trudeau, in an interview with ABC News, says he intends to fight on to defend his First Amendment right to speak and write freely, taking his appeal, if necessary, to the Supreme Court.  His only "crime," he says, is telling truths that challenge big pharma and other entrenched interests.

The $37 million fine is the amount courts and the Federal Trade Commission say consumers were defrauded by what they term deceptive infomercials used by Trudeau to promote his book The Weight Loss Cure 'They' Don't Want You to Know About.

Trudeau is also is author of Natural Cures 'They' Don't Want You to Know About, Free Money 'They' Don't Want You to Know About, and other titles, some of which have been best-sellers.

The fine originally was levied on him in 2009 by U.S. district court Judge Robert Gettleman, who found Trudeau to be in violation of a prohibition against his misrepresenting the content of his books in his infomercials.  Trudeau's infomercials, wrote Gettleman, had "falsely and intentionally led thousands (probably hundreds of thousands) of consumers to believe that the Weight Loss Book would describe an 'easy,' 'simple' protocol that, once 'finished,' would allow the consumer to 'eat anything' he or she wants."

The FTC's war with Trudeau began 1998, when Trudeau was charged with making what a commission statement calls, "false and misleading claims in infomercials for products he claimed could cause significant weight loss and cure addictions to heroin, alcohol, and cigarettes, and enable users to achieve a photographic memory."  Five years later, the FTC charged him with falsely claiming in infomercials that Coral Calcium Supreme could cure cancer.

Trudeau's response consistently has been that he is being persecuted by the government, by the pharmaceutical industry and others for daring to tell the truth -- for example, that you don't need to spend money on drugs to cure or prevent disease; you can accomplish the same thing with herbs and foods and lifestyle changes.

Trudeau says he will ask for his appeal to be heard next "en banc" by the court, meaning by all its judges at once. "If I don't get an appropriate outcome, then absolutely I'm taking it to the Supreme Court," he says.  A final legal resolution, he thinks, may not come for years.

Copyright 2011 ABC News Radio


FTC Files Complaints against Debt Collection Agencies

Comstock/Thinkstock(WASHINGTON) -- The Federal Trade Commission filed complaints against seven debt collection companies in California for making fake threats to consumers who owed money that they had been sued or could be arrested if they did not pay, at times threatening their employers and family members.

The complaints are part of a crackdown on debt collectors, including one company that allegedly threatened one woman in Illinois who could not pay for her daughter's funeral to "dig her daughter up" and made threats to "eat" her dog.

Debt collectors generate more complaints to the FTC than any other industry, according to the government agency. Last year, there were 144,159 filings against collection companies, the second largest category of complaints to the FTC. There were 250,854 identity theft related complaints last year, or 19 percent of all complaints.

Last month, the FTC filed a complaint against Rumson, Bolling & Associates, based in Van Nuys, Calif., for allegedly making abusive calls to debtors, including the Illinois woman who reportedly owed money after her daughter's funeral. The company also threatened to use "violence or other criminal means" to harm the alleged debtors, including calling them "deadbeat," "white trash," "piece of crap," "crackerhead," "scumbag," and "lowlife."

The Central district court in California granted a temporary restraining order which became a preliminary injunction against the business.

Christopher Pitet, an attorney for all but one of the defendants listed in the complaint, said when given the opportunity to provide the court with evidence, they will show that they committed a "substantial amount of resources" to comply with the Federal Debt Collection Practices Act.

"If there are instances where employees did not comply with the Act and mistreated debtors or did the things alleged in the FTC's complaint, I will be the first to say to say those things never should have happened under any circumstance," Pitet said.

Copyright 2011 ABC News Radio

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