https://consumer.ftc.gov/consumer-alerts/2023/03/far-full-vehicle-protection?utm_source=govdelivery
Consumer Alert
Far from “full vehicle” protection
By
Kira Krown
Consumer Education Specialist
March 24, 2023
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When it comes to telemarketing and extended auto warranties, what you’re promised on the phone…may not be what you get. Today, the FTC announced a settlement in its case against American Vehicle Protection — who it charged last year with running a telemarketing extended auto warranty scheme that cheated people out of more than $6 million.
According to the FTC, American Vehicle Protection cold-called people, lied about being affiliated with car manufacturers or authorized dealers, and misrepresented the terms of the extended auto warranties they were selling. They claimed to offer “full vehicle” protection and reimbursements within 30 days if people were unsatisfied. But the written contract — which they would only send after you paid a down payment — listed lots of exceptions. And the option for a refund within 30 days? It turns out that was really hard to get.
Thinking about getting an extended auto warranty?
- Get the coverage in writing before you pay. Make sure what the seller has told you matches what’s written in the contract. Few auto service contracts cover all repairs and maintenance.
- Think twice before buying an extended auto warranty from a telemarketer. They may have no connection to your car’s manufacturer or an authorized dealer, even if they claim to.
- Check if the company has a good reputation. Search for their name and words like “review” or “complaint” to see if people have had issues in the past.
Getting unwanted calls about extended auto warranties? Tell the FTC: ReportFraud.ftc.gov.
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For Release
FTC Action Leads to Lifetime Industry Ban for Operators of ‘Extended Vehicle Warranty’ Scam
Proposed court orders prohibit defendants from all extended warranty sales and from all outbound telemarketing
March 24, 2023
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- Consumer Protection
- Regional Offices
- Southeast Region
- Bureau of Consumer Protection
- Cars
- deceptive/misleading conduct
- Automobiles
- Advertising and Marketing
- Telemarketing
- Advertising and Marketing Basics
As a result of a Federal Trade Commission lawsuit, the operators of a telemarketing scam that called hundreds of thousands of consumers nationwide to pitch them expensive “extended automobile warranties” will face a lifetime ban from the extended automobile warranty industry and from all outbound telemarketing.
Under the terms of proposed court orders, three companies and their owners that were charged by the FTC with running the operation that scammed consumers out of millions of dollars would be permanently banned from participating in the extended automobile warranty market, as well as from any further involvement in outbound telemarketing.
“AVP misled consumers about who they were and what they were selling and called a large number of consumers who were on the FTC’s Do Not Call List,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s order banning five defendants from the industry and imposing a monetary judgment of $6.6 million continues the Commission’s aggressive crackdown on telemarketing fraud.”
The FTC first charged the owners and operators of American Vehicle Protection Corporation (AVP) with violating the FTC Act and the Telemarketing Sales Rule in February 2022. In its complaint, the FTC charged that AVP made unsolicited calls in which it claimed to be affiliated with vehicle makers, and deceptively claimed their products, which cost thousands of dollars, offered “bumper to bumper” protection.
American Vehicle Protection Corp.; CG3 Solutions, Inc.; and Tony Gonzalez Consulting Group,
Inc., along with individual defendants, Tony Allen Gonzalez, and his brother, Charles Gonzalez, have agreed to the terms of the proposed court orders.
The orders also include a monetary judgment of $6.6 million, which is largely suspended based on their inability to pay. If the defendants are found to have lied to the FTC about the financial status, the full judgment would be immediately payable.
The FTC’s case against the remaining defendants in the case, Kole Consulting Group, Inc., and its owner and manager, Daniel Kole, will continue.
The Commission vote approving the stipulated final orders was 3-0-1, with Commissioner Christine S. Wilson not participating. The FTC filed the proposed orderin the U.S. District Court for the Southern District of Florida.
NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.
The staff attorneys on this matter are Harold Kirtz, Hans Clausen, and Chris Gleason of the FTC’s Southeast Region.
The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.
Press Release Reference
FTC Charges Florida-based Sellers for Deceptively Marketing “Extended Auto Warranty” Programs
Contact Information
Contact for Consumers
FTC Consumer Response Center
Media Contact
Office of Public Affairs
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Consumer Alert
The pros and cons of free trials, auto-renewals, and subscriptions
By
Sam Levine
Director, Bureau of Consumer Protection, FTC
March 23, 2023
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You get your regular shipments of dog food, have your gym membership set to auto-renew each month, and have a free trial subscription to some genealogy site. Helpful, keeps you from having to remember to pay every month, lets you try new stuff for free. But what about when you want to cancel? How is that working for you?
That’s what the FTC is asking as it’s proposing to expand an existing rule to provide people with more protections when they want to cancel a negative option. In non-legal, non-salesy terms, negative options are the set-it-and-forget-it of the purchasing world: you, Company, will keep sending me that dog food ‘til I say stop. But when Company decides that, no, they’re still gonna send you dog food, no matter what you say (or until you jump through a million hidden hoops), that’s a problem. The same goes for that free trial you tried to cancel but Other Company still kept charging you, month after month, for a service you tried and decided it wasn’t for you. These are some types of reports the FTC hears: especially the frustration with not being able to stop the thing you don’t want anymore. And, of course, stop paying for it.
In response, the FTC proposes to set requirements that it could enforce to stop more kinds of bad behavior. It also proposes to tell companies to clearly explain to people what they’re buying, make sure they know what they’re agreeing to, and make it as easy to cancel as it was to sign up.
The rule is still a proposal, and the FTC will soon be taking comments from anybody interested. To comment, check out Regulations.gov and, in the meantime, if you’re stuck in a trial, auto-renewal, or subscription that makes you feel, well, stuck, check out this advice from the FTC. And then report it: ReportFraud.ftc.gov.
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Business Blog
Negative reinforcement? FTC proposes amending Negative Option Rule to include click-to-cancel and other protections
By
Lesley Fair
March 23, 2023
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Prenotification plans, continuity programs, automatic renewals, free-to-pay conversions. They’re all variations on the negative option theme. Under the right circumstances, those marketing methods can be convenient for consumers. But as decades of FTC law enforcement makes clear, when negative options are tainted with untruths, half-truths, and hidden strings, the impact on consumers can be, well, negative. That’s why the FTC is asking for public comment on proposed amendments to its Negative Option Rule designed to combat unfairness and deception.
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When the FTC takes a closer look at existing rules, it keeps an eye out for changes in the marketplace that suggest an update may be due. The Negative Option Rule is a good example of that. First, thanks to the burgeoning doorstep economy, consumers can buy just about anything – meals, clothes, household supplies, etc. – on a periodic schedule. However, the current Negative Option Rule applies only to prenotification plans, an older (and frankly, fading) business model. Under a prenotification plan, members of, say, a record club (remember record clubs?) get a notice in advance that the company intends to send them a certain album. If members don’t want that album, they have a limited time to return a postcard (remember postcards?). If they miss the deadline, they’re stuck with the album – and the bill. Given the narrow scope of the existing Negative Option Rule, the time seems right for a rethink.
A second reason why the FTC is asking for your feedback about proposed changes to the Rule is because problematic negative option practices continue to inflict consumer injury. Consumers tell us they’ve been being billed for stuff they never agreed to buy in the first place. Or they’ve made multiple cancellation attempts and yet products keeps coming at ‘em like clockwork. Others recount inconvenient hoops that companies make them jump through to cancel.
Because of the limited applicability of the Negative Option Rule, our approach to date has been to bring individual cases alleging violations of the FTC Act or – if applicable – the Telemarketing Sales Rule, the Restore Online Shoppers’ Confidence Act (ROSCA), and other laws. But the volume of complaints suggests that case-by-case enforcement may not protect consumers sufficiently.
So in 2019 the FTC published an Advance Notice of Proposed Rulemaking. Based on the comments we received, in 2021 the Commission issued an Enforcement Policy Statement Regarding Negative Option Marketing. The latest step is the just-announced proposal to amend the Rule. You’ll want to read the Federal Register Notice for details, but the FTC has a fact sheet with some highlights. And here is a summary of three of the proposals that are on the table:
- Requiring companies to spell out the details of the deal. “They signed me up, but never told me what was involved!” It’s a common theme when consumers file reports about misleading negative option offers. To address that information deficit, the proposed amendment would require sellers to give people important information before getting their billing information: 1) that consumers’ payments will be recurring, if applicable, 2) the deadline for stopping charges, 3) what consumers will have to pay, 4) the date the charge will be submitted for payment, and 5) information about how consumers can cancel.
- Ensuring companies get consumers’ express informed consent. “Why am I getting all this unwanted stuff and who said these people could bill my credit card?!” We hear that a lot from consumers, suggesting that additional provisions may be necessary to protect them from illegal practices. The proposed amendment is consistent with ROSCA’s “express informed consent” requirement, while providing more guidance for businesses on how to comply.
- Requiring companies to implement click-to-cancel. “How the $%#& do I cancel?!” Online marketers have that frictionless enrollment thing down pat. But when consumers want to cancel, some of those same companies set up obstacle courses designed for frustration and failure. Two practices challenged in recent FTC cases illustrate this. One company required people to call a phone number to cancel and then left them on hold for ages. Another company ignored cancellation requests unless consumers sent them to one hard-to-find email address authorized to accept cancellations. The proposed amendment would require companies to make it easy to cancel and one way to further that goal is to mandate that businesses must let people cancel using the same method they used to enroll – in other words, click-to-cancel.
The FTC envisions that proposed changes would apply to all forms of negative option marketing and in all media. The proposed amendments also address other issues of interest to businesses and consumers: the use of “saves” (additional offers made before cancellation to keep the customer signed up), reminders and confirmations, penalties for violations, and the impact on existing state laws, to name just a few.
Another proposed change would change the name from the Negative Option Rule to the Rule Concerning Recurring Subscriptions and Other Negative Option Plans. It may seem like a small revision, but it would signal that “negative option” applies much more broadly than to your dad’s record club.
At this stage, the proposal is just that – a possible approach about which we would like your feedback. Once the Notice is published in the Federal Register, you can save a step by filing a public comment online.
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For Your Information
FTC To Hold Informal Hearing on Proposed Impersonation Rule
March 22, 2023
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The Federal Trade Commission will hold an informal hearing on its proposed rule prohibiting government and business impersonation at 1 p.m. on May 4, 2023.
In a Federal Register Notice, the FTC notes that during the recent public comment period regarding the Notice of Proposed Rulemaking, an informal hearing was requested by a commenter. Any member of the public wishing to speak at the informal hearing must request to speak by April 14, 2023. Requests can be made in response to the Federal Register Notice on regulations.gov, where it will be posted shortly.
The informal hearing will be held virtually and livestreamed on ftc.gov.
The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.
Press Release Reference
FTC Proposes New Rule to Combat Government and Business Impersonation Scams
Contact Information
Media Contact
Office of Public Affairs
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Business Blog
Framing the issues at a May 18th event about proposed Eyeglass Rule changes
By
Lesley Fair
March 21, 2023
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The FTC is considering proposed changes to the Eyeglass Rule and has announced a May 18, 2023, public workshop, A Clear Look at the Eyeglass Rule. If you have clients in the industry – or if you’re interested in consumers’ rights when shopping for glasses – you’ll want to read the Federal Register Notice to see how the issues are framed.
The Ophthalmic Practice Rules – most people know it as the Eyeglass Rule – require ophthalmologists and optometrists to provide patients with a copy of their prescription immediately after the completion of an eye exam. Prescribers can’t require that patients buy eyeglasses, pay an additional fee, or sign a waiver or release as a condition of getting their prescription. In addition, the Rule requires that prescribers give patients a copy of their prescription even if the patient doesn’t ask for it and even if their prescription hasn’t changed.
In December 2022, the FTC proposed revisions to the Eyeglass Rule. One notable amendment would require prescribers to ask patients to sign an acknowledgement confirming they have received their prescription. Prescribers would need to retain that confirmation for three years. The thinking behind the proposal is that it would encourage prescribers to honor the Rule, remind patients of their rights, and provide prescribers with a way to verify compliance. Other proposed changes would allow prescribers, with a patient’s verifiable affirmative consent, to provide a digital (not paper) copy of the prescription and would clarify that a patient’s proof of insurance coverage will be deemed to be a payment for the purpose of determining when the prescriber must provide the prescription. One other proposal: changing the term “eye examination” to “refractive eye examination” throughout the Rule.
A Clear Look at the Eyeglass Rule will continue the conversation at a half-day event scheduled for 9:00 to 1:00 pm ET on May 18th in the FTC’s Constitution Center conference room. Can’t make it to DC that day? Watch the webcast live from a link we’ll post that morning. We’ll announce the agenda soon, but the discussion will likely focus on the proposed prescription release confirmation requirement for eyeglass prescriptions, consumers’ and prescribers’ experiences with how a similar requirement for contact lens prescriptions is working, other proposed changes to the rule, and issues raised in public comments filed in response to the Notice of Proposed Rulemaking.
The FTC is accepting requests to participate as a panelist. If you’re interested, email us at eyeglassworkshop2023@ftc.gov
by April 7, 2023, following the procedure in today’s Federal Register Notice. In addition, we’re leaving the public record open until June 20, 2023, if you want to file a written comment.
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- Consumer Protection
- Bureau of Consumer Protection
- Health Care
- Advertising and Marketing
- Health Claims
- Advertising and Marketing Basics
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