AND Scammers are impersonating FTC Inspector General Andrew Katsaros (BELOW);
Consumer Alert
Unmasking sellers of bogus COVID-19 prevention claims
By
Colleen Tressler, FTC, Division of Consumer and Business Education
October 24, 2023
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Even though the COVID-19 health emergency is over, many Americans continue to struggle with treatment for illness ― and the FTC will continue go after bad actors who trick people with claims about their products. Case in point: The sellers of The 1 Virus Buster Invisible Mask ― also advertised as The 1 Virus Buster Card ― claim their product gives you an invisible, three-foot barrier of protection against 99.99% of airborne diseases, including COVID-19. Hard to believe? The FTC agrees. Read on to learn more.
In the FTC’s latest fake COVID claims case, the makers of The Invisible Mask said their product protected you from COVID-19 and other diseases with 30 days of airborne protection. But the FTC complaint says the people and companies behind those claims don’t have scientific evidence to back up their prevention claims. The FTC also says the defendants claimed Invisible Mask was FDA-approved…when it’s not.
The proposed court order bars certain defendants from making more unsubstantiated claims, and orders them to pay up, including some money back to the people they tricked. Litigation will continue against one defendant.
When it comes to spotting unsupported claims about the prevention, treatment, or cure of COVID-19, and other health problems:
- Ask your doctor. If you’re curious about a product that claims to treat any disease, talk to your doctor or health care provider about it.
- Stay informed. Visit MedlinePlus.gov, a site operated by the National Institutes of Health and Healthfinder.gov to find reliable sources of information about diseases and their treatments.
- Know that unproven products and treatments might be dangerous. Using unproven products might mean that you stop or delay taking proven medical treatments ordered by your health care provider. Unproven products might also cause bad interactions with your medications or other products you take.
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Business Blog
FTC-Wisconsin settlement challenges car dealers’ sales practices, including alleged discrimination against American Indian consumers
By
Lesley Fair
October 26, 2023
In the automotive world they’re called “add-ons.” But for many consumers, they really amount to junk fees on wheels that add to the cost of a car while subtracting from the transparency of the transaction. $1.1 million FTC and State of Wisconsin proposed settlements with Wisconsin dealership group Rhinelander Auto Center, its current and former owners, and its general manager allege the defendants deceptively tacked illegal junk fees onto what consumers had to pay and also discriminated against American Indian customers by charging them higher financing costs and fees.
According to the complaint, about half of Rhinelander’s customers were charged for add-on products and services without their consent or through deceptive practices. The lawsuit alleges that taking its customers for hundreds or even thousands of dollars in junk fees was a big-time money maker for the business. As the FTC and Wisconsin allege, “Add-on products and services have been a major source of profit for Rhinelander Auto Dealerships because these products and services have been sold far above cost and have increased the total amount financed, leading to higher principal and interest payments on auto contracts.” What’s more, the defendants allegedly “incentivized senior staff to maximize markups and add-ons by tying their compensation to dealership profits.”
You’ll want to read the complaint for specifics about the tactics the FTC and Wisconsin say Rhinelander used to hide the truth from its customers, but it often involved either slipping add-ons into lengthy and complicated contracts without consumers’ knowledge or consent or falsely representing add-ons as mandatory purchases. For example, according to one car buyer, she was told she had to buy a $2,500 vehicle service contract – an amount equal to almost 15% of the vehicle’s purchase price. As the complaint alleges, “Overall, Defendants’ misrepresentation that the vehicle service contract was required led the customer to bear nearly $4,000 in unwanted costs.” Another consumer says she was told that Guaranteed Asset Protection (GAP) insurance was mandatory for her transaction – a falsehood that cost her more than $1,000 in fees and additional interest.
In addition to alleging that Rhinelander’s practice of charging for add-ons without consumers’ express, informed consent violated the FTC Act and Wisconsin law, the complaint charges that the defendants discriminated against American Indian customers by imposing higher borrowing costs on them when compared to non-Latino White customers, in violation of the Equal Credit Opportunity Act, the FTC Act, and state law. The complaint includes key facts about how auto financing generally works and the substantial discretion Rhinelander gave its salespeople to – among other things – jack up the interest rate on certain consumers’ auto loans.
According to the complaint, the defendants’ practices resulted in American Indian customers paying much more in interest rate mark-ups and unwanted add-ons than other consumers. As the lawsuit alleges, the defendants’ discriminatory conduct “has resulted in American Indian customers paying on average approximately $1,362 more in credit transactions than similarly situated non-Latino White customers. Since March 2019, moreover, American Indian customers have paid on average approximately $1,374 more than similarly situated non-Latino White customers.”
The proposed settlement with Rhinelander’s current owners and general manager Daniel Towne imposes a $1 million financial remedy, requires them to get consumers’ express informed consent before charging them for add-ons, and mandates that they establish a comprehensive fair lending program that will require Rhinelander to offer consumers discounted and zero-markup financing before resorting to markup. A separate proposed settlement with former owners Rhinelander Auto Center, Inc., and Rhinelander Motor Company includes an additional $100,000 financial remedy and requires them to wind down the businesses permanently.
What can other companies take from the FTC-Wisconsin action in this case?
Be clear – and truthful – about what consumers are buying and how much it will cost. Whether people are shopping for widgets, gadgets, or cars, don’t claim that consumers have to buy something when it’s not true. And don’t slip stuff into the transaction without getting consumers’ express, informed consent. In other words, be crystal clear about the nature of the product or service and how much it costs. Also consider the additional burdens on consumers that deceptive practices impose. For example, many of Rhinelander’s customers lived in rural areas where a trip to the car dealer can take several hours. Even in large cities, the bumper-to-bumper trek to a dealership involves a substantial time commitment. After consumers have browsed, test-driven, and negotiated, changing the deal at the last minute adds to the underlying injury.
Law enforcers take discriminatory credit practices very seriously. It should go without saying – but we’ll say it anyway – that discriminating against consumers in credit transactions on the basis of race, color, national origin, or certain other criteria violates the law. If you haven’t conducted an Equal Credit Opportunity Act compliance check at your business, now is the time.
Individuals may be liable under the FTC Act and state law for illegal conduct. Depending on the facts, federal and state consumer protection actions may name business executives in their corporate capacities and as individuals. Consider that fact as you make business decisions.
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Consumer Alert
This Halloween, don’t get ghosted by scammers
By
Andrew Rayo
Consumer Education Specialist
October 26, 2023
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Halloween is almost here. What could be scarier than not having your costume ready? How about ordering a costume online and never getting what you paid for? Scammers are making this season extra spooky by pretending to be real companies like Spirit Halloween and Party City. But it’s all a trick. Here’s what to know.
You see an ad on Facebook or Instagram that looks like it’s from a company like Spirit Halloween or Party City, promoting a huge clearance sale for “90% off” last year’s stock. It might look like an incredible deal — but the ad’s a fake placed by scammers. And if you place an order, you’ll end up with a counterfeit item, an item with wear or damage, something completely different than what you ordered…or nothing at all.
So, if you’re shopping online for Halloween costumes, decorations, or party favors, how do you spot the impersonators?
- Know that scammers can make ads look like they’re from a real company by using the same name and logo, even though they’re not actually legit. If you see an ad for a company you know but you’re not sure the ad is real, visit the company’s website using a link you know is official — not the link in the ad.
- See what people are saying online. Search the company’s name online plus the word “scam.” It’s possible someone else has experienced a scammer pretending to be a real company.
- Pay by credit card. If you’re charged for an order you never got, or for a product that’s not as advertised, contact your credit card company and dispute the charge.
Learn more about business impersonators at ftc.gov/impersonators. If you suspect a scam seller, tell the FTC at ReportFraud.ftc.gov.
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For Release
FTC Sends Nearly $100 Million in Refunds to Vonage Consumers Who Were Trapped in Subscriptions By Dark Patterns and Junk Fees
October 30, 2023
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- Consumer Protection
- Bureau of Consumer Protection
- deceptive/misleading conduct
- consumer refunds
- Technology
- Telecommunications
- Credit and Finance
The Federal Trade Commission is sending nearly $100 million in refunds to consumers who lost money as a result of internet phone service provider Vonage imposing junk fees and creating obstacles to those who try to cancel their service.
According to the FTC’s November 2022 complaint, Vonage used dark patterns to make it difficult for consumers to cancel their service and often continued to illegally charge them even after they spoke to an agent directly and requested cancellation. The company agreed to a settlement with the FTC that required it to pay refunds to consumers harmed by the company’s actions, make its cancellation process simple and transparent, and stop charging consumers without their consent.
The FTC is sending payments to 389,106 consumers. Most consumers will get a check in the mail. Recipients should cash their checks within 90 days, as indicated on the check. Eligible consumers who did not have an address on file will receive a PayPal payment, which should be redeemed within 30 days. Consumers who have questions about their payment should contact the refund administrator, Epiq, at 1-877-525-4728 or visit the FTC website to view frequently asked questions about the refund process. The Commission never requires people to pay money or provide account information to get a refund.
The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of refunds in FTC cases. In 2022, Commission actions led to more than $392 million in refunds to consumers across the country.
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.
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For Release
FTC Case Leads to Permanent Ban Against Merchant Cash Advance Owner for Deceiving Small Businesses, Seizing Personal and Business Assets
Court rules in FTC favor on summary judgment, issues permanent injunction against Jonathan Braun
October 30, 2023
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- Consumer Protection
- Bureau of Consumer Protection
- Credit & Loan Offers
- deceptive/misleading conduct
- Finance
- Credit and Finance
- Credit and Loans
- Debt Collection
As a result of a Federal Trade Commission lawsuit, Jonathan Braun, who controlled small-business funding company RCG Advances, will face a permanent ban from the merchant cash advance and debt collection industries. A federal court issued summary judgment in favor of the FTC in the case along with a permanent injunctionagainst Braun.
“Mr. Braun and his company targeted small business consumers with an egregious array of tactics, from predatory contract terms to violent threats, and the court’s opinion is a significant win on their behalf,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “This case makes clear that the FTC will fight back against those who prey on small businesses.”
The FTC sued Braun in June 2020, along with four other defendants, for his role with RCG Advances, which formerly did business as Richmond Capital Group, charging that he deceived small businesses and other organizations by misrepresenting the terms of merchant cash advances the business provided, and then used unfair collection practices, including sometimes threatening physical violence, to compel consumers to pay.
The suit also alleged that Braun and the other defendants made unauthorized withdrawals from consumers’ accounts and required businesses and their owners to sign confessions of judgment as part of their contracts, which allowed the defendants to go immediately to court and obtain an uncontested judgment in case of an alleged default. The complaint alleges that the defendants unlawfully and unfairly used these confessions of judgment to seize consumers’ personal and business assets in circumstances not expected by consumers or permitted by the defendants’ financing contracts.
The court’s opinion granting summary judgment in favor of the FTC found that Braun engaged in “extensive misconduct” that violated both the FTC Act and the Gramm-Leach-Bliley (GLB) Act, and that Braun was liable for the damages caused by his and the company’s unlawful conduct.
The permanent injunction includes a number of key provisions:
- Ban on merchant cash advance: Braun is permanently banned from any involvement with the merchant cash advance industry, including assisting anyone else in offering those services.
- Ban on debt collection: Braun is permanently banned from the debt collection industry.
- Remove negative credit information: Braun is required to contact credit reporting agencies within 30 days to remove any negative information that was filed on consumer or business credit reports as a result of his actions.
- Prohibition on deceiving consumers and unauthorized charges: Braun is prohibited from deceiving consumers about any product or service, and is also prohibited from charging consumers without their authorization.
The court has scheduled a trial for January 2024 to determine the amount of monetary relief that should be imposed for Braun’s law violations.
The other defendants in the FTC’s case previously settled the FTC’s charges against them, resulting in industry bans and monetary relief totaling more than $2 million.
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.
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Consumer Alert
Scammers are impersonating FTC Inspector General Andrew Katsaros
By
Alvaro Puig
Consumer Education Specialist
October 30, 2023
Scammers are using the names of FTC employees, including the FTC’s Inspector General, to trick people into sending money or giving up their personal information. Here’s what you need to know.
https://player.vimeo.com/video/877999871?h=5aa57b30ce&title=0&byline=0&portrait=0
(View or share the YouTube version of the video.)
The FTC won’t threaten you or demand a payment. If you get a letter with the name of an FTC Commissioner or staff member that threatens some dire consequence if you don’t pay immediately, it’s a scam. Don’t pay. The same goes for threatening callers that claim to be from the FTC.
The FTC doesn’t give out prizes. If someone contacts you claiming to be from the FTC and says you need to pay to get your prize, it’s a scam.
FTC employees won’t identify themselves with a badge number. If someone claiming to work for the FTC gives you a badge number, it’s a scam. Especially if they then ask you for money.
Don’t respond to someone who says they’re from the FTC and demands money, threatens you, or asks for personal or financial information. Report them to the FTC at ReportFraud.ftc.gov.
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Consumer Alert
Scammers are impersonating FTC Inspector General Andrew Katsaros
By
Alvaro Puig
Consumer Education Specialist
October 30, 2023
Scammers are using the names of FTC employees, including the FTC’s Inspector General, to trick people into sending money or giving up their personal information. Here’s what you need to know.
https://player.vimeo.com/video/877999871?h=5aa57b30ce&title=0&byline=0&portrait=0
(View or share the YouTube version of the video.)
The FTC won’t threaten you or demand a payment. If you get a letter with the name of an FTC Commissioner or staff member that threatens some dire consequence if you don’t pay immediately, it’s a scam. Don’t pay. The same goes for threatening callers that claim to be from the FTC.
The FTC doesn’t give out prizes. If someone contacts you claiming to be from the FTC and says you need to pay to get your prize, it’s a scam.
FTC employees won’t identify themselves with a badge number. If someone claiming to work for the FTC gives you a badge number, it’s a scam. Especially if they then ask you for money.
Don’t respond to someone who says they’re from the FTC and demands money, threatens you, or asks for personal or financial information. Report them to the FTC at ReportFraud.ftc.gov.
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October 30, 2023
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Business Blog
From the FTC: Another 10 spine-tingling Halloween tales of deception
By
Lesley Fair
October 30, 2023
We’re ba-aack. Last year we offered our Top 10 “Nightmare on Main Street” consumer protection horror movies. Just in time for Halloween, the FTC Multiplex has reopened with ten more scary screens of deceptive practices.
Polter-priced. Ask consumers what scares them and they’re likely to answer zombie invasions and junk fees – not necessarily in that order. People are fed up with hidden and bogus charges that haunt many different kinds of transactions. That’s why the FTC has proposed a rule that would crack down on mysterious fees that lurk in the shadows.
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Village of the Spammed. Consumers have a right to keep their email boxes safe from spooky intruders, including unwanted commercial messages. The CAN-SPAM Rule requires companies to clearly tell people they can opt out of getting those messages in the future and to include a working unsubscribe link. Earlier this year the FTC announced a $650,000 settlement with a national company, alleging CAN-SPAM violations. We also published updated guidance on how to comply.
True Blood. Even vampires visit healthcare providers every now and then. And somebody somewhere must market a health-related app for blood-thirsty denizens of the night. We hope they’re up on the latest guidance from the FTC and HHS about health privacy. Collecting, Using, or Sharing Consumer Health Information? Look to HIPAA, the FTC Act, and the Health Breach Notification Rule includes informative links to help keep their practices within the law.
The Texas Chainsaw Mail Order. Crazed cannibals with destructive implements can be pretty frightening, but so are individuals and companies that peddle fake or unsafe merchandise on online platforms. Whether they’re selling chainsaws, hacksaws, seesaws, or other consumer products, as of June 2023, the INFORM Consumers Act requires online marketplaces to collect, verify, and disclose certain information about “high-volume third party sellers.” Informing Businesses about the INFORM Consumers Act and What Third Party Sellers Need to Know About the INFORM Consumers Act offer to-the-point insights into what the law requires.
Frankenstain. Could that suspicious spot on your cloak be vampire blood – or ketchup? The good news for consumers is that the FTC’s Care Labeling Rule requires manufacturers and importers of wearing apparel to provide care instructions for the product. Read Clothes Captioning: Complying with the Care Labeling Rule for guidance.
The Signing. A haunted Colorado hotel, “redrum” in the mirror, the mysterious Room 237 – and an inescapable maze. Those are elements of what some critics call the most frightening movie of all time. But scarier than celluloid are the experiences of consumers who have been trapped by digital dark patterns. One pernicious practice that has been the subject of recent FTC law enforcement actions: making it easy for consumers to sign up for products or services and billing their credit cards like clockwork, but making it difficult to cancel.
A double feature: The Hills Have Eyes and The Watcher. It’s a popular horror film trope: The audience knows – but the hero doesn’t – that somebody is secretly watching their every move. It’s even more frightening when it’s a real-world threat that comes from apps and online services that promise to keep consumers’ personal information private and then share it with social media companies, online advertising platforms, and other shadowy third parties. It’s a top consumer protection priority at the FTC – a fact that should scare companies that engage in that illegal practice.
Hellr-AI-ser. “Demons to Some, Angels to Others.” That was the slogan for the 1987 supernatural thriller Hellraiser. It’s also an apt description for how the potential uses – and misuses – of artificial intelligence could impact consumers. The FTC’s ongoing AI and Your Business blog series discusses some of the issues that should be on marketers’ minds.
Silence of the Scams. Fraudsters’ fervent hope is that consumers won’t report their creepy conduct. To help the FTC and law enforcement partners across the country identify deceptive or unfair practices, consumers and businesses should tell us about questionable conduct in the marketplace at ReportFraud.ftc.gov.
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