Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • FTC obtains $2.7 million judgment against “free samples” operation; settles deceptive marketing matter

    Federal Issues

    On April 11, the FTC announced that the U.S. District Court for the Northern District of Illinois ordered a New York-based office supply operation to pay $2.7 million to resolve allegations that the defendants targeted consumers, such as small businesses, hotels, municipalities, and charitable organizations, by deceptively misrepresenting the terms of their “free samples.” Specifically, the FTC alleged in 2017 that the defendants violated the Telemarketing and Consumer Fraud and Abuse Prevention Act (Telemarketing Act) and the Unordered Merchandise Statute by calling consumers with offers of free product and then billing the consumers after shipping the samples. In some instances, the FTC stated, consumers refused the offer of the free product, but the defendants sent it anyway. Once the samples were shipped, the FTC claimed the defendants sent follow-up invoices demanding payment for the product, and would then send dunning notices and place collection calls. Under the terms of the order, the defendants are permanently banned from advertising, marketing, promoting, offering for sale, or selling any type of unordered merchandise, or from misrepresenting material facts, and are required to pay $2.7 million to be refunded to affected consumers.

    Separately, on April 10, the FTC announced proposed settlements (see here and here) issued against twelve corporate and four individual defendants for allegedly claiming their “cognitive improvement” supplements increase brain power and performance. According to the complaint, the defendants’ deceptive acts and practices included using “sham news” websites to market false and misleading efficacy claims, such as fraudulent celebrity endorsements and fictitious clinical studies. Furthermore, the FTC alleged that, while the defendants claimed to offer a “100% Money Back Guarantee” on their supplements, consumers found it difficult or nearly impossible to get a refund, and that some consumers were allegedly charged for supplements they ordered but never received. The proposed settlements, among other things, prohibits the specified behavior and impose monetary judgments of $14,564,891 and $11,587,117, both of which will be partially suspended due to the defendants’ inability to pay.

    Federal Issues FTC Consumer Protection Deceptive Fraud Telemarketing and Consumer Fraud and Abuse Prevention Act

    Share page with AddThis
  • FTC files complaint against two operations allegedly responsible for making billions of illegal robocalls

    Privacy, Cyber Risk & Data Security

    On June 5, the FTC announced charges filed against two individuals and their related operations (defendants) for allegedly facilitating billions of robocalls to consumers across the country through a telephone dialing platform in violation of the FTC Act, the Telemarketing and Consumer Fraud and Abuse Prevention Act, and the Telemarketing Sales Rule. According to the complaint filed in the U.S. District Court for the Central District of California, the alleged misconduct—dating back to 2001—centered around the principal and owner of a group of companies that operated and developed a computer-based telephone dialing platform, and a second individual defendant and his group of call center businesses that paid for the development and use of software designed to make autodial telephone calls and deliver prerecorded messages. The FTC alleged that for many years the two individual defendants jointly owned and operated businesses that resold access to a “bundle of services”—referred to as a “one-stop-shop for illegal telemarketers”—that provided, among other things, (i) servers to host the autodialing software, as well as the physical space housing the servers; and (ii) the ability to make calls using “spoofed” caller ID numbers, which made it look as if the calls came from a consumer’s local area code. According to the FTC, this “bundle of services” became so widely used within the industry that it has been named in at least eight other FTC lawsuits centered on the facilitation of unlawful calls. Among other things, the charges against the defendants include assisting with illegal robocalls, calling with prerecorded messages, calling numbers on the National Do Not Call Registry, calling with spoofed caller IDs, and abandoning calls. The FTC seeks civil monetary penalties, a permanent injunction against the defendants to prevent future violations, and reimbursement of costs for bringing the action.

    Privacy/Cyber Risk & Data Security FTC Robocalls FTC Act Telemarketing Sales Rule Telemarketing and Consumer Fraud and Abuse Prevention Act

    Share page with AddThis

Upcoming Events