Consumer Complaints Catalogued
the 11th consecutive year, identity theft was at the top of the
list of complaints consumers submitted to the FTC. Of the more than 1.3 million
complaints received by the agency in 2010, 19 percent were related to ID theft.
A total of 11 percent of the complaints — nearly 145,000 — dealt
with debt collection; some five percent dealt with internet services. For the
first time, imposter
scams — where fraudsters pose as friends, family, or government agents
to trick people into sending them money — made the top 10. The new FTC
report also includes complaint data by state, and data about the 50 metropolitan
areas reporting the highest per capita incidence of complaints.
part of Operation
Empty Promises, the FTC, the U.S. Department of Justice, the U.S. Postal
Inspection Service, and several states announced more than 90 law enforcement
actions against companies promising online business opportunities, steady and
lucrative employment, and successful home businesses. According to the FTC, the
cases run the gamut of business opportunity fraud: one company sold worthless
internet business coaching; one claimed to offer roles as TV and movie extras;
yet another sold services that were supposed to help people recover money they'd
already lost to other business opportunity and work-at-home scammers. Estimates
of consumer losses were more than $60 million. Before you buy a business opportunity,
check out ftc.gov/bizopps.
Help Right Wrongs
the last month, the FTC mailed over 1,400 refund checks totaling $1.25 million
to consumers defrauded
by a mortgage foreclosure rescue scam, and sent out claim forms to 11,780
by illegal auto warranty robocalls. In the first case, the court found that
homeowners got few, if any, loan modifications; indeed, many people lost their
homes to foreclosure rescue scams after paying up to $5,500 for help. In the
second, the FTC alleged that Transcontinental Warranty, Inc., hired a telemarketing
company that made millions of deceptive prerecorded calls.
Buck Stops Here
FTC announced settlements with three credit report resellers whose alleged security
failures allowed hackers to access sensitive information. The
agency charged that the resellers failed to take reasonable steps to protect
people's personal information; they allowed clients that didn't use basic security
measures — like firewalls and updated antivirus software — to access
credit reports online. As a result, the hackers were able to break into the system
and access more than 1,800 credit reports. The FTC alleged that even after learning
about the data breaches, the resellers failed to take reasonable steps to protect
against them in the future. The settlements require the resellers to strengthen
their data security procedures and submit to audits for 20 years.
FTC has asked a federal judge to shut down a telemarketing outfit for violating
the FTC Act and the CAN-SPAM Act. According
to the complaint, the defendant blasted consumers with millions of illegal
spam text messages that included pitches for loan modification assistance, debt
relief, and other services; indeed, the agency claimed that in one 40-day period,
the defendant sent more than 5.5 million spam texts at a rate of 85 per minute,
every minute, every day. The FTC alleged that some recipients got stuck paying
fees to their mobile carriers for the texts, and that the defendant didn't offer
any way for people to opt out of getting them.
FTC has recovered more than $3 million that will be returned to victims of an
alleged scam that promoted video rental machines as a business opportunity.
The FTC filed its law enforcement action against American Entertainment Distributors,
Inc., in 2005, naming 10 defendants. According to the complaint, the defendants
tricked investors into paying $28,000 to $37,500 each for video rental vending
machines, telling them they could expect to earn between $60,000 and $80,000
a year, or recoup their initial investment in six to 14 months. The court has
entered final orders against nine of the 10 defendants, prohibiting further illegal
conduct and requiring them to pay for refunds.
Culture of Innovation
new FTC report says improvements to the patent system could reduce the risk
and uncertainty surrounding innovation, and foster synergies between the patent
system and competition policy. Among the recommended improvements:
should give clear notice of the technology the patent covers.
remedies that match compensation of patent holders with the economic value of
their patented inventions are important for both innovation and competition.
victims of these [business opportunity] frauds are our neighbors — people
who are trying to make an honest living... they risked their limited financial
resources in response to the promise of a job, an income — a chance at
a profitable home-based business. But these turned out to be empty promises."
Vladeck, Director, Bureau of Consumer Protection