ICFE eNEWS #11-32 - September 15th 2011

News from the Federal Trade Commission - September 2011

News from the Federal Trade Commission - September

Mother, May I?

Mother May I?  
A developer of mobile applications, including children’s games for the iPhone and iPod touch, will pay $50,000 to settle FTC charges it violated the COPPA Rule by collecting kids’ information without their parent’s consent. W3 Innovations, LLC, doing business as Broken Thumbs Apps, encouraged users of its “Emily” apps to email comments and “shout-outs” to friends, the FTC alleges, and collected and maintained thousands of email addresses from users of the Emily apps. The company also allowed kids to publicly post information, including personal information, on message boards. The COPPA Rule requires website operators to notify parents and get their okay before collecting, using, or disclosing their personal information, in addition to posting a clear privacy policy that’s easy to spot.

Wish Not Granted

Wish Not Granted  
The FTC worked with four state attorneys general to shut down an operation that allegedly tricked people into paying hundreds of dollars for “guaranteed” government grants. Several defendants will have to pay hundreds of thousands of dollars in refunds. According to the complaint, Grant Writers Institute, LLC mass-mailed postcards claiming people were entitled to $25,000 in free government grant money, guaranteed. But anyone who called the number got a pitch for a $59 grant writing book instead. Later on, those who bought the book heard from the company again, this time for research, writing, or coaching services that would cost hundreds of dollars. The company also falsely claimed a 70 percent success rate in securing grant funding.

No Help

No Help  
Schemes that took advantage of people already deep in debt have been stopped under three settlements with the FTC. In Truman Foreclosure Assistance, LLC, the principals will pay $1.8 million for allegedly charging people thousands of dollars for promises the company could get their mortgages modified or stop foreclosures on their homes with a 100 percent money-back guarantee. In Fedmortgageloans.com, the company misrepresented that its mortgage assistance and debt relief programs were affiliated with the government. Finally, the defendants behind Making Home Affordable impersonated MakingHomeAffordable.gov, a federal site that helps eligible homeowners refinance or modify their mortgages.

Robocall Refunds

Robocall Refunds  
The FTC is sending almost 4,500 refund checks totaling nearly $3.2 million to people tricked by illegal robocalls into buying bogus auto “warranties” that were extended service contracts. Transcontinental Warranty allegedly hired Voice Touch Inc., a telemarketing company, to blast people with prerecorded calls. The scripts they used made it seem like the callers were affiliated with the person’s car dealership or manufacturer, and that the original auto warranty was about to expire. Refunds will vary from a few dollars to more than $7,000, depending on how much the consumer paid for a warranty. For answers to some common questions about the refund process, go to ftc.gov/refunds. 

Authorized Generics

Authorized Generics  
When a pharmaceutical company introduces a lower-cost, generic version of one of its own brand-name drugs, it’s called an authorized generic. A final FTC report looks at how competition and drug prices are affected in the short-term and over the long haul by authorized generics. The report concludes that authorized generics can lower drug prices at first. They also can substantially lower the revenues of competing generic firms. But the report also found strong evidence that agreements by the brand-name manufacturer not to launch an authorized generic have become a way for manufacturers to persuade competing generic companies to delay bringing their drugs to market. The result: Consumers pay higher brand drug prices until the generic version is introduced, and higher generic prices after because there’s no competition from an authorized generic.

How Do You Spell Relief?

How Do You Spell Relief?  
Debt Relief USA, Inc., a debt relief operation that allegedly lured thousands of consumers across the nation into paying thousands of dollars in up-front fees, is banned from doing business, thanks to a settlement with the FTC. According to the FTC’s complaint, Debt Relief USA told people it could eliminate 40 to 60 percent of their credit card debt and they could be out of debt in 24 to 48 months. The company not only failed to reduce most people’s credit card debts, but in many cases also left people even deeper in the hole. Through settlement of a separate action brought by the Attorney General of Texas, people have received $3.7 million in refunds from the company’s bankruptcy estate and will receive more soon. For information on dealing with debt, visit ftc.gov/moneymatters.

"We want to make it crystal clear, to app developers and to others in this new mobile space, that we believe the protection under COPPA is not platform specific. If you can't do it online, you can't do it in an app."

David Vladeck, Director, Bureau of Consumer Protection

A Penny Spent…

Penny auctions aren’t traditional auctions, where only the winning bidder pays. Penny auctions move faster; and participants pay to bid, win or lose. Winning the auction doesn't mean you've won the auction item — it means you've won the right to buy the item at the final price. And if you lose the auction? You’re out the money you spent on bids. Learn more at Online Penny Auctions: Nothing for Something?  

DaVita Must Divest

Dialysis services company DaVita, Inc. must sell 29 outpatient dialysis clinics around the U.S. to settle FTC charges that its proposed acquisition of rival DSI would be anticompetitive. Dialysis treatment is a life-sustaining therapy critical to patients with end-stage renal disease. According to the FTC’s complaint, without the spin-offs, the acquisition would result in higher prices and lower quality for outpatient dialysis services in 16 local markets.

 New Report on Gas Prices and the Petroleum Industry

A Bureau of Economics staff report examines trends in the petroleum industry and how they’ve affected gasoline prices between 2005 and early 2011. The report concludes that while a broad range of factors influence the price of gasoline, worldwide crude oil prices continue to drive what Americans pay at the pump.


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Sent by:

Paul Richard
President - Executive Director
Institute of Consumer Financial Education (ICFE)

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