ICFE eNEWS #11-34 - October 14th 2011

News from the Federal Trade Commission - October 2011


Reebok Refunds

Reebok Refunds
Reebok International Ltd. has agreed to pay $25 million in customer refunds to settle charges it deceptively advertised its toning shoes. Reebok claimed its EasyTone and RunTone shoes would tone and strengthen leg and butt muscles more than regular shoes because of “micro instability” created by pockets of moving air — claims the company couldn’t support, alleges the FTC. If you bought Reebok’s EasyTone or RunTone shoes or apparel, you might be eligible for a refund. Go to ftc.gov/reebok to learn more. While you’re at it, check out the FTC’s How's That Work-Out Working Out? Tips on Buying Fitness Gear.

A Cold Four or Five

Four Loko
The marketers of supersized, high-alcohol Four Loko have agreed to re-label and repackage the carbonated malt beverage to resolve charges of deceptive advertising. According to the FTC, Phusion Projects, LLC, claimed a 23.5-ounce can of Four Loko contains as much alcohol as one or two regular 12-ounce beers. In reality, the FTC says, a can contains as much alcohol as four or five beers, so someone drinking one can would be binge drinking. Under the settlement, Phusion Projects will disclose the amount of alcohol, compared to the amount found in regular beers, on its high-alcohol flavored malt beverages, and soon will start using resealable containers.

Spam Texts Stopped

Spam Texts
Under a settlement with the FTC, a marketer who allegedly sent millions of spam text messages pitching mortgage modification services has been banned from sending any more unsolicited messages. The FTC says the defendant, Phil Flora, misrepresented that he was affiliated with a government agency and sold  the phone numbers of people who responded — positively or negatively — as “debt settlement leads” to third parties.

Crossing the Line

Abusive Debt Collection Practices
Per the FTC’s request, a company that allegedly used abusive tactics to collect debts and that deceived its small-business clients has been stopped. According to the FTC’s complaint, the people behind Rumson, Bolling & Associates harassed and abused people, using obscene and profane language, and threatening to harm or kill them and their pets, or desecrate the bodies of their deceased relatives. They also improperly revealed debts to people’s employers and others, and falsely threatened  lawsuits and arrest. When it came to their clients, the defendants allegedly kept more money than they were entitled to after collecting a debt, and asked businesses to pay for lawsuits that never were brought. For more on the rules for debt collectors, read Debt Collection FAQs: A Guide for Consumers.

Two Heads Up for Businesses

There’s good news for 100 small businesses defrauded in a debit and credit card processing scheme: your refund is in the mail. According to the FTC, the defendants falsely promised that switching to their service would save the businesses hundreds to thousands of dollars a year in processing fees. They also failed to disclose their fees, and concealed pages of fine print until the contracts were signed.
Good news for retailers, too: if you let people pay with credit or debit cards, some new rules — like caps on some debit card interchange fees — may help lower your cost of doing business. The FTC, one of several federal agencies enforcing the rules, has materials explaining what’s new. Contact the FTC with questions or comments about how the rules are being put into practice.

Payday Loans, No Garnish

A payday lending operation that tried illegally to garnish people’s wages has agreed to stop after an action was filed in U.S. district court. The FTC alleged that Payday Financial, LLC, which advertised online and on TV, along with other defendants, tried illegally to garnish people’s wages without getting a court order to collect payments on payday loans. When a person didn’t pay back a loan on time, the defendants sent documents to the employer that mimicked those used by federal agencies. As a result, the FTC says, the defendants not only illegally revealed people’s supposed debts to their employers, but also deprived them of their right to dispute the debts or make payment arrangements.

"The FTC wants national advertisers to understand that they must exercise some responsibility and ensure that their claims for fitness gear are supported by sound science."

 David Vladeck, Director, Bureau of Consumer Protection

A New Look

Feel like you’re up to snuff when it comes to internet safety and security know-how? Visit  OnGuardOnline.gov to find out. You’ll find practical tips and resources, a new cybersecurity blog, and an easy way to subscribe to updates via e-mail. Created by a partnership of 16 federal agencies led by the FTC, OnGuardOnline.gov is a one-stop source of free information for your home, school, community group, or workplace.

Facial Recognition Technology Workshop 

The FTC will host a workshop exploring facial recognition technology and its privacy and security implications in Washington, DC on December 8, 2011. The workshop is free and open to the public.

Scholarship Fraud

The FTC, Department of Justice, and Department of Education have issued their annual report to Congress describing the agencies’ continued efforts to combat scholarship and financial aid fraud.


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Sent by:

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

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