- On September 1, consumers in 14 East Coast states joined the rest of the country in qualifying for a free annual credit report from each of the three nationwide consumer reporting companies – Equifax, Experian, and TransUnion. The free reports were mandated by Congress in The Fair and Accurate Credit Transactions Act of 2003 (“FACTA”), which requires the nationwide credit bureaus to provide consumers with a free copy of their credit report, at their request, once every 12 months. Consumers who want to access their credit report online can go to www.annualcreditreport.com. Credit reports contain consumers’ identification and financial information, including payment history with different creditors, inquiries made by various financial institutions, and information on the public record, such as foreclosures or bankruptcies. Consumer reporting companies collect and sell this information to lenders and other businesses that have a permissible purpose to obtain it. Access to the free credit reports was phased in across the country in four installments from west to east starting last December. September 1 marks the final phase of the roll-out. Consumers in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, the District of Columbia, Puerto Rico, and all U.S. territories are now eligible to receive their reports.
- Canadian defendants accused of fraudulently selling business directory listings were banned from the business directory industry on August 25 to settle charges brought by the Federal Trade Commission (“FTC”). The primary defendants are paying $165,000 in consumer redress. The FTC alleged the defendants called small U.S. businesses saying they wanted to “renew” the company’s directory listings when, in fact, no prior relationship existed. One individual defendant is subject to a default judgment of almost $9 million. On the same day, the FTC also announced a new consumer education brochure, entitled: Business Directory Scams Try to ‘Give You the Business’. The defendants, Datatech Communications Inc.; 9102-3127 Quebec, Inc. (doing business (“dba”) as I-Point Media); Elias Bakomichalis; Gregory MacNeil; and, Robert Brewer are based in Montreal, Canada. They targeted American consumers exclusively, contacting small businesses and representing that they were calling to renew the businesses’ directory listings. Some employees who talked with the defendants agreed to the “renewal” because they thought they were merely continuing an existing business relationship. When invoices for $299 were forwarded to their accounts payable departments, however, the businesses allegedly found that they were billed for “purchasing” a directory listing, and that the company had never purchased such a listing before. The defendants routinely denied requests to cancel the directory listings and harassed customers who refused to pay, saying their credit rating would be damaged and sometimes referring their accounts to collections. As part of a default judgment against Brewer and a settlement against the others, the defendants are banned from the business directory industry and from assisting others involved in the industry.
- On August 23, the marketers of “Smoke Away” settled FTC charges that they deceptively marketed dietary supplement kits by claiming they would allow smokers to quit smoking quickly, easily, permanently, and without cravings or other side effects. The FTC had filed a complaint against Emerson Direct, Inc. (“Emerson Direct” dba the Council on Natural Health) of Naples, Florida, the corporation that marketed Smoke Away; its owner Michael J. Connors, also of Naples, Florida; Thomas De Blasio, M.D., a physician from Manalapan, New Jersey; and Sherry Bresnahan, D.C., a chiropractor from Algonquin, Illinois. Emerson Direct marketed Smoke Away, while De Blasio and Bresnahan appeared as expert endorsers in advertisements. The FTC alleged the defendants did not have a reasonable basis for the claims they made about Smoke Away or for their claims that it is more effective than FDA-approved smoking-cessation products. The FTC also charged that two doctors who endorsed Smoke Away in advertisements did not properly use their expertise, and that one, a chiropractor, did not actually have the expertise she was represented as having. The company marketing Smoke Away and its owner agreed to pay $1.3 million to settle the charges. They also are prohibited from making any claims about the benefits, performance, efficacy, safety, or side effects of Smoke Away or any other smoking cessation product or program unless those claims are true, non-misleading, and substantiated. All of the defendants are prohibited from making any claims about the benefits, performance, or efficacy of any food, drug, or dietary supplement unless those claims are backed by scientific evidence. If either doctor is endorsing one of those products as an expert, they must actually have exercised their expertise by examining or testing the product. In addition, the chiropractor cannot misrepresent her expertise, training, and experience.
- The FTC announced on August 19 that it had authorized the staff to file an amended complaint in the matter currently pending against Elite Designs, Inc. and Anthony Antonelli. The Commission’s original complaint in this matter, filed in February 2005 as part of the Project Biz Opp Flop law enforcement sweep, charged the defendants with several violations related to the FTC’s Franchise Rule through their selling of jewelry display rack business ventures. Through this action, to be filed by the U.S. Department of Justice (“DOJ”) on the FTC’s behalf, the FTC seeks to add The Designer Collection, Inc. as an additional defendant in this matter. The Commission vote authorizing the DOJ to file the amended complaint on the FTC’s behalf was 4-0.
- On August 18, FTC Chairman Deborah Platt Majoras issued a statement reporting that as of that week, the National Do Not Call Registry (“Registry”) topped 100 million phone numbers. Her statement indicated that this number was a significant milestone for the Registry, which opened for business just over two years ago. The Registry is an efficient and effective tool for consumers and businesses. While millions of citizens have chosen to limit the number of unwanted telemarketing calls they receive, thousands of businesses are also able to target their calls to people who want to receive them. Industry compliance continues to be high, and registration remains free and easy. According to Chairman Majoras, the “Registry speaks volumes about the success of government programs driven by consumer choice, and Americans’ preference for uninterrupted dinner-time conversation.”
- The FTC charged an employment-opportunity scammer and his three companies on August 17 with marketing a fraudulent U.S. Postal Service (“USPS”) employment program. The program offered consumers help in getting jobs with the USPS and guaranteed them job placement if they were able to get a certain score on the USPS’ entrance exam. In reality, jobs, or even the opportunity to apply for jobs, were not available through the defendants. For many consumers, the advertised postal jobs were not available in their area at all. The FTC alleged the defendants, Sean Terrance Asberry and his companies, National Testing Services, LLC; Exam Preparation, LLC; and Future Planning, LLC, doing business as Exam Prep, LLC and Registration Department, put classified ads in newspapers across the country. The ads, which read $ ATTENTION $ Now Hiring for Postal Jobs and offered hourly salary rates, paid training and full benefits, led consumers to believe the defendants were connected with the USPS and the hiring process. When consumers called the toll-free numbers listed in the ads, they were told there were jobs available at their local post office. The defendants offered consumers an exam-preparation package and told consumers they had to pay a “one-time refundable fee” for the study materials. According to the defendants, the materials would assist consumers in getting jobs with the USPS by helping them pass the required entrance exam. The defendants also told consumers that if they scored high enough on the exam, they would receive immediate job placement. The defendants said that their product would include an employment application, a book entitled “Exam Prep Guide,” 12 practice exams, and a copy of the actual exam.