News from the Federal Trade Commission - August 2013

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Penn Corner August 2013

Debt Threats

Debt threats

The FTC has reached a partial settlement with the principal defendants in its case against AMG Services Inc., a payday lending operation. The consent stops AMG from using threats of arrest or lawsuits as a tactic for collecting debts or requiring borrowers to allow electronic withdrawals from their bank accounts. In a significant victory for the agency, the magistrate judge found that these lenders are subject to federal law even if they are affiliated with American Indian tribes. The FTC continues to litigate other charges.

Debit Debacle

Debit debacle

A federal judge agrees with the FTC that an online operation crossed the line when it illegally debited people's bank accounts when they applied for payday loans. The FTC charged Direct Benefits Group, LLC and its affiliated companies and principals with illegally debiting and enrolling consumers in programs they didn’t want. The judge stopped the illegal practices and ordered the defendants to return more than $9.5 million to the affected borrowers.



General Electric has agreed to modifications to complete its purchase of Avio’s aviation business, settling FTC charges that the $4.3 billion acquisition would be anticompetitive. The FTC alleged that GE’s acquisition of Avio would substantially lessen competition for the sale of engines used on the Airbus A320neo, resulting in higher prices, reduced quality, and engine delivery delays. Under the settlement, GE cannot interfere with the design and certification of a key engine component designed by Avio for rival aircraft engine manufacturer Pratt & Whitney.

No Option

No option

The FTC is seeking a contempt order in federal court against defendants Bryon Wolf and Roy Eliasson, and their firm Membership Services, LLC, alleging they violated the terms of a court order by engaging in some of the same deceptive tactics that led to the FTC’s prior charges against them. The FTC alleges misuse of a negative option program, where a company takes someone’s failure to cancel the program as permission to debit funds from the person's account. The defendants settled the FTC’s previous charges in 2008, but according to the FTC, they had devised a new scam within months to trick loan applicants.

Collection Correction

collection correction

At the FTC’s request, a U.S. district court has stopped Asset & Capital Management Group and its affiliates, a debt collection operation, from using unlawful tactics to harass debtors. The court order froze their assets and appointed a temporary receiver to take over the business pending resolution of the case. The FTC alleged that the defendants posed as process servers or law office employees and falsely claimed they were delivering papers related to a lawsuit. In some instances, the defendants threatened that people would be arrested if they didn’t respond to the calls.


"I agree with the FTC’s characterization that the Defendants took advantage of financially distressed consumers who went to websites seeking payday loans to cover immediate expenses, only to end up having debits to their bank accounts that sometimes resulted in overdraft charges in addition to the initial charges themselves."

— John Antoon II, United States District Judge, Memorandum Decision and Order, FTC v. Direct Benefits Group, LLC

Care Labels

The FTC will host a public roundtable to analyze proposed changes to its Care Labeling Rule. The Rule requires manufacturers and importers to attach labels with instructions for how to dryclean, wash, bleach, dry, and iron clothes. The event will be held October 1 in the FTC’s Conference Center, 601 New Jersey Avenue, NW, Washington, DC.

Energy Costs

The FTC has approved new EnergyGuide labels for refrigerators and clothes washers, and updated comparative energy consumption information on labels for other appliances. The new labels are intended to help buyers compare products using the Department of Energy’s new tests for measuring energy costs.

Giving Them the Business

The FTC has charged an operation that sells services necessary for small businesses to accept credit and debit cards with violating federal law. The FTC alleged that Merchant Services Direct, LLC and its affiliates didn’t tell businesses important facts, lied about their fees, and tricked them into leasing new processing terminals.

No Relief

The FTC banned a telemarketer from selling debt relief services, telemarketing, and making robocalls. Jeremy R. Nelson and four companies he controlled allegedly defrauded consumers. Under a settlement with the FTC, Nelson was ordered to pay more than $4.6 million. The judgment will be suspended, based on Nelson’s inability to pay but the full judgment will become due immediately if he is found to have lied about his financial condition.



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  • Is your memory foam or natural latex mattress free of volatile organic compounds (VOCs)? Probably not.



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