News from the Federal Trade Commission - June 2012

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Penn Corner June 2012

The Facts of (Your) Life

Spokeo, Inc., a data broker that compiles and sells detailed information profiles on millions of people, will pay $800,000 to settle FTC charges that it marketed the profiles to human resources professionals, job recruiters, and others as an employment screening tool without taking the appropriate steps. Those steps, required under the Fair Credit Reporting Act, include ensuring the information is accurate, and telling clients they must let people know when they use the profile information from Spokeo to make negative decisions about them. Profiles can include a person’s name, address, age range, and email address, and even their hobbies, ethnicity, religion, participation on social networking sites, and photos. The FTC also alleged that the company posted endorsements of their service that actually were created by Spokeo employees.

Up to Old Tricks

bad credit
U.S. district court has temporarily shut down a Florida-based operation for allegedly continuing to pitch bogus credit-repair services across the country, despite a 2010 court order to stop. The FTC is seeking a contempt ruling against the company. According to the FTC’s 2008 complaint, Latrese and Kevin Hargrave and the firms they control allegedly advertised online and on radio stations that they could erase people’s bad credit for just $250 a pop. At least part of the payment was required up-front. But after the customers paid, the defendants did little, if anything, to fulfill the promises they made, the FTC says. For more on how to improve your creditworthiness, read Credit Repair: How to Help Yourself.

A Mortgage Mess

mortgage papers
An operation that allegedly convinced people in danger of losing their homes to pay $1,995 for supposed help renegotiating their mortgages has been stopped at the request of the FTC. According to the FTC’s complaint, the defendants offered to review people’s mortgage loan documents to see whether lenders complied with state and federal laws, falsely claiming that homeowners could use the resulting “forensic audits” to avoid foreclosure and negotiate more favorable terms on their mortgages. But many homeowners didn’t receive modifications or reduced payments, and found out that the defendants never contacted their lenders or didn’t follow up. The defendants also failed to provide requested refunds, the FTC says, and people often learned too late that their houses were being foreclosed upon. Read Forensic Mortgage Loan Audit Scams for more.

Peering Into Private Info

The FTC has charged two businesses — a Utah debt collector and a Georgia auto dealer — with illegally exposing the sensitive personal information of thousands of people by allowing peer-to-peer file-sharing software to be installed on their corporate computer systems. P2P file-sharing software can be used to share music, video, and documents, but files shared to a P2P network are available to any computer on the network. The FTC alleged that EPN, Inc., a debt collector, failed to use reasonable security measures, making Social Security numbers, health insurance numbers, and medical diagnosis codes of hospital patients available to every computer connected to the P2P network. Similarly, the FTC charged that by allowing P2P software to be installed on its network, Franklin's Budget Car Sales, Inc., exposed the sensitive financial information of nearly 100,000 people.

Debt Daydream

A debt relief operation has settled FTC charges that it allegedly deceived people with claims it could reduce their debt by 40 to 60 percent. According to the FTC’s complaint, Timothy Daniels and FDN Solutions, LLC — also doing business as Everest Debt Solutions,, and — used paid search results on Google and Google ads on third-party websites to advertise their services. But the company’s claims didn’t take into account the people who dropped out of the program, or the fact that the fees each client paid totaled 30 percent of the savings achieved, the FTC says. The company also allegedly used a fake testimonial. For more information on dealing with debt, see Debt Relief Services

"Privacy policies have to get better, they have to get simpler… So people can really understand them."

Jon Leibowitz, FTC Chairman, at the recent D10 conference

Say Halo to a Refund

The FTC has sent more than 27,000 checks averaging $25 each to people who bought the Oreck Halo vacuum or the Oreck ProShield Plus air cleaner. The checks result from a settlement Oreck reached with the FTC for allegedly making false and unproven claims that its products could reduce the risk of flu and other illnesses, and eliminate virtually all common germs and allergens. Learn more about the refunds at For more on claims by marketers that their products can fight diseases, read Miracle Cures.

POM Not So Wonderful

An administrative law judge has upheld the FTC's complaint that POM Wonderful LLC deceptively advertised that its products would treat, prevent, or reduce the risk of heart disease, prostate cancer, and erectile dysfunction. The ads in question appeared in national publications, including The New York Times and Prevention magazine, and online. The order requires POM to have competent and reliable scientific evidence for its disease and health claims

Break-ing News

Johnson & Johnson will sell its system for surgically treating serious wrist fractures to settle FTC charges that its acquisition of Synthes, Inc., would reduce competition illegally. As proposed, the $21.3 billion deal would have given J&J control over 70 percent of products used to treat distal radius wrist fractures. According to the FTC, the proposed spin-offs will ensure that hospitals and surgeons will not face higher prices or reduced innovation when treating patients with the most common type of wrist fracture.


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