News from the Federal Trade Commission - September 2015

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September 2015

Deceptive Video Reviews for Xbox One


Machinima, Inc., an online entertainment network, agreed to settle FTC charges that it engaged in deceptive advertising. According to the FTC, the company paid “influencers” to post positive YouTube videos endorsing Microsoft’s Xbox One system and several games – without disclosing that they were being paid. According to the settlement, among other things, Machinima, Inc. must prominently disclose any material connection between the endorser and the advertiser.

Vemma Pyramid Scheme Halted


The FTC issued a complaint against Vemma Nutrition Company, alleging it is running an illegal pyramid scheme – and a federal court has ordered the operation to temporarily shut down. According to the FTC, Vemma Nutrition Company recruited heavily on college campuses with claims that young adults can earn up to $50,000 per week and live in the lap of luxury by selling an energy drink. But, says the FTC, the company emphasized recruiting other “affiliates” instead of drink sales, made false earnings claims, and failed to disclose that its structure ensures that most people who join will not earn substantial income.

False Claims Harmed Homeowners


The FTC took action against Wealth Educators, Inc., a bogus law firm that promised to help homeowners avoid foreclosure. According to the FTC, Wealth Educators, Inc. promised government-sponsored loan modifications to struggling homeowners who paid thousands of dollars in upfront fees. The FTC alleges the company did little or nothing to help people keep their homes, and never worked with homeowner’s lenders. The FTC also says few people received the full refunds that the company promised.

Business Opportunity Deception

business opportunity

A series of elusive marketers, operating as Money Now Funding, among other names, were shut down by court orders obtained by the FTC. According to the FTC, the defendants told people they could earn up to $3,000 a month by referring small businesses to their company to get loans. But, says the FTC, the defendants charged up to $499 for the business “opportunity,” and then thousands more for useless sales leads. Money Now Funding cheated American and Canadian consumers – many of them older adults on limited incomes – out of more than $7 million.


Drug Competition Lowers Prices

generic pills

Drug makers Concordia Pharmaceuticals Inc. and Par Pharmaceutical, Inc., settled FTC charges that they entered into an unlawful agreement not to compete to sell generic versions of Kapvay, a prescription drug used to treat Attention Deficit Hyperactivity Disorder. At the time of the agreement, Concordia and Par were the only two firms approved by the FDA to sell generic Kapvay, but rather than competing against one another, Concordia agreed not to sell an authorized generic version of Kapvay in exchange for receiving a share of Par’s revenues. According to the FTC, the agreement deprived consumers of the lower prices that typically occur with generic competition. Under the settlement, the firms cannot enforce the anticompetitive provisions of their agreement. 

"Rather than focusing on selling products, Vemma uses false promises of high income potential to convince consumers to pay money to join their organization. We are also alleging that Vemma is an illegal pyramid scheme."

— Jessica Rich, Director of the FTC’s Bureau of Consumer Protection

New Resource for Recent Refugees

The FTC has new information for people who have recently arrived in the United States. Spotting, Avoiding and Reporting Scams: A Fraud Handbook for Recent Refugees and Immigrants is a short handbook to help people spot, avoid and report scams. The handbook and posters are free and available in English, Spanish, French, Arabic, Dari, Amharic, and Somali.

Lights Out for UV Disinfectants

Two companies, Angel Sales, Inc. and Zadro Health Solutions, agreed to settle FTC charges that they made false and unsubstantiated advertising claims. According to the FTC, both companies claimed that their ultraviolet (UV) light devices could kill nearly all viruses and bacteria. But the FTC says neither company had the scientific proof to back up those claims.

Your Money Back

The FTC is mailing 6,936 refund checks of $25.18 each – totaling $175,000 – to consumers who lost money buying Speak and Smooth dietary supplements. According to the FTC, NourishLife, LLC said the supplements were clinically proven to support healthy and normal speech development in kids. But the FTC says the company didn’t have the scientific evidence to back up its claims. People who receive the checks are encouraged to cash them before they expire on October 23, 2015.


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