Consumer protection is goal of FTC
A regular source of inspiration for this column is the Federal Trade Commission’s Web site — www.ftc.gov. There, among other things, you can find information about actions the FTC has taken to carry out its consumer-protection mission — “to prevent fraudulent, deceptive and unfair business practices in the marketplace.” You can also marvel at the schemes people think up to dupe others.
Currently posted on the site are reports of two settlements resulting from enforcement actions brought by the FTC. The first involves a company called Roex and two of its principals (one of whom was the director of consumer education). Roex sold dietary supplements and health-related devices that the company claimed would effectively treat, or reduce the risk of, a large number of the world’s most heinous diseases, including cancer, HIV/AIDS, diabetes, strokes, heart attacks, Alzheimer’s disease, Parkinson’s disease, arthritis, multiple sclerosis, ulcers, asthma, glaucoma and herpes. By way of example, one of Roex’s offerings was an infrared sauna for the treatment of cancer. Roex’s primary marketing outlet was an hourlong, nationally broadcast dial-in radio program called “The Truth About Nutrition.”
As part of the settlement, Roex is sending to purchasers more than 5,700 refund checks totaling some $3 million. The average size of these checks is $500. The company is also under strict orders not to make claims about its products unless the claims are true, nonmisleading and substantiated by competent and reliable scientific evidence.
The second enforcement action highlighted on the FTC’s Web site is against Advantage Credit Repair. The company made false claims that it could remove negative information from a consumer credit report, even if that information was true and current. The company also violated a federal law — the Credit Repair Organizations Act — by requiring an upfront fee.
The company’s advertising stated: “We would never charge a large fee up front.” However, Advantage Credit Repair charged individual customers an upfront fee of $219, out of a total fee of $495, and charged couples an upfront fee of $269, out of a total fee of $665.
The settlement in the case imposes on Advantage Credit Repair a $200,000-plus judgment if there are further violations. It also prevents the company from collecting payments from customers who purchased its services before Oct. 23, 2008 — the day the court shut down its operations and seized its assets — and requires the company to properly use and dispose of customer information. Finally, the settlement bars the company from misrepresenting what it can do to assist customers and how it charges for its services.
There is a great deal of other interesting and useful information at www.ftc.gov. Your tax dollars at work. Check it out.
Our attorney general, John Suthers, is also very active in shutting down deceptive trade practices affecting consumers. The state attorney general’s office recently announced a $4.4 million judgment against a Grand Junction company, National Energy Rebate Fund, which offered large product rebates but then made it difficult to collect.
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Jim Flynn is a private attorney at Flynn Wright & Fredman LLC in Colorado Springs. The firm primarily represents clients in the real estate, financial services and small-business sectors. Reach him
at jtflynn@fwflegal.com.
