Legal Library: Cases and Proceedings

The Federal Trade Commission today sued Walmart for allowing its money transfer services to be used by fraudsters, who fleeced consumers out of hundreds of millions of dollars. In its lawsuit, the FTC alleges that for years, the company turned a blind eye while scammers took advantage of its failure to properly secure the money transfer services offered at Walmart stores. The company did not properly train its employees, failed to warn customers, and used procedures that allowed fraudsters to cash out at its stores, according to the FTC’s complaint. The FTC is asking the court to order Walmart to return money to consumers and to impose civil penalties for Walmart’s violations.

The Federal Trade Commission alleged Elite IT Partners, Inc. and its founder, President and CEO James Martinos settled FTC allegations that they tricked consumers into believing their computers were infected with viruses in order to sell them costly computer repair services. 

In November 2019, the Federal Trade Commission obtained a temporary restraining order halting an operation that bilked consumers out of millions of dollars by pretending to be affiliated with the U.S. Department of Education and falsely promising student loan debt relief. In September 2020, the FTC announced several of the operators settled FTC charges and agreed to pay at least $835,000. In January 2022, the FTC announced that the remaining defendants in the case are banned from providing student loan debt relief services in settlements with the FTC. The defendants are required to forfeit all of their frozen funds held by the receiver. In June 2023, the FTC sent more than $3.3 million to consumers harmed by this scam.

At the request of the Federal Trade Commission and the Florida Attorney General's Office, a federal court temporarily halted an alleged sham credit card interest rate reduction operation that often targeted financially distressed consumers and older adults in July 2020. In February 2022, the FTC announced that the operators are permanently banned from the debt relief industry as part of court orders resolving charges by the FTC and Florida AG’s Office.

In February 2023, the FTC sued to stop an interconnected web of operations responsible for delivering tens of millions of unwanted VoIP and ringless voicemail phony debt service robocalls to consumers nationwide. DOJ filed the complaint in federal court on the FTC’s behalf. The DOJ also filed a proposed consent order against one of the companies and individuals involved in the operation, which would, if approved by the court, bar them from making further misrepresentations about debt relief services and ordering them to comply with the TSR.

The Federal Trade Commission has taken action against a for-profit medical school in the Caribbean and its Illinois-based operators, alleging they deceptively marketed the school’s medical license exam test pass rate and residency matches to lure prospective students. The school and its operators are also charged with violating the Holder Rule, which preserves rights for injured consumers, and the Credit Practices Rule, which protects consumers in credit contracts. The $1.2 million judgment against Saint James School of Medicine and its operators will go toward refunds and debt cancellation for students harmed by the deceptive marketing.

In 2019, the operators of a sweepstakes scam that appeared to target seniors agreed to forfeit a record $30 million in cash and assets and will be permanently banned from the prize promotion business under a settlement with the Federal Trade Commission. In July 2022, the FTC returned almost $25 million to consumers worldwide who were defrauded by the scheme.

In September 2019, the operators of a deceptive negative option scheme agreed to a court-ordered preliminary injunction temporarily barring them from a wide range of conduct.  The preliminary injunction stops the defendants from misleading consumers about supposedly “free trial” offers, enrolling them in unwanted continuity plans, billing them without their authorization, and making it nearly impossible for them to cancel or get their money back. In June 2022, the Commission announced it was returning $5.4 million to defrauded consumers.

The owners and operators of a vast payday lending scheme that overcharged consumers millions of dollars will be permanently banned from the lending industry under the terms of a settlement with the Federal Trade Commission. The settlement also provides that nearly all outstanding debt—made up entirely of illegal finance charges—held by the company will be deemed as paid in full.

The FTC charged the enterprise with deceptively overcharging consumers millions of dollars and withdrawing money repeatedly from consumers’ bank accounts without their permission.

The Federal Trade Commission is sending 26,698 checks totaling more than $970,000 to consumers who were harmed by a deceptive payday lending scheme that operated under the names Harvest Moon Financial, Gentle Breeze Online, and Green Stream Lending.

The FTC sued VoIP service provider VoIP Terminator, Inc., a related company, and the firms’ owner for assisting and facilitating the transmission of millions of illegal prerecorded telemarketing robocalls, including those they knew or should have known were scams, to consumers nationwide. Many of the calls originated overseas, and related to the COVID-19 pandemic, with the defendants allegedly failing to act as a gatekeeper to stop them from entering the country. The proposed consent order bars the defendants from the allegedly illegal conduct.

The FTC’s October 2018 complaint against Redwood Scientific charged the defendants with a scheme that used illegal robocalls to deceptively market dissolvable oral film strips as effective smoking cessation, weight-loss, and sexual-performance aids. Announced in June 2019 as part of a crackdown on illegal robocalls against operations around the country responsible for more than one billion calls, an initial  settlement resolved the FTC’s charges against one defendant in the Redwood Scientific case, Danielle Cadiz. The order permanently banned Cadiz from all robocall activities, including ringless voicemails, and imposes a judgment of $18.2 million against Cadiz. In March 2022, the FTC announced the final court orders against all remaining defendants.

The FTC and the State of Maine’s complaint against Health Research Laboratories and its principal, announced in November 2017, alleged that the defendants deceptively marketed two of their health products, BioTherapex and NeuroPlus. In November 2018, the FTC mailed 16,596 checks totaling more than $750,000 to consumers who bought the two deceptively marketed supplements. The FTC and State of Maine subsequently filed a motion seeking a contempt order against the defendants in December 2019, for allegedly violating the final Commission order by continued to market and sell dietary supplements with claims that were not supported by competent and reliable scientific evidence. In November 2020, the FTC staff discontinued its contempt action and filed an administrative complaint against the defendants. The FTC announced a proposed order settling the complaint in March 2020.

In February 2022, at the request of the Federal Trade Commission, federal courts in California ordered two Voice-over-Internet Protocol (VoIP) service providers, Xcast and Deltracon, to turn over information that the agency is seeking as part of ongoing investigations into potentially illegal robocalls. Companies that fail to comply with such federal court orders can be held in contempt.

In February 2022, at the request of the Federal Trade Commission, federal courts in California ordered two Voice-over-Internet Protocol (VoIP) service providers, Xcast and Deltracon, to turn over information that the agency is seeking as part of ongoing investigations into potentially illegal robocalls. Companies that fail to comply with such federal court orders can be held in contempt.

The Federal Trade Commission is returning an additional $25 million to consumers who lost money to a business coaching scheme that used the names Coaching Department and Apply Knowledge, among others. These refunds are the result of the FTC’s settlements with the scheme’s ringleaders, the companies through which the scheme operated, and a payment processor who helped facilitate the scheme.

Announced in June 2019 as part of a crackdown on illegal robocalls against operations around the country responsible for more than one billion calls, this court order contains provisions related to two sets of defendants: 1) the Lifewatch defendants, which includes Lifewatch, Inc., Evan Sirlin, and Mitchel May; and 2) the Roman defendants, which includes Safe Home Security, MedGuard Alert, Inc., and David Roman. The order permanently bans the Lifewatch defendants from telemarketing and prohibits them from misrepresenting the terms associated with the sale of any product or service. It also imposes a financial judgment of $25.3 million against Lifewatch and Sirlin. According to the FTC’s July 2015 complaint, filed jointly with the Florida Attorney General’s Office, since 2012 the defendants bombarded primarily elderly consumers with at least a billion unsolicited robocalls to pitch supposedly “free” medical alert systems.

Announced in June 2019 as part of a crackdown on illegal robocalls against operations around the country responsible for more than one billion calls, thisFTC complaint against five corporate and four individual defendants<, alleges that since at least 2017 the defendants have used a combination of illegal telemarketing robocalls, live telephone calls, text messaging, internet ads, emails, social media, and live events to market and sell consumers fraudulent money-making opportunities. The complaint charges the defendants, who operate from California, Colorado, New York, and Tennessee, with violating the FTC Act, the Telemarketing Sales Rule (TSR), or both, by making deceptive earnings claims through robocalls and other marketing techniques. In September 2021, The Federal Trade Commission sent checks totaling more than $1 million to consumers who were harmed by the company.

In January 2020, three people and a telephone call center that helped Florida-based Grand Bahama Cruise Line LLC (GBCL) and others to make millions of illegal robocalls to consumers settled an FTC complaint and are permanently barred from making telemarketing robocalls. The FTC will litigate in federal court against GBCL and six other defendants involved in the massive operation, who have not agreed to settle. The FTC announced a settlement with the seven remaining defendants in September 2021.

In June 2020, the marketers of a low-level light therapy device (LLLT) called Willow Curve agreed to stop making allegedly deceptive claims that the device treats chronic, severe pain and associated inflammation, under a settlement with the FTC. 

In a complaint filed in federal court the FTC alleged that the marketers of Willow Curve promoted the device nationwide since 2014, touting it as a “smart” device that is “clinically proven,” even though they lack scientific evidence to support these claims. The order settling the complaint also requires two defendants to pay $200,000 each to the Commission. In August 2021, the FTC sent refunds totaling more than $350,000 to defrauded consumers.