Legal Library: Cases and Proceedings

The operators of a business coaching scheme will pay at least $1.2 million to settle Federal Trade Commission charges that they targeted people who were trying to start new businesses online and used deception to sell them bogus marketing products and services.

According to the FTC’s complaint, Position Gurus and Top Shelf Ecommerce, and their owners Aaron Poysky, Stacy Griego and Samuel Cohen Brown, targeted consumers who were looking for ways to make money by starting retail businesses on the Internet. The defendants found many of their targets by purchasing consumers’ contact information from other online business coaching operations that had already deceived the targets. In August 2021, the FTC sent refunds totaling more than $1.5 million to defrauded consumers.
 

Globex Telecom, Inc. and an affiliated company will pay a total of $1.9 million to settle Federal Trade Commission and State of Ohio charges that they facilitated a scheme that peddled bogus credit card interest rate relief, illegally charging consumers millions of dollars. The settlement marks the end of the FTC’s first consumer protection case against a Voice over Internet Protocol (VoIP) service provider.

The FTC and Ohio alleged that Globex provided a company called Educare Centre Services with the means to make calls to U.S. consumers, including illegal robocalls, to market Educare’s phony credit card interest rate reduction services.

The FTC and Ohio charged that both Globex and Educare were controlled by Mohammed Souheil, Globex’s former CEO and president, who was named in the lawsuit along with a number of other corporations and individuals.

In July 2021, the owners of a New Jersey-based company that sells septic tank cleaning products agreed to a permanent ban on telemarketing and will pay more than $1.6 million to settle FTC charges that the company and its telemarketer made illegal robocalls to consumers, including tens of millions of calls to numbers listed on the agency’s DNC Registry. In addition, the defendants will turn over a residential property as part of the settlement. The complaint names as defendants: Environmental Safety International, Inc. or ESI; ESI’s two officers, brothers Joseph Carney and Sean Carney; and their other brother Raymond Carney.

Career Education Corporation (CEC) and its subsidiaries, American InterContinental University, Inc., AIU Online, LLC, Marlin Acquisition Corporation, Colorado Technical University, Inc., and Colorado Tech., Inc. (collectively, CEC), has been ordered to pay $30 million to the FTC to settle Federal Trade Commission charges that the operator used sales leads from lead generators that falsely told consumers they were affiliated with the U.S. military, and that used other unlawful tactics to generate leads. CEC’s lead generators also induced consumers to submit their information under the guise of providing job or benefits assistance. The FTC also charged that CEC’s lead generators falsely told consumers that their information would not be shared, and that both CEC and its lead generators illegally called consumers registered on the National Do Not Call (DNC) Registry.

The Federal Trade Commission is sending nearly $30 million in refunds to people tricked by agents working on behalf of Career Education Corporation (currently operating as Perdoceo Education Corporation), the operator of several post-secondary schools.

The Federal Trade Commission is sending full refunds totaling more than $11 million to consumers who lost money to a bogus credit card interest rate reduction scheme operated by E.M. Systems & Services.

The FTC and the State of Florida alleged that the company’s owners, Steven D. Short and Karissa L. Dyar, used a variety of phony business names with associated websites, cold-called consumers with credit card debt and falsely promised to save them thousands of dollars by reducing their credit card interest rates. The FTC says that the defendants charged an up-front fee between $695 and $1,495, and falsely promised to provide refunds to consumers if they failed to reduce the interest rates.

In April 2021, the FTC used funds from this case to provide $11 million in redress to consumers harmed by the E.M. Systems and Services scam.

The Federal Trade Commission, along with 46 agencies from 38 states and the District of Columbia, has stopped a massive telefunding operation that bombarded 67 million consumers with 1.3 billion deceptive charitable fundraising calls (mostly illegal robocalls). The defendants collected more than $110 million using their deceptive solicitations. Associated Community Services (ACS) and a number of related defendants have agreed to settle charges by the FTC and state agencies that they duped generous Americans into donating to charities that failed to provide the services they promised.

Online fashion retailer Fashion Nova will pay $9.3 million to settle Federal Trade Commission charges that it didn’t properly notify consumers and give them the chance to cancel their orders when it failed to ship merchandise in a timely manner, and that it illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds.

The DOJ, at the FTC’s request, filed suit in federal district court charging that satellite television provider Dish Network, directly and through its authorized dealers, called numerous consumers whose numbers are on the National Do Not Call Registry. The United States also charged Dish Network, previously known as EchoStar, with violating the Telemarketing Sales Rule (TSR) by assisting and supporting its authorized dealers in telemarketing Dish Network services via “robocalls” that deliver prerecorded telemarketing messages when consumers answer their phones.  

In December 2020, Voice over Internet Protocol (VoIP) service provider Alcazar Networks Inc. and its owner settled FTC charges that they facilitated tens of millions of illegal telemarketing phone calls, including some calls from overseas and some that displayed spoofed caller ID numbers. The proposed settlement bars the defendants from similar misconduct in the future, imposes a monetary penalty, and requires them to screen and monitor their customers. This was the FTC’s second case against a VoIP service provider.

A sprawling fundraising operation that allegedly scammed consumers out of millions of dollars will be permanently banned from charitable fundraising along with its owner and others involved in its operation as a result of a lawsuit brought by the Federal Trade Commission and Attorneys General of New York, Virginia, Minnesota, and New Jersey.

The operation is made up of multiple companies all under the control of owner Mark Gelvan, along with his associates Thomas Berkenbush, William English, and Damian Muziani. The complaint filed by the FTC and the states alleges that the defendants served as the primary fundraisers for a number of sham charities that were the subject of numerous law enforcement actions.

At the FTC’s request, in May 2019 a U.S. district court in Florida granted summary judgment against two individuals, approved six settlement agreements involving 11 defendants, and entered a default judgment against the remaining seven defendants, officially ending the massive Pointbreak Media robocall scheme. In August 2020, the FTC returned more than $70,000 to consumers defrauded through the scheme.

In December 2018, the operators of a student loan debt relief scheme agreed to pay approximately $1.3 million to settle Federal Trade Commission allegations that they pretended to be affiliated with the U.S. Department of Education or with consumers’ loan servicers, and tricked consumers into believing that illegal upfront fees were being used to pay off their student loans. In July 2020, the FTC announced it was mailing checks totaling more than $1 million to individuals who lost money to the scheme.

The operators of a work-from-home scheme and the CEO of their main affiliate marketing network agreed to pay nearly $1.5 million to settle Federal Trade Commission allegations that they used misleading spam emails to lure consumers into buying work-from-home services. 

In their complaint against Madera Merchant Services and B&P Enterprises, the Federal Trade Commission and the Ohio Attorney General allege that the companies generated and processed remotely created payment orders (RCPOs) or checks that allowed many unscrupulous merchants, including deceptive telemarketing schemes, to withdraw money from their victims’ bank accounts. The FTC’s Telemarketing Sales Rules (TSR) specifically prohibits the use of RCPOs in connection with telemarketing sales. The court issued temporary restraining orders against Madera Merchant Services and B&P Enterprises, halting their operations and freezing their assets. The defendants and the FTC have agreed to a stipulated Preliminary Injunction in this matter. The defendants agreed to a settlement with the FTC in 2020 that permanently banned them from payment processing.

One of the biggest payment processing companies and its former executive will pay more than $40.2 million to settle Federal Trade Commission charges they knowingly processed payments and laundered, or assisted laundering of, credit card transactions for scams that targeted hundreds of thousands of consumers.

The FTC alleged that First Data Merchant Services, LLC and its former vice president, Chi “Vincent” Ko, allegedly ignored repeated warnings from employees, banks, and others that they were laundering, or assisting laundering, and facilitating payments for companies that were breaking the law over a number of years.

A Canadian company, RevenueWire, and its CEO, Roberta Leach, will pay $6.75 million to settle Federal Trade Commission charges they laundered credit card payments for, and assisted and facilitated, two tech support scams previously sued by the FTC. According to the FTC, RevenueWire entered into contracts with payment processors to obtain merchant accounts to process credit card charges for its own sales of eBooks and software. The contracts prohibited RevenueWire from submitting third-party sales through its merchant accounts. In reality, however, RevenueWire used its accounts to process credit card charges and collect payments from consumers on behalf of ICE and Vast, two companies that allegedly used tech support scams to bilk consumers out of millions of dollars.

The Federal Trade Commission is sending refunds totaling more than $6.9 million to small businesses, non-profits, and government agencies targeted by an office supply telemarketing scam that charged them for products they did not order. The FTC alleged that defendants’ victims included child care centers, schools, and police and fire departments.

In March 2020, Nevada-based Health Center, Inc. (HCI) and its owner Peggy Pearce agreed to halt their allegedly deceptive advertising claims about three “cure-all” health and wellness products that targeted older consumers nationwide, in a settlement with the Federal Trade Commission. The order settling the FTC’s complaint prohibits HCI and Pearce from such deceptive conduct and imposes a partially suspended monetary judgment.