FTC and Law Enforcement Partners Continue Targeting Scammers of Spanish-Speakers

The Federal Trade Commission and state and local law enforcement officials today announced 55 law enforcement actions as part of their ongoing collaborative campaign to stop fraud exploiting the Hispanic community. The actions involve a range of products and services, including prize-promotion scams, purported weight-loss supplements, immigration fraud, bogus high school diplomas, and mortgage fraud.

The announcement came during the Hispanic Law Enforcement and Outreach Forum in Miami, Florida, which marked the one-year anniversary of the FTC’s Hispanic Law Enforcement and Outreach Initiative and highlighted recent federal, state, and local efforts to protect Hispanic consumers from fraud. The FTC also unveiled a new Spanish-language consumer Web site, www.ftc.gov/espanol, and announced the publication of new Spanish-language consumer education materials on prize promotions and getting credit.

Today’s event is part of a series of workshops the FTC and the U.S. Postal Inspection Service are hosting in Hispanic communities across the country to bring local law enforcement and Hispanic community leaders together in the fight against fraud. The workshops aim to identify local problems and discuss ways to address them; facilitate open dialogue with local government, consumer groups, and members of the Hispanic community on issues affecting Hispanic consumers; and share consumer education resources to help local communities conduct outreach about fraud and how to report it.

The FTC and the U.S. Postal Inspection Service previously hosted outreach workshops in Chicago and Dallas, and are planning events in Phoenix and Los Angeles for later this year. In addition, the FTC, the Montgomery County, Maryland, Division of Consumer Affairs, and AARP will co-host a Hispanic Symposium on June 23 in Montgomery County, Maryland.

“These workshops play an important role in bringing local law enforcement and community leaders together – often for the first time – to discuss the issues most relevant to the Hispanic community and build lasting partnerships to help fight fraud,” said Andrea Foster, Director of the FTC’s Southeast Region.

Law Enforcement Actions

Since the FTC announced its Hispanic Law Enforcement and Outreach Initiative in April 2004, the FTC has brought more than 20 cases against a variety of frauds targeting Hispanics, including:

• Frauds targeting immigrants, such as fake international driver’s permits, bogus English-language courses, and green card lotteries;
  
  
• Financial frauds, such as advance fee loan credit cards and credit repair;
  
  
• Employment-related frauds, such as work-at-home and business opportunity scams; and
  
  
• Health fraud, including bogus weight-loss supplements and “miracle” health cures.

At the Miami event, the FTC announced the following law enforcement actions, including three new complaints (one with a proposed settlement), and one settlement of a previously filed action:

Del Sol, LLC

The FTC filed a complaint against California-based Del Sol LLC, also doing business as Del Sol Educational, and its owner, Fernando Lopez Gonzalez, alleging that their telemarketing campaign targeted Spanish-speaking consumers and deceived them into paying hundreds of dollars for cheap merchandise with the promise of a valuable “prize,” such as a laptop computer or digital video camera. According to the FTC, consumers who participate in the purported prize offer must spend approximately $213-$250 for merchandise, which defendants claim includes designer perfumes, name-brand watches, and music CDs. Instead of the promised brand-name goods and valuable prizes, consumers allegedly received cheap, knock-off merchandise and inexpensive electronic gadgets, and were unable to get refunds. The FTC filed its complaint in the U.S. District Court for the Central District of California on April 25, 2005. That day, the court granted the FTC’s request for a temporary restraining order halting the defendants’ illegal business practices and freezing their assets.

The FTC received valuable assistance from the U.S. Postal Inspection Service, the Arkansas Attorney General’s Office, and the North Carolina Attorney General’s Office in this matter. The states of Arkansas and North Carolina also have initiated separate actions against Del Sol. For more information, see the attached list highlighting the FTC’s partners’ actions.

Direct-Prom, Inc.

The FTC is filing a complaint against Direct-Prom, Inc. and its principal, Ramiro Mailland, along with a proposed stipulated final order to settle charges that they deceptively advertised a purported “carb blocker” weight-loss supplement on Spanish-language radio and television stations. The defendants allegedly made false claims that their product, “ReduCarb,” causes substantial weight loss in a short time and without any change in diet, and unsubstantiated claims that ReduCarb causes weight loss and works by blocking carbohydrates. The proposed stipulated final order would bar the defendants from making the challenged false claims for ReduCarb and similar weight-loss products in the future, and from making false or unsubstantiated claims for any product, service, or program. The order contains a $1.97 million suspended judgment, which would become immediately due if it is found that the defendants misrepresented their financial condition. Direct-Prom is currently in Chapter 7 bankruptcy proceedings, and the bankruptcy trustee will liquidate the business in accordance with Chapter 7 requirements. The complaint and stipulated final order are being filed in the U.S. District Court for the Western District of Texas on May 17, 2005. The stipulated final order is subject to court approval.

Femina, Inc.

The FTC announced that the defendants have agreed to settle the November 2004 complaint against Femina, Inc. and its owner, Husnain Mirza, alleging that they made misleading claims for “1-2-3 Reduce Fat,” “Siluette [sic] Patch,” and “Fat Seltzer Reduce” in Spanish-language advertising. The FTC later amended its complaint to include Ines Cinthya Karina Arroyo as a defendant. The settlement order permanently bars the defendants from making unsubstantiated claims that any product causes rapid, substantial weight loss in all users; causes rapid, substantial weight loss without the need to diet or exercise; reduces or eliminates body fat; reduces or eliminates cellulite; or controls metabolism. The settlement order contains a suspended $43,000 judgment, which will immediately become due if it is found that the defendants misrepresented their financial situation. The stipulated final order was filed in the U.S. District Court for the Southern District of Florida on May 13, 2005, and requires court approval.

Success Vending

The FTC charged National Vending Consultants, Inc., Success Vending Group, Inc., and several related defendants with deceptively marketing vending machine business opportunities – with many marketing efforts specifically targeting Spanish-speaking consumers. According to the FTC complaint, the defendants allegedly claimed that the vending machines would yield “a 700% - 2000% Return on Investment!,” and that for a $9,995 investment, the vending machines would generate earnings of $700-$900 per week. The FTC also alleged that the defendants paid imposters to pose as successful vending machine owners. Numerous buyers who relied on the scam lost money. The FTC alleged that the defendants violated the FTC Act and the Franchise Rule by making deceptive earnings claims, lying about references to current customers, and failing to provide accurate and complete disclosure documents.

The FTC filed its complaint in the U.S. District Court for the District of Nevada on February 7, 2005. On February 8, the court issued a temporary restraining order halting the defendants’ allegedly illegal business practices, freezing their assets, and appointing a receiver to take over the business. On April 27, the court entered a preliminary injunction upholding the conditions of the temporary restraining order, and specifically prohibiting defendants from making misrepresentations regarding earnings potential, the availability of locations for the vending machines, the authenticity of references, and the timely delivery of the the machines.

The Commission vote in each case was 5-0.

Educational Outreach

The FTC’s Hispanic Initiative includes a significant outreach component that includes disseminating consumer information in Spanish, providing consumer news to the Spanish-language media, and building partnerships with organizations, businesses, and leaders in the Hispanic community. The FTC recently created a new Web site, www.ftc.gov/ojo, for its Spanish-language consumer fraud awareness campaign, “OJO - Mantente alerta contra el fraude. Infórmate con la FTC” (“Be on the alert against fraud. Stay alert with the FTC”). The FTC launched the OJO campaign in September 2004 with a series of radio public service announcements and website banner ads geared toward Latino audiences; it is being piloted in 11 major Hispanic markets.

The FTC has more than 100 publications in Spanish, including one issued today on prize-promotion scams entitled “Prize Offers: You Don’t Have to Pay to Play!.” Consumers can find them at www.ftc.gov/espanol. Since October 2004, the FTC has disseminated more than 90,000 Spanish-language consumer publications, and has received an average of 40,000 hits monthly to ftc.gov/espanol, a 33 percent increase over the prior year. In addition to the OJO Web site, the FTC has five Spanish-language “micro sites” on credit, business opportunities and work-at-home scams, identity theft, information security, and diet and fitness. Most recently, the FTC released a Spanish version of its “Getting Credit” publication, a booklet for young people on how to build and maintain good credit. The FTC today announced a partnership with Miami Dade College, InterAmerican campus, in which the school will provide the new booklet to all incoming students.

The FTC wants to hear from Spanish speakers who want to get information about consumer rights or to complain about consumer fraud. The agency’s objective is to let Spanish speakers know how they can identify and avoid fraudulent and deceptive practices and where they can report them.

A Nationwide Network of Partners

The FTC and state and local officials nationwide are working together to address ways to prevent and stop fraud against Hispanic consumers. The FTC’s partners include the Arkansas Attorney General’s Office; the Florida Attorney General’s Office; the Florida Division of Consumer Affairs; the Illinois Attorney General’s Office; the Kansas Attorney General’s Office; the County of Los Angeles – Department of Consumer Affairs; the Miami-Dade County Consumer Services Department; the Miami, Florida, State Attorney’s Office; Montgomery County, Maryland, Division of Consumer Affairs; the New York Attorney General’s Office; the North Carolina Attorney General’s Office; and the Texas Attorney General’s Office.

To protect Hispanic consumers from fraud, the partners have launched consumer protection campaigns, hosted workshops and fairs, formed public/private task forces to share information on frauds targeting Spanish-speaking consumers, and/or filed lawsuits against perpetrators of fraud directed to the Hispanic community. The lawsuits included a bogus high school diploma scheme; advance-fee loan credit cards; fraudulent immigration services; fraudulent tax preparation services; bogus international drivers permits; an identity theft and mortgage fraud scam; marinating sauce sold primarily to Hispanic consumers packaged in amounts less than advertised; and a fraudulent prize promotion scheme. (See attached list of partners’ law enforcement and outreach activities.)

NOTE: The Commission files a complaint when it has “reason to believe”that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

NOTE: These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final orders have the force of law when signed by the judge.

Copies of the documents mentioned in this press release are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to civil and criminal law enforcement agencies in the U.S. and abroad.

(Del Sol: FTC File No. 052-3020; Civ. No. CV-05-3013 GAF (RCx)
(Direct-Prom: FTC File No. 042-3049; Civ. No.Civ. Not Available at Press Time)
(Femina: FTC File No. X05-0008; Civ. No. 04-61467-CIV-Altonaga)
(Success Vending: FTC. File No. X000039; Civ. No. CV-S-05-0160)