Operators of Government Imposter Scheme to Pay $1.2 Million In Settlement With FTC, State of Florida

The operators of a scheme that targeted new businesses across the country with bogus threats of government fines will pay $1.2 million and be banned from sending unsolicited direct mail under a settlement with the Federal Trade Commission and the State of Florida.

The FTC and the State of Florida alleged that Thomas Henry Fred, Jr., and three companies that he owns, sent thousands of businesses mailers designed to look like invoices from a government agency for labor law posters. 

“Just because an invoice looks official doesn’t mean it is,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “If you get an official-looking bill that you don’t understand, call the government agency directly using the number you find online or in a local directory, not the one on the mailer.”

The defendants’ mailers directed businesses to pay $84 for labor law posters and threatened that, “Failure to comply with posting regulations can lead to fines of up to $17,000.” Such posters are available for free from government agencies.

The settlement imposes judgments totaling more than $8 million, which are suspended due to the defendants’ inability to pay. They will instead pay $1.2 million that will be returned to businesses that lost money to the scheme. If the defendants were not truthful about their financial condition, the full amount will be immediately payable.

In addition to being permanently banned from sending unsolicited direct mail to consumers, the defendants will also be banned from misrepresenting themselves as a government agency, or misrepresenting that any goods or services they sell are being offered on behalf of a government agency.

The Commission vote approving the stipulated final order was 5-0. The FTC filed the proposed order in the U.S. District Court for the Southern District of Texas.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

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