FTC ANNOUNCES DECEPTIVE AUTO LOAN CASES SETTLED

FROM:  U.S. FEDERAL TRADE COMMISSION 
In First FTC Cases Against Car Title Lenders, Companies Settle Charges They Deceptively Advertised the Cost of Their Loans
Businesses Failed to Disclose Qualifications for “Zero Percent” Loan Offers
FOR RELEASE
January 30, 2015

The Federal Trade Commission has taken action for the first time against two car title lenders, reaching settlements that will require them to stop their use of deceptive advertising to market title loans.

A car title loan is typically a high cost, short-term loan, secured with the consumer’s car title. In administrative complaints issued against two title lenders, First American Title Lending of Georgia, LLC, and Finance Select, Inc., the FTC charged that the companies advertised, both online and in print, zero percent interest rates for a 30-day car title loan without disclosing important loan conditions or the increased finance charge imposed after the introductory period ended.

“This type of loan is risky for consumers because if they fail to pay, they could lose their car – an asset many of them can’t live without,” said Jessica Rich, director, FTC’s Bureau of Consumer Protection. “Without proper disclosures, consumers can’t know what they’re getting, so when we see deceptive marketing of these loans we’re going to take action to stop it.”

While advertised as short-term loans, title loans can become longer-term, high cost installment loans with payments due over several months. The annual percentage rate of a car title loan can be over 300 percent. If a consumer does not repay the loan within 30 days, high finance charges can add up quickly, with a consumer paying hundreds or thousands of dollars in fees or forfeiting the vehicle.

The FTC charged that First American Title Lending, which operates over 30 locations in Georgia, advertised a zero percent offer (in English and Spanish) and failed to disclose that the borrower had to meet specific conditions to receive that rate. The borrower had to be a new customer, repay the loan within 30 days, and pay with a money order or certified funds, not cash or a personal check. If a borrower failed to meet those conditions, the offer did not apply, and he or she would be required to pay a finance charge from the start of the loan. The company’s advertisements also failed to disclose the amount of the finance charge after the introductory period ended.

The FTC alleged Finance Select, doing business as Fast Cash Title Pawn, failed to disclose that unless a loan was paid in full in 30 days, the zero percent offer did not apply, and that a borrower would have to pay a finance charge for the initial 30 days of the loan in addition to any finance charges incurred going forward. Fast Cash, which has five locations across Georgia and two in Alabama, also failed to disclose how much the finance charge would cost a borrower after the 30-day introductory period was over.

As part of the proposed settlements with First American Title Lending and Fast Cash Title Pawn, the respondents are prohibited from:

failing to disclose all the qualifying terms associated with obtaining a loan at its advertised rate;
failing to disclose what the finance charge would be after an introductory period ends; and
misrepresenting any material terms of any loan agreements.
In addition, First American Title Lending is also prohibited from stating the amount of any down payment, number of payments or periods of repayment, or the amount of any payment or finance charge without clearly and conspicuously stating all the terms required by the Truth in Lending Act and Regulation Z.

These cases are part of the FTC’s ongoing effort to protect consumers in the short-term lending and auto marketplaces. The agency’s guidance, Caution: Car Title Loans Can Leave You Stranded, encourages consumers to shop around for their loan, and to look to their bank or other lenders for options that may be more affordable than a car title loan.

The Commission vote to issue the administrative complaints and accept the proposed consent orders for public comment was 5-0. The agreements will be subject to public comment for 30 days, beginning today and continuing through March 3, 2015, after which the Commission will decide whether to make the proposed consent orders final. Submit comments for Fast Cash Title Pawn and First American Title Lending online.

NOTE: The Commission issues an administrative 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. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

COURT HALTS SUPPLEMENT MARKETERS FROM DECEPTIVE ADS, ILLEGAL DEBITING OF ACCOUNTS

FROM:  U.S. FEDERAL TRADE COMMISSION 

At FTC’s Request, Court Stops Supplement Marketers From Deceptive Advertising and Illegally Debiting Consumers’ Accounts

At the Federal Trade Commission’s request, a U.S. district court has temporarily stopped a group of marketers in Nevada and California from conducting business using “free” trial offers and health claims that the agency charges are deceptive and illegal to pitch green coffee bean extract and another dietary supplements. The FTC is seeking to permanently stop their allegedly deceptive conduct.

This is the first FTC action alleging violations of the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits marketers from charging consumers in an Internet transaction, unless the marketer has clearly disclosed all material terms of the transaction and obtained the consumers’ express informed consent.

“The defendants behind Simple Pure used nearly every trick in the book to deceive consumers,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “They not only deceived consumers about the effectiveness of their products, but also repeatedly debited consumers’ accounts without their approval.”

According to the FTC’s complaint, Health Formulas, LLC, its related entities, and principals (Simple Pure) use telemarketing, the Internet, print, radio, and television advertisements to pitch a variety of dietary supplements and other weight-loss, virility, muscle-building, or skin cream products. Examples of Simple Pure’s advertising claims include: 1) “Burn fat without diet or exercise”; 2) “Shed pounds fast!” and 3) “Extreme weight loss!”  The FTC alleges that the defendants have no basis for the weight-loss claims they make about their products.

In addition, the defendants allegedly trick consumers into disclosing their credit and debit card information, and then enroll them without authorization in a negative option program in which defendants continually charge consumers’ accounts. The charge for Simple Pure’s weight-loss supplements, with names like Pure Green Coffee Bean Plus and RKG Extreme, typically ranges from $60 to $210 per month. Some consumers were sold additional products that cost between $7.95 and $60.

The FTC charges that the defendants failed to provide the disclosures required for a negative-option program, failed to provide a way for consumers to stop the automatic charges, and also failed to disclose material facts about their refund and cancellation policy.

The complaint charges the defendants with violating the FTC Act, the ROSCA, and the Commission’s Telemarketing Sales Rule (TSR). It also charges the defendants with violating the TSR’s Do Not Call provisions by calling consumers who had asked them to stop calling. Finally, the complaint charges the defendants with violating the Electronic Funds Transfer Act by debiting consumers’ accounts on a recurring basis without their prior written authorization.

Defendants in the case include: 1) Health Formulas, LLC, also doing business as (d/b/a) Simple Pure Nutrition; 2) Pure Vitamins, LLC; 3) Longhorn Marketing, LLC also d/b/a Men’s Health Formulas, LLC, Life Vitamins, and Unleash the Thunder; 4) Method Direct, LLC, also d/b/a Extamax, LLC, Vitaman Labs, Inc., Vitafit, and Playboy Offer/DVD Entertainment; 5) Weight Loss Dojo, LLC, also d/b/a Fitness DVDs; 6) VIP Savings, LLC, also d/b/a VIP Saving Center; 7) DJD Distribution, LLC; 8) MDCC, LLC, also d/b/a Method Direct Calling Center; 9) Chapnick, Smukler & Chapnick, Inc.; and 10) Brandon Chapnick, Keith Smukler, Danelle Miller (also known as Danelle Folta and Danelle Kenealy), and Jason Miller, individually and as members of the corporate defendants.

Information for Consumers

Consumers should carefully evaluate advertising claims for weight-loss products. For more information, see the FTC’s guidance for consumers of products and services advertised for Weight Loss & Fitness. The FTC also has information about understanding free trial offers, including “Free” Trial Offers?, which includes a video on potential risks of such offers, and a short online audio tip on free trials.

The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Nevada on October 7, 2014, and the court entered a temporary restraining order against the defendants on October 9, 2014.

The FTC is a member of the National Prevention Council, which provides coordination and leadership at the federal level regarding prevention, wellness, and health promotion practices. This case advances the National Prevention Strategy’s goal of increasing the number of Americans who are healthy at every stage of life.

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.

FTC CHARGES SUPPLEMENT MARKETERS WITH MAKING DECEPTIVE CLAIMS

FROM: U.S. FEDERAL TRADE COMMISSION 

Supplement Marketers Settle FTC Charges that “BrainStrong Adult” Memory Improvement Claims Are Deceptive

Supplement marketers i-Health, Inc. and Martek Biosciences Corporation have agreed to settle FTC charges of deceptive advertising for claiming that their BrainStrong Adult dietary supplement will improve adult memory and prevent cognitive decline. The complaint also alleges the marketers falsely claimed they had clinical proof that BrainStrong Adult improves adult memory.

“Supplement marketers must ensure that adequate scientific proof supports their specific advertising claims,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.  “When the results of a scientific study don’t match the hype, consumers are likely to be misled.”

Since at least March 2011, i-Health and Martek have sold BrainStrong Adult for about $30 for a 30-day supply at major retail stores, including CVS Pharmacy, Walmart, Walgreens, and Rite Aid; and online through drugstore.com and Amazon.com.  They advertised the product – which contains the Omega-3 fatty acid DHA – on television, on Twitter, and at brainstrongdha.com.

In the television ad, a woman forgets why she walked into a room. Through a voice over, her dog tells the audience she is there to find her sunglasses, which are sitting on top of her head.  Another voice over then asks, “Need a memory boost?  Introducing BrainStrong…Clinically shown to improve adult memory.”

The proposed administrative settlement covers any dietary supplement, food, or drug promoted to prevent cognitive decline or improve memory, or containing DHA. It bars the companies from claiming that any such product prevents cognitive decline or improves memory in adults unless the claim is truthful and supported by human clinical testing. The settlement also prohibits claims about the health benefits, performance, safety, or effectiveness of these products unless the claims are backed up by competent and reliable scientific evidence. Finally, the companies cannot claim they have clinical proof to support their claims when they do not.

For consumer information see: What’s in a health claim? Should be a healthy dose of proof.

The Commission vote to accept the agreement containing the proposed consent order for public comment was 3-1-1, with Commissioner Ohlhausen voting no, and Commissioner McSweeny not participating. Chairwoman Ramirez and Commissioner Brill issued a joint concurring statement, Commissioner Wright issued a separate concurring statement, and Commissioner Ohlhausen issued a dissenting statement.

The FTC will publish a description of the consent agreement in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through July 9, 2014, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in “Supplementary Information” section of the Federal Register notice. Comments should be submitted electronically using this form. Instructions for submitting comments in paper form are listed in the “Accessibility” portion of the form.

NOTE: When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.

FTC SETTLES CHARGES REGARDING DECEPTIVE AD FOR NISSAN FRONTIER TRUCK

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Approves Final Consent Settling Charges Nissan Frontier Truck Ad Was Deceptive

Nissan North America, Inc., Advertising Agency TBWA Worldwide, Inc. Named in Case

Following a public comment period, the Federal Trade Commission has approved final consent orders settling charges that Nissan North America, Inc. and advertising agency TBWA Worldwide, Inc. deceptively advertised a Nissan Frontier truck pushing a dune buggy up a steep hill, something the truck actually cannot do.

First announced in January 2014, the settlements prohibit Nissan and TBWA Worldwide, which designed the 30-second television ad for the mid-sized truck, from misrepresenting any material quality or feature of a pickup truck through the depiction of a test, experiment, or demonstration. The orders do not prohibit the use of special effects and other production techniques as long as they do not misrepresent a material quality or feature of the pickup truck.

The Commission vote to approve the final order in this case was 4-0-1 with Commissioner McSweeny not participating.

FTC SETTLES DECEPTIVE AD CHARGES AGAINST TWO AUTO DEALERS

FROM:   FEDERAL TRADE COMMISSION 
FTC Approves Final Order Settling Charges Involving Two Auto Dealers’ Deceptive Ads

Following a public comment period, the Federal Trade Commission approved final consent orders settling charges that two automotive dealers deceptively advertised the cost or available discounts for their vehicles.

The FTC charged Don White’s Timonium Chrysler Jeep Dodge of Cockeysville, Md., with advertising “dealer discounts” and “internet prices” not available to a typical consumer. Ganley Ford West, Inc., in Cleveland, was charged with misrepresenting that vehicles were available at a specific dealer discount, when in fact the discounts only applied to specific, and more expensive, models of the advertised vehicles.

Under the settlements, both dealers are prohibited from advertising discounts or prices unless the ads clearly disclose any qualifications or restrictions. The settlements also prohibit the auto dealers from making misrepresentations regarding the existence, price, value coverage, or features of any product or service associated with the motor vehicle purchase, and the number of vehicles available at particular prices.

Both cases are part of the FTC’s ongoing efforts to combat deceptive motor vehicle dealer practices. The FTC announced these cases in September 2013 as well as a nationwide sweep against 10 other dealers in January 2014.

The Commission vote to approve the final orders was 4-0.

CONSUMERS TO RECEIVE REFUND CHECKS FOR CERTAIN "COLON CLEANSER" PURCHASES

FROM:  U.S. FEDERAL TRADE COMMISSION 
FTC Sends Refund Checks Totaling nearly $6 Million to Consumers Who Bought Dietary Supplements

An administrator working for the Federal Trade Commission is mailing 316,716 checks averaging $18.74 each to consumers who purchased acai berry supplements, “colon cleansers,” and other products from Phoenix-based Central Coast Nutraceuticals, Inc.

In August 2010, the FTC charged Central Coast Nutraceuticals, two individuals, and four related companies with multiple violations, including unfair billing practices, and deceptively advertising Acai Pure, an acai berry supplement, as a weight-loss product, and Colotox, a colon cleansing supplement, as an aid for preventing cancer.

The checks, which total $5,936,243.63, must be cashed within 60 days after they are issued.  The deadline for filing a refund request has expired.  Consumers who have questions should call (877) 283-6531.  For more general information, see www.FTC.gov/refunds.  The FTC never requires consumers to pay money or provide information before redress checks can be cashed.

Consumers should carefully evaluate advertising claims for dietary supplements.  For more information see:  Dietary Supplements.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.