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Tag: FTC Act

  • FTC: Spammer/Scammer Who Sent ‘Mind-Boggling’ Number Of Text Messages And Traded On Name Of Government Hit With Judgment, Ban

    Phillip A. Flora of Huntington Beach, Calif., caused cell-phone bills to rise when he sent millions of unsolicited text messages. Flora sent at least 5 million such messages, a number the FTC described as mind-boggling when it sued him in February for violating the CAN-SPAM Act and the FTC Act.

    But spam was only part of the problem, the FTC said. Flora also was hawking purported mortgage-relief and debt-reduction “programs” — and trading on the name of the government and using the symbols of government to do so.

    Spam recipients were instructed to visit a website known as loanmod-gov.net. The site “claimed to provide ‘Official Home Loan Modification and Audit Assistance Information,’ and displayed a photo of an American flag,” the FTC said.

    To dial up the fraud, Flora also sold “leads” generated by his spamming to third parties.

    The FTC and Flora have settled the case. Flora was hit with a judgment of $58,946 and enjoined from breaking the law. The judgment will be satisfied when Flora pays $32,000. The balance will be suspended because of Flora’s inability to pay, but will be reimposed if he lied about his financial affairs, the FTC said.

    Flora agreed to a permanent injunction and the judgment without acknowledging he broke the law, according to the settlement agreement.

  • FTC: California Internet Marketer Duped Brits By Making Them Believe He Was Operating In United Kingdom; $500,000 Judgment Entered Against Jaivin Karnani And ‘Balls of Kryptonite’

    UPDATED 12:15 P.M. ET (U.S.A., FEB. 6, 2012) An Internet Marketer based in Calfornia used domains with “co.uk” extensions and duped British customers into believing they were doing business with a firm based in the United Kingdom, the Federal Trade Commison said.

    The actions of Jaivin Karnani and his associated firms, including a company known as “Balls of Kryptonite,” led to Brits being charged “unexpected import duties” while leaving them with worthless warranties.

    When customers tried to cancel their orders, they were hit with “draconian” cancellation and refund fees, the FTC charged.

    Karnani and his firms, which sold cameras, video games and other electronics, have been bit with a $500,000 court judgment. Under the terms of a settlement with the FTC in which the defendants neither admitted nor denied the allegations, the judgment was waived because of the defendants’ professed inability to pay.

    The settlement prohibits Karnani and the companies from engaging in deceptive business practices and from violating the Mail Order Rule. The FTC was assisted in its investigation by the U.K. Office of Fair Trading.

    U.S. investigators brought the action under provisions added to the FTC Act by the U.S. SAFE WEB Act of 2006, the FTC said.

    “SAFE WEB confirmed the agency’s authority to sue U.S.-based wrongdoers who harm consumers abroad, as part of a strategy to prevent the United States from becoming a haven for fraud,” the agency said.

    Read the FTC’s amended complaint. The complaint alleges Karnani also operated a Belize company known as Intrigue Inc., which also did business from California.

    As part of the overall fraud, the FTC said, British customers often did not receive what they ordered — instead receiving undisclosed “substitutions” unintended for sale outside the United States and perhaps even inoperable in the United Kingdom, along with an explanation that the ordered merchandise was out of stock.

    The defendants, though operating from California, used pricing schemes and the name of the Royal Mail as pretexts to advance the scheme, the FTC charged.

  • FTC: Company Sold Bogus ‘Green’ Certifications To ‘Anyone Willing To Pay A Fee’; Firm Known As ‘Tested Green’ Hawked ‘Worthless Labels,’ Agency Says

    A company that called itself “Nonprofit Management LLC” and did business as “Tested Green” sold bogus environmental certifications and ramped up the deception by implying it was independently endorsed by the National Green Business Association and the National Association of Government Contractors, the FTC said.

    Not only were the environmental certifications bogus, the purported endorsements were deceptive because Jeremy Ryan Claeys, who owned both Nonprofit Management and Tested Green, also owned the purported associations that provided the endorsements, the FTC said.

    “It’s really tough for most people to know whether green or environmental claims are credible,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection.

    The purported “green” operation was designed to harvest money, the FTC said.

    “Tested Green never tested any of the companies it provided with environmental certifications, and would ‘certify’ anyone willing [to] pay a fee of either $189.95 for a ‘Rapid’ certification or $549.95 for a ‘Pro’ certification,” the FTC said. “After customers paid, Tested Green gave them its logo and the link to a ‘certification verification page’ that could be used to advertise their ‘certified’ status. The agency charged that the respondents violated the FTC Act by providing the means to deceive consumers.”

    Although Tested Green billed itself “the nation’s leading certification program for businesses that produce green products or use green processes in the manufacture of goods and services,” the labels it sold were worthless, the FTC said.

    Claeys settled the FTC civil case by agreeing to a ban on making deceptive claims.