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March 2017

FTC Charges Marketers of Invention Promotion Scheme with Deception and Unfairly Suppressing Consumer Criticism

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Consistent with recent remarks by acting Chairman Maureen Ohlhausen regarding re-focusing the agency on its “bread-and-butter fraud enforcement” priorities, the Federal Trade Commission has charged the operators of a patent and invention-promotion scam with deceiving consumers and suppressing complaints about the company by using threats of criminal prosecution.

In a recently issued press release, the FTC has stated that “[t]hrough TV ads, telemarketing, and the internet, the Florida-based defendants tout their services as a way for inventors to patent their products and make big money. According to the FTC, in their initial conversation with an inventor, the defendants’ sales people invariably praise the invention, but say they need “Board” or “Team” approval. Then comes the call saying the invention has been “accepted,” and that if the inventor signs up for the defendants’ services, they’re likely to realize financial gain and possibly see their product sold at big-name retail stores.”

As alleged by the FTC, consumers paid defendants thousands of dollars to patent and market their inventions based on bogus “success stories” and testimonials. Subsequently, according to the Commission, defendants strung consumers along and did not deliver what was promised.

The FTC also alleges that defendants used unfair tactics to discourage consumers from publishing reviews about the service, including threats of legal action, criminal charges and prison. For example, according to the FTC, one customer who sought a refund and filed a complaint with the Better Business Bureau received a letter from defendants’ attorney stating that seeking a refund was extortion under Florida law.

Defendants also allegedly linked to a company blog that claimed a consumer who visited their office was expelled by the company’s “intimidating security team, all ex-Israeli Special Ops and trained in Krav Maga, one of the most deadly of the martial arts.”

“This case is about protecting innovators, the engine of a thriving economy,” Acting FTC Chairman Maureen K. Ohlhausen said. “The defendants promised to promote people’s inventions and took thousands of dollars, but provided almost no service in return. Then they added insult to injury by threatening people who complained.”

A copy of the Complaint can be seen, here (Federal Trade Commission v. World Patent Marketing, Inc., et al.).  The FTC press release can be seen, here.

The assets of the Florida-based enterprise have been frozen, pending litigation.

Contact a Federal Trade Commission investigation and defense lawyer if you are the subject of a local, state AG or federal regulatory enforcement investigation or action.

HINCH NEWMAN LLP ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result

 

 

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