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Pace Lattin

Pace Lattin has 19 articles published.

FTC Reveals Social Media Influencers Guidelines

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The Federal Trade Commission wants social media influencers to shape up when it comes to disclosure of sponsorships and other financial ties. In a Twitter Q&A about its policies yesterday, the group held up a recent settlement with YouTubers endorsing a Counter-Strike betting site they owned as an example of its increased attention on the subject, saying it had also sent 21 warning letters to other influencers engaged in suspect behavior.

Over the course of the Q&A, the FTC warned influencers not to rely on disclosures built into social media platforms, specifically stating that its staff does not believe YouTube’s “includes paid promotion” mark, the “Paid” tag on Facebook, or Instagram’s default disclosure to be adequate. However, not all of the guidelines were so straight forward. Putting “#ad” on a sponsored Twitter post should be sufficient, but if it’s in the midst of a number of hashtags people are likely to skip over, then it might not be considered adequate disclosure. Additionally, tags like “#spon,” “#ambassador,” and “#collab” are considered too ambiguous, as is a generic “thanks.”

All of these disclosures must be made up front in hard to miss fashion. That means it’s not enough to include full disclosure if it’s hidden behind the “More” button in a YouTube video’s description. If the platform in question is Snapchat or Instagram, the FTC wants to see the disclosure superimposed directly over the images. Even a Facebook “like” counts as an endorsement, although the FTC acknowledged there’s no method for disclosure in that system.

Disclosures are also required on reviews of items the influencer received for free, even if there was no payment involved and no agreement that anything would be posted in exchange for the item. The FTC said that counts as an ad, suggesting that any YouTuber relying on review keys must clearly disclose whatever content comes from that as sponsored material.

That may seem to be holding influencers to a higher standard of disclosure than more established media outlets, but the FTC insists it is not because the audience of those traditional outlets understands the nature of the relationship better.

“If you’re employed by a newspaper or TV station to give reviews – whether online or offline – your audience probably understands that your job is to provide your personal opinion on behalf of the newspaper or television station,” it stated in a FAQ for its guidelines. “In that situation, it’s clear that you did not buy the product yourself – whether it’s a book or a car or a movie ticket. On a personal blog, a social networking page, or in similar media, the reader might not realize that the reviewer has a relationship with the company whose products are being recommended. Disclosure of that relationship helps readers decide how much weight to give the review.”

As for the obligations of brands and advertisers who use influencers, they seem easier to fulfill. The FTC says they should give influencers advice about proper disclosure, then monitor to ensure it is followed. If not, the brand should follow up with the influencer, “But if an influencer doesn’t listen & is dismissed, then that’s all brand can do.”

FTC and Florida AG Shut Down Massive Debt Relief Scam in Florida

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Florida Attorney General Pam Bondi and the Federal Trade Commission jointly obtained a court order against a debt relief operation that they allege bilked millions of dollars from customers.

According to their complaint, filed in the U.S. District Court in the Southern District of Florida, Jeremy Lee Marcus, Craig Davis Smith and Yisbet Segrea set up 11 debt relief companies, which all listed their address at 1410 S.W. Third St. in Pompano Beach.

The defendants allegedly persuaded consumers to pay hundreds or thousands of dollars a month by falsely promising to pay, settle or obtain dismissals of consumers’ debts and improve consumers’ credit.

“Despite alleged promises, the victims of this scam ended up with little or nothing to show for their payments and were made worse off financially,” Bondi said in a statement. “I will continue to work with our federal partners to stop scammers targeting and exploiting consumers in search of financial help.”

The defendants promised guaranteed debt consolidation loans with attractive interest rates and significantly lower monthly payments, the complaint alleged. In addition, the complaint said that the defendants falsely claimed nonprofit status to appear more legitimate.

The court order prohibits the three defendants and their companies from misrepresenting their services to clients, claiming to be a nonprofit or claiming a debt relief program will improve consumers’ creditworthiness.

The defendants are all alleged in the complaint to have violated the Florida Deceptive and Unfair Trade Practices Act, the FTC Act and the FTC’s Telemarketing Sales Rule.

Shark Tank Breathometer Was Complete Fraud: Ordered to Refund all Customers

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Being on Shark Tank can make you often a star. However, One of Shark Tank’s highest-profile deals—for a smartphone breathalyzer—took a hit from the Federal Trade Commission Monday.

The FTC settled a complaint against Breathometer and its CEO and Shark Tank pitcher Charles Yim.

Yim had wowed the sharks with a 2013 pitch for the product—he got an unprecedented deal from all five sharks of $1 million for 30% of the company.

But the FTC, in announcing the complaint and settlement, said that though the ABC TV show’s stars had gone for the product “hook, line and sinker, the defendants’ deceptive claims about the accuracy of the devices’ readings left consumers floundering.”

That complaint was against the marketing of both the original device and a second iteration of the product called Breeze, a Bluetooth-enabled version billed as “law-enforcement grade.”

“People relied on the defendant’s products to decide whether it was safe to get behind the wheel,” said FTC Bureau of Consumer Protection director Jessica Rich. “Overstating the accuracy of the devices was deceptive — and dangerous.”

Breathometer will have to refund consumers $1 million after Breathometer learned of accuracy problems—users had a higher blood alcohol level than they were registering on the device and the device’s sensors deteriorated over time—but did not convey that to the thousands of customers who were already basing their decisions on whether they were safe to drive on the readings.

“So as late as February 2016, people could still buy Breeze from big-name national retailers even though Breathometer had known about the inaccurate results for more than a year,” said the FTC.

Breathometer is also disallowed from making similar accuracy claims with future breathalyzers, unless they undergo rigorous testing. This one should be easy enough, since the company no longer sells or manufactures breathalyzers.

If you picked up either the first-generation or Breeze breathalyzer, a request form will be available through Breathometer’s website to claim your refund.

Western Union to Pay $586 Million to Settle DOJ Money Laundering case

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Western Union will pay $586 million in customer refunds and beef up its money laundering and fraud protections after admitting to criminally violating the U.S. Bank Secrecy Act and federal anti-fraud regulations, according to the U.S. Department of Justice. The settlement also involves the Federal Trade Commission and covers conduct that took place between 2004 and 2012.

The federal government had been investigating the company to determine whether the Company’s oversight of agents, anti-fraud program and anti-money laundering controls adequately prevented misconduct by agents and third parties. The period in question ranged from 2004 to 2012, and part of the $586 million settlement will go to reimburse Western Union customers who were affected by fraud during that period due to Western Union’s alleged negligence.

The money will go toward compensating defrauded consumers. Western Union also has agreed to create policies that detail “corrective action” against agents who pose a risk of not complying with money laundering and anti-fraud laws; to make sure that all its agents around the world comply with those laws; and to report suspicious or illegal activity to authorities. An independent compliance auditor will oversee those actions for three years.

For its part, Western Union said it has increased its compliance spending by 200 percent over the last five years, to about $200 million annually, and that a fifth of its workforce now focuses on compliance issues. “The comprehensive improvements undertaken by the company have added more employees with law enforcement and regulatory expertise, strengthened its consumer education and agent training, bolstered its technology-driven controls and changed its governance structure so that its chief compliance officer is a direct report to the compliance committee of the board of directors,” Western Union said.

This recent settlement will also resolve potential claims by the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). FinCEN alleges Western Union violated the Bank Secrecy Act from 2010 to 2012.

Ashley Madison Doesn’t Have Money to Pay FTC Fine.

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Ashley Madison, the site which promotes cheating and STD sharing, has been under investigation for a breach in its data management system that saw 36 million account details published online but now will only have to pay $1.6 million USD of a $17.5 million settlement to the US Federal Trade Commission.

According to an FTC spokesperson the rest of the settlement was suspended due to parent company Ruby Corp being unable to pay the fine because of financial difficulties. They are facing lawsuits and other investigations into their practices including a major class action lawsuit by consumers.

“I recognize that it was a far lower number frankly than I would have liked,” said Federal Trade Commission chairwoman Edith Ramirez. “We want them to feel the pain. We don’t want them to profit from unlawful conduct. At the same time, we are not going to seek to put a company out of business.”

Due to the lower settlement number, Ashley Madison customers affected by the breach won’t receive any financial compensation. Class action lawsuits are still pending.
Even though the company admits they can’t pay the larger fine, they still came out with the following statement: “The company is stable. We’re very pleased with the outcome,” said Rob Segal, who took over as CEO earlier this year. Founder Noel Biderman left the company to travel the world with the money he made.

Yet, that’s not the only problems: In August, the Privacy Commissioner of Canada and the Office of the Australian Information Commissioner ran a joint investion on Avid Life Media (Ruby Corp’s former name). The investigation found that there were inadequate authentication processes for employees accessing the company’s system remotely, poor key and password management practices, and poor encryption processes.

Credit Card Debt Scammers Banned by FTC For Life and Fined $27 Million

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Steven D. Short and his wife Karissa L. Dyar, E.M. Systems & Services LLC, Administrative Management & Design LLC, Empirical Data Group Technologies LLC, Epiphany Management Systems LLC, and KLS Industries LLC, doing business as Satisfied Service Solutions LLC has been sued by the FTC.

Now the Federal Trade Commission (FTC) announced a ban Nov. 30 against a group of fraudulent credit card debt scammers that allegedly bilked more than $12 million from consumers by falsely promising to reduce credit card interest rates.

The group of defendants will be banned from telemarketing and from selling debt relief services for life Additionally, the payment processors who allegedly enabled them will be banned from the payment processing industry.

 “Working with the Florida Attorney General’s Office, the Federal Trade Commission has stopped yet another telemarketing scam that offered bogus solutions to relieve credit card debt,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “People should just hang up the phone when they get this kind of offer.”
 
The FTC voted 3-0 to approve the proposed stipulated final orders. Three separate settlements with different defendants total roughly $27 million, most of which will be suspended upon the surrender of certain assets.

Facebook Stops Student Loan Ads

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Claiming that many of the advertising being run on Facebook for student loans is fake, the Consumer Financial Protection Bureau has put pressure on Facebook to ban them – and it looks like Facebook has complied.

The letters from Rohit Chopra, the CFPB’s student loan ombudsman, say web analytics show stressed-out borrowers are searching on-line for help using those phrases. In the ads and search results that then appear on these advertiser-supported on-line platforms, scammers and dishonest businesses tell the borrowers that for a fee, they can help them enroll in a Department of Education renegotiation program – a program that is actually free.

“While we have warned consumers about these scams we are concerned that unscrupulous companies may be using aggressive advertising through search products to lure distressed borrowers,” Chopra wrote.

In response, Facebook has added the following addition to their policies:

26. Misleading Student Loan Services
Ads must not promote misleading or deceptive services related to student loan consolidation, forgiveness, or refinancing.

The Federal Trade Commission and the State of Florida has also taken action against two operations charged with running phony student loan debt relief schemes, and defendants in a similar FTC action brought earlier this year have agreed to a ban on participating in any debt relief business, as part of a consumer protection crackdown to combat such frauds.

“The FTC is not going to stand on the sidelines when it uncovers evidence of fraudsters targeting students,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Consumers should be wary of any company that claims it can eliminate or greatly reduce debt, especially if they ask for money in advance.”

Florida Attorney General Pam Bondi said, “The Federal Trade Commission has been a steadfast partner in our consumer protection enforcement efforts. These latest joint actions will help protect Floridians, as well as many across the country, from these companies’ unscrupulous debt relief operations and ensure that those responsible will be held accountable.”

FTC Calls ePath Media’s Practices “Illegal”

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A collection of entities known as Consumer Education Group operating out of California and Colorado, has settled Federal Trade Commission charges that, between late 2013 and 2015, it made millions of illegal telemarketing calls to consumers on the national Do Not Call (DNC) Registry — including pre-recorded robocalls — as part of a campaign to generate sales leads for third-parties.

The court order settling the Commission’s complaint bars the defendants from making such illegal telemarketing calls, ensures they will comply with the Telemarketing Sales Rule (TSR), and requires them to pay a $100,000 civil penalty. The U.S. Department of Justice (DOJ) filed the complaint and the order today on the FTC’s behalf.

“These telemarketers and lead generators ignored the Do Not Call Registry and made illegal robocalls,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “It should be clear by now that companies are headed for law enforcement trouble when they use this kind of unlawful campaign to attract customers.”

According to the FTC’s complaint, defendants created websites and landing pages that allowed consumers to complete an online form supposedly to get information about solar panels, reverse mortgages, walk-in bathtubs and other products. Defendants then used the consumers’ names and phone numbers to call the consumers, either by direct dialing or through robocalls, to gauge their interest in these products.

None of the calls placed to consumers identified the operation by a name consumers would recognize as someone they had authorized to call them. More than two million calls were placed to consumers registered on the DNC registry. The FTC alleged that the telemarketing campaign was not to solicit actual sales to consumers but rather designed to collect consumers’ names and phone numbers and sell the information as leads to third party merchants.

Based on this conduct, the FTC charged the defendants with violating the TSR by illegally making telemarketing calls to consumers whose phone numbers are on the DNC Registry and using robocalls in telemarketing. All such pre-recorded calls have been illegal since September 1, 2009, unless the company has an express agreement, in writing, from consumers agreeing to receive them.

The proposed civil penalty order settling the FTC’s charges bars the defendants from violating the TSR by making outbound telemarketing calls to consumers on the national DNC Registry unless they meet certain requirements, making telemarketing calls to consumers who have asked them not to call again, and making pre-recorded telemarketing robocalls to consumers unless they have their express permission to do so.

The proposed order imposes a suspended $2,339,687 civil penalty that is equivalent to the revenue defendants obtained through their illegal acts. The defendants will pay $100,000 to the U.S. Treasury due to their inability to pay the full penalty amount. If they are later found to have misrepresented their financial condition to the FTC, the full amount of the penalty will become due.

The Commission vote authorizing staff to refer the civil penalty complaint proposed consent order to DOJ for filing was 3-0. The DOJ filed the complaint and proposed consent order on behalf of the Commission in U.S. District Court for the District of Colorado on November 1, 2016.

A complete list of the settling defendants can be found in the proposed consent order linked to this press release on the FTC’s website.

NOTE: The Commission authorizes the filing of 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. Consent orders have the force of law when approved and signed by the District Court judge.

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Feds Say Homeopathic Products Must Be Labeled Bullshit

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The Feds have decided to go after the advertisers of homeopathic medicine, the stuff like nerve tonics, pain relievers, penis growing pills, claiming that most of their claims are absolute and total bullshit. The FTC says will either have to get scientific backing for the efficacy of their health claims or “effectively communicate the lack of scientific evidence backing them and that their claims are based only on theories of homeopathy from the 1700s that are not accepted by most modern medical experts.”

“This is a real victory for reason, science, and the health of the American people,” said Michael De Dora, public policy director for the Center for Inquiry, which had urged the FCC to crack down on what it said was false advertising of homeopathic products. “The FTC has made the right decision to hold manufacturers accountable for the absolutely baseless assertions they make about homeopathic products.”

Consumers are constantly being misled about homeopathics,” Edzard Ernst, an emeritus professor of complementary medicine at the University of Exeter in the United Kingdom, told BuzzFeed News. “They believe that they are natural, safe, and effective — none of this is true.”

Homeopathic products can also pose rare safety risks, according to the FDA. In 2009, for example, the agency received more than 130 accounts of people who lost their sense of smell after taking Zicam homeopathic cold remedies. One expert testified to the FDA that those accounts raised concerns about toxic levels of zinc.

Michelle Rusk, senior staff attorney in the FTC advertising practices division, said in a public hearing Sept. 21 on over-the-counter homeopathic products that advertisements lauding the health benefits of medical products need to be based on competent, reliable, and rigorous scientific support.

“As a general rule, for treatment claims, we expect randomized, double-blind, placebo-controlled human clinical studies—not in vitro studies, not animal studies, not anecdotal evidence, no matter how compelling it is,” she said. “Second, we expect the studies to be internally valid. That means well-designed, reliably conducted, using procedures accepted in the field of research. It also means that results are not just statistically significant but also strong enough to be clinically meaningful.

The law enforcement agency is responding to decades of growth in the market for over-the-counter homeopathy products. And its examination coincides with the Food and Drug Administration’s reconsideration of a 1988 policy that allows, without FDA approval, the manufacture and sale of products listed in the Homoeopathic Pharmacopoeia of the United States.

Krispy Kreme Facing Federal Lawsuit for Not Being Nutritious.

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Occasionally there is that lawsuit that makes you realize the legal profession might have a little too much time on their hands. According to court documents, Krispy Kreme is facing a class-action lawsuit filed in Los Angeles federal court Wednesday by a former customer who says the doughnut chain is guilty of false advertising and fraud because some of its supposed fruit-filled and maple-glazed products are made with “nutritionally inferior ingredients.”

Yes, the 32-page complaint  filed in U.S. District Court for the Central District of California this week on behalf of Jason Saidian, said he wouldn’t have bought the doughnuts if he didn’t know they were healthy and not nutritious.

“Unbeknownst to Plaintiff and other consumers, the Raspberry Products do not contain actual raspberries, the Maple Products do not contain actual maple syrup or maple sugar and the Blueberry Products do not contain actual blueberries,” the lawsuit reads.

Let’s clear this up: Doughnuts aren’t health food.

 

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