For Release: April 27, 2004
The Federal Trade Commission today announced its Hispanic Law Enforcement and Outreach Initiative to address the growing problem of deceptive advertising aimed at Spanish-speaking consumers. The Initiative encompasses traditional law enforcement actions and consumer outreach. In addition, on May 12 and May 13, 2004, the FTC and the Department of Justice's Office for Victims of Crime are hosting workshops to explore best practices for outreach and coordinated law enforcement.
"The Commission is dedicated to a strong enforcement presence in areas affecting the Hispanic community," said Howard Beales, Director of the FTC's Bureau of Consumer Protection. "Our research shows that Hispanics are more likely than non-Hispanic whites to be victims of consumer fraud."
In 2003, the Commission initiated the Spanish Language Media Monitoring Project to review Spanish language ads on television, radio, the Internet, and in print to identify deceptive advertising for law enforcement actions. As a result of the Project, the FTC is announcing seven matters against allegedly deceptive marketing advertised in high circulation Spanish language magazines, on national cable television channels, or in newspapers. These cases cover a variety of products and services including work-at-home business opportunities, weight-loss products, junk computers, and fraudulent international driving permits.
The Commission filed a complaint in the U.S. District Court for the Southern District of Texas against Estaban Barrios Vega, doing business as EBV Promotions, Paymentech Promotions, and Promotions of Service, alleging violations of the FTC Act and the Telemarketing Sales Rule (TSR). According to the complaint, the defendant advertised work-at-home business opportunities in various Spanish-language newspapers and circulars. According to the FTC, few, if any, consumers who paid up to $149 received the promised work, and realized the earnings the defendants claimed. On April 15, 2004, the Commission obtained a temporary restraining order, ordering the defendant to stop his deceptive advertising and freezing the defendant's assets. On April 23, 2004, the court granted the FTC a preliminary injunction banning the defendants from telemarketing and selling business opportunities. It also continues the asset freeze. The FTC received assistance in its investigation from the U.S. Postal Inspection Service in Houston, Texas.
On April 16, 2004, the Commission filed a complaint in the U.S. District Court for the Southern District of Florida against American Dream Enterprises, LLC and its owner, Andres Fernandez-Salvador. The Miami-based defendants advertised a weight-loss dietary supplement called "Fat Seltzer," which, when added to water, produces bubbles. According to the complaint, the defendants claim that the effervescent action, when combined with Fat Seltzer's ingredients, produces substantial and permanent weight loss without the need to diet or exercise. These claims are the type that the FTC staff report, Red Flag: Bogus Weight Loss Claims, identified as scientifically unfeasible.Latin Hut
The FTC filed a complaint and stipulated final order on April 22, 2004, against Latin Hut, Inc., doing business as Maya Sales Corporation, in the U.S. District Court for the Southern District of California. The Commission alleged that the defendant, based in San Diego, deceptively marketed a weight-loss patch, "Parche Para Bajar Peso"; a "fat absorber" dietary supplement, "Iman De Grasa"; and "Total Bust," a breast augmentation dietary supplement. According to the complaint, advertisements for the two weight-loss products falsely claimed that they cause substantial weight loss. In addition, the complaint alleges that ads for Total Bust deceptively claimed that the product can increase breast size and change the appearance of users' breasts. The order settling the charges prohibits the defendant from making similar claims in the future and requires it to pay $149,425 in consumer redress.
The FTC filed a complaint and proposed stipulated final order against Heritage Health Products Company, a Fort Collins, Colorado-based company for allegedly marketing a product containing shark cartilage - known in Spanish as "cartílago de tiburón" - using deceptive disease-treatment claims for lupus, herpes, rheumatoid arthritis, cancer, and other serious illnesses and conditions. In addition, the Commission's complaint alleged that the defendant deceptively marketed its Cat's Claw product - known in Spanish as "Uña de Gato" - as an effective treatment for serious illnesses and conditions, including Crohn's Disease, AIDS, and cancer. The proposed order prohibits Heritage from making deceptive disease treatment claims for shark cartilage, Cat's Claw, or certain other products.
The complaint and proposed stipulated final order for permanent injunction were filed in the U.S. District Court for the District of Colorado in Denver, on April 16, 2004.
On March 4, 2004, the FTC filed a complaint in the U.S. District Court for the Central District of California against Unicyber Technology, Inc.; Unicyber Gilboard, Inc.; and Chul K. Han, for allegedly targeting Spanish-speaking consumers with an offer of a complete computer system for three payments of $199. Instead of delivering the entire computer at the time the first payment was made, Unicyber allegedly delivered only keyboards and parts that would be useless without the computer itself. Consumers then learned that they would not receive the full computer until they sent more money. Those who made the payments allegedly ended up with computers that did not work.
On March 12, 2004, the court issued a temporary restraining order halting the defendants' business practices and freezing their assets. On March 19, 2004, the defendants agreed to a preliminary injunction that prohibits them from making misrepresentations about computer systems or other products, continues the asset freeze, and appoints a receiver. On March 30, the original complaint was amended to name two additional corporate defendants, URI Technology, Inc. and URI Communications, Inc. Litigation is ongoing.
On January 8, 2003, the FTC filed a complaint in the U.S. District Court for the District of Massachusetts against William Scott Dion, and Donald and Vivian Lockwood, all doing business as PT Resource Center and PTRC. According to the Commission's complaint, the defendants marketed bogus international driving permits (IDPs) and related identification cards on their website to immigrants and others for $65 or more.
On April 5, 2004, the court entered a default judgment against the Lockwoods banning them from the business of IDPs and requiring them to pay full consumer redress of $88,671.55.
The proposed stipulated final order against Dion, filed on April 27, 2004, likewise bans him from the business of IDPs and prohibits him from making future misrepresentations. Both the default judgment and the stipulated final order contain provisions to assist the FTC in monitoring defendants' compliance.
The FTC filed a complaint and stipulated final order on April 27, 2004 in the U.S. District Court for the Southern District of Florida against Alternative Medical Technologies, Inc. and Jose Fernandez, AMT's principal owner. The complaint alleges that the defendants falsely claimed that their weight-loss supplement, "X-TOX 10," causes substantial weight loss without the need to diet. In addition, the complaint alleges that the defendants made deceptive claims for their smoking cessation product, "X-TOX 80." The proposed order prohibits the defendants from making similar claims in the future.
The Commission vote on all these matters was 5-0.
The FTC's Hispanic Initiative includes a significant outreach component that includes making consumer information available in Spanish, distributing radio public service announcements in Spanish, providing consumer news to the Spanish-language media, and building partnerships with organizations, businesses, and leaders in the Hispanic community.
The FTC wants to hear from Spanish speakers who want to get information about consumer rights or complain about consumer fraud. The agency's objective is to let Spanish speakers know how they can identify and avoid fraudulent and deceptive practices and where they can report them.
To date, the FTC has translated nearly 70 consumer publications and posted them to the FTC's En Español Web site at www.ftc.gov/spanish. Among the subjects the publications cover are identity theft, fair debt collection, abusive lending practices, and job scams. Since January 2002, the FTC has disseminated nearly 500,000 Spanish-language consumer publications and logged more than 600,000 accesses to the Spanish-language information on its Web site.
On May 12 and May 13, 2004, the FTC and the Department of Justice's Office for Victims of Crime are hosting workshops to explore strategies on effective and high impact education for the Hispanic community and ways for federal, state, and local law enforcement officials to collaborate to deter and stop fraud targeted at Hispanics.
The Hispanic Consumer Outreach Forum, which will be held on May 12, 2004, from 12:45 p.m. to 5:00 p.m., will explore the makeup of the Hispanic market, share best practices for consumer education, and provide effective fraud prevention messages for the Hispanic community. On May 13, 2004, from 9:00 a.m. to 5:00 p.m, the Law Enforcement Workshop will explore which consumer frauds commonly affect the Hispanic community and consider new approaches to stopping those frauds and assisting victims.
Both workshops will be held at the FTC's Conference Center at 601 New Jersey Avenue, N.W., Washington, D.C. They are free and open to the public, and there is no pre-registration. More information on these workshops is available at: www.ftc.gov/bcp/workshops/hispanic/index.htm
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. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
NOTE: These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final orders have the force of law when signed by the judge.
Copies of the complaints and stipulated final orders announced today are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint format http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Bureau of Consumer Protection
Bureau of Consumer Protection
(American Dream Enterprises)
Laura Koss or Robin Richardson
Bureau of Consumer Protection
202-326-2890 or 202-326-2798
Barbara Anthony or Michael Bloom
FTC's Northeast Region - New York
Jeffrey Klurfeld or Jennifer Brennan
FTC's Western Region - Los Angeles
Barbara Anthony or Thomas Cohn
FTC's Northeast Region - New York
(PT Resource Center)
(Paymentech: FTC File No. 042 3066; Civil Action No. H-04-1478)
(American Dream: FTC File No. 032 3193; Civil Action No. 04-CV-20904)
(Latin Hut: FTC File No. 032 3166; Civil Action No. 04-CV-0830-BTM)
(Heritage Health: FTC File No. 022 3203; Civil Action No. 04-WM-0775 (cbs))
(Unicyber Technology: FTC File No. 032 3186; Civil Action No. 04-1569 LGB (MANx)
(PT Resource Center: FTC File No. X030019; Civil Action No. 03-40005-NMG)
(Alternative Medical Technologies: FTC File No. 032 3172; Civil Action No. not available at press time)