Legal Library: Cases and Proceedings

Kohl’s Department Stores, Inc. agreed to pay a civil penalty of $220,000 to settle Federal Trade Commission allegations that the retailer violated the Fair Credit Reporting Act by refusing to provide complete records of transactions to consumers whose personal information was used by identity thieves.

In their complaint against Madera Merchant Services and B&P Enterprises, the Federal Trade Commission and the Ohio Attorney General allege that the companies generated and processed remotely created payment orders (RCPOs) or checks that allowed many unscrupulous merchants, including deceptive telemarketing schemes, to withdraw money from their victims’ bank accounts. The FTC’s Telemarketing Sales Rules (TSR) specifically prohibits the use of RCPOs in connection with telemarketing sales. The court issued temporary restraining orders against Madera Merchant Services and B&P Enterprises, halting their operations and freezing their assets. The defendants and the FTC have agreed to a stipulated Preliminary Injunction in this matter. The defendants agreed to a settlement with the FTC in 2020 that permanently banned them from payment processing.

HyperBeard, a developer of apps that are popular with children has agreed to pay $150,000 and to delete personal information it illegally collected from children under 13 to settle Federal Trade Commission allegations. In a complaint filed by the Department of Justice on behalf of the FTC, the Commission alleges that HyperBeard, Inc. violated the Children’s Online Privacy Protection Act Rule (COPPA Rule) by allowing third-party ad networks to collect personal information in the form of persistent identifiers to track users of the company’s child-directed apps, without notifying parents or obtaining verifiable parental consent. The ad networks used the identifiers to target ads to children using HyperBeard’s apps.

In January 2020, the sellers of a pill called ReJuvenation settled FTC charges that they deceptively claimed that their product is a virtual cure-all for age-related ailments—including cell damage, heart attack damage, brain damage, blindness, and deafness. The orders settling the FTC’s complaint prohibit the defendants from making such claims unless they are true and supported by scientific evidence. The orders also require payment of $660,000, which the Commission may use to provide refunds to defrauded consumers. In June 2020, the FTC announced it was sending checks totaling more than $149,000 to consumers who bought the product.

A payment processor that allegedly ignored clear warning signs its client was operating an unlawful business coaching and investment scheme will be barred from processing payments in the business coaching field under a settlement with the Federal Trade Commission.

According to the FTC’s complaint against California-based QualPay, the company for years processed payments for MOBE, a scheme the FTC alleged charged consumers hundreds of millions of dollars for worthless business coaching products, and that Qualpay ignored numerous signs that MOBE was a fraudulent business.

Össur Hf and College Park Industries, Inc., both makers of prosthetic limbs, have agreed to divest College Park’s myoelectric elbow business to settle Federal Trade Commission charges that Össur’s proposed acquisition of College Park would violate federal antitrust law.

In October 2019, the Florida-based marketers and sellers of two aloe vera-based supplements agreed to settle FTC charges that they deceived consumers with false and unsupported claims that two products, TrueAloe and AloeCran, were effective treatments for a range of conditions affecting seniors, including chronic pain, ulcerative colitis, diabetes, and acid reflux. The court order resolving the complaint prohibits the sellters from making false and unsubstantiated health claims and requires them to pay $537,500. In May 2000, the FTC announced it was sending checks totaling more than $470,000 to consumers who bought the two supplements.

Tapplock settled FTC allegations that it deceived consumers by falsely claiming that its Internet-connected smart locks were designed to be “unbreakable” and that it took reasonable steps to secure the data it collected from users.

In March 2018, the FTC filed a complaint and motion for preliminary injunction alleging that Alliance Security Inc., a home security installation company, and its founder, directly and through its authorized telemarketers, called millions of consumers whose numbers are on the National Do Not Call (DNC) Registry. At the same time, two of Alliance’s authorized telemarketers and their principals agreed to settle charges that they made illegal calls on Alliance’s behalf. In August 2019, the court issued two orders against the remaining defendants in the case. The first permanently bars Alliance from telemarketing and obtaining or using consumer credit reports without written authorization. The second, a preliminary injunction, imposes the same ban on the company’s CEO and founder Jasjit “Jay” Gotra. In May 2020, the FTC announced that Gotra had settled the case against him under a court order barring him from nearly all outbound telemarketing.

The Federal Trade Commission is sending refunds to individuals who lost money to a company called I Works, which operated deceptive "trial" memberships and bogus government-grant and money-making schemes in 2010. 

Rent-to-own operators Aaron’s Inc., Buddy’s Newco, LLC, and Rent-A-Center, Inc. agreed to settle FTC charges that they negotiated and executed reciprocal purchase agreements in violation of federal antitrust law. The complaints allege that from June 2015 to May 2018, Aaron’s, Buddy’s, and Rent-A-Center each entered into anticompetitive reciprocal agreements with each other and other competitors. The three proposed consent agreements prohibited the rent-to-own companies and their franchisees from entering into any reciprocal purchase agreement or inviting others to do so, and from enforcing the non-compete clauses still in effect from the past reciprocal purchase agreements. After a public comment period, the Commission announced the final consent agreements.

Rent-to-own operators Aaron’s Inc., Buddy’s Newco, LLC, and Rent-A-Center, Inc. agreed to settle FTC charges that they negotiated and executed reciprocal purchase agreements in violation of federal antitrust law. The complaints allege that from June 2015 to May 2018, Aaron’s, Buddy’s, and Rent-A-Center each entered into anticompetitive reciprocal agreements with each other and other competitors. The three proposed consent agreements prohibited the rent-to-own companies and their franchisees from entering into any reciprocal purchase agreement or inviting others to do so, and from enforcing the non-compete clauses still in effect from the past reciprocal purchase agreements. After a public comment period, the Commission announced the final consent agreements.

Rent-to-own operators Aaron’s Inc., Buddy’s Newco, LLC, and Rent-A-Center, Inc. agreed to settle FTC charges that they negotiated and executed reciprocal purchase agreements in violation of federal antitrust law. The complaints allege that from June 2015 to May 2018, Aaron’s, Buddy’s, and Rent-A-Center each entered into anticompetitive reciprocal agreements with each other and other competitors. The three proposed consent agreements prohibited the rent-to-own companies and their franchisees from entering into any reciprocal purchase agreement or inviting others to do so, and from enforcing the non-compete clauses still in effect from the past reciprocal purchase agreements. After a public comment period, the Commission announced the final consent agreements.