FTC Stops Alleged Extortion Scheme Aimed At Hispanics Nationwide

Allegedly Threatened Consumers With Lawsuits and Jail for Not Paying Bogus Bills

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For Release

At the request of the Federal Trade Commission, a federal court has stopped an operation that allegedly victimized Spanish-speaking consumers nationwide by posing as debt collectors seeking payments consumers did not owe.

“Lying to consumers about debts they don’t owe and harassing and threatening them when they don't pay are illegal business practices, period,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “We will aggressively pursue companies that use these tactics to extort money from consumers.”

According to the FTC’s complaint, from 2003 to 2005 the defendants sold an English-language instruction course, “Inglés con Ritmo,” advertised on Spanish-language television and the defendants’ Web sites, www.tonorecords.com and www.tonomusic.com, stating that it was free due to government or non-profit subsidies. Inquiring consumers were told that a shipping and handling fee of $100 to $169 applied. Since 2006, the complaint states, the defendants, posing as third-party debt collectors, told consumers they owed money, typically $900, and repeatedly called them, even though the evidence shows that they owe no money.

The defendants are charged with violating the FTC Act and the Fair Debt Collection Practices Act (FDCPA) by falsely claiming that a debt is owed; by falsely claiming to be, or to represent, an attorney; and by falsely threatening legal action, arrest, imprisonment, property seizure, or garnishment of wages. Other FDCPA violations alleged are attempting to collect an amount of debt not authorized by contract or permitted by law; harassing consumers; and failing to inform consumers, within five days of their initial communication with them, of their right to dispute and obtain verification of their debt and the name of the original creditor.

The defendants are Tono Records, dba Tono Music and Professional Legal Services, Tono Publishing, Promo Music, Millennium Three Corp., Dulce Ugalde, Luis Roberto Ruiz, and Maria Oceguera, all based in Los Angeles County, California.

On June 14, a U.S. district court judge ordered an ex parte temporary restraining order freezing the defendants’ assets. The FTC seeks to permanently bar them from further violations and make them forfeit their ill-gotten gains. By a 5-0 vote, the Commission approved the filing of the complaint in the U.S. District Court for the District of California, Central District of California.
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.

Copies of the complaint are available from the FTC’s Web site at http://www.ftc.gov and 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 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 form at http://www.ftc.gov/ftc/complaint.shtm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.

Contact Information

Frank Dorman,
Office of Public Affairs
Sarah Schroeder,
Bureau of Consumer Protection