July 2022

Federal Trade Commission Sues Gravity Defyer and its Owner for Violating FTC Order and Making Baseless Pain-Relief Claims to Market Footwear


The Federal Trade Commission is taking action against California-based Gravity Defyer Medical Technology Corporation and its owner Alexander Elnekaveh, filing a complaint in federal district court to permanently stop their allegedly deceptive pain-relief claims for Gravity Defyer footwear.

In a complaint filed in federal district court, the FTC alleged that Elnekaveh violated a 2001 order barring him from such allegedly deceptive advertising by making scientifically unsupported claims and using misleading consumer testimonials to sell Gravity Defyer products. The FTC claimed that the company’s advertisements often targeted older Americans suffering from pain-related conditions like arthritis.

“Ignoring a prior Commission order, Gravity Defyer and its owner used false pain-relief claims to target older Americans and undercut honest competitors,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Healthbased claims require science-based proof, and faking it by misusing studies and customer reviews breaks the law.”

Since at least 2016, the defendants have advertised their Gravity Defyer footwear as containing soles with “VersoShock” technology that supposedly relieves pain, including pain in people suffering from numerous medical conditions. According to the FTC’s complaint, the ads claim, without competent and reliable scientific evidence, that Gravity Defyer footwear:

  • will relieve pain, including knee, back and foot pain;
  • will relieve pain in people suffering from multiple conditions such as plantar fasciitis, arthritis, joint pain, and heel spurs; and
  • is clinically proven to relieve pain, including 85 percent less knee pain, 91 percent less back pain, 92 percent less ankle pain, and 75 percent less foot pain.

Gravity Defyer has sold more than 100 styles of footwear for men and women on its website, including athletic shoes, casual shoes, dress shoes, hiking shoes and boots, and sandals. Prices have ranged from $140 for men’s and women’s sandals to $155 for the widely advertised Mighty Walk walking shoes, and $235 for men’s work boots.

The company sells Gravity Defyer footwear on its own website, through its in-house call center, and at retailers throughout the country, including The Walking Company, Hammacher Schlemmer, and Shoe City, according to the FTC. It advertises the products through magazine ads, Facebook ads, Internet ads, radio commercials and catalogs.

One of the company’s ads stated that Gravity Defyer shoes are “clinically proven pain defying footwear.” Another said, “Enjoy the benefits of exercise, with proven pain relief.” The company’s ads cite a study to back up their claims, but the FTC alleges this study has substantial flaws and was insufficient to determine the effects of wearing Gravity Defyer footwear.

In filing the complaint, the Commission is seeking an order permanently barring the defendants from making misleading or deceptive pain-relief claims, as well as civil penalties and other relief.

The Commission vote to authorize the staff to approve the complaint and proposed order was 4-0. It was filed in the U.S. District Court for the District of Columbia.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest.



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Federal Trade Commission Returns More Than $164,000 To Consumers Harmed by Bogus Mortgage Relief Scam


The Federal Trade Commission is sending 2,155 checks totaling more than $164,000 to consumers who were harmed by a bogus mortgage relief scam that operated under the names Brookstone Law and Advantis Law.

Consumers who receive checks should cash them within 90 days, as indicated on the check. Recipients who have questions about their refund, or who didn’t receive a check and believe they may be eligible for a refund, should call the refund administrator, JND Legal Administration, at 855-606-0653. The Commission never requires people to pay money or provide account information to get a refund.

The FTC sued Brookstone and the attorneys who operated it in 2016 for falsely telling homeowners that they could join so-called “mass joinder” lawsuits against their lenders that would save them from foreclosure and provide additional financial awards. The court ruled in 2017 that the defendants “made numerous false and/or misleading material statements to consumers,” including falsely claiming that homeowners could get “at least $75,000” or their homes “free and clear” through these so-called mass joinder lawsuits. The defendants charged consumers $895 or more for a “legal analysis” and thousands of dollars in recurring legal fees. Although the defendants filed some lawsuits, they failed to file all promised lawsuits and never won any of the lawsuits.

The U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward. The money being returned to consumers today comes from settlements that were entered before the Supreme Court’s decision. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of Commission refunds. In 2020, Commission actions led to more than $483 million in refunds to consumers across the country.



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Federal Trade Commission Returns More Than $970,000 To Consumers Harmed by Deceptive Payday Lending Operation


The Federal Trade Commission is sending 26,698 checks totaling more than $970,000 to consumers who were harmed by a deceptive payday lending scheme that operated under the names Harvest Moon Financial, Gentle Breeze Online, and Green Stream Lending.

Consumers who receive checks should cash them within 90 days, as indicated on the check. Recipients who have questions about their refund should call the refund administrator, Epiq, at 855-662-0075. The Commission never requires people to pay money or provide account information to get a refund.

Explore date with the FTC

The FTC sued the payday loan enterprise and its owners in 2020, alleging that the defendants deceptively marketed their payday loans when they told borrowers that the loans would be repaid after a fixed number of payments. Yet, according to the FTC, long after the promised number of payments had been made, borrowers learned that the payments had been applied to finance charges only and that the defendants were continuing to make regular withdrawals from their checking accounts.

In 2021, the defendants in the case agreed to a court order that permanently banned them from the debt collection industry and required them to deem nearly all outstanding debts owed by consumers as being paid in full.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of Commission refunds. In 2020, Commission actions led to more than $483 million in refunds to consumers across the country, but the U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.



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FTC Seeks Public Comment on Petition by Gilbarco, Inc. for Partial Exemption to the Agency’s Fuel Rating Rule


The Federal Trade Commission is seeking public comment on a petition by Gilbarco, Inc a fuel dispenser pump manufacturer. The company is requesting a partial exemption from the FTC’s Fuel Rating Rule, which, among other things, requires retailers of automotive fuel to post the automotive fuel rating of all automotive fuel sold to consumers.

The partial exemption would allow Gilbarco to make small reductions in the type and size of fuel labels to allow room for an additional fuel grade button on its pumps. The FTC has published a Federal Register notice seeking public comment. Information about how to submit a comment can be found in the notice.

The FTC implemented the Fuel Rating Rule under the Petroleum Marketing Practices Act in 1979. The law establishes uniform automotive fuel ratings and labeling standards, including octane content information, which provide consumers with the information they need to make informed choices at the gas pump. The rule also defines how ethanol content should be displayed on fuel rating labels.

Gilbarco is one of the largest manufacturers of fuel dispensers in the United States, and three times since 1988, the FTC has approved similar petitions by the company related to proposed fuel label changes. In its current petition, the company is requesting permission to make small reductions to:

  • The type of “XX% Ethanol” and “Flex-Fuel Vehicles” ethanol labels;
  • The type and letter spacing for the words “Minimum Octane Rating” on octane labels; and
  • The width of labels for gasoline and five other types of fuels.

The Commission vote approving publication of the Federal Register notice was 5-0 with Commissioner Christine S. Wilson issuing a separate statement. The FTC will consider all public comments submitted by the deadline in the notice before voting on whether to approve Gilbarco’s petition.



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FTC Report Warns About Using Artificial Intelligence to Combat Online Problems


Today the Federal Trade Commission issued a report to Congress warning about using artificial intelligence (AI) to combat online problems and urging policymakers to exercise “great caution” about relying on it as a policy solution. The use of AI, particularly by big tech platforms and other companies, comes with limitations and problems of its own. The report outlines significant concerns that AI tools can be inaccurate, biased, and discriminatory by design and incentivize relying on increasingly invasive forms of commercial surveillance.

“Our report emphasizes that nobody should treat AI as the solution to the spread of harmful online content,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Combatting online harm requires a broad societal effort, not an overly optimistic belief that new technology—which can be both helpful and dangerous—will take these problems off our hands.”

In legislation enacted in 2021, Congress directed the Commission to examine ways that AI “may be used to identify, remove, or take any other appropriate action necessary to address” several specified “online harms.” The harms that are of particular concern to Congress include online fraud, impersonation scams, fake reviews and accounts, bots, media manipulation, illegal drug sales and other illegal activities, sexual exploitation, hate crimes, online harassment and cyberstalking, and misinformation campaigns aimed at influencing elections.

The report warns against using AI as a policy solution for these online problems and notes that its adoption could also introduce a range of additional harms. Indeed, the report outlines several problems related to the use of AI tools, including:

  • Inherent design flaws and inaccuracy: AI detection tools are blunt instruments with built in imprecision and inaccuracy. Their detection capabilities regarding online harms are significantly limited by inherent flaws in their design such as unrepresentative datasets, faulty classifications, failure to identify new phenomena, and lack of context and meaning.
  • Bias and discrimination: In addition to inherent design flaws, AI tools can reflect biases of its developers that lead to faulty and potentially illegal outcomes. The report provides analysis as to why AI tools produce unfair or biased results. It also includes examples of instances in which AI tools resulted in discrimination against protected classes of people or overblocked content in ways that can serve to reduce freedom of expression.
  • Commercial surveillance incentives: AI tools can incentivize and enable invasive commercial surveillance and data extraction practices because these technologies require vast amounts of data to be developed, trained, and used. Moreover, improving AI tools accuracy and performance can lead to more invasive forms of surveillance.

Congress instructed the Commission to recommend laws that could advance the use of AI to address online harms. The report, however, finds that, given that major tech platforms and others are already using AI tools to address online harms, lawmakers should consider focusing on developing legal frameworks that would ensure that AI tools do not cause additional harm.

The Commission voted 4-1 at an open meeting to send the report to Congress. Chair Lina M. Khan as well as Commissioners Rebecca Kelly Slaughter, and Alvaro Bedoya issued separate statements. Commissioner Christine S. Wilson issued a concurring statement and Commissioner Phillips issued a dissenting statement.



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Federal Trade Commission Returns More Than $9.7 Million To Small Businesses Harmed by Yellowstone Capital’s Merchant Cash Advance Operation


The Federal Trade Commission is sending 7,731 checks totaling more than $9.7 million to small businesses who were harmed by Yellowstone Capital, a merchant cash advance company that withdrew money from their bank accounts without permission.

Explore data with the FTCEligible businesses are getting 51% of their money back, averaging more than $1,200 for each check. Recipients should cash their checks within 90 days, as indicated on the check. Businesses who have questions about their refund should call the refund administrator, Epiq, at 855-604-1861. The Commission never requires people to pay money or provide account information to get a refund.

The FTC sued Yellowstone and its owners in 2020, alleging that they unlawfully withdrew millions of dollars in excess payments from their customers’ accounts. The complaint alleged that Yellowstone continued to withdraw hundreds or thousands of dollars from businesses after they had repaid the full amounts owed in their contracts. In some cases, Yellowstone would only refund this money when businesses complained, and even then the refunds could take weeks or months, leaving small businesses without needed cash on hand.

In 2021, Yellowstone agreed to a court order that required them to surrender funds to the FTC, which the FTC is using to provide refunds. The order also prohibits the defendants from misleading consumers or withdrawing money without authorization and requires them to monitor companies working on their behalf.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of Commission refunds. In 2020, Commission actions led to more than $483 million in refunds to consumers across the country, but the U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.



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As Energy Prices Rise, FTC Prevails in Deceptive Energy-Efficiency Case


In response to legal action by the Federal Trade Commission, the U.S. District Court for the Middle District of Florida ordered SPM Thermo-Shield, Inc. to permanently halt deceptive energy-efficiency claims it has been making about wall coating products that it sells for houses and other buildings. The court issued a permanent injunction prohibiting SPM Thermo-Shield and its officers from misrepresenting the coatings’ insulating or energy-saving capabilities.

“We know consumers are concerned about rising energy costs,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “In this environment, it’s more critical than ever that sellers be honest about energy efficiency claims—and we are poised to hold them accountable when they are not.”

In July 2020, the FTC sued four companies, including Florida-based SPM Thermo-Shield, that sell paint products used to coat buildings and homes, alleging they deceived consumers about their products’ insulation and energy-savings capabilities. The FTC charged the companies with falsely overstating the R-value ratings of the coatings, and making deceptive statements about heat flow and insulating power.

A product’s R-value is a measure of its resistance to heat flow: the higher the R-value, the greater the insulating power. Using R-value and other product information, consumers can make purchasing decisions that improve the energy efficiency of their homes. The R-value depends on the type of insulation, its thickness, and its density. The R-value of most insulations also depends on temperature, aging, and moisture accumulation.

The complaint against SPM Thermo-Shield and its officers, Peter and George Spiska, alleged they falsely claimed their Thermo-Shield Roof Coat, Thermo-Shield Exterior Wall Coat, and Thermo-Shield Interior Wall Coat have R-values of R-22 or R-21 and provide significant energy savings for consumers.

Enforcement Action

In issuing the opinion and order the court found that although SPM Thermo-Shield and its officers admitted that the R-value claims the FTC challenged were false, and stated that they had removed them from their marketing materials, the claims did, in fact, reappear after the lawsuit was filed. It permanently prohibits the defendants from:

  • Misrepresenting the R-value of any architectural coating product;
  • Making unsubstantiated claims that any architectural coating product is equivalent to, or substantially similar to, the R-value of any other product or system or provide the equivalent of adding insulation with a specific R-value; and
  • Claiming that any architectural coating product will provide energy savings without disclosing that such savings vary according to several factors, such as location, climate, building type, and level of construction.

The order also prohibits them from providing the “means and instrumentalities” that would allow anyone else to make such misleading R-value or energy-savings claims.

The opinion and order and permanent injunction were filed in the U.S. District Court for the Middle District of Florida, Fort Myers Division. They have now been signed and entered by the Court.



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Federal Trade Commission Finalizes Action Against “Made in USA” Repeat Offender


The Federal Trade Commission has finalized an order against Resident Home LLC and owner Ran Reske for allegedly making false, misleading, or unsupported advertising claims that their imported DreamCloud mattresses were made from 100% USA-made materials. Resident Home LLC and Reske will pay $753,000.

In the company’s promotional material, Resident Home LLC and Reske claimed that their DreamCloud mattresses were “proudly made with 100 percent USA-made premium quality materials.” But, according to the complaint, these claims were false or misleading, and violated the FTC Act. The FTC says all DreamCloud mattresses are finished overseas and, in some cases, are wholly imported or use significant imported materials.

Under the terms of the final order, in addition to paying $753,000, Resident Home LLC and Reske are prohibited from making several claims that deceive consumers and harm law-abiding businesses whose sales were siphoned because of this behavior. The order specifically covers unqualified U.S.-origin claims (claims made with no limitations) for any product, unless they can show that:

  • the product’s final assembly, final processing, and all significant processing takes place in the United States; and
  • all or virtually all ingredients or components of the product are made and sourced in the United States.

The order also governs any qualified Made in USA claims (claims that include explanatory information). For qualified claims, Resident Home LLC and Reske must include a clear disclosure about the extent to which the product contains foreign parts, ingredients, components, or processing.

The FTC’s Enforcement Policy Statement on U.S. Origin Claims offers guidance on making Made in USA claims. The Made in USA Labeling Rule went into effect on August 13, 2021. Companies that violate the Rule from that date forward may be subject to civil penalties.

The Commission voted 3-2 to approve the complaint and settlement order, with Commissioners Noah Joshua Phillips and Christine S. Wilson voting no. The majority issued a statement, and Commissioners Phillips and Wilson issued a joint dissenting statement.  



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Federal Trade Commission Sends More than $2 Million to Students Harmed by Debt Relief Scam


The Federal Trade Commission is sending 22,817 checks totaling more than $2 million to borrowers who lost money to a student loan debt-relief scam that operated under the names Student Debt Doctor.

Consumers who receive checks should cash them within 90 days, as indicated on the check. Recipients who have questions about their refund should call the refund administrator, Analytics, at 844-916-3240. The Commission never requires people to pay money or provide account information to get a refund.

In late 2017, the FTC sued Student Debt Doctor and its owner, Gary B. White Jr. alleging that the company tricked consumers into believing they could receive immediate relief from monthly loan payments and complete loan forgiveness in return for a large, upfront fee. The defendants also told students that their loans were in forbearance when they were not, causing consumers to neglect required payments and to suffer diminished credit scores. In reality, the FTC alleged that the vast majority of consumers lost their hard-earned money but received little or no relief—and some borrowers ended up owing more.

In December 2018, the FTC announced a stipulated final order that bans White and his company from the debt-relief industry and from making misrepresentations related to financial products or services.

The U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward. The money being returned to consumers today comes from settlements that were entered before the Supreme Court’s decision. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of Commission refunds. In 2020, Commission actions led to more than $483 million in refunds to consumers across the country.



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FTC Takes Action Against Harley-Davidson and Westinghouse for Illegally Restricting Customers’ Right to Repair


The Federal Trade Commission is taking action against motorcycle manufacturer Harley-Davidson Motor Company Group, LLC and Westinghouse outdoor generator maker MWE Investments, LLC for illegally restricting customers’ right to repair their purchased products. The FTC’s complaints charge that the companies’ warranties included terms that conveyed that the warranty is void if customers use independent dealers for parts or repairs. The FTC is ordering Harley-Davidson and Westinghouse to fix warranties by removing illegal terms and recognizing the right to repair, come clean with customers, and ensure that dealers compete fairly with independent third-parties.

“Consumers deserve choices when it comes to repairing their products, and independent dealers deserve a chance to compete,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “These orders require Harley and Westinghouse to fix their warranties, come clean with consumers, and ensure fair competition with independent providers. Other companies that squelch consumers’ right to repair should take notice.”

Wisconsin-based Harley-Davidson sells motorcycles worldwide, and Ohio-based MWE Investments sells Westinghouse-brand outdoor power generators and related equipment. Each company offers limited warranties to consumers who buy their products that provide for no-cost repair or replacement, should the products have defects or other issues.

The FTC has made it a priority to protect consumers’ right to repair their products. The Magnuson Moss Warranty Act is one of the FTC’s tools to address repair restrictions. It prohibits a company from conditioning a consumer product warranty on the consumer’s using any article or service which is identified by brand name unless it is provided for free. Following the FTC’s right to repair report Nixing the Fix, the Commission issued a Policy Statement on Repair Restrictions Imposed by Manufacturers pledging to ramp up investigations into illegal repair restrictions.

According to the FTC’s complaints, both companies were imposing illegal warranty terms that voided customers’ warranties if they used anyone other than the companies and their authorized dealers to get parts or repairs for their products. The FTC also alleged that Harley-Davidson failed to fully disclose all of the terms of its warranty in a single document, requiring consumers to contact an authorized dealership for full details. The FTC alleges that these terms harm consumers and competition in multiple ways, including:

  • Restricting consumers’ choices: Consumers who buy a product covered by a warranty do so to protect their own interests, not the manufacturer’s. The companies’ warranties improperly implied that as a condition of maintaining warranty coverage, consumers had to use the company’s part or services for any repairs.
  • Costing consumers more money: By telling consumers their warranties will be voided  if they choose third-party parts or repair services, the companies force consumers to use potentially more expensive options provided by the manufacturer. This violates the Warranty Act, which prohibits these clauses unless a manufacturer provides the required parts or services for free under the warranty or is granted an exception from the FTC.
  • Undercutting independent dealers: The Warranty Act’s tying prohibition protects not just consumers, but also independent repairers and the manufacturers of aftermarket parts. By conditioning their warranties on the use of authorized service providers and branded parts, the companies infringed the right of independent repairers and manufacturers to compete on a level playing field. 
  • Reducing resiliency: Consumers rely on the companies’ products for emergency power and transportation. Robust competition from aftermarket part manufacturers is critical to ensuring that consumers get the replacement parts they need when they need them and are not at the mercy of branded part supply chains. More resilient and repairable products also lead to less waste in the form of products that could otherwise be fixed. 

Enforcement Actions

Under the FTC Act and the Warranty Act, the FTC has the authority to take action against companies violating consumer protection laws, including those engaging in unfair or deceptive acts or practices. The FTC’s orders in these cases:

  • Prohibit further violations: The companies will be prohibited from further violations of the Warranty Act, and in Harley-Davidson’s case, the Disclosure Rule. They will also be prohibited from telling consumers that their warranties will be void if they use third-party services or parts, or that they should only use branded parts or authorized service providers. If the companies violate these terms, the FTC will be able to seek civil penalties of up to $46,517 per violation in federal court.
  • Recognize consumers’ right to repair: Both companies will be required to add specific language to their warranties saying, “Taking your product to be serviced by a repair shop that is not affiliated with or an authorized dealer of [Company] will not void this warranty. Also, using third-party parts will not void this warranty.”
  • Come clean with consumers: Both companies must send and post notices informing customers that their warranties will remain in effect even if they buy aftermarket parts or patronize independent repairers.
  • Alert dealers to compete fairly: Both companies are being required to direct authorized dealers to remove deceptive display materials, train and monitor employees, and not promote branded parts and dealers over third parties.

The Commission vote to issue the administrative complaints and to accept the consent agreement was 5-0. Chair Lina M. Khan and Commissioner Rebecca Kelly Slaughter issued a statement. The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days, beginning today and continuing through July 22, 2022, after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments appear in the published notice. Once processed, comments will be posted on Regulations.gov.



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