As a result of a Federal Trade Commission lawsuit, the operators of an alleged credit card debt relief scheme based in Tennessee have agreed to court orders that would permanently ban them from telemarketing and selling debt relief products or services.

Sean Austin, John Steven Huffman, John Preston Thompson, and their affiliated companies were charged by the FTC in November 2022 with taking tens of millions of dollars from people by falsely promising to eliminate or substantially reduce their credit card debt. At the time, a federal court agreed to the FTC’s request to temporarily freeze the defendants’ assets and appoint a receiver over the businesses while the case took place.

“These scammers ripped off consumers trying to get out of debt, and we’re pleased with these court orders banning them from the industry,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “With credit card delinquencies surging, the FTC will continue to take aggressive action against those who prey on struggling consumers.”

The FTC’s complaint alleges that Austin, Huffman, and Thompson operated a network of companies incorporated in Tennessee, Nevada, New Mexico, and Wyoming that worked together as a common enterprise to support the defendants’ deceptive debt relief scheme. Their companies operated under multiple names such as ACRO Services, American Consumer Rights Organization, Consumer Protection Resources, Reliance Solutions, Thacker & Associates, and Tri Star Consumer Group.

The court orders, which were agreed to by Austin, Huffman, and Thompson to settle the case, include a number of requirements:

• Ban on debt relief: The defendants are permanently banned from advertising, selling, or assisting in any debt relief product or service.
• Ban on telemarketing: The defendants are permanently banned from participating in telemarketing.
• Prohibition against deceiving consumers: The orders broadly enjoin the defendants from deceiving consumers about any other product or service they sell or market.
• Surrender assets: The orders require the defendants to surrender certain property interests and assets contained in multiple bank accounts that will be used to provide any possible refunds to affected consumers.

The orders contain a total monetary judgment of $17,486,080, which is partially suspended upon the defendants’ surrender of assets and also based on their inability to pay the full amount. If the defendants are found to have lied to the FTC about their financial status, the full judgment would be immediately payable.

The Commission vote approving the stipulated final orders was 3-0. The U.S. District Court for the Middle District of Tennessee, Nashville Division, entered the final orders on April 28, 2023.

NOTE: Stipulated final orders or injunctions have the force of law when approved and signed by the District Court judge.

The staff attorneys on this matter are Margaret Burgess, Alan Bakowski, and Natalya Rice of the FTC’s Southeast Region.

The Federal Trade Commission appeared before the House Appropriations Subcommittee on Financial Services and General Government to discuss its FY 2024 budget request and the agency’s ongoing work to ensure open, competitive, and fair markets on behalf of consumers, workers, and honest businesses.

In Commission testimony delivered by Chair Lina M. Khan, the FTC described how the agency is utilizing its current funding to address pressing issues across the country, from data practices that can expose Americans’ most sensitive and personal information, to corporate mergers affecting critical sectors of the economy, the integrity of supply chains, and the prices consumers pay for drugs.

The testimony notes that the FTC is charged with tackling unfair or deceptive practices and rooting out unfair methods of competition that can crush entrepreneurs and stifle innovation. The Commission remains committed to ensuring that the funding it receives from Congress is used effectively and that the agency is addressing root causes and dealing with the most significant harms across markets, particularly by dominant firms whose business practices affect large numbers of Americans.

For FY 2024, the Commission is requesting a budget of $590 million, which would enable the FTC to fund an additional 310 full time employees to address in part the increased demand on agency staff and resources. Demands on the Commission continue to grow as the agency reviews corporate mergers, conducts more complex and expensive litigation, receives millions of consumer complaints, works to stay abreast of transformative technological and market changes, and responds to burgeoning requests for research and investigation of various economic sectors.

The Commission vote to approve the testimony was 3-0.

As a result of action by the Federal Trade Commission and the Commonwealth of Pennsylvania, debt collection company International Credit Recovery, Inc. (ICR), officer Richard Diorio, Jr., and manager Cynthia Powell, have agreed to a permanent ban from the debt collection industry after being charged with engaging in bogus debt collection efforts against businesses and non-profits. 

The FTC and Pennsylvania alleged that ICR was a key part of a telemarketing scheme run by American Future Systems, Inc., (AFS), which also does business as Progressive Business Publications and the Center for Education and Employment Law. ICR allegedly collected on debts AFS claimed organizations such as businesses, schools, fire and police departments, and non-profits owed for book and newsletter subscriptions they did not order.

 “The defendants in the case were the second half of a one-two punch that targeted small businesses, non-profits and first responders, first with bogus subscription bills and then bogus debt collection,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We’re proud to work with our partners in Pennsylvania to hold them accountable.”

“Through collaboration with our federal partners, we reached an agreement that ensures Pennsylvanians will be protected from these callous defendants that preyed on emergency-responder and non-for-profit organizations to fulfill their selfish greed,” Pennsylvania Attorney General Michelle Henry said.

The FTC and Pennsylvania charged that, in connection with its debt collection activities, ICR contacted consumers that it knew or had reason to know did not agree to order paid subscriptions. They also charged that ICR used false or unsubstantiated representations to try to get consumers to pay, and that ICR illegally threatened consumers if they did not pay.

The court order, which was agreed to by the defendants to settle the case, permanently bans them from the debt collection industry, as well as requires them to cooperate since the case will continue against the other defendants AFS, Progressive Business Publications of New Jersey, Inc. and Edward Satell.

The Commission vote approving the stipulated final order was 3-0-1, with Commissioner Christine S. Wilson not participating. The vote on this matter closed on March 23, 2023, prior to Commissioner Wilson’s departure from the Commission. The U.S. District Court for the Eastern District of Pennsylvania approved the settlement.

NOTE: Stipulated final orders or injunctions have the force of law when approved and signed by the District Court judge.

This matter is being handled by the FTC’s East Central Region.

The Federal Trade Commission will hold an informal hearing on its proposed rule prohibiting government and business impersonation at 1 p.m. on May 4, 2023. Chief Administrative Law Judge D. Michael Chappell will preside over the hearing, which will be held virtually and livestreamed on ftc.gov.

The following thirteen interested persons have requested to make an oral submission at the hearing:

• Risk Management Society (speaker: Mr. Stuart Ruff-Lyon, Chief Events & Sales Officer)
• Consumer Technology Association (speaker: J. David Grossman, Vice President, Regulatory Affairs)
• Exhibitions & Conferences Alliance (speaker: Thomas F. (Tommy) Goodwin, Vice President of Government Affairs)
• International Association of Exhibitions and Events (speaker: Nicole Bowman, MBA, CEM, VP of Marketing & Communications for IAEE and Executive Director of Exhibitions Mean Business)
• American Society of Association Executives (speaker: Michelle I. Mason, FASAE, CAE, President and CEO)
• William MacLeod, Esq.
• USTelecom – The Broadband Association (speaker: Joshua M. Bercu, Vice President, Policy & Advocacy)
• Neil Chilson, Esq.
• Voice on the Net Coalition (speaker: Glenn S. Richards, outside counsel)
• American Bankers Association
• INCOMPAS
• Anti-Phishing Working Group (speaker: Peter Cassidy, Secretary General)
• NCTA – The Internet & Television Association (speaker: Joni Lupovitz, Vice President & Associate General Counsel)

The order of the oral submissions will be as listed above. Each oral statement will be limited to five minutes. Each speaker’s oral presentation should be limited to the topic of the proposed trade regulation rule entitled “Rule on Impersonation of Government and Businesses.”

FTC Chair Lina M. Khan and officials from three other federal agencies jointly pledged today to uphold America’s commitment to the core principles of fairness, equality, and justice as emerging automated systems, including those sometimes marketed as “artificial intelligence” or “AI,” become increasingly common in our daily lives – impacting civil rights, fair competition, consumer protection, and equal opportunity.

Chair Khan and officials with the Civil Rights Division of the U.S. Department of Justice, the Consumer Financial Protection Bureau, and the U.S. Equal Employment Opportunity Commission released their joint statement outlining a commitment to enforce their respective laws and regulations to promote responsible innovation in automated systems.

All four agencies have previously expressed concerns about potentially harmful uses of automated systems and resolved to vigorously enforce their collective authorities and to monitor the development and use of automated systems.

“We already see how AI tools can turbocharge fraud and automate discrimination, and we won’t hesitate to use the full scope of our legal authorities to protect Americans from these threats,” said Chair Khan. “Technological advances can deliver critical innovation—but claims of innovation must not be cover for lawbreaking. There is no AI exemption to the laws on the books, and the FTC will vigorously enforce the law to combat unfair or deceptive practices or unfair methods of competition.”

The Federal Trade Commission is sending 41,934 checks, totaling more than $1.1 million, to consumers who were charged for deceptive “free trial” offers for tooth whiteners and other products by RevMountain, LLC; Anasazi Management Partners; and 59 related corporate defendants.

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 1-888-574-7818, or visit the FTC website to view frequently asked questions about the refund process. The Commission never requires people to pay money or provide account information to get a refund.

The FTC sued the defendants in August 2017, alleging that they used deceptive claims, hidden disclosures, and confusing terms to trick people into providing their billing information, supposedly to pay a small fee for the tooth whiteners and other trial products. Instead, the defendants charged consumers for two ongoing subscriptions to nearly identical products until the consumers canceled.

As a result, consumers who believed they had bought a single trial product for about $5 were charged without their knowledge approximately $200 a month until they canceled both subscriptions. Under settlement orders announced in April 2018, the defendants agreed to pay money to provide refunds to defrauded consumers.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of refunds in FTC cases. In 2022, Commission actions led to more than $392 million in refunds to consumers across the country.

The refunds being sent today are the result of a settlement resolved before the U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court. Because of that ruling, the Commission no longer has its strongest tool to return money to consumers, and it will become harder to provide refunds to consumers harmed by deceptive and unfair conduct. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.

Following a public comment period, the Federal Trade Commission has finalized a consent order against Denver-based HomeAdvisor, Inc. – a company affiliated with Angi, formerly known as “Angie’s List” – settling allegations that it used a wide range of deceptive and misleading tactics in selling home improvement project leads to service providers, including small businesses operating in the “gig” economy. 

The FTC’s March 2022 administrative complaint against HomeAdvisor charged that since at least mid-2014 it had made false, misleading, or unsubstantiated claims about the quality and source of the leads the company sells to service providers who are in search of potential customers. The complaint also alleged that HomeAdvisor often told service providers that its leads result in jobs at rates much higher than it can substantiate. Finally, the complaint alleged that HomeAdvisor’s sales agents misrepresented that the optional one-month mHelpDesk subscription was free.

In addition to requiring that HomeAdvisor pay up to $7.2 million for redress, the final order prohibits the company from making any false or misleading claims regarding its leads, including that they concern individuals who are ready to hire a service provider or who submitted a request for home services directly to HomeAdvisor.

The Commission vote approving the final consent order and response to public commenters was 3-0. The lead staff attorney on the HomeAdvisor matter was Sophia H. Calderón of the FTC’s Northwest Region.

Federal Trade Commission staff sent 37 new cease and desist letters to eyeglass prescribers, including optometrists and ophthalmologists, warning them of potential violations of the agency’s Ophthalmic Practice Rules, known as the Eyeglass Rule, which ensures consumers the right to comparison shop for prescription eyeglasses.

The Eyeglass Rule requires prescribers to provide patients with a copy of their eyeglass prescription immediately after an eye exam that includes a refraction, even if the patient does not request it. Under the rule, prescribers also cannot require that patients buy eyeglasses as a condition of providing them with a copy of their prescription, place a liability waiver on the prescription, require patients to sign a waiver, or require patients to pay an additional fee in exchange for a copy of their prescription. Prescribers further cannot refuse to perform an eye exam unless the patient buys eyeglasses, contact lenses, or other ophthalmic goods from them.

The letters, sent as a result of reported violations, remind the prescribers that they are required to provide patients with a copy of their eyeglass prescription immediately after an eye exam, even if the patient does not request it. The letters also warn the prescribers that violations of the Eyeglass Rule may result in legal action, including civil penalties of up to $50,120 per violation.

Finally, the letters require the recipients to contact the staff within five days of receipt describing the specific action they plan to take to address the reported violations.

Along with the letters, staff provided prescribers with links to its business guidance publication, Complying with the Eyeglass Rule. The FTC has recently updated information to help consumers understand their rights under federal law. See: Buying Prescription Glasses or Contact Lenses: Your Rights.

The primary staffer responsible for the cease and desist letters announced today is Sarah Botha in the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission testified before the U.S. Senate Committee on Veterans’ Affairs today about the work the agency is doing to crack down on fraud and related threats against veterans and the broader military community. The testimony discussed fraud, enforcement actions, and rulemaking initiatives involving the military community, and the FTC’s military-specific consumer education and outreach efforts.

Testifying on behalf of the Commission, the Deputy Director of the Bureau of Consumer Protection, Monica Vaca, stressed that combating scams and unlawful tactics aimed at the military community is an important part of the Commission’s law enforcement agenda. In 2022, the FTC’s Consumer Sentinel consumer complaint database received over 195,000 complaints from the military community, including over 150,000 reports from veterans and military retirees. Military consumers reported monetary harm of over $414 million from fraud, an increase of more than 50 percent from the previous year.

According to the testimony, the FTC has responded with enforcement actions combating illegal practices that harm military consumers, including deceptive earnings claims, educational recruitment tactics, illegal auto-related and financing practices, and bogus charities.

The testimony emphasizes that while the Commission remains vigilant in combating fraud and other unlawful business practices, it continues to face difficult challenges with the Supreme Court’s 2021 decision in AMG v. FTC, which held that the FTC does not have the ability to obtain monetary relief pursuant to Section 13(b) of the FTC Act. Although the Commission has worked to use other legal tools and authorities, the AMG decision has continued to cripple the agency’s ability to move forward with claims seeking billions of dollars for affected consumers, including veterans, servicemembers, and their families.