The Federal Trade Commission has acted to stop Nexway, a multinational payment processing company, along with its CEO and chief strategy officer, from serving as a facilitator for the tech support scammers through credit card laundering. The defendants in the case have agreed to court orders that prohibit them from any further payment laundering and require them to closely monitor other high-risk clients for illegal activity. The complaint and orders were filed by the U.S. Department of Justice on behalf of the FTC.

The FTC’s complaint against Nexway (and several of its subsidiaries and an associated company known as Asknet), its CEO Victor Iezuitov, and its chief strategy officer Casey Potenzone charges that the defendants were at the center of several offshore tech support scams, processing tens of millions of dollars in charges and giving the scammers access to the U.S. credit card network.

“Companies like Nexway that knowingly launder charges for scammers are breaking the law and helping scammers cheat money from consumers,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will not hesitate to use its law enforcement powers to stop them.” 

“The Department of Justice will not hesitate to pursue and hold accountable payment processors who facilitate tech support scams that defraud consumers,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department is committed to protecting consumers from companies that engage in or support deceptive practices.”

According to the complaint, Nexway acted as the payment processor for multiple tech support scams going back to at least 2016, noting that the company’s “premium tech support” clientele accounted for a quarter of all of its business between 2016 and 2020.

The complaint details Nexway’s relationships with tech support scammers, in which Nexway acquired credit card merchant accounts and then used those accounts to collect money from consumers on behalf of the scammers. The complaint charges that Nexway, Iezuitov, and Potenzone were aware that their tech support clients were scammers and directly received numerous complaints about the companies.

The court orders include a number of restrictions and requirements on Nexway and Iezuitov, asknet, and Potenzone:

• Prohibition on credit card laundering: The orders will prohibit the defendants from laundering sales through their merchant accounts.  
• Requirement to monitor high-risk clients: The orders require the defendants to screen and monitor any clients they serve who meet criteria that make them an elevated risk of violating the law, and also require them to take action if their clients charge consumers without authorization or violate the Telemarketing Sales Rule (TSR).
• Prohibition on payment processing or assisting tech support scammers: The orders will prohibit the defendants from engaging in payment processing for tech support companies that use pop ups, telemarketing or false or unsubstantiated advertising.
• Monetary judgments: The orders require Nexway and its subsidiaries to pay $350,000; Asknet and its subsidiaries to pay $150,000; Iezuitov to pay $100,000; and Potenzone to pay $50,000.

The orders contain a total monetary judgment of $16.5 million, which is partially suspended based on the defendants’ inability to pay the full amount. If the defendants are found to have lied to the FTC about the financial status, the full judgment would be immediately payable.

The Commission vote to authorize the staff to refer the complaint to the DOJ and to approve the proposed consent decree was 4-0. The vote on this matter closed on February 16, 2023, prior to former Commissioner Christine S. Wilson’s departure from the Commission. The DOJ filed the complaint and proposed consent decrees on behalf of the Commission in 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. Consent decrees have the force of law when approved and signed by the District Court judge.

The FTC staff attorneys on this matter were Russell Deitch and J. Ronald Brooke, Jr. of the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission extended the deadline for members of the public to comment in response to its Request for Information on franchise agreements and franchisor business practices, including how franchisors may exert control over franchisees and their workers.

At the request of several interested parties, the Commission extended the original May 9, 2023 public comment period for 30 days, until June 8, 2023. Information on how to submit comments can be found online at regulations.gov.

The FTC announced the Request for Information on March 10. The agency would like to know more about how franchisors may exert control over franchisees and their workers. In particular, the agency is interested in how franchisors disclose certain aspects and contractual terms of the franchise relationship, as well as the scope, application, and effect of those aspects and contractual terms.

Separately, the FTC is seeking public comment on a proposed rule to ban noncompete clauses for workers in some situations. As part of that proposed rulemaking, the FTC is interested in public comments on the question of whether that proposed rule should also apply to noncompete clauses between franchisors and franchisees. Comments related to the use of noncompete restrictions in franchise agreements should be submitted as part of the noncompete rulemaking through April 19, 2023. This request is separate from the noncompete rulemaking proceeding. Similarly, this Request for Information is separate from the Franchise Rule regulatory review. Comments submitted in response to this request will not automatically become part of either the noncompete rulemaking proceeding or the Franchise Rule regulatory review record. 

The lead staff attorneys on this matter are Christine M. Todaro and Josh Doan from the FTC’s Bureau of Consumer Protection and Alex Petros from the FTC’s Office of Policy Planning.

The Federal Trade Commission is putting hundreds of advertisers on notice that they should avoid deceiving consumers with advertisements that make product claims that cannot be backed up or substantiated. In notices sent to the companies, the FTC warned that it will not hesitate to use its authority to target violators with large civil penalties.

Under FTC law, companies must back up claims about what their product can do with reliable evidence. If a company makes a claim about the health or safety benefits of a product, that claim must be based on scientific evidence. If a company claims that its product can cure, mitigate, or treat a serious disease such as cancer or heart disease, it must back up that claim through the accepted standards of scientific testing.

“The requirement for advertisers to have adequate support for their advertising claims at the time they’re made is a bedrock principle of FTC law,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection. “The prospect of steep civil penalties will help ensure that advertisers don’t play fast and loose with the truth.”

While the FTC has long history of providing guidance on advertising substantiation, through both litigated cases and policy statements, many sellers continue to make unsubstantiated claims about their products and false claims about the proof they have. Consequently, the FTC is now using its penalty offense authority to remind advertisers of the legal requirement to have a reasonable basis to support objective product claims and to deter them from making deceptive claims in the future.

By sending notices of penalty offenses to approximately 670 companies involved in the marketing of OTC drugs, homeopathic products, dietary supplements, or functional foods, the agency is placing them on notice they could incur significant civil penalties if they fail to adequately substantiate their product claims in ways that run counter to the litigated decisions of prior FTC administrative cases.

Notices of penalty offenses allow the agency to seek civil penalties — up to $50,120 per violation — against a company that engages in conduct that it knows has been found unlawful in a previous FTC administrative order, other than a consent order.

The notices outline specific unlawful acts and practices, including failing to have: 1) a reasonable basis consisting of competent and reliable evidence for objective product claims; 2) competent and reliable scientific evidence to support health or safety claims; and 3) at least one well-controlled human clinical trial to support claims that a product is effective in curing, mitigating, or treating a serious disease. The unlawful acts or practices also include: 1) misrepresenting the level or type of substantiation for a claim, and 2) misrepresenting that a product claim has been scientifically or clinically proven.

A full list of the businesses receiving the notice from the FTC is available on the Commission’s website. A recipient’s inclusion on the list does not in any way suggest that it has engaged in deceptive or unfair conduct. Although the initial distribution of the notice is limited to those making or likely to make health claims, the notice is not limited to health claims and applies to any marketer making claims about the efficacy or performance of its products.

The letter to the recipients also provides them with a copy of a previously approved notice of penalty offenses regarding the use of endorsement and testimonials. That notice addresses falsely claiming an endorsement by a third party; misrepresenting whether an endorser is an actual, current, or recent user; using an endorsement to make deceptive performance claims; failing to disclose an unexpected material connection with an endorser; and misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience.

Finally, the letters suggested that the recipients consult FTC staff’s recently issued “Health Products Compliance Guidance.”

The March 31, 2023, Commission vote to approve the substantiation notice and authorize the distribution of both notices was 3-1, with then-Commissioner Christine S. Wilson voting no and issuing a separate statement on her final day as a Commissioner. Commissioner Rebecca Kelly Slaughter issued a statement, joined by Chair Lina M. Khan and Commissioner Alvaro Bedoya. The primary staffers in this matter were Michael Ostheimer and Christine DeLorme in the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission and the State of Florida have filed suit against Chargebacks911 for unfairly thwarting consumers who were trying to dispute credit card charges through the chargeback process.

In a complaint filed in federal court, the FTC and Florida charged that, since at least 2016, the “chargeback mitigation” company and its owners, Gary Cardone and Monica Eaton Cardone, have used multiple unfair techniques to prevent consumers from successfully winning chargeback disputes.

“Chargebacks911 helped scammers stay in business and defeat chargeback attempts by consumers hit with fraudulent charges,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue to take aggressive action against those who undermine consumers’ ability to exercise their rights.”

The chargeback process is a key protection for consumers who wish to contest unwanted, fraudulent, or incorrect credit card charges When a consumer sees a charge they did not authorize, or for which the promised goods of services didn’t arrive, they can dispute the charge with their credit card company. The company then contacts the merchant’s credit card company for information and determines whether to reverse the charge.

According to the complaint, Chargebacks911 has regularly sent screenshots on behalf of their clients to credit card companies that supposedly show that consumers had agreed to the disputed charges—often recurring monthly subscription charges. The complaint notes that, in many instances, these screenshots have not actually been from the website where consumers made the disputed purchases and that the company ignored clear warning signs the website screenshots were misleading.

A screenshot sent by Chargebacks911 and a screenshot of the site actually used by the consumer; both images from the complaint.

The complaint also charges that Chargebacks911 used a system called Value Added Promotions (VAP), which allowed the company’s clients to run numerous small-dollar transactions via prepaid debit cards. By doing so, clients could raise their total number of transactions, lowering the percentage of their charges that were disputed by consumers. The percentage of chargebacks a company faces plays a role in the level of scrutiny a company receives from credit card companies; a higher percentage will likely lead to more scrutiny.

In the complaint, the FTC and Florida note that Chargebacks911 served numerous companies that the FTC has sued for deceiving consumers, including Apex Capital, F9 Advertising, and AH Media. The complaint notes that Chargebacks911 disputed tens of thousands of chargebacks on behalf of each of those companies.

There were many instances, according to the complaint, where Chargebacks911 submitted screenshots of websites on behalf of Apex Capital and AH Media where the name of the product on the sites in the screenshots did not even match the brand name of the product for the disputed purchase. According to the complaint, Chargebacks911 regularly overlooked other suspicious behaviors from their clients, including when clients used a large number of different merchant accounts to process charges.

The FTC and Florida allege that Chargebacks911, Gary Cardone, and Monica Eaton Cardone are violating both the FTC Act and the Florida Unfair and Deceptive Trade Practices Act, and are asking the court to stop the defendants’ illegal activities and order monetary relief, including compensation for consumers and civil penalties.  

The Commission vote authorizing the staff to file the complaint was 3-0-1, with then-Commissioner Christine S. Wilson recorded as not voting. The vote on this matter closed on March 29, 2023, prior to Commissioner Wilson’s departure from the Commission. The complaint was filed in the U.S. District Court for the Middle District of Florida.

NOTE: The Commission files 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. The case will be decided by the court.

The FTC staff attorneys on this matter are Evan Rose and Bobbi Tonelli of the FTC’s Western Region San Francisco.

The Federal Trade Commission testified today before a California State Senate committee considering a bill that would create a “right to repair” for several types of consumer products including requiring manufacturers of certain products to make spare parts, diagnostic tools, and repair instructions available to owners of products and to independent repair shops. 

Testifying on behalf of the Commission, Dan Salsburg, Chief Counsel for Development and Innovation in the FTC’s Bureau of Consumer Protection, addressed two of the justifications for repair restrictions. First, in the FTC’s 2021 Nixing the Fix report to Congress, the FTC found scant evidence that repair restrictions are necessary to protect repair workers and consumers from injuries that could result from improperly fixing a product or using an improperly repaired product. Second, the Nixing the Fix report found no empirical evidence to suggest that independent repair shops are more or less likely than authorized repair shops to compromise or misuse customer data or that providing them access to diagnostics and firmware patches would introduce cybersecurity risks.

The testimony before the California State Senate Judiciary Committee builds on the FTC’s efforts to expand consumer choices and competition when it comes to repairing products. The Commission followed up its Nixing the Fix report by issuing a Policy Statement that warned manufacturers that the Commission would prioritize enforcement against repair restrictions that violate antitrust laws enforced by the FTC or the FTC Act’s prohibitions on unfair or deceptive acts or practices. And in 2022, the Commission announced three major enforcement actions against manufacturers whose warranties included terms that conveyed that the warranty is void if customers use independent dealers for parts or repairs in violation of the Magnuson-Moss Warranty Act.

The FTC stands ready to work with legislators, either at the state or federal level, to ensure that consumers and independent repair shops have appropriate access to replacement parts, instructions, and diagnostic software.

The Commission voted 3-0 to approve the presentation of the testimony before the California State Senate’s Judiciary Committee.

As the menace of unwanted illegal robocalls continues, U.S. consumers are bombarded by millions of these calls each month, both to their landlines and cell phones. Data show that a significant proportion, if not the majority, of illegal robocalls originate from overseas.

To stop these illegal overseas calls, the Federal Trade Commission has implemented Project Point of No Entry (PoNE), targeting “point of entry” or “gateway” Voice over Internet Protocol (VoIP) service providers and warning they must work to keep illegal robocalls out of the country.

“Project Point of No Entry is yet another way the FTC is sending VoIP service providers the clear message that the Commission will not stand by as illegal robocalls blast American phones,” said Samuel Levine, Director of the Bureau of Consumer Protection. “We will use all of our tools to stop companies that knowingly permit illegal calls to flood into the country.”

Project Point of No Entry

Through Project PoNE, the FTC is disrupting foreign-based scammers and imposters responsible for blasting U.S. consumers with annoying and unwanted calls. Through Project PoNE, the Commission: 1) identifies point of entry VoIP service providers that are routing or transmitting illegal call traffic, 2) demands they stop doing so and warns their conduct may violate the Telemarketing Sales Rule, and then 3) monitors them to pursue recalcitrant providers, including by opening law enforcement investigations and filing lawsuits when appropriate.

The FTC can seek civil penalties and court injunctions to stop TSR violations. It can also seek money to refund to consumers who were defrauded via illegal telemarketing calls. The FTC coordinates directly with the agency’s federal and state partners, which support the program and pursue their own actions to fight illegal telemarketing robocalls.

Quantifiable Results

Results to date have shown that Project PoNE is having a significant impact in the fight to stop illegal calls.

Through the FTC’s enforcement efforts and its collaboration with partners, such as the Industry Traceback Group (ITG), the Federal Communications Commission (FCC), and state attorneys general, Project PoNE has uncovered the activity of 24 target point of entry service providers responsible for routing and transmitting illegal robocalls between 2021 and 2023, in connection with approximately 307 telemarketing campaigns, including government and business imposters, COVID-19 relief payment scams, and student loan debt relief and forgiveness schemes, among others. According to ITG, a single campaign often represents hundreds of thousands or millions of calls.

The FTC demanded that each of the target providers stop allowing illegal robocalls into the United States, warning of potential law enforcement action for illegal conduct. ITG traceback data show that after being contacted by Project PoNE staff, 22 of the 24 targets significantly curbed or altogether stopped the flow of illegal robocalls entering the country over their networks.

Designated by the FCC as the official traceback consortium, ITG uses its traceback process to seek out the source of suspicious traffic and shares information with law enforcement when appropriate. Each traceback represents a snapshot of any given campaign.

Before being contacted by the FTC, the targets had a combined total of 1,043 tracebacks. After being contacted and warned about their possibly illegal conduct, that number dropped to 196, illustrating Project PoNE’s effectiveness at stopping illegal robocalls before they could enter the country. Of the 196, 147 are linked to two uncooperative providers, one of which is subject to an FCC law enforcement action.

The FTC is making available to the public recordings of the robocalls that the targets have allowed into the country at Project Point of No Entry Letters . Making these recordings available will help consumers identify and avoid the various scams delivered by illegal robocalls. The FTC’s East Central Region is spearheading Project PoNE.

Following a public comment period, the Federal Trade Commission has approved a final consent order against The Bountiful Company for abusing a feature of Amazon.com to deceive consumers into thinking that its newly introduced supplements had more product ratings and reviews, higher average ratings, and “#1 Best Seller” and “Amazon’s Choice” badges.

The FTC’s February 2023 complaint alleged that by manipulating Amazon.com product pages, Bountiful misrepresented the reviews, the number of Amazon reviews and the average star ratings of some products, and that some of them were number one best sellers or had earned an Amazon Choice badge. The case against Bountiful marked the FTC’s first law enforcement challenging “review hijacking,” in which a marketer steals or repurposes reviews of another product.

In addition to requiring that Bountiful pay $600,000 as monetary relief for consumers, the final order prohibits Bountiful from making similar types of misrepresentations and bars the company from using deceptive review tactics that distort what consumers think about its products or services.

The March 28, 2023, Commission vote approving the final consent order was 4-0. Staff attorneys in the FTC’s Advertising Practices Division handled this matter.

Anthony Joseph Damiano and his funeral service companies—Funeral & Cremation Group of North America, LLC, and Legacy Cremation Services, LLC (doing business as Heritage Cremation Provider, Evergreen Funeral Home and Crematory, and Carolina Central Crematory)—will pay civil penalties and abide by strict requirements on how they communicate with customers to resolve a lawsuit filed on behalf of the Federal Trade Commission by the U.S. Department of Justice.

The DOJ and FTC filed their complaint against Damiano and his companies in April 2022, alleging that they misrepresented their location, leading consumers to believe they were a local provider, advertised deceptively low prices, illegally threatened and failed to return cremated remains to bereaved consumers, and failed to provide disclosures required by the Funeral Rule.

“Lying to consumers about critical information including price and location of services when they are dealing with the loss of a loved one is outrageous and illegal,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Our actions in this case show the FTC’s commitment to enforcing the Funeral Rule to protect consumers and honest funeral homes.”

The complaint alleged that the defendants claimed to be local funeral or cremation providers when speaking with customers, failing to disclose that the services would be contracted to a third party, sometimes hours away from loved ones. The complaint also alleged that when consumers were presented with undisclosed fees and higher prices, the defendants in some cases withheld the remains of their loved ones to extract payment.

The proposed court order, which was agreed to by the defendants in the case, would require the defendants to:

• Share important info on their website: The order requires the defendants to disclose key facts on their website, including their actual physical location and a general price list, as well as a notice when funeral goods or services will be provided by a third-party company not owned by the defendants.
• Disclose their price list upfront: The defendants are required to provide consumers with a general price list either during or immediately after their first interaction with a consumer about funeral goods or services, whether online or by telephone, and before any discussion of price occurs.
• Provide info on third parties: The order requires the defendants to give consumers the name, address, and contact information for any third-party provider that will provide funeral goods or services.
• Pay a civil penalty: The order requires the defendants to pay $275,000 in civil penalties.

The staff attorneys on this matter are Thomas Harris and Rebecca Plett.

The Department of Justice filed the order and civil penalty judgment on behalf of the Commission in the U.S. District Court for the District of Florida. NOTE: Consent judgments have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission is sending payments totaling nearly $45,000 to consumers who purchased DreamCloud mattresses sold by Resident Home, LLC, the parent company of Nectar Sleep, which used misleading “Made in USA” claims to pitch its products to consumers.  

The FTC has begun sending checks to consumers who were affected. Recipients should cash their checks within 90 days.

In the next few months, the FTC will be contacting an additional 12,300 consumers who bought DreamCloud mattresses and may be eligible for a payment. Consumers who believe that they may be eligible and want more information about the claims process can contact the administrator, JND Legal Administration, at 844-798-0740. The Commission never requires people to pay money or provide account information to get a refund.

The FTC sued Resident Home and its owner, Ran Reske, in October 2021. In the company’s promotional material, Resident Home 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 alleged all DreamCloud mattresses were finished overseas and, in some cases, wholly imported or used significant imported materials.

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.

As a result of a Federal Trade Commission lawsuit, the operators of a telemarketing scam that called hundreds of thousands of consumers nationwide to pitch them expensive “extended automobile warranties” will face a lifetime ban from the extended automobile warranty industry and from all outbound telemarketing.

Under the terms of proposed court orders, three companies and their owners that were charged by the FTC with running the operation that scammed consumers out of millions of dollars would be permanently banned from participating in the extended automobile warranty market, as well as from any further involvement in outbound telemarketing.

“AVP misled consumers about who they were and what they were selling and called a large number of consumers who were on the FTC’s Do Not Call List,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s order banning five defendants from the industry and imposing a monetary judgment of $6.6 million continues the Commission’s aggressive crackdown on telemarketing fraud.”

The FTC first charged the owners and operators of American Vehicle Protection Corporation (AVP) with violating the FTC Act and the Telemarketing Sales Rule in February 2022. In its complaint, the FTC charged that AVP made unsolicited calls in which it claimed to be affiliated with vehicle makers, and deceptively claimed their products, which cost thousands of dollars, offered “bumper to bumper” protection.

American Vehicle Protection Corp.; CG3 Solutions, Inc.; and Tony Gonzalez Consulting Group,

Inc., along with individual defendants, Tony Allen Gonzalez, and his brother, Charles Gonzalez, have agreed to the terms of the proposed court orders.

The orders also include a monetary judgment of $6.6 million, which is largely suspended based on their inability to pay. If the defendants are found to have lied to the FTC about the financial status, the full judgment would be immediately payable.

The FTC’s case against the remaining defendants in the case, Kole Consulting Group, Inc., and its owner and manager, Daniel Kole, will continue.

The Commission vote approving the stipulated final orders was 3-0-1, with Commissioner Christine S. Wilson not participating. The FTC filed the proposed order in the U.S. District Court for the Southern District of Florida.

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

The staff attorneys on this matter are Harold Kirtz, Hans Clausen, and Chris Gleason of the FTC’s Southeast Region.