The Federal Trade Commission is sending 5,726 checks totaling more than $255,000 to consumers who were harmed by Vantage Point Services’ illegal debt collection practices.

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, JND Legal Administration, at 877-389-2224. The Commission never requires people to pay money or provide account information to get a refund.

In 2018, the FTC negotiated a settlement with Vantage Point, permanently banning Vantage Point and its executives from the debt collection business. The settlement also prohibits these defendants from misrepresenting material facts about financial-related products and services, profiting from customers’ personal information collected as part of the challenged practices, and failing to dispose of such information properly.

The FTC and the State of New York sued Vantage Point in 2015, alleging that the debt collection company used threats and abusive language, including false threats that consumers would be arrested, to collect supposed debts from thousands of consumers.

In their complaint against Vantage Point, the FTC and New York alleged that the company often falsely claimed to be a law firm, process server, or even affiliated with the government when talking to consumers. In some instances, they posed as FBI agents and district attorneys, and in other cases they falsely claimed they were working as an intermediary with the state, or that the state had placed the consumers’ account with them to give them a chance to pay the debt before criminal charges were filed.

The defendants, using these deceptions, falsely claimed that consumers had committed a crime and that an arrest warrant would be issued unless they made a payment. Often, the defendants told consumers that they would spend months in jail or would need to pay thousands of dollars in bail if they didn’t pay. In some cases, the defendants falsely told third parties, including consumers’ friends and employers, that the consumers had committed a crime and that a warrant had been issued for their arrest.

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.

The Federal Trade Commission is sending 1,064 checks totaling more than $542,000 to consumers who were harmed by a bogus business and investment scheme known as Digital Income System.

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, Rust Consulting, Inc., at 833-539-2840. The Commission never requires people to pay money or provide account information to get a refund.

The FTC sued Digital Income System in 2020 as part of the Operation Income Illusion sweep, alleging that the Florida-based scam falsely told consumers that by selling memberships in the defendants’ programs, they were likely to earn large sums of money. The defendants claimed on their website that participants would “earn between $500 and $12,500 per sale,” and “Every time one of our professionals closes a sale on your behalf, we will send you a huge commission check right to your doorstep.”  According to the FTC’s complaint, though, the vast majority of consumers who paid the defendants never earned substantial income, and in fact, many consumers earned nothing.

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.

The staff of the Federal Trade Commission has provided its annual report to the Consumer Financial Protection Bureau on its enforcement and related activities in 2021 regarding the Truth in Lending Act (TILA), Consumer Leasing Act (CLA), and Electronic Fund Transfer Act (EFTA).

The report highlights the FTC’s enforcement actions related to the Acts and their implementing regulations, including in the areas of automobile purchases and financing, payday lending, credit repair and debt relief, and electronic fund transfers:

• Automobile Purchase and Financing: The report notes the FTC’s settlement with Richard Berry, the owner and manager of four auto dealers, in the FTC’s action against Tate’s Auto for falsifying consumers’ information on financing applications and misrepresenting financial terms in advertisements. The settlement provides for a $450,000 payment to the FTC for consumer redress, and prohibits Berry from misrepresenting the costs or other material facts related to vehicle financing and from violating the TILA and CLA. The report also notes the Commission’s administrative opinion and order against Traffic Jam Events for sending consumers deceptive mailers about COVID-19 benefits and potential prize winnings, and violating the TILA including by quoting monthly payments for consumers to purchase vehicles that failed to provide or hid in fine print key financing terms required by law. The order bans the defendants from the auto industry, prohibits misrepresentations regarding financial assistance from the government, and requires compliance with TILA.  
• Payday Lending: The report highlights the FTC’s settlement against Harvest Moon Financial for overcharging consumers millions of dollars, deceiving them about the terms of their loans and failing to make required loan disclosures. According to the report, the owners and operators of the settling entities are banned from making loans or extending credit, nearly all debt held by the company will be deemed paid in full, and the companies involved are being liquidated, with the proceeds to be used to provide redress to consumers harmed by the company.  
• Credit Repair and Debt Relief: The report discusses the FTC’s settlement with the operators of a student loan debt relief scheme (Student Advocates Team), charged with falsely promising consumers the company could lower or eliminate student loan balances, illegally imposing upfront fees for credit repair services, and signing consumers up for high-interest loans to pay the fees without making required loan disclosures in violation of TILA. The order bans the defendants from providing debt relief services and from collecting any further payments from consumers who purchased the services, and  requires the defendants to return money to be used to refund consumers.

The report also highlights the agency’s Military Task Force, which comprises a cross-section of FTC representatives and focuses on various initiatives to assist military consumers. The report further outlines the FTC’s consumer and business education efforts on truth in lending and electronic fund transfer issues, including updates about vehicle purchases and financing and  add-on products and services that can cost consumers thousands of extra dollars, and information about how debit and prepaid cards differ from other cards and important considerations about each type of card.

The FTC also has provided a copy of the report to the Federal Reserve Board.

The staff of the Federal Trade Commission is seeking the public’s input on ways to modernize the agency’s business guidance titled “.com Disclosures: How to Make Effective Disclosures in Digital Advertising.” First published in March 2013, this resource provides guidance to businesses on digital advertising and marketing.

As digital deception grows in sophistication, some companies are wrongly citing the guides to justify practices that mislead consumers online. For example, firms have claimed that they can avoid liability under the FTC Act by burying disclosures behind hyperlinks, a practice that can expose consumers to financial fraud, intrusive surveillance, and other harms.

“We know that some companies are wrongly citing our current guides to justify dark patterns and other forms of digital deception,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We are looking to update the guides to make clear that online tricks and traps will not be tolerated, and we look forward to hearing from the public on this initiative.”

FTC staff is seeking public input to ensure the guides are helping honest businesses treat consumers fairly, rather than being used as a shield by firms looking to deceive. In seeking public comment on possible revisions, staff is interested in the technical and legal issues that consumers, the FTC’s law enforcement partners, and others believe should be addressed. The issues on which FTC staff is seeking comment include:

• the use of sponsored and promoted advertising on social media;
• advertising embedded in games and virtual reality and microtargeted advertisements;
• the ubiquitous use of dark patterns, manipulative user interface designs used on websites and mobile apps, and in digital advertising that pose unique risks to consumers;
• whether the current guidance adequately addresses advertising on mobile devices;
• whether additional guidance is needed to reflect the multi-party selling arrangements involved in online commerce and affiliate marketing arrangements;
• how the guidance on the use of hyperlinks can be strengthened to better protect consumers; and
• the adequacy of online disclosures when consumers must navigate multiple webpages;

The FTC will seek public comment beginning today and continuing through August 2, 2022. Information on how to submit comments can be found here. 

This is one of a number of initiatives the FTC is undertaking to tackle dark patterns and digital deception, including issuing a click-to-cancel policy statement, proposing strengthened advertising guidelines against fake and manipulated reviews, arming staff with new tools to investigate dark patterns, and authorizing a Notice of Penalty Offense against deceptive reviews.

Consumers reported losing over $1 billion to fraud involving cryptocurrencies from January 2021 through March 2022, according to a new analysis from the Federal Trade Commission. Fraud reports suggest cryptocurrency is quickly becoming the payment of choice for many scammers, with about one out of every four dollars reported lost to fraud paid in cryptocurrency.

The FTC’s latest Consumer Protection Data Spotlight finds that most of the cryptocurrency losses consumers reported involved bogus cryptocurrency investment opportunities, which totaled $575 million in reported losses since January 2021. These scams often falsely promise potential investors that they can earn huge returns by investing in their cryptocurrency schemes, but people report losing all the money they “invest.”

After cryptocurrency investment schemes, the next largest losses reported by consumers were on:

• Romance Scams: These often involve a love interest who tries to entice someone into investing in what turns out to be a cryptocurrency scam.
• Business and Government Impersonation Scams: Reports show these scammers often target consumers by claiming their money is at risk because of fraud or a government investigation and the only way to protect their cash is by converting it to cryptocurrency.

Reports suggest that cryptocurrency-related scams often begin on social media. Nearly half of consumers who reported a cryptocurrency related scam since 2021 said it started with an ad, post or message on a social media platform.

People ages 20 to 49 were more than three times as likely as older age groups to have reported losing money to a cryptocurrency scam. Older age groups, however, reported losing more money when they did report a cryptocurrency-related scam.

Some of the red flags consumers should watch out for include:

• anyone who claims they can guarantee profits or big returns by investing in cryptocurrency;
• people who require you to buy or pay in cryptocurrency; and
• a love interest who wants to show you how to invest in cryptocurrency or to send them cryptocurrency.

The Federal Trade Commission’s lawsuit against RCG Advances, LLC and Robert Giardina has led to a court order that permanently bans the company and owner from the merchant cash advance industry for deceiving and threatening small businesses and their owners. The FTC alleged that the scheme’s operators lied to small business owners about terms and fees for their financing, and threatened them with violence when they were unable to pay. In addition, the court ordered RCG Advances and Giardina to make an upfront payment of $1.5 million and subsequent payment of more than $1.2 million to refund consumers.

“These defendants lied to small businesses about financing, stole money from their accounts, made violent threats, and gave false documents to the courts,” said Samuel Levine, the Director of the FTC’s Bureau of Consumer Protection.  “This order bans them from the merchant cash advance business and requires them to return money to the businesses they cheated.”  

RCG Advances and Giardina, along with the other defendants in the FTC’s case, operated a merchant cash advance scheme since at least 2015, the agency alleged. Merchant cash advances are a type of alternative small business financing. Generally speaking, merchant cash advance companies provide funds to businesses in exchange for a percentage of the businesses’ revenue, which typically are paid through daily withdrawals from the business’s bank account. 

The FTC’s investigation found that the defendants in the case, including RCG Advances and Giardina, lied to small businesses about numerous elements of the financing agreements before they were signed, and broke the law in their communications with businesses and their owners after the fact. The harms to small businesses and their owners were extensive, including:

• Deceiving consumers about personal guarantees: The defendants’ websites falsely claimed that their cash advances required “no personal guaranty of collateral from business owners,” meaning that the people obtaining financing on behalf of companies would not have their personal possessions treated as collateral. In fact, their contracts did include those requirements.
   
• Forcing consumers and businesses into confessions of judgment: The defendants also required businesses and their owners to sign confessions of judgment, which allow the defendants to immediately obtain an uncontested judgment in case of an alleged default. The complaint alleges that the defendants illegally and unfairly used these confessions of judgment to unexpectedly and improperly seize consumers’ personal and business assets.

• Providing less funding than promised: The complaint alleges that when businesses received their funding from the defendants, it was often thousands of dollars less than promised. The shortfall was due to large supposed fees that were not disclosed to the business owners. This happened despite the defendants marketing promises of “no upfront fees.”

• Threatening consumers and businesses: The complaint alleges that the defendants made threatening calls to consumers, including telling one man that they would “break his jaw” if he did not make his payments and, in another case, threatening to ruin a consumer’s reputation by falsely accusing him of being a child molester if he did not pay.

Enforcement Action

Under a court order agreed to by the defendants in order to settle the case, they will be:

• Permanently banned from the business financing and debt collection industries.

• Required to vacate judgments and liens: The defendants are being ordered to vacate any judgments against their former customers and to release any liens against their customers’ property.

• Prohibited from misleading consumers: The defendants will be prohibited from misleading consumers about any key facts about any good or service, including any fees, the total cost of the product, and other facts that reflect their deceptions in this case.

• Pay more than $2.7 million: The defendants are being ordered to pay more than $2.7 million, which will be used to provide refunds to consumers harmed by their actions.

The FTC previously obtained a court order in settlement with defendants RAM Capital Funding, LLC and Tzvi Reich. The FTC’s case against remaining defendant Jonathan Braun is still under way.

The Commission vote approving the stipulated final order was 4-0-1, with Commissioner Alvaro M. Bedoya not participating. The FTC filed the proposed order in the U.S. District Court for the Southern District of New York.

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

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. “Health–based 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.

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.