News Flash Testimony Coming Events New Consumer and Business Products Tip of the Month — AVOID CHARITY FRAUD Numbers to Know

NEWS FLASH

CHARITY FRAUD. The FTC joined federal and state partners --- Attorneys General, Secretaries of State, and others from 49 states and the District of Columbia --- to announce 76 law enforcement actions to crack down on fraudulent telemarketers that claim to help police, firefighters, and veterans. The FTC and states also released new information in English and Spanish to help people recognize and avoid donation solicitation fraud. Press release: www.ftc.gov/opa/2009/05/charityfraud.shtm.

ROBO-CALLS. A federal judge has issued a temporary restraining order stopping Voice Touch, Inc., a telemarketing company, its principals, James and Maureen Dunne, and their associates from operating a massive telemarketing scheme. According to the FTC, they used random, pre-recorded phone calls to fool people into thinking that their vehicle’s warranty is about to expire. Press release: www.ftc.gov/opa/2009/05/charityfraud.shtm.

MORTGAGE FRAUD. The FTC has settled its charges against two people who allegedly violated federal law --- and a previous court order --- by luring homeowners into high-cost, short-term loans secured by an additional mortgage on their homes. The defendants, Christopher Tomasulo and Bonnie Werner, allegedly extended credit based on the value of peoples’ collateral without regard to their repayment ability, required balloon payments after only six months, provided loans that caused homeowners to owe more at the end of the loan than at the beginning, and didn’t make the required disclosures. The judgment --- $2 million each --- is suspended based on their inability to pay, but will become due immediately if they are found to have lied about their financial condition. Press release: www.ftc.gov/opa/2009/05/rescue.shtm.

FORECLOSURE “RESCUE” SCAMS. The FTC has charged a mortgage foreclosure “rescue” operation with falsely promising Spanish-speakers behind on their mortgage payments that it would stop foreclosure. Many people who paid the defendants ultimately lost their homes, and others avoided foreclosure only through their own efforts. At the FTC’s request, a federal court temporarily stopped the practices of Dinamica Financiera, LLC, and its affiliates and principals, and froze their assets. Press release: www.ftc.gov/opa/2009/05/mortgagerescue.shtm.

MORTGAGE DISCRIMINATION. The FTC has charged a home mortgage lender and its owner with violating federal law by charging Hispanic people higher prices for mortgage loans than non-Hispanic white borrowers --- price disparities that couldn’t be explained by the applicants’ credit characteristics or underwriting risk. According to the FTC’s complaint, the defendants gave loan officers and branch managers wide discretion to charge “overages” through higher interest rates and higher up-front charges. The defendants allegedly paid loan officers a percentage of the overages as a commission and failed to monitor whether Hispanic consumers were paying higher overages than non-Hispanic white borrowers. Press release: www.ftc.gov/opa/2009/05/gem.shtm.

HIGHER PRICES, LESS INNOVATION. The FTC moved to block CSL Limited’s proposed $3.1 billion acquisition of Talecris Biotherapeutics Holdings Corporation, charging that the deal would lead to higher prices and less innovation in U.S. markets for four plasma-derivative protein therapies. The companies compete to convert plasma to treat patients suffering from primary immunodeficiency disease, chronic inflammatory demyelinating polyneuropathy, alpha-1 antitrypsin disease, and hemolytic disease of the newborn. Press release: www.ftc.gov/opa/2009/05/talecris.shtm.

NOTHING TO SMILE ABOUT. The FTC staff urged the Louisiana Legislature to reject a bill that would limit dental care provided to underserved children in the state through in-school programs.  According to the FTC’s comments, the bill would restrict the market to dentists already providing in-school services and would permit the state dental board, made up of competing dentists, to reject applications of other dentists wanting to treat students in school. Press release:  www.ftc.gov/opa/2009/05/ladentistry2.shtm.

COOLING OFF RULE. The FTC is reviewing the costs and benefits of its Cooling-Off Rule, which was last amended in October 1995. The Rule requires anyone selling consumer goods or services “door to door” --- at a price of at least $25 --- to tell buyers about their right to cancel within three business days of buying the product. The deadline for comments is June 22. Press release: www.ftc.gov/opa/2009/04/coolingoff.shtm.

TESTIMONY

Before the House Energy and Commerce Committee

Subcommittee on Commerce, Trade, and Consumer Protection.

FINANCIAL FRAUDS. During the past five years, the Commission has brought more than 70 law enforcement actions involving mortgage advertising and marketing, mortgage servicing, debt settlement and credit counseling, debt collection practices, credit repair operations, lending discrimination, loan modification and foreclosure rescue scams and other financial issues. Press release: www.ftc.gov/opa/2009/05/debitproact.shtm.

FILE SHARING. The Commission has ongoing efforts to promote better security for sensitive consumer information and to prevent the inadvertent sharing of peoples’ personal or sensitive data over peer-to-peer file sharing networks. The agency strongly supports the goals of legislation that would require companies to put reasonable data security policies and procedures in place, and to notify people when there has been a data security breach that affects them. Press release: www.ftc.gov/opa/2009/05/peer2peer.shtm.

Before the House Committee on Financial Services

Subcommittee on Housing and Community Opportunity

MORTGAGE FORECLOSURE SCAMS. The Commission has brought 11 cases targeting mortgage foreclosure rescue and loan modification scams in just over a year, and is engaged in ongoing, non-public investigations. Press release: www.ftc.gov/opa/2009/05/4closurescam.shtm .

COMING EVENTS

AT THE FTC.

BIZ OPP RULE. The FTC will hold a public workshop on June 1 to explore proposed changes to the FTC’s Business Opportunity Rule, including the effectiveness of a proposed one-page Business Opportunities Disclosure Form that sellers of business opportunities would have to provide to prospective buyers. The Form is intended to give potential buyers information about earnings claims, legal actions, cancellation or refund policies, and references so they can make an informed decision about the opportunity. The deadline for public comments is June 15. The workshop, which is free and open to the public, will be from 9 am to 5 pm at the FTC’s satellite building Conference Center, 601 New Jersey Avenue, N.W., Washington, DC. All attendees must display a current driver’s license or other form of photo identification for entry. Press release: www.ftc.gov/opa/2009/04/bizopp.shtm.

FUTURE OF NEWS MEDIA. Starting September 15, the FTC will hold a series of workshops about the news media in the internet age. The series will consider possible business and non-profit models for news organizations, the role of targeted behavioral and other online advertising, whether additional, limited antitrust exemptions may be necessary, and the implications of online news for both copyright protection and the availability of broadband access. Participants will include journalists, representatives of news and new media organizations, privacy experts, direct marketers, online advertisers, academics, and consumer advocates. Press release: www.ftc.gov/opa/2009/05/newspapers.shtm.

ROAD SHOW

DEBT COLLECTION ROUNDTABLE. The FTC and the Searle Center on Law, Regulation, and Economic Growth at Northwestern University School of Law will host a two-day public roundtable discussion about debt collection litigation and arbitration August 5 and 6. This will be the first of several events for state court judges, government officials, debt collectors and their representatives, consumer advocates, and academics. Press release: www.ftc.gov/opa/2009/05/debtcollection.shtm.

NEW CONSUMER AND BUSINESS PRODUCTS

CHURCHES CHEATED IN OPPORTUNITY SCAM. Warns that con artists are targeting African-American churches with the offer of “free” equipment or services if the church will sign a lease and make payments. Once scammers get access to the church’s bank account, they clean it out. 8.5”x11”, 1 page. www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt138.shtm.

HOW TO STEER CLEAR OF AUTO WARRANTY SCAMS. Cautions people to be skeptical of mail and phone calls warning that their car warranty is about to expire and offering high cost service contracts. 8.5"x11", 2 pages. www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt155.shtm.

COMPLYING WITH THE RED FLAGS RULE: Do-It-Yourself Program for Businesses at Low Risk For Identity Theft.  Gives organizations at low risk for identity theft a tool to develop an Identity Theft Program as required by federal law.  www.ftc.gov/bcp/edu/microsites/redflagsrule/get-started.shtm.

RENTAL LISTINGS MAY BE RED HERRINGS. Cautions prospective renters that scammers may place fake or altered ads on “classified” websites to trick them into sending money for a place that either doesn’t exist or isn’t the scammer’s to rent. 8.5"x11, 2 pages. www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt002.shtm.

Tip of the Month — AVOID CHARITY FRAUD

A flyer in the mail, a phone call, a personalized email — everyone receives requests for donations in one form or another. Many legitimate charities use telemarketing, direct mail, email and online ads to ask for contributions. Unfortunately, scam artists also use these techniques. If someone asks for a donation, take your time and familiarize yourself with the charity:

NUMBERS TO KNOW

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