Consumer- and Skeptic-friendly FTC Actions of 2013
by Josh DeWald
June 6, 2014
Someone has to complain. I am only able to present an even smaller number here that struck me as particularly meaningful or satisfying.This article will cover actions the Federal Trade Commission took in 2013 to quell the tide of commerce-related scammery that exists. There is a depressingly large number of complaints, which I am sure makes only the smallest of dents in the total amount of false health claims and other claims, financial scams, and privacy violations that go on every day. Think about every time a company seems "legit" merely because "if it were illegal they couldn't be doing it right?" It can just take awhile for something to be done about it.
POM (finalized) - As the end of a three-year battle, the FTC finally completed its proceedings against the makers of "POM Wonderful" pomegranate juice. You may recall that the company had led people to believe that consuming POM and POMx would have astounding effects on your immune system and could even help with specific ailments. Shockingly, POM did not provide solid scientific evidence of these claims. So the FTC "prohibits misrepresentations regarding any test, study, or research, and requires competent and reliable scientific evidence to support claims about the 'health benefits, performance, or efficacy' of any food, drug, or dietary supplement."
Springtech and Cedarcide Industries (final judgement) - In December the courts made final judgements against makers of "natural" bed bug and head lice treatments branded "BEST Yet!" In the judgement (first link), the company and everyone acting with or on their behalf is prevented from making pretty much any claim whatsoever about the efficacy of their products without actual "competent and reliable scientific evidence" to back up the claims. The same goes for their head lice treatment of course. Oh, and they also have to pay $7,279,000 to cover consumer refunds and costs associated with administering the refunds.
Iovate Health Sciences (refunds!) - In September the FTC began sending out refunds averaging about $70 each to people who had bought any of Accelis, nanoSLIM, and any Cold MD, Germ MD, or Allergy MD dietary supplements. These products were claimed, without evidence, to help consumers lose weight and fight illness. In one case (Allergy MD) it was claimed that the product was homeopathic when it was not. In other words, they chose or were incapable of making a sugar pill correctly.
Sherwin-Williams - Sherwin-Williams was ordered to stop claiming that its Dutch Boy Refresh product contained "zero" volatile organic compounds (VOCs) without providing, you know, evidence for that. A similar complaint and order went out against the Essential Natural Memory Foam Company, EcoBaby Organics, and Relief-Mart who were all selling mattresses they claimed were free of VOCs without sufficient evidence.
Four Loko - Remember Four Loko? (It got famous for a bit where I live.) Well apparently Phusion Products — makers of the product — claimed that their 23.5 oz cans contained the equivalent of two bottles of beer when it was actually closer to four beers. So you can imagine why people thought it strange when they consumed it and got "way drunker" than they should have. The FTC has prohibited them from making false claims about their alcohol content and that the equivalent beer amount must be clearly disclosed. Crazy that.
Privacy and Security Violations
Multiple PC Rent-To-Own companies made use of products called PC Rental Agent and Detective Mode by DesignerWare LLC on the PCs they rented, which collected confidential information (credit cards, social security numbers, passwords) as well as using fake registration screens to collect credit card numbers. The FTC just asked them to stop doing it, which seems a bit lenient.
Cbr Systems - This one was likely unintentional, but still bad. Cord blood and umbilical cord bank Cbr Systems said that it protected the security of all data given to them by its clients. However multiple unencrypted backups and a laptop, containing readable credit and debit card numbers as well as social security numbers and other identifying information, were stolen from an employee's car in December of 2010. The FTC is requiring them to actually enact a proper data security program.
HTC - Handset maker HTC apparently made quite a few mistakes in their customization of the Android OS, placing consumers at risk of malware through apps being able to easily bypass the permission model and enter various debug modes. FTC said they basically need to actually implement a comprehensive security review and audit of their implementation of Android to ensure it doesn't happen again.
Straight out Scams
Acquinity Interactive (hearings) - The FTC started some initial hearings in mid-July against Acquinity Interaction (and others) for sending out spam text messages claiming people would get gift cards from Best Buy, Wal-Mart, etc., just for signing up for some stuff. Just simply enter your credit card number here. I myself got a couple of these, and I'm aware of companies that were inadvertently used to send out the messages, so it potentially cost a lot of money all around (messages aren't free). Hopefully this one is open and shut for the FTC, but time will tell.
Fraudulent mobile subscriptions (hearings) - Still somewhat early on, but in December the FTC initiated investigations into several companies who were pitching various text alerts (tips, advice, celebrity news) which enrolled the consumer in costly premium SMS subscriptions that the companies counted on the consumer not being aware of. This has been going on for years and years and years and is one of the oldest scams in the SMS playbook. Very bad for consumers.
Fake car buying (judgement) - Some wonderful Canadian folks were apparently trolling eBay and Craigslist car ads and contacting the sellers with claims that they had lined up buyers willing to pay more than the list price. For the low low fee of $399, they would put them in contact and for $99 extra they could get "insurance" in case the car didn't actually sell. You can imagine how well that all went. So they were ordered to pay $5.1 million and aren't allowed to telemarket or process payments anymore. No doubt they have learned their lesson.
by Josh DeWald
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