Articles Posted in Consumer Fraud/Consumer Protection

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Having a bad credit score can negatively impact your life in a big way. It can prevent you from getting loans for things you need – everything from buying a car to getting repairs done on your home can become difficult, if not impossible when you have a low credit score. When you are able to obtain a loan, a low credit score can mean you have to pay a much higher interest rate than you would get if you had a higher credit score. People struggling to pay back debt often have low credit scores, but having a low credit score imposes another financial burden on them, making it even more difficult for them to dig themselves out of debt. When you take all that into consideration, it’s no wonder people are desperate to have their credit scores improved by any means necessary. Unfortunately, this makes them vulnerable to predators claiming to be credit repair companies.

While there are legitimate companies that can help you improve your credit score by removing debt and “hard” credit checks from your credit score, there are also companies out there that claim they can do these things, charge a hefty fee, and then never deliver.

The Federal Trade Commission (FTC) and the office of the Illinois attorney general have each filed lawsuits against companies offering credit repair services while allegedly engaging in deceptive business practices and defrauding consumers. Continue reading ›

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IMG_6355_3-300x189The FTC and the State of Ohio sued a third party payment processor that engaged in processing payments for third party merchants engaged in deceptive practices and consumer fraud, as well as telemarketers in violation of the FTC Act, the TSR, and the Ohio CSPA.

The Federal Trade Commission and the State of Ohio filed a complaint seeking a permanent injunction and other equitable relief against Madera Merchant Services and B&P Enterprises. The United States District Court for the Western District of Texas issued a temporary restraining order, asset freeze, and other equitable relief, as well as an order to show cause why a permanent injunction should not be issued.

Madera Merchant Services and B&P Enterprises operate a third-party processing scheme that uses remotely created payment orders or remotely created checks to withdraw money from consumers’ accounts on behalf of third-party merchants. Madera and B&P routinely withdrew funds from consumers for merchants that were engaged in fraud or deceptive marketing. The district court stated that the defendants also routinely provided payment processing services to telemarketers in violation of the TSR, which expressly prohibits collecting payments in connection with telemarketing sales. Continue reading ›

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MG_6325_1-300x200The FTC sued a student loan debt relief company that promised consumers that it would reduce their monthly student loan payments, or arrange for their student debts to be forgiven in whole or part by their student loan servicers. Instead, the company kept most of the money sent to them by the consumers and failed to negotiate with the servicers or remit the payments in a timely fashion. The district court granted summary judgment to the FTC and issued a permanent injunction against the defendants, as well as a monetary judgment for more than $27 million in restitution.

The United States District Court for the Central District of California granted summary judgment to the Federal Trade Commission in a suit filed against Elegant Solutions, Inc. The FTC filed a complaint against Elegant Solutions for a permanent injunction and other equitable relief pursuant to § 13(b) and 19 of the Federal Trade Commission Act and 57(b) of the Telemarketing and Consumer Fraud and Abuse Prevention Act.

The FTC’s complaint charged that the defendants participated in acts or practices that violated § 5(a) of the FTC Act by representing in advertising that consumers who purchased the defendants’ debt relief services would be enrolled in a repayment plan that would reduce their monthly payments on their student loans to a lower, specific amount, or have their student loan balances forgiven in whole or part; that most or all of the consumers’ monthly payments to the defendants would be applied toward consumers’ student loans; and that the defendants would assume responsibility for the servicing of consumers’ student loans. The district court found that, in numerous instances in which the defendants made such representations, they were false or not substantiated. The panel determined that these representations constituted a deceptive act or practice in violation of § 5(a) of the FTC Act. Continue reading ›

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Although e-cigarettes were first marketed as a way for smokers to quit smoking, not only has it been proven that they are not an effective way to quit smoking, but e-cigarette companies, like Juul, have actually gotten young people addicted to nicotine by targeting teens and young adults who had not previously been smokers.

Despite the fact that vaping has been marketed as a safe alternative to smoking, the reality is that it has contributed to thousands of cases of lung cancer. In addition to nicotine, many e-cigarettes also contain THC, which is a psychoactive ingredient.

Dr. Ngozi Ezik, the Director of the Illinois Department of Public Health, has reported that 201 cases of lung illnesses in Illinois alone have been confirmed as vaping-related illnesses. The youngest patient was just 13 years old. Five deaths in Illinois have been linked to vaping.

Juul is the most popular e-cigarette company by far, and it is now facing a consumer fraud lawsuit by the state of Illinois for having targeted teens. Among other things, the lawsuit alleges Juul has been instrumental in undoing decades of work by both government agencies and anti-tobacco activists towards reducing smoking rates among teens. Despite the initial success of those efforts, which saw teen use of nicotine drop from 36% in 1997 to 5% in 2017, new data shows that the use of e-cigarettes among both teens and middle school students is currently on the rise. Continue reading ›

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A building contractor in Minnesota ordered a specific brand of flameproof lumber from a Chicago distributor of commercial building materials. Unbeknownst to the contractor, the distributor substituted its in-house brand of lumber in the order. The in-house brand of lumber had not been certified to meet the safety standards required by the architect of the buildings and the contractor was later required to rip out the lumber and replace it with new material. The contractor sued the distributor. The distributor’s insurance company then sought a judgment that it was not required to defend the distributor. The district court and the appellate court agreed, finding that the actions of the distributor were not covered under its insurance policy.

Chicago Flameproof is an Illinois-based distributor of commercial building materials, including fire retardant and treated lumber (FRT). Chicago Flameproof maintained general liability insurance through Lexington Insurance Company. Under the policy, Lexington had the right and duty to defend Chicago Flameproof against any suit seeking covered damages, but no duty to defend against any suit seeking uncovered damages.

The policy defined an occurrence as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. The policy also defined “property damage” as physical injury to tangible property, including all resulting loss of that property, or loss of use of tangible property that is not physically injured. Chicago Flameproof sold lumber to Minnesota-based residential and commercial contractors JL Schwieters Construction, Inc. and JL Schwieters Building Supply, Inc. Schwieters then contracted with two building contractors, Big-D Construction Midwest, LLC and DLC Residential, LLC to provide labor and material for the framing and paneling for four building projects in Minnesota. The architectural firm on all of the projects, Elness Swenson Graham Architects, Inc. required that FRT lumber meeting the requirements set forth in the International Building Code be used for the exterior walls of each building. Continue reading ›

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Two consumers initiated a class action suit against Fannie May alleging that they were deceived by the size of the candy boxes that they purchased. The consumers argued that the boxes contained an acceptable level of empty space, amounting to over a third of the volume of the boxes. The appellate panel found that though the company’s boxes correctly indicated the included weight and portion size of the candy, the consumers had sufficiently pled the initial elements of a claim for deceptive practice. However, the panel found that the consumers could not show that they suffered actual damages, because they could not demonstrate that the candy was worth less than the amount they paid, or that they could have purchased the same candy for cheaper elsewhere. The panel then affirmed the district court’s decision in favor of Fannie May.

Clarisha Benson and Lorenzo Smith each purchased an opaque, seven-ounce box of Fannie May’s chocolate for $9.99 plus tax. Benson purchased Fannie May’s Mint Meltaways, and Smith purchased Fannie May’s Pixies. Although the boxes accurately disclosed the weight of the chocolate within, and the number of pieces in each box, the boxes were emptier than either had expected. The box of Mint Meltaways contained approximately 33% empty space, and the box of Pixies contained approximately 38% empty space. Continue reading ›

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Alison Victoria, a Chicago native and one of the stars of HGTV’s “Windy City Rehab” has said that she wants to take over Chicago and put her stamp on every neighborhood. Whether fellow Chicagoans want that is another matter, and one that is currently being handled (at least in part) in the courts since Victoria and her partner, Donovan Eckhardt, is being sued by the buyers of one of their home renovations.

The house at 2308 W. Giddings Street sold for $1.36 million after Victoria and Eckhardt gave it a makeover. The end of the episode featuring the house showed it looking fixed up with fresh paint and chic furniture, but according to the current residents’ allegations (which are denied), the rehab was only skin deep, while severe structural damage continues to cause problems. Continue reading ›

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In early 2017, the Consumer Review Fairness Act (CRFA), 15 U.S.C. §45b, took effect. With the passage of this law, the Federal Trade Commission has begun using the CRFA to crack down on businesses that use non-disparagement provisions in consumer contracts to attempt to prevent consumers from posting negative reviews in order to make a product seem more favorable than it really is. To date the FTC has launched numerous investigations into suspected violations of the CRFA and has brought and settled a handful of administrative actions against companies.

The CRFA is meant to protect consumers’ ability to share their honest opinions about a business’s products, services, or conduct in any forum, including in online reviews and via social media. According to the FTC the CRFA:

makes provisions of form contracts between sellers and individual consumers void from inception if the provisions: (1) prohibit or restrict individuals from reviewing sellers’ goods, services, or conduct; (2) impose penalties or fees on individuals for such reviews; or (3) require individuals to transfer intellectual property rights in such reviews. The Act also bars sellers from offering form contracts with such provisions. The Act contains certain exceptions, including for contract provisions that bar the submission of confidential, private, or unlawful information. Continue reading ›

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Real product reviews are a great tool for helping consumers make better, informed decisions. Many of these reviews come from real customers who really used the product. Other reviews, however—particularly those on websites, in blogs, and on social media—are not from legitimate customers but come from companies that use fake reviews to paint a pretty picture of their products and boost their bottom line.

Earlier this year, the Federal Trade Commission (“FTC”) set its sights on a cosmetic company accused of posting fake consumer reviews of its own products online. According to a leaked internal email, the CEO of the company allegedly pressured employees to post positive reviews of new products that the company had recently released and even provided detailed instructions regarding what the employees should write about the product in reviews as well as how to avoid having the reviews traced back to the company’s IP address by using a VPN. Continue reading ›

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Online dating sites are an increasingly common way people seek to find romance. But, according to the Federal Trade Commission, these sites could also be a source of scams or a haven for scammers. The FTC recently filed a lawsuit against the company that owns popular dating sites and apps such as Match.com, Tinder, OKCupid, and PlentyOfFish, alleging that the company used fake advertisements designed to trick consumers into believing someone had shown interest in them and purchase a paid subscriptions on Match.com.

According to the FTC’s complaint, many consumers received emails or instant messages containing attention-grabbing text such as: “He just emailed you! You caught his eye and now he’s expressed interest in you… Could he be the one?” (referred to as “You caught his eye”-type notices in the complaint) Although Match allows consumers to create free accounts, to actually read these messages Match required consumers to upgrade to paid subscriptions. For many consumers hoping to find that special someone, the representation that specific suitors were already eager to meet them proved impossible to pass up. Many consumers responded to these emails and messages, often paying more than $100 for a subscription in the hope of connecting with these people who had already “expressed interest” in them. Continue reading ›

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