COMPANY & MARKETING PARTNERS SETTLE FTC CHARGES OF DECEPTIVE MARKETING OF RESALE TICKETS

FROM:  U.S. FEDERAL TRADE COMMISSION 

TicketNetwork and Marketing Partners Ryadd and Secure Box Office Settle Charges of Deceptively Marketing Resale Tickets

FTC, Connecticut AG Allege that Ryadd and SBO Websites Mimicked Entertainment Venues

Online resale ticket exchange TicketNetwork, Inc., and two of its marketing partners, Ryadd, Inc. and SecureBoxOffice, LLC, have settled Federal Trade Commission and State of Connecticut allegations that their advertisements and websites misled consumers into thinking they were buying event tickets from the original venue at face value. Instead, the complaint alleges, the defendants’ websites actually were ticket reseller sites with event tickets often priced above the venue’s original price.

Under the terms of the settlements, the defendants are prohibited from deceptively advertising their resale ticket services, and will pay $1.4 million into a Connecticut fund for consumer education and enforcement.

TicketNetwork operates an electronic exchange enabling ticket brokers and other ticket-holders to resell their tickets to consumers on the secondary market. It promotes the sale of these tickets through its own websites and through affiliate marketers and private-label marketing “partners.” The joint complaint alleges that TicketNetwork and two of its top partners, Ryadd and SBO, violated the FTC Act and the Connecticut Unfair Trade Practices Act by misrepresenting that they were the “official” site or “box office” for the actual venue where an event was being held.

“With today’s settlements, the FTC and the Connecticut Attorney General’s office send a strong message to all online ticket sellers that they must clearly disclose who they are and what they are offering,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These are basic rules of the road for marketers of any product or service, and consumers deserve no less.”

Ryadd, for example, placed the following paid Google ad that appeared at or near the top of the search results page when consumers searched for “radio city music hall”:

Radio City Music Hall/ RadioCity MusicHall-NY.com
radiocity.musichall-ny.com
Official Ticket Source Online for Radio City Music Hall Tickets in NY

The ad conveyed the impression that it was for the official Radio City Music Hall site, according to the complaint. Consumers who clicked on the ad were taken to a website prominently titled “Radio City Music Hall” which featured photos, text, and other material designed to look like the official Radio City Music Hall website. It was actually a Ryadd site, selling resale tickets, often at a price higher than original face value.

SBO allegedly used a similar approach, mimicking actual venues by using the term “box office” in its ads and websites. For example, SBO placed the following paid Google ad that appeared at or near the top of the results page when consumers searched “Providence Performing Arts Center”:

Providence PAC Tickets / pac.providenceboxoffice.com
pac.providenceboxoffice.com
Buy Providence PAC Tickets. Official ProvidenceBoxOffice Site

Consumers who clicked on this ad landed on a website featuring a headline and text designed to look like the official website for the Providence Performing Arts Center, in Providence, Rhode Island, when, in fact, it was an SBO site selling resale tickets, often for more than their face value.

Accordingly, the complaint alleges that Ryadd and SBO routinely misrepresented their resale ticket sites as actual venue sites; failed to adequately disclose that the sites offered tickets for resale and that prices often exceeded the tickets’ face value; and that the websites were neither owned by the venue, sports team, performer, or promoter, nor authorized to sell tickets on their behalf.

The complaint further alleges that TicketNetwork participated in Ryadd’s and SBO’s misleading marketing. TicketNetwork allegedly helped create the deceptive portions of certain ads, provided legal cover through inadequate disclosures, and helped to maintain the deception by defusing complaints and bad publicity, among other means. The complaint states that TicketNetwork knowingly profited from Ryadd’s and SBO’s deceptive practices.

The complaint also names Charles A. Lineberry and Ryan J. Bagley, who are officers of Ryadd, Inc., and James P. Moran, who is the owner and manager of SBO, as defendants.

Under the three proposed settlements:

All of the defendants are prohibited from misrepresenting, directly or by implication, that a resale ticket site is a venue site or is offering tickets at face value;
 The defendants are prohibited from using the word “official” in any ad, URL, website, or other advertising for resale tickets, except in very narrow circumstances;
The defendants must affirmatively disclose that: their websites are resale marketplaces and not venues or box offices; the ticket price may exceed the ticket’s face value; and the website is not owned by the venue, sports team, performer, or promoter;
TicketNetwork must require all partners to sign written contracts promising to adhere to the order, and must take disciplinary action when partners violate the order and appropriately handle consumer complaints about venue confusion; and
The three defendants will pay a total of $1.4 million to the state of Connecticut, with $750,000 coming from Ticket Network, $550,000 from Ryadd, and $100,000 from SBO.

The Commission vote authorizing the staff to file the complaint and approving the three proposed settlement orders was 5-0. The FTC filed the complaint and the proposed orders in the U.S. District Court for the District of Connecticut on July 24, 2014. They are subject to court approval.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. Settlement orders have the force of law when approved and signed by the district court judge.

AMERICAN PLASTIC LUMBER CASE SETTLEMENT APPROVED BY FTC

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Approves Final Order in ‘Green Marketing’ Case Against American Plastic Lumber

Following a public comment period, the Federal Trade Commission has approved a final order settling charges that American Plastic Lumber, Inc. (APL), a company that markets plastic lumber and related products, misled consumers about the environmental attributes of its products.

The FTC’s June 2014 complaint states that from at least 2011 through 2013, APL’s ads and marketing materials implied that its products – and the recycled plastics they contain – were made virtually all out of post-consumer recycled content, such as milk jugs and detergent bottles. In reality, the products contained less than 79 percent post-consumer content, on average. The FTC also charged that about eight percent of APL’s products contained no post-consumer recycled content at all, and nearly seven percent of the products were made with only 15 percent post-consumer content.

The final consent order prohibits APL from making deceptive claims regarding environmental benefits for any product or package.

The Commission votes approving the final order was 5-0. (FTC File No. 132-3200; the staff contact is Robert M. Frisby, Bureau of Consumer Protection, 202-326-2098)

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

Contact Information
MEDIA CONTACT:
Mitchell J. Katz
Office of Public Affairs

TEXT MESSAGE "FREE" GIFT CARD SPAMMER AGREES TO SETTLE FTC CHARGES

FROM:  FEDERAL TRADE COMMISSION  Scammer Settles FTC Charges He Sent Consumers Millions of Unwanted Texts Deceptive Messages Promised “Free” Gift Cards for Consumers A text message spammer and his company have agreed to settle Federal Trade Commission charges that they were responsible for sending millions of unwanted messages to consumers across the country, which contained false promises of “free” $1,000 gift cards for major retailers like Walmart, Target and Best Buy. Under the terms of the settlement with the FTC, Rishab Verma and his company, Verma Holdings, LLC, will be permanently banned from sending unwanted or unsolicited commercial text messages or assisting others in doing so. In addition, the two will be prohibited from misrepresenting to consumers that a product is “free,” that they have won a prize or been selected for a gift, or that consumers’ personal information is needed to send free merchandise. Verma and his company were among the defendants in the Commission’s 2013 sweep against text message spammers and affiliate marketers who used false promises of gift cards to draw consumers to websites that collected sensitive personal information. The sites also required consumers to provide credit card information to sign up for trial offers. The settlement contains a monetary judgment of $2,863,000, which is suspended due to the defendants’ inability to pay after Verma and the company pay $26,100.   The Commission vote approving the proposed stipulated final judgment was 5-0. It is subject to court approval. The FTC filed the proposed stipulated final judgment in the U.S. District Court for the Southern District of Texas, Houston Division. NOTE: Stipulated final judgments have the force of law when approved and signed by the District Court judge.

FTC APPROVES FINAL ORDER IN CASE ALLEGING FALSE ADVERTISING

FROM:  U.S. FEDERAL TRADE COMMISSION 

FTC Approves Modified Final Order in Four Loko Deceptive Advertising Case

The Federal Trade Commission has approved a modified order with the marketers of the supersized, high-alcohol malt beverage Four Loko – Phusion Projects, LLC.

Phusion Projects settled with the FTC in 2013 to resolve FTC charges of deceptive advertising. The Commission alleged that Phusion Projects, LLC and its principals falsely claimed that a 23.5-ounce, 11 or 12 percent alcohol by volume can of Four Loko contains alcohol equivalent to one or two regular 12-ounce beers, and that a consumer could drink one can safely in its entirety on a single occasion.

The 2013 order required Phusion Projects to file applications with the Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) to include an “Alcohol Facts” disclosure panel, using a specified format, on labels of products containing more than 1.2 ounces of pure alcohol (the amount in two regular drinks), and to feature those disclosure panels on its products beginning 90 days after receiving TTB approval.
Phusion Projects submitted the required applications to TTB; however, due to changes in TTB policy, Phusion’s requests were denied. The modified order provides for revised “Alcohol Facts” disclosures that are consistent with TTB’s current guidance. It also eliminates the requirement that certain Phusion products be resealable.

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HOME HEALTH CARE COMPANY OWNER PLEADS GUILTY FOR ROLE IN $74 MILLION FRAUD

FROM:  U.S. JUSTICE DEPARTMENT  

Wednesday, July 23, 2014

Owner and Administrator of Miami Home Health Companies Pleads Guilty for Role in $74 Million Health Care Fraud Scheme

A Miami resident who owned a home health care company and was the administrator of another home health care company pleaded guilty today for her participation in a $74 million Medicare fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Ryan Lynch of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami Office made the announcement.

Elsa Ruiz, 45, pleaded guilty today before U.S. District Judge Marcia G. Cooke in the Southern District of Florida to one count of conspiracy to commit health care fraud.   Her sentencing is scheduled for Oct. 8, 2014.

According to court documents, Ruiz was an owner of Professional Home Care Solutions Inc. (Professional Home Care) and an administrator of LTC Professional Consultants Inc. (LTC), Miami home health care agencies that purported to provide home health and therapy services to Medicare beneficiaries.  Ruiz and her co-conspirators operated LTC and Professional Home Care for the purpose of billing the Medicare program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.

Also according to court documents, Ruiz ran and oversaw the schemes operating out of LTC and Professional Home Care.   Ruiz and co-conspirators paid kickbacks and bribes to patient recruiters, who provided patients to LTC and Professional Home Care , as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries.   Ruiz and her co-conspirators used these prescriptions, POCs and medical certifications to fraudulently bill the Medicare program for unnecessary home health care and therapy services.

From approximately January 2006 to June 2012, LTC and Professional Home Care submitted approximately $74 million in claims for home health care services that were not medically necessary and/or not provided, and Medicare paid approximately $45 million on those claims.

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.   The case is being prosecuted by Assistant Chief Joseph S. Beemsterboer of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

MADE IN USA BRAND, LLC AGREES TO STOP USING DECEPTIVE CERTIFICATION CLAIMS

FROM:  U.S. FEDERAL TRADE COMMISSION 

Made in USA Brand, LLC Agrees to Drop Deceptive Certification Claims

Company Claimed to Evaluate Made in USA Claims, but Instead Relied on Companies to Self Certify that Products Met Standard

A company that  provides a “Made in USA” certification seal to marketers has agreed to settle Federal Trade Commission charges that it deceived consumers by allowing companies to use the seal without either independently verifying that those companies’ products were made in the United States, or disclosing that the companies had certified themselves.

The company, Made in USA Brand, LLC, is required under the proposed settlement to stop its deceptive claims.

The FTC’s Enforcement Policy Statement on U.S.-Origin Claims provides that products advertised or labeled as “Made in the USA” must be “all or virtually all” made in the United States. Made in the USA Brand, LLC charges companies to use its certification mark and to be listed in a database of “certified” companies that comply with the FTC’s standard.
The Columbus, Ohio-based Made in the USA Brand, LLC charged $250 to $2,000 for a one-year license to use the certification mark, according to the FTC. But the company did not independently evaluate the products before certifying them, and had no procedures to determine whether marketers complied with the FTC’s Made in USA standard, according to the complaint.

In fact, the FTC charged that Made in the USA Brand has never rejected a company’s application to use its Certification Mark or terminated a company’s use of the mark. Instead, Made in the USA Brand, LLC awarded licenses to any company that self-certified that it was complying with the FTC’s standard.

“Seals can be very helpful when consumers purchase products based on claims that are difficult to verify – like the Made-in-the-USA claim,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “When marketers provide seals without any verification, or without telling consumers the seal is unverified, consumers are deceived and the value of all marketers’ seals is diminished.  This case makes it clear that the FTC will not let that happen.”

In a promotional flyer, Made in the USA Brand, LLC claimed:

“The Made in USA Brand Certification Mark provides a standard symbol for Made in USA product identification . . . When printed on labels by accredited manufacturers, consumers are able to identify at a glance which products are
made in the USA.”

“The Certification Mark is available to be downloaded by U.S. businesses that meet the accreditation standards based on the Federal Trade Commission’s regulations for complying with Made in USA origin claims.”

According to the complaint, Made in the USA Brand, LLC:

falsely advertised that it independently and objectively evaluated whether certified products met its accreditation standard.
made false or unsupported claims that companies listed in its database as certified marketers were in fact selling products that complied with the FTC’s Made in USA standard.
provided the companies it licensed with the means to deceive consumers into believing that the companies were marketing products that were made in the United States.
Under the proposed administrative order, respondent Made in the USA Brand, LLC, is prohibited from:

claiming that any products or companies meet its certification standard unless it either conducts an independent and objective evaluation, or discloses on its logo and all its promotional materials that companies and products are self-certified.
claiming that any product is made in the USA or in any other country unless the claim is true and supported by competent and reliable evidence, or – if the certification mark is used –unless it discloses that companies and products are self-certified.
providing the companies it certifies with the means to deceive consumers.
The Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 5-0.

The FTC will publish a description of the consent agreement in the Federal Register shortly.  The agreement will be subject to public comment for 30 days, beginning today and continuing through August 22, 2014, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in “Supplementary Information” section of the Federal Register notice. Comments should be submitted electronically using the online form here.

Instructions for submitting comments in paper form are listed in the “Accessibility” portion of the form.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.  When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

Contact Information
MEDIA CONTACT:
Betsy Lordan
Office of Public Affairs