You are here: Home / News / News Releases / FTC Releases

Court Halts Tax Relief Scam That Collected More Than $60 Million

October 20, 2010 By Paul (Founder, WorkAtHomeTruth) Leave a Comment

FTC 10/6/2010 News Release:

Company’s Owners Lived Lavish Lifestyle, Targeted Financially Distressed Consumers

At the request of the Federal Trade Commission, a federal judge has halted a national operation that allegedly bilked consumers out of more than $60 million by falsely claiming it can reduce people’s tax debts – the company’s California state business license was suspended last year for not paying its own taxes, the FTC alleges. The FTC is seeking to make the defendants pay restitution to victims.

“We’ve made it a top priority to go after scammers who try to exploit the financial hardship of others,” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. “For people having a tough time paying their taxes, the last thing they need is to lose more money to a fraud.”

According to the FTC, in TV, radio and Internet ads, American Tax Relief LLC falsely claims it can settle consumers’ delinquent federal and state taxes for a fraction of the amount they owe. The company also falsely claims that it can remove tax liens and stop wage garnishments, bank and tax levies, property seizures, and “unbearable monthly payments.” For example, the company’s website states, “The IRS is currently accepting a fraction of back taxes owed to them (sic) for those who qualify. The IRS is allowing the people with delinquent tax liabilities a ONE-TIME opportunity to settle the debt ONCE AND FOR ALL. But at the same time, the IRS does not advertise, promote or even voluntarily suggest this program.”

The FTC alleges that the company has continued its deceptive practices even after federal agents executed a criminal search warrant on the operation’s Beverly Hills business premises in April, 2010. At that time, criminal authorities seized money from bank accounts and a Ferrari from the company’s owner, and placed liens on two residences, including a $3.4 million house. At the time, one of the company’s owners was leasing six other vehicles, including a Rolls Royce, a Bentley, two Porsches, and two Mercedes-Benzes, according to exhibits the FTC filed in court.

American Tax Relief charges up-front fees ranging from about $3,200 to $25,000 for the purported tax relief services. The company’s ads include a toll-free number for consumers to call for a “free consultation.” After speaking briefly with commission-based sales people who are supposedly “tax consultants,” virtually all consumers are told that they “qualify” for a tax relief program, and that American Tax Relief can help them significantly reduce their tax debts, the FTC complaint alleges.

In reality, very few of the company’s customers qualify for the promised tax relief programs, which are available only in very limited circumstances. Most people who hire the company would qualify at most for installment payment plans, which still require payment of the full amount owed, and which many taxpayers can easily arrange by themselves.

Many consumers are told that they qualify for an “Offer in Compromise,” which the Internal Revenue Service states is its only program that allows people to avoid paying the full amount of back taxes, and is available only in limited circumstances; taxpayers are eligible only after other payment options have been exhausted and the person’s ability to pay has been reviewed.

Other consumers are told that they qualify for a “penalty abatement,” which the company claims will eliminate both accumulated penalties and interest stemming from late payments. However, a penalty abatement is considered by the IRS only in very limited circumstances for people who have “reasonable cause” for the late payments, such as death, serious injury, natural disaster or the like. The FTC alleges that the company does not gather sufficient information from consumers to know whether they would be likely to qualify for either an Offer in Compromise or a penalty abatement.

The FTC’s complaint names Alexander Seung Hahn, Joo Hyun Park, and American Tax Relief LLC. Park’s parents, Young Soon Park and Il Kon Park, are named because they are allegedly holding funds obtained from the defendants’ customers. On September 24, 2010, a federal judge in Chicago entered a temporary restraining order prohibiting deceptive claims, freezing the defendants’ assets, and appointing a receiver to manage the company.

The Commission vote to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

To help consumers who may be having trouble meeting their tax obligations, the FTC created “Owe Back Taxes? Tax Relief Companies Can Result in More Pain than Gain,” which is available on the agency’s website.

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. The complaint is not a finding or ruling that the defendants have actually violated the law.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and
unfair business practices and to provide information and events 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 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

Filed Under: FTC Releases Tagged With: ,

FTC Settlement Bars Deceptive Online Marketing Tactics

October 6, 2010 By Paul (Founder, WorkAtHomeTruth) Leave a Comment

10/4/2010 FTC News Release:

The technology officer of a payday loan marketer has agreed to pay $850,000 to settle FTC charges for his role in an allegedly deceptive and unfair scheme that allegedly debited the bank accounts of hundreds of thousands of cash-strapped consumers in violation of federal law.

The FTC has been closely monitoring payday lending and other types of financial services as part of a broad campaign to protect consumers made vulnerable by the financial downturn.

According to the FTC complaint, Swish Marketing Inc., and its three officers, Mark Benning, Matthew Patterson, and Jason Strober, operated websites advertising short-term, or “payday,” loan matching services. The websites included an online loan application form that tricked consumers into unknowingly ordering a debit card when they applied for a loan online. . On numerous sites, clicking the button for submitting loan applications led to four product offers unrelated to the loan, each with tiny “Yes” and “No” buttons. “No” was pre-clicked for three of them; “Yes” was pre-clicked for a debit card, with fine-print disclosures asserting the consumer’s consent to have their bank account debited. Consumers who simply clicked a prominent “Finish matching me with a payday loan provider!” button were charged for the debit card. Other websites touted the card as a “bonus” and disclosed the fee only in fine print below the submit button. As a result, consumers allegedly were improperly charged up to $54.95 each.

In August 2009, the FTC charged these marketers and VirtualWorks LLC, the debit card company that helped them design the online offers, with deceptive business practices. The debit card company paid Swish Marketing up to $15 for each transaction. The debit card company defendants have settled the charges against them. (See http://www.ftc.gov/opa/2009/08/everprivate.shtm)

In April 2010, the FTC filed an amended complaint against the payday loan marketers, adding an allegation that the defendants sold consumers’ bank account information to the debit card company without the consumers’ consent. The amended complaint further alleges that Benning, Patterson, and Strober were made aware of consumer complaints about the unauthorized debits, as indicated in their e-mail and instant messages. For example, Patterson explained that consumers were going “ballistic” about the debit because the offer was defaulted to yes . . . and customers don’t see it.” More than six months after first learning of the complaints, Benning allegedly described the practice of defaulting to “Yes” as “fraud and identity theft.”

The settlement order announced today with Jason Strober, the Vice President of Product Development and/or Engineering of Swish Marketing, bars him from misrepresenting material facts about a product or service, such as the cost or the method for charging consumers. He also is permanently prohibited from misrepresenting that a product or service is free or a “bonus” without disclosing all material terms and conditions, and from charging consumers without first disclosing what billing information will be used, the amount to be paid, how and on whose account the payment will be assessed, and all material terms and conditions. The order further requires that transactions be affirmatively authorized by consumers, and that Strober, in marketing financial products or services, monitor his affiliates to ensure compliance with the order. He also is required to provide specific cooperation to the FTC in its ongoing litigation. In addition, the order requires him to pay $850,000.

The Commission vote to file the amended complaint and the stipulated final order as to Strober was 5-0. The order was filed and entered in the U.S. District Court for the Northern District of California, San Jose Division. Litigation will continue against the remaining defendants.

NOTE: Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated orders have the full force of law when signed by the judge. The Commission issues 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.

Click here to read the full FTC news release

Related posts:

Filed Under: FTC Releases Tagged With: , ,

FTC Testifies Before House Judiciary Subcommittee on Antitrust in the Digital Age

September 19, 2010 By Paul (Founder, WorkAtHomeTruth) 2 Comments

FTC Press Release: 9/16/2010

My Note: An interesting part of the testimony referenced in this press release is the following statement:

“In other words, although most of our enforcement actions involve conduct that violates either the Sherman or Clayton Acts, the FTC Act gives the Commission some additional leeway to block anticompetitive conduct that may not reach the level of a traditional antitrust violation. This authority is particularly useful in rapidly changing markets, where new technology and new business models may complicate the antitrust analysis.”

FTC Applies Enduring Competition Principles to Today’s Dynamic Markets

In testimony before a U.S. House of Representatives subcommittee, the Federal Trade Commission explained how it protects consumers by applying well-established principles of competition to fast-changing technology markets.

“Some have argued that there should be different rules for markets characterized by rapid technological development, but Congress drafted the antitrust laws in general terms to accommodate changing markets and new products, and the laws are flexible enough to meet the challenges of the high-tech era,” said Bureau of Competition Director Richard Feinstein, testifying on behalf of the FTC before the House Committee on the Judiciary, Subcommittee on Courts and Competition Policy.

The testimony discusses two recent FTC matters to illustrate the agency’s flexibility in investigating and bringing enforcement actions in high-tech markets. Last year, the FTC charged Intel Corporation with using unfair methods of competition dating back to 1999 to stifle competition. The agency recently reached a settlement with the company that will help restore lost competition and prevent Intel from suppressing competition in the future, while allowing the company to compete aggressively.

Also last year, the FTC investigated Google’s proposed acquisition of mobile advertising firm AdMob and ultimately decided not to oppose the transaction. The Commission initially had concerns that the loss of head-to-head competition between the two leading mobile advertising networks would harm competition. However, Apple’s acquisition of the third-largest mobile ad network, Quattro, and the introduction of its own mobile advertising network, iAd, indicated that Apple would quickly become a strong player in the mobile advertising market.

The investigation provided an example of how the agency addresses rapidly changing technology markets, in which there is sometimes a short track record of past competition and great uncertainty about the future path of the market.

Going forward, the testimony states, the FTC’s merger reviews will continue to focus on market facts to predict how competition is likely to take place in the future. While that may be slightly more challenging in markets that are experiencing rapid change, “the Commission relies on time-tested tools . . . to protect consumers from anticompetitive mergers, and promote competitive markets where innovation and change can occur.”

The FTC vote approving the testimony and its inclusion in the formal record was 4-0, with Commissioner William E. Kovacic abstaining. The testimony can be found on the FTC’s website at http://www.ftc.gov/os/testimony/100916digitalagetestimony.pdf.

Copies of the Commission’s testimony are available from the FTC’s website at http://www.ftc.gov. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

Filed Under: FTC Releases
« Older Posts
Newer Posts »