Last month, the Federal Trade Commission (FTC) announced actions or settlements against multiple businesses it alleges engaged in various forms of deceptive and misleading online marketing. The variety of businesses - from supplement merchants to student loan consolidators - demonstrates the broad use of deceptive practices and how they continue to flourish online. It's a reminder to payment service providers and e-commerce platforms that virtually any merchant poses risk for deceptive marketing.
Highlights from the FTC in just the past month include the following:
The FTC announced that Renaissance Health Publishing, LLC and its owner would refund more than $76,000 to consumers who purchased Isoprex, a supplement comprising mostly herbs and spices. According to the FTC, the company made problematic claims that the product could relieve suffering from muscle and joint pain, headaches, arthritis, joint inflammation, and a range of other ailments in older adults.
Arete Financial Group and other related companies agreed to pay at least $835,000 to settle FTC allegations that their student debt relief program charged illegal upfront fees and made false promises. The FTC first alleged in 2019 that the companies pretended to be affiliated with the US Department of Education and deceptively promised loan forgiveness, consolidation, and repayment programs for those with student debt to reduce or eliminate payments and balances.
More than 70,000 consumers will receive reimbursement in response to an FTC settlement with NeuroMetrix, Inc., a company that sold Quell, a wearable transcutaneous electrical nerve stimulation device. According to the FTC, the company touted the device as "clinically proven" and "FDA cleared" for chronic pain relief. The pain claims lacked scientific evidence and claims about FDA clearance for this use were false, according to the FTC.
The FTC alleged that a company using the name "SBA Loan Program" and the website SBALoanProgram[.]com misled small businesses to believe they had an affiliation with the US Small Business Administration and could provide access to the relief programs offered as a result of the pandemic. The settlement announced last month prohibits Ponte Investments, LLC, and its owner from misrepresenting that they are authorized to accept or process applications for SBA loans and that they are in any way affiliated with the SBA or the US government.
More than 12,000 consumers will receive checks from a $110,000 settlement over a complaint the FTC filed with Excellent Marketing Results, Inc. The FTC alleges the company made problematic claims about the supplement's ability to treat or relieve joint pain.
The FTC announced last month that Online Trading Academy (OTA) will pay between $5 and $9.1 million as well as forgive the debt of thousands of consumers as part of a settlement over deceptive marketing practices. The FTC alleged that for years the company used sales pitches with testimonials to promise significant income from their investment training program, when in actuality most purchasers made little to no money.
At LegitScript, our mission is to make the internet and payment ecosystems safer and more transparent for businesses and internet users. Our experts proactively track high-risk areas and provide analysis of whether a merchant may be engaged in deceptive marketing posing regulatory, reputational, or credit risk. Our merchant monitoring provides best- in-class solutions for identifying and removing these problematic vendors.
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