Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—C.D. Cal.: Mortgage assistance firm temporarily barred from making misrepresentations, required to preserve records and maintain assets, (Jul 15, 2013)

By John W. Arden, J.D., LL.M.

Finding good cause to believe that Backend, Inc. has engaged in, and is likely to engage in, practices violating Section 5(a) of the FTC Act and the Commission’s Mortgage Assistance Relief Services Rule, the federal district court in Santa Ana, California, has entered a preliminary injunction barring Backend, its officers, and employees from falsely representing that Backend will obtain motor loan modifications; from collecting advance fees for such service; and from failing to provide disclosures required by the MARS rule (FTC v. A to Z Marketing, Inc., July 12, 2013, Carter, D.)

Backend, its officers, and its employees are further required to preserve records and other documents; refrain from releasing consumer information; disable any websites used to advertise or promote any mortgage assistance relief product or service containing prohibited statements; and suspend Internet domain name registrations of websites used by Backend for the advertising or promotion of mortgage assistance relief products or services containing statements prohibited by the order.

The Backend Receivership was enjoined from directly or indirectly selling, assigning, transferring, or converting any assets; opening any safe deposit boxes; cashing checks from consumers; or failing to disclose any asset or person holding any of its assets to the FTC and the receiver. Persons possessing documents, records, or assets of Backend must preserve, maintain, and prohibit the withdrawal, removal, or disposal of such documents, records, and assets; must provide the FTC and the receiver with immediate access to electronically-stored information that is stored, hosted, or otherwise maintained on behalf of Backend; and must deny access to any safe deposit boxes that are subject to control of any Backend receivership defendant. Backend also must deliver a completed financial statement to the FTC, must furnish consumer credit reports to the FTC, and must repatriate foreign assets.

The receivership was continued until further order of the court. The receiver was directed to maintain full control over the Backend receivership, maintain and control all assets and documents, and secure the Backend business premises. The Backend receivership and all officers, agents, and employees must provide requested information to the receivers and provide access to documents and records.

The receiver will be reasonably compensated and allowed expenses for performing duties required by the order. The receiver shall make periodic reports to the court regarding steps taken to implement this order. Agents or representatives of the FTC may contact Backend directly or anonymously for the purpose of monitoring compliance with this order.

The FTC filed its complaint in the action on June 18.

The case is No. SA CV 13-919 DOC (RNBx).

Attorneys: Jonathan L. Kessler for FTC. M. Candice Bryner (M. Candice Bryner Law Offices) for A to Z Marketing, Inc. Joseph Sean Dumm (Borchard and Callahan APC) for Backend, Inc.

Companies: A to Z Marketing, Inc.; Backend, Inc.

Cases: ConsumerProtection CaliforniaNews