Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC settlement bars bogus trade association from selling healthcare-related products to consumers, (Oct 14, 2014)

The FTC has announced a settlement barring a group of marketers and their bogus trade association from selling any healthcare-related products to consumers. Under the scheme conducted by James C. Wood and his family and businesses, consumers seeking health insurance submitted their contact information to websites purportedly offering quotes from health insurance companies, according to the FTC. The consumers paid an initial fee ranging from $50 to several hundred dollars, and a monthly fee ranging from $40 to $1,000 purportedly for comprehensive health insurance coverage. Instead, they were enrolled in memberships to a bogus trade association, the Independent Association of Businesses (IAB).

The program included purported discounts on services such as identity-theft protection, travel, and roadside assistance, as well as certain purported healthcare related benefits, including limited discounts and reimbursements on visits to certain doctors or hospitals, subject to broad exclusions and limitations.

In 2012, the FTC charged the IAB defendants and those who ran IAB’s largest telemarketing operation with violating the FTC Act and the FTC’s Telemarketing Sales Rule (TSR). A federal court halted the operation until the case was resolved. A settlement order announced in 2013 bans the telemarketing defendants from selling healthcare-related products.

The latest settlement order permanently bans the remaining defendants from selling healthcare-related products, violating the TSR, misrepresenting material facts about any goods or services, and selling or otherwise benefitting from consumers’ personal information. The defendants are IAB Marketing Associates LP, Independent Association of Businesses, HealthCorp International Inc., JW Marketing Designs LLC, International Marketing Agencies LP, International Marketing Management LLC, Wood LLC, James C. Wood, his sons, James J. Wood and Michael J. Wood, and his brother, Gary D. Wood.

The order imposes a $125 million judgment that will be partially suspended once the defendants surrender assets valued at almost $2 million, including $502,000 in IRA funds and personal property that includes five luxury cars (a Lamborghini, two Mercedes, a Porsche, and an MG Roadster). A separate settlement order requires relief defendant Avis. K. Wood to pay $60,000 from an IRA account that was funded by the defendants’ allegedly unlawful activities.

The Commission vote approving the proposed stipulated final order was 5-0. The order was entered by the U.S. District Court for the Northern District of Texas, Dallas Division on October 10, 2014. The Commission vote approving the proposed stipulated final order against Avis S. Wood was 5-0, and it was entered by the U.S. District Court for the Northern District of Texas on August 8, 2014.

Companies: IAB Marketing Associates LP; Independent Association of Businesses; HealthCorp International Inc.; JW Marketing Designs LLC; International Marketing Agencies LP; International Marketing Management LLC; Wood LLC.

News: ConsumerProtection FederalTradeCommissionNews TexasNews