Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Marketers settle FTC charges of deceptive health care discount schemes, (Sep 15, 2014)

By Linda O’Brien, J.D., LL.M.

The FTC has stopped the U.S. and Canadian marketers of two health care scams directed at seniors and Spanish speaking consumers that were designed to trick consumers into paying for phony discount cards, which the scammers falsely claimed would provide consumers with health insurance, or help them pay for prescription drugs, the agency announced on September 12 (FTC v. AFD Advisors LLC, File No. 132-3138).

Under settlements with the FTC and a default judgment entered by the court, the operators of the drug discount schemes have been banned from selling healthcare-related benefits or discount programs. In a separate action, a federal court temporarily halted a scheme that targeted Spanish-speaking and other consumers by pitching them a nearly worthless discount card and falsely claiming it would provide them with health insurance.

In its complaint, filed in the federal district court in Chicago in September 2013, the FTC alleges that ten defendants, calling from a call center in Montreal, Canada, marketed prescription drug discount cards they said would provide consumers with substantial discounts or even free prescription drugs. But the cards were available for free elsewhere and typically provided no discounts for anyone who had insurance. The defendants also led consumers to believe they had to buy the $299 card to continue receiving Medicare, Social Security, or medical insurance benefits. The court stopped the scheme and froze the defendants’ assets, pending litigation.

Under the terms of the settlement orders with the FTC, Fawaz Sebai and 9210-7838 Quebec Inc. and Stephane Scebba and 9262-2182 Quebec Inc., are banned from telemarketing. All of the settling defendants are permanently prohibited from misrepresenting any good or service, failing to provide information for consumer redress, disclosing or otherwise benefiting from customers’ personal information, and failing to dispose of such information properly.

The settlement orders against Sebai and 9210-7838 Quebec Inc., and Scebba and 9262-2182 Quebec Inc., impose a $1,091,450 judgment, reflecting the amount of consumer harm. The judgments will be suspended when Sebai has surrendered certain investments, and Scebba and 9262-2182 Quebec Inc. have turned over $7,752.

The settlement orders against Aaron Dupont and Charles Lamborn and CAL Consulting LLC also bar them from deceptive and abusive telemarketing tactics, and they impose judgments of $887,841 and $203,609, respectively, reflecting the total consumer payments each processed. The judgments will be suspended when Dupont has surrendered his interest in a house in Weston, Wisconsin, and Lamborn and CAL Consulting have given up $39,329. The full judgments under each order will become due immediately if the covered defendants are found to have misrepresented their financial condition.

The court entered a default judgment against defendants, AFD Advisors LLC, AMG Associates LLC, and Park 295 Corp. It bans them from selling healthcare-related benefits or discount programs, permanently prohibits them from deceptive and abusive telemarketing tactics, and from misrepresenting any good or service, and imposes a monetary judgment of $887,841.

The Commission vote approving the proposed settlement orders was 5-0.

Companies: AFD Advisors LLC; AMG Associates LLC; Park 295 Corp.; CAL Consulting LLC; 9210-7838 Quebec Inc.; 9262-2182 Quebec Inc.

News: ConsumerProtection FederalTradeCommissionNews