Payment Processor Caught In The Web Of Allegedly Illegal “Free Trial” Scheme

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Payment Processor Caught in the Web of Allegedly Illegal “Free Trial” Scheme

  • The FTC reached a settlement with overseas payment processor SIA Transact Pro and its former Chief Executive Officer (collectively “SIA”) to settle allegations that it enabled U.S.-based defendants to market deceptive “free trial” offers in violation of the FTC Act, the Restore Online Shoppers’ Confidence Act, and the Electronic Funds Transfer Act.
  • The FTC’s amended complaint alleged that SIA illegally maintained merchant accounts in the name of shell companies for U.S.-based defendants who marketed personal care products and dietary supplements with free trial offers but still billed consumers the full price and enrolled them in continuity plans without their consent. The amended complaint also alleged that SIA enabled the U.S.-based defendants to evade credit card chargeback monitoring programs.
  • Under the terms of the final order, SIA is enjoined from the conduct alleged in the amended complaint and from payment processing activities relating to certain categories of merchants, including those selling or promoting dietary supplements, drugs, or cosmetics. In addition, SIA agreed to pay a $3.5 million judgment, which the FTC may use to issue refunds to consumers who were defrauded by the free trial scheme.

If You Are a Hospital in Washington State, Charity Is Not Just Good for the Soul but Required by Law

  • Washington AG Bob Ferguson reached a settlement with healthcare provider Columbia Capital Medical Center Limited Partnership d/b/a Capital Medical Center (“Capital”) to resolve allegations that the company had denied access to charity care to eligible patients in violation of Washington’s Consumer Protection Act and Charity Care Law.
  • According to the AG’s office, Capital allegedly charged patients for medical care even though they were near the federal poverty level, in violation of the state law that requires hospitals to provide charity care to such patients. Capital also allegedly engaged in aggressive billing and collection practices that forced charity care-qualified patients to incur medical debt or cancel needed medical procedures.
  • Under the consent decree, among other things, Capital must pay at least $250,000 in restitution to patients who did not receive the charity care they qualified for, and must provide charity care to patients with income of up to 400% of the federal poverty level for the next five years. In addition, Capital must pay $1.2 million to the AG’s office to cover the costs and fees of the investigation and lawsuit.

Beware of Online Marketing Claims about the Value of Mushroom-Infused Instant Coffee

  • The Federal Trade Commission (“FTC”) filed a complaint and was granted a temporary restraining order (“TRO”) by the United States District Court for the District of Arizona against multilevel marketing company Success by Media Holdings Inc. d/b/a Success by Health and its executives (collectively “Success by Health”), shutting down an alleged pyramid scheme in violation of the FTC Act, the Merchandise Rule, and the Cooling-Off Rule.
  • The FTC’s complaint alleged that the company made false promises of income based on the sale of instant coffee containing mushrooms, which the company claimed had health benefits, and that the company sold products directly to consumers at the same wholesale price it sold its products to its affiliates, undercutting the ability of affiliates to sell the same products with a markup and make a profit.
  • Under the terms of the TRO, Success by Health is enjoined from continuing its business activities and marketing program. The TRO also places a freeze on the assets of Success by Health, among other things.

Comcast/Xfinity Agrees to Pay $1.3 Million to Settle Suit over Its Marketing and Billing Practices

  • Minnesota AG Keith Ellison reached a settlement with telecommunications company Comcast Corporation d/b/a Xfinity and related companies (collectively “Comcast”) to resolve allegations of deceptive advertising and billing practices in violation of Minnesota’s Consumer Fraud and Deceptive Trade Practices Acts.
  • As previously reported, the complaint alleged that, among other things, Comcast billed consumers for unordered services and equipment, billed customers for amounts other than those they were promised, imposed hidden fees, and did not honor its promises to send customers prepaid gift cards.
  • Under the terms of the consent judgment, among other things, Comcast is required to disclose all charges and fees in its sales and advertising materials. In addition, Comcast will create a restitution fund of $1.14 million to issue refunds to eligible customers. Comcast will also pay $160,000 to the AG’s office, which can be used to provide refunds to customers or administering the settlement.

2020 AG Elections

Incumbent Attorneys General in West Virginia and Pennsylvania Announce Bids for Reelection

False Claims Act

ResMed on the Hook for $39.5 Million for Alleged Kickbacks

  • Forty-four AGs, including Kentucky AG Daniel Cameron, North Carolina AG Josh Stein, and Massachusetts AG Maura Healey, as well as the U.S. Department of Justice (“U.S. DOJ”), reached a settlement with medical equipment manufacturer ResMed Corp. (“ResMed”) to resolve allegations that the company provided illegal kickbacks to medical equipment suppliers and health care providers in violation of state and federal false claims statutes.
  • According to the U.S. DOJ, the settlement was the result of coordinated investigation by a team from the National Association of Medicaid Fraud Control Units and four U.S. Attorneys’ offices, among others, into allegations that ResMed violated the law by providing free sleep apnea equipment to medical equipment suppliers and health care providers in exchange for patient referrals, resulting in the submission of false claims for payment to state Medicaid programs.
  • Under the terms of the settlement, ResMed is required to pay $39.5 million, of which $4.47 million will go to state Medicaid programs.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

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Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

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Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

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