At the end of February of this year, the FTC settled deceptive and unfair practices charges with various individuals and Florida-based companies targeting Spanish-speaking consumers. The defendants were engaged in the advertising, marketing and sale of weight loss products, English-language courses, cell phones, and various other items.
According to the FTC, the defendants would pressure consumers to purchase goods, and then send them defective products, incomplete orders, or products that failed to perform. However, when customers attempted to return or exchange the defective or incomplete orders, they were left without recourse. The complaint alleged that the defendants either refused to process returns, or would attempt to charge significant fees for returns. Other customer calls were ignored or disconnected by the sales representatives. Even when a return or exchange was promised, it was never processed.
The settling defendants admitted the allegations in the complaint and are banned from telemarketing, selling weight loss products, and from making material misrepresentations about goods and services. Any of their future businesses must provide free returns or exchanges for incorrect or defective products, and must not deceive consumers about return or exchange policies.
Following the June 2014 complaint filed by the FTC, a federal judge froze the defendants’ assets. Under the settlement, a $50 million judgment will be suspended in exchange for a surrender of the assets, which include a house, various bank accounts, and a car. In addition to those settling, the FTC also seeks default judgments against two other defendants.
The FTC warned that “targeting Spanish speakers is not a means to fly under the FTC’s radar.” Nor is operating overseas. The defendants’ call center through which the products were sold was located in Peru. This action is also a reminder that good customer service not only makes good business sense, it could keep your company out of the FTC’s cross-hairs.