Apr 14, 2020 | Consumer Protection, Employment & Technology Archive
FTC Issues New Round Of “Warning Letters” To Companies Making Coronavirus Claims
Kehoe Law Firm, P.C. is making consumers aware that the FTC has issued ten new Coronavirus warning letters, which follow seven FTC-FDA letters announced on March 9, 2020 and additional joint warning letters sent since then. The FTC is advising marketers that regardless of what kind of pill, potion, device, or what-have-you your company promotes – including through social media – if you suggest or imply Coronavirus prevention or treatment claims, your practices will attract scrutiny from the FTC.
The FTC advised that the following ten companies just received letters from FTC staff:
Bioenergy Wellness Miami. The FTC says the Florida company claimed on its website that devices it sells emit sound frequencies that “target Coronavirus/SARS viral infections, and can be used either as homeoprophylaxis or at the onset of flu-like symptoms. . . .”
Face Vital LLC. According to the FTC, the Miami Beach business marketed its “Face Vital Sonic Silicone Facial Brush” as a way to “fight off Coronavirus” and suggested consumers could “RAMP UP YOUR BEAUTY AND CLEANSING REGIMEN, FIGHT OFF CORONA” by using its product.
LightAir International AB. On its website, the Swedish company claimed, “The corona virus can in various ways be air-borne . . . . IonFlow air purifiers are scientifically proven to efficiently prevent spread of air-borne viruses.”
MedQuick Labs LLC. According to statements the Arkansas company made on its Facebook page, “The CoronaVirus, as well as the flu, has everyone in a frenzy right now. One of the best things you can do is make sure your immune system is ready to fight off anything nasty. Boost your immune system with our improved Immunity Boost drip! You can wash your hands all day long but one of the best defenses against ANY illness is to boost your immune system and the best way is by putting Vitamin C and other immune building vitamins straight into your bloodstream.”
New Performance Nutrition. The warning letter to the Los Angeles business cites this statement the company had on its website: “NPN ANTI-VIRUS KIT is a bundle of immune defense supplements, hand-picked by NPN Owner/Founder Matt Mahowald, that will target and increase your immunity to help ward off the COVID-19 virus.”
ParaTHRIVE LLC. The Colorado company’s website promoted its Liposomal Vitamin C products by claiming “Experts in the field are suggesting that regular dosing of Vitamin C could help to prevent the Coronavirus . . . . ‘The coronavirus can be dramatically slowed or stopped completely with the immediate widespread use of high doses of Vitamin C. Bowel tolerance levels of C taken in divided doses throughout the day, is a clinically proven antiviral, without equal.’”
Resurgence Medical Spa, LLC. The warning letter to the Arlington, Texas business cites Facebook and Instagram posts that said, “More and more research is showing that high doses of Vitamin C could both prevent and treat Covid-19. Whether you’re experiencing symptoms or trying to keep from getting sick, call us today to schedule an appointment for a High Dose Vitamin C plus Immunity Booster IV infusion.”
Rocky Mountain IV Medics. The Colorado company advertised its IV treatments through social media and on its webpage, using claims like this: “Coronavirus Symptoms Treatment Tests are underway and IV Vitamin C treatments are starting to show promising results! If you’re looking for IV Vitamin C therapy, we have ASAP and prescheduled appointments available.” The website also linked to an article that said, “Shanghai Medical Association has released an expert consensus statement on the comprehensive treatment of COVID-19 where they endorse the use of high-dose IV vitamin c for the illness.”
Suki Distribution Pte. Ltd. The Singapore-based company’s said on its website, “As the coronavirus COVID-19 pandemic is spreading globally, our clients ask whether our products can help prevent or treat Coronavirus. The good news is that several of our products may play a role in strengthening the immune system or in fighting the Coronavirus.” The website further described a product as a “safe Japanese drug with anti-Coronavirus effects” and that a laboratory study concluded that the purported active ingredient cepharanthine “can be applied for the prevention and treatment of Human Coronavirus infection.”
Vita Activate. According to the warning letter, the Canadian company claimed on its website that its Natural Chaga Mushroom “may prevent invaders such as the corona virus. Just a few sprays a day can boost your immunity effectively . . . Very rich in source of magnesium, zinc, and selenium that have anti-corona virus properties. Get ready and be prepared to fight off bacteria and harmful airborne diseases with the powerful anti-viral, anti-bacterial Chaga Mushroom.”
The letters advise that the companies must ensure they have stopped making Coronavirus prevention, treatment, or cure claims for the cited products. The following is a sample of what the letters say:
It is unlawful under the FTC Act . . . to advertise that a product can prevent, treat, or cure human disease unless you possess competent and reliable scientific evidence, including, when appropriate, well-controlled human clinical studies, substantiating that the claims are true at the time they are made. For COVID-19, no such study is currently known to exist for the product identified above. Thus, any coronavirus-related prevention or treatment claims regarding such product is not supported by competent and reliable scientific evidence. You must immediately cease making all such claims.
Source: Federal Trade Commission – FTC.gov
Apr 14, 2020 | Consumer Protection, Employment & Technology Archive
Class Action Lawsuit On Behalf of Individuals and Businesses Whose Personal or Private Information Was Unlawfully Collected, Disclosed And/Or Used by Zoom, Facebook And/Or LinkedIn Upon The Installation, Opening, Closing Or Use of The Zoom App
Kehoe Law Firm, P.C. is making consumers and businesses aware that on April 13, 2020, a class action lawsuit was filed in United States District Court, Central District of California, against Zoom Video Communications, Inc., Facebook, and LinkedIn Corporation on behalf a nationwide Class of all persons and businesses in the United States whose personal or private information was unlawfully collected, disclosed and/or used by Zoom, Facebook and/or LinkedIn upon the installation, opening, closing or use of the Zoom App.
According to the complaint:
Zoom . . . contends that it cares for its users and seeks to deliver happiness. Not so. It recently has been revealed that: (a) Defendants Facebook and LinkedIn eavesdropped on, and otherwise read, attempted to read and learned the contents and meaning of, the communications between Zoom users’ devices and Defendant Zoom’s server; (b) Zoom and LinkedIn disclosed Zoom users’ identities to third parties even when those users actively took steps to keep their identities anonymous while using the Zoom platform; and (c) Zoom falsely represented the safeguards in place to keep users’ video communications private.
Indeed, the exploitation of Zoom users began simultaneously with the installation of Zoom’s software application (the “Zoom App”), especially if they used the iOS operating system – the system to run to Apple products. At that time, and each time thereafter that a Zoom user opened or closed the Zoom App, Defendant Facebook eavesdropped on, and otherwise read, attempted to read and learned the contents and meaning of, communications between Zoom users’ devices and Defendant Zoom’s server without the users’ knowledge or consent.
Facebook engaged in that unlawful conduct in order to gather users’ personal information and amass increasingly detailed profiles on Zoom users, which profiles Zoom and Facebook then used for their respective financial benefit.
Similarly, Defendant LinkedIn eavesdropped on, and otherwise read, attempted to read and learned the contents and meaning of[] communications between Zoom users’ devices and Defendant Zoom’s server, in order to harvest users’ personal information. Further, Zoom and LinkedIn surreptitiously provided certain Zoom users with the personal information of other users even when the victim users proactively took steps to hide their identities.
Additionally, Defendant Zoom has misrepresented the nature of the security used to protect Zoom users’ video communications. It has also concealed, suppressed and omitted from disclosure various flaws in its products until they are publicly disclosed by third parties, knowing that the disclosures could harm its business. [Emphasis added.]
The class action seeks damages and equitable relief on behalf of a nationwide Class of all persons and businesses in the United States whose personal or private information was unlawfully collected, disclosed and/or used by Zoom, Facebook and/or LinkedIn upon the installation, opening, closing or use of the Zoom App.
Apr 14, 2020 | Antitrust
Class Action Filed Against Grubhub, DoorDash, Postmates, and Uber Technologies – Companies Allegedly Use Their Meal Delivery Market Monopoly Power To Prevent Competition And Limit Consumer Choice
Kehoe Law Firm, P.C. is making consumers aware that on April 13, 2020, a class action lawsuit was filed against Grubhub, Inc., also doing business as Seamless, DoorDash Inc., Postmates Inc., and Uber Technologies, Inc., in its own right and as parent of wholly-owned subsidiary Uber Eats, in United States District Court, Southern District of New York.
According to the complaint, “Defendants’ anticompetitive conduct has enabled each Defendant to: (a) prevent and limit competition in the Meal Delivery Market; (b) prevent and limit competition in the Direct Purchase Market; [and] (c) prevent and limit competition in the Dine-In Market.” Class members, allegedly, “. . . purchased meals from restaurants that were subject to Defendants’ [No Price Competition Clause]. As a result of Defendants’ illegal conduct, these consumers were compelled to pay artificially inflated prices for their meals.” [Emphasis added.]
The complaint, among other things, alleges the following:
Unable to compete on anything that ‘meaningfully impact[s] user experience,’ each Defendant instead uses its monopoly power in the meal delivery market to prevent competition and limit consumer choice. Specifically, Defendants use their market power to impose unlawful price restraints in their merchant contracts, which have the design and effect of restricting price competition from competitors in order to maintain the Delivery Apps’ market share.
In their form contracts with restaurants, Defendants include clauses requiring uniform prices for restaurants’ menu items throughout all purchase platforms (the “No Price Competition Clause” or “NPCC”). The NPCCs prevent restaurants from charging different prices to meal delivery customers than they charge to dine-in customers for the same menu items. The purpose and effect of the No Price Competition Clause is to act as an unlawful price restraint that prevents restaurants from gaining marketshare and increased profitability per consumer by offering lower prices to consumers. The NPCCs target and harm not only restaurants, but also two distinct classes of consumers: (1) consumers who purchase directly from restaurants in the Meal Delivery Market; and (2) consumers who buy their meals in the separate and distinct restaurant Dine-In Market.[] Both restaurants and consumers would benefit absent Defendants’ unlawful restraints[.]
The rise of the four Defendants has come at great cost to American society. Defendants offer restaurants a devil’s choice: in exchange for permission to participate in Defendants’ Meal Delivery monopolies, restaurants must charge supra-competitive prices to consumers who do not buy their meals through the Delivery Apps,[] ultimately driving those consumers to Defendants’ platforms. Unable to offer consumers the increased choice of paying better prices to dine-in, restaurants have seen precious dine-in customers slip away year after year.
Defendants’ NPCCs work by forcing Direct and Dine-In consumers to shoulder Defendants’ exorbitant economic rents. While both meals sold through Defendants’ platforms and directly from the restaurant share the same costs and overhead, meals sold through the Delivery Apps are more expensive, because of Defendants’ high fees. Restaurants must calibrate their prices to the more costly meals served through the Delivery Apps in order to not lose money on those sales. Defendants’ unlawful NPCCs then force restaurants to also charge those higher prices to Dine-In and Direct Consumers, even though the cost of those consumers’ meals are lower as they do not include Defendants’ exorbitant fees.
Absent Defendants’ unlawful restraints, restaurants could offer consumers lower prices for direct sales, because direct consumers are more profitable. This is particularly true of Dine-In consumers, who purchase drinks and additional items, tip staff, and generate good will. Restaurants cannot offer Plaintiffs and the class this lower cost option, because the Delivery Apps’ No Price Competition Clauses prevent them from doing so. [Emphasis added.]
The Class is defined as all persons or entities who, since April 14, 2016, either 1) purchased meals directly from any restaurant contemporaneously contracted with the Delivery Apps or 2) all persons or entities who purchased Dine-In meals from any restaurant contracted with the Delivery Apps of Defendants Grubhub, Uber and/or Uber Eats, Postmates and/or DoorDash.
Apr 13, 2020 | Shareholder & Investor Protection
SEC Alerts “Main Street” Investors About Investment Frauds, Including Scams Related to Coronavirus (COVID-19) Pandemic
Kehoe Law Firm, P.C. is making investors aware that on April 10, 2020, the SEC’s Office of Investor Education and Advocacy and Division of Enforcement’s Retail Strategy Task Force issued an alert warning investors that fraudsters often seek to use national crises and periods of uncertainty to lure investors into scams. As detailed below, the SEC cautions that fraudsters may play off investors’ hopes and fears, as well as their charity and kindness, and may try to exploit confusion or rumors in the marketplace.
Frauds Main Street Investors Should Watch For, Especially During The Coronavirus Health Crisis
As you navigate the COVID-19 pandemic, don’t overlook the importance of protecting yourself and others from investment scams. Many investment frauds involve unlicensed individuals or unregistered firms, so verify that the seller is currently registered or licensed using the free and simple search tools on Investor.gov. Also, watch for promises of guaranteed high investment returns and unsolicited investment offers. To learn more about these red flags and others, access the webpage How to Avoid Fraud.
Fraudulent Stock Promotions and Market Manipulation
If you are considering investing in a company, especially in a microcap or penny stock, be skeptical of claims that products or services can prevent, detect, or treat COVID-19, or help to solve issues resulting from the current pandemic.
The SEC has become aware of a number of stock promotions, including online and through unsolicited phone calls, claiming that products or services of publicly-traded companies can prevent, detect, or cure COVID-19, and that the stock of these companies will dramatically increase in value as a result. Individuals should contact the Food & Drug Administration (FDA) with questions about FDA involvement with, or approval of, specific products and services.
Wrongdoers may promote rumors on social media, as well as on online bulletin boards and in online chat rooms. Claims also might concern companies converting operations to COVID-19-related support, or legislative stimulus packages and related industries that supposedly benefit from the current crises. You may lose a lot of money if you invest in a company based on inaccurate or unreliable claims or rumors.
False claims about a company’s products and services are sometimes part of a “pump-and-dump” scheme where fraudsters profit at the expense of unsuspecting investors. Microcap stocks may be particularly vulnerable to pump-and-dump schemes because there is often limited publicly-available information about microcap companies’ management, products, services, and finances as well as limited institutional interest in those companies. This can make it easier for fraudsters to spread false information about the company and move the price of the stock to take advantage of the public.
SEC Trading Suspensions
Recent trading suspensions issued in connection with coronavirus/COVID-19 include:
Fraudulent Unregistered Offerings
Under the federal securities laws, a company may not offer or sell securities unless the transaction has been registered with the SEC or an exemption from registration applies. Many legitimate companies use unregistered offerings to raise funds from investors. Fraudsters, however, may also use unregistered offerings to conduct investment scams.
Be wary of promises of high investment returns with little or no risk, unregistered professionals, aggressive sales tactics, and other red flags. Be particularly vigilant of fraudsters taking advantage of the volatile markets to tout “safe” or “bottomed out” investments in companies that purportedly have interests in commodities such as gold, silver, or oil and gas, for example. Before you hand over your money, research the investment and ask questions. See also 10 Red Flags that an Unregistered Offering May be a Scam.
If you are considering an investment relating to the COVID-19 pandemic, check if it is registered with the SEC by using the SEC’s EDGAR database or contacting the SEC’s toll-free investor assistance line at (800) 732-0330.
Charitable Investment Scams
Many organizations currently offer opportunities to help those most affected by the COVID-19 pandemic. Fraudsters may try to exploit your desire to help others by using charitable causes as a hook for investment schemes. For example, they may pretend that your investment will provide financial support or medical treatment to people in need as a result of the COVID-19 pandemic and then steal your money instead.
If you are considering participating in an investment offered by a charity that claims to be a tax-exempt or “501(c)(3)” organization, check out the organization’s tax status on the Tax Exempt Organization Search on the Internal Revenue Service’s website. If a so-called charitable organization is not listed, and has misrepresented that it is tax-exempt, do not invest in the organization. Even if a charity has 501(c)(3) status, this does not mean the investment is a legitimate opportunity – it still could be part of a fraudulent scheme. Ask questions and independently research the organization to find out as much as you can.
Community-Based Financial Frauds
Community-based financial frauds, also called affinity frauds, target members of identifiable groups, including people with common ties based on ethnicity, nationality, religion, sexual orientation, military service, and age. These scams exploit the trust and friendship that exist within groups.
Fraudsters may be (or pretend to be) part of the very group they are trying to cheat. They may enlist group leaders to spread the word about the scheme. Those leaders may not realize the “investment” is actually a fraud, which means they too may be victims.
Know who you are dealing with and know what they are selling—even if you have something in common with the person. Type the person’s name into the search box on Investor.gov to do a background check on anyone offering or selling you an investment.
Bogus CDs Offering High Returns
During periods of market volatility, many investors may seek investments they feel are safer and less subject to risk and price fluctuation, such as financial products with fixed-rate returns. The SEC is aware of current fraudulent promotions of phony Certificates of Deposit (CDs) through internet advertising and “spoofed” websites – websites that mimic the actual sites of legitimate financial institutions. Spoofed websites may use URL addresses similar to those of legitimate firms’ websites, or use legitimate-sounding names and URLs.
Spoofed websites selling fake CDs may offer high interest rates with no penalties for early withdrawals, promote only CDs (and no other financial products), require high minimum deposits, direct investors to wire funds abroad or to an account with a different name than the listed financial institution, claim the deposits are FDIC-insured, and identify “clearing partners” purportedly registered with the SEC.
Investors should be extremely cautious when purchasing CDs from websites they find through internet searches. If you are considering an investment in CDs, consider these tips to help you avoid bogus CD scams.
Source: Securities and Exchange Commission – SEC.gov
Apr 13, 2020 | Consumer Protection, Employment & Technology Archive
2018-2019 Toyota Manufactured Vehicles Equipped With Low-Pressure Fuel Pumps With Part Number Prefix 23220 Or 23221
Kehoe Law Firm, P.C. is making consumers aware that on April 10, 2020, a class action lawsuit was filed against Toyota Motor Corporation, Toyota Motor North America, Inc., Toyota Motor Sales, USA, Inc., and Toyota Motor Engineering & Manufacturing North America, Inc. (collectively, “Toyota”) in United States District Court, Eastern District of Pennsylvania, on behalf of consumers who purchased Toyota and Lexus vehicles equipped with certain defective low-pressure fuel pumps.
According to the complaint:
On January 13, 2020, Toyota submitted a safety recall report (the “Recall Report”)[] to NHTSA voluntarily recalling nearly 700,000 Toyota and Lexus vehicles[] manufactured between August 1, 2018 through January 31, 2019 with defective low-pressure Denso fuel pumps (the “Recall”). In the Recall Report, Toyota identified a dangerous defect in the low-pressure fuel pump which can fail and cause the Recalled Vehicles to unexpectedly stall and cause engine shut down:
These fuel pumps contain an impeller that could deform due to excessive fuel absorption. . . . [i]f impeller deformation occurs, the impeller may interfere with the fuel pump body, and this could result in illumination of check engine and master warning indicators, rough engine running, engine no start and/or vehicle stall . . . .
(“Fuel Pump Defect”). Approximately 695,541 Recalled Vehicles are covered by the Recall, but the same dangerous condition is present in all 2018-2019 Toyota manufactured vehicles equipped with low-pressure fuel pumps with part number prefix 23220- or 23221- (“Class Vehicles”) that gave rise to the Recall.
Toyota concluded that the Fuel Pump Defect in Class Vehicles presents an immediate risk of physical injury when used in their intended manner and for their ordinary purpose.
Toyota has long known of the Fuel Pump Defect in the Class Vehicles, despite marketing Class Vehicles as safe and dependable. Toyota admitted in the Defect Information Report accompanying the Recall Report that it received thousands of warranty requests related to the Fuel Pump Defect in Class Vehicles.[]
The Fuel Pump Defect in the Class Vehicles exposes occupants and others to extreme danger, or even death. A vehicle that stalls or suffers engine shutdown is at heightened risk for collision. A vehicle that stalls or suffers engine shutdown causes drivers to react to remove themselves from danger, typically by exiting the road. Drivers stranded on the side of the road experience a heightened risk of danger, whether it is from other vehicles or weather elements.
Fuel pump failure can prevent the driver from accelerating at the necessary and anticipated pace. Diminished acceleration ability creates unexpected hazards, startling drivers of the Class Vehicles and other drivers in their proximity. Finally, once a Class Vehicle fuel pump fails, the vehicle becomes totally inoperable and will not start. [Emphasis added.]
NOTE: The class action complaint identified the “Recalled Vehicles” as follows: 2018-2019 Toyota 4Runner, 2019 Toyota Avalon, 2018-2019 Toyota Camry, 2019 Toyota Corolla, 2019-2019 Toyota Highlander, 2018-2019 Toyota Land Cruiser, 2018-2019 Toyota Sequoia, 2018-2019 Toyota Sienna, 2018-2019 Toyota Tacoma, 2018-2019 Toyota Tundra, 2019 Lexus ES, 2018-2019 Lexus GS, 2018-2019 Lexus GX, 2018-2019 Lexus IS, 2018-2019 Lexus LC, 2018-2019 Lexus LS, 2018-2019 Lexus LX, 2019 Lexus NX, 2018-2019 Lexus RC, 2018-2019 Lexus RX.
Kehoe Law Firm, P.C.
