Jan 14, 2018 | Consumer Protection, Employment & Technology Archive
Charity-Related Telemarketer InfoCision Charged by FTC with Making Express Misrepresentations to Solicit Donations
The FTC issued a press release regarding Akron, Ohio-based InfoCision, Inc., a company that has made millions of calls to consumers nationwide on behalf of charitable organizations.
InfoCision has agreed to pay a $250,000 civil penalty to settle Federal Trade Commission charges that InfoCision’s telemarketers misled consumers by falsely saying they were not calling to solicit contributions.
The proposed order settling the charges, filed by the Department of Justice on the FTC’s behalf, also bars InfoCision from violating the FTC’s Telemarketing Sales Rule, which requires telemarketers calling on behalf of a charity to promptly tell someone the charity on whose behalf they are calling and if the purpose of the call is to seek a donation.
FTC’s Telemarketing Sales Rule – An Overview
The FTC’s complaint filed against InfoCision, Inc. described the FTC’s Telemarketing Sales Rule as follows:
Congress directed the FTC to prescribe rules prohibiting abusive and deceptive telemarketing acts or practices pursuant to the Telemarketing Act, 15 U.S.C. §§ 6101- 6108. The FTC adopted the original Telemarketing Sales Rule in 1995, extensively amended it in 2003, and amended certain provisions thereafter. See 16 C.F.R. Part 310.
Section 1011 of the USA Patriot Act, codified in relevant part at 15 U.S.C. §§ 6102 and 6106, amended the Telemarketing Act to cover “charitable solicitations” and directed the FTC to expand the scope of the Telemarketing Sales Rule to cover calls made to solicit charitable contributions.
In 2002, the FTC amended the Telemarketing Sales Rule to modify the definition of telemarketing to:
- include interstate calls made by for-profit telemarketers to solicit charitable contributions;
- require for-profit telemarketers calling to solicit such contributions to promptly disclose the name of the organization making the request and that the purpose of the call is to ask for a charitable contribution; and
- prohibit for-profit telemarketers from making a false or misleading statement to induce any person to make a charitable contribution.
These requirements ensure that for-profit telemarketers that solicit charitable contributions are truthful about the purpose of the call and that consumers receive material information so that they can make informed choices about whether to engage with the telemarketers and give a charitable contribution.
Under the Telemarketing Sales Rule, a “telemarketer” means “any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor.” 16 C.F.R. § 310.2(ff).
A “donor” means “any person solicited to make a charitable contribution,” 16 C.F.R. § 310.2(p), and a “charitable contribution” means “any donation or gift of money or any other thing of value.” 16 C.F.R. § 310.2(h).
Under the Telemarketing Sales Rule, an “outbound” telephone call means “a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution.” 16 C.F.R. § 310.2(x).
The Telemarketing Sales Rule prohibits telemarketers from “[m]aking . . . false or misleading statement[s] to induce any person to pay for goods or services or to induce a charitable contribution.” 16 C.F.R § 310.3(a)(4).
USA v. InfoCision, Inc. – The FTC’s Complaint for Civil Penalties, Permanent Injunction & Other Relief
According to the FTC’s complaint, since at least 2013, InfoCision has conducted hundreds of telemarketing campaigns reaching consumers nationwide on behalf of charitable organizations. In some of those campaigns, the FTC alleges, InfoCision’s telemarketers called consumers and told them at the start of the call that they were not calling to ask for a donation.
According to the FTC, the telemarketers subsequently asked consumers to mail or hand-deliver materials requesting donations to family members, friends, or neighbors. Additionally, in many cases, despite initially saying they were not calling to solicit donations, InfoCision’s telemarketers allegedly asked consumers to donate money, generally in amounts ranging from $10 to $50. Based on this conduct, the FTC’s complaint charges InfoCision with making false or misleading statements to induce consumers to make a charitable contribution, in violation of the Telemarketing Sales Rule.
The proposed order settling the FTC’s charges bars InfoCision, in connection with its telemarketing activities, from making any false or misleading statements designed to induce anyone to pay for goods or services or make a charitable contribution.
The FTC’s proposed order also requires InfoCision, when making outbound telemarketing calls to induce a charitable contribution, to truthfully disclose: 1) the name of the charity on whose behalf it is making the call; 2) that the purpose of the call is to solicit a charitable contribution; and 3) whether the contribution sought is a donation, monetary gift, or anything else of value. The order also bars InfoCision from violating the Telemarketing Sales Rule in the future.
Finally, the order imposes a $250,000 civil penalty against InfoCision and includes standard recordkeeping and monitoring provisions to ensure compliance with its terms.
Consumers: For-Profit Charitable Callers Must Follow the Telemarketing Sales Rule
A recent FTC blog posting advised that “The Do Not Call Registry” is designed to stop unwanted sales calls; however, one exception to the Do Not Call Registry allows for-profit fundraisers to call individuals on behalf of charities even if one’s telephone number is listed on the Do Not Call Registry. When these charitable fundraisers call someone, however, they must still follow the Telemarketing Sales Rule.
Examples of Telemarketing Sales Rule requirements that charitable, for-profit fundraisers must follow:
- Fundraisers can’t call before 8 a.m. or after 9 p.m.
- Fundraisers must promptly state the charity they’re calling for and state that the purpose of the call is to seek a donation.
- Fundraisers can’t make a false or misleading statement to persuade one to donate.
- Fundraisers cannot misrepresent information during the call, such as the fundraiser’s connection to the charity; the mission or purpose of the charity; whether a donation is tax deductible; or how a donation will be used or how much of the donation actually goes to charity programs.
- Fundraisers cannot use a robocall or prerecorded message to reach an individual unless the individual has supported the charity in the past.
- Fundraisers also cannot call a person again if the person tells them that he/she does not want any more calls from that charity.
Source: FTC.gov, consumer.ftc.gov, ecfr.gov.
Have You Received Unsolicited or Unwanted Telemarketing Calls, Autodial Calls, Robocalls or Text Messages?
If you have received unwanted, unsolicited or harassing telemarketing calls, autodial calls, robocalls or text messages and would like to speak privately with an attorney to learn more about your potential legal rights, please complete the form to the right or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected]; John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected]; or send an e-mail to [email protected].
Jan 14, 2018 | Securities Class Action Archive
AMD Stock Shares Down 3.6% Aftermarket After AMD Acknowledges Spectre Security Flaw
On January 11, 2018, SeekingAlpha reported (“AMD drops after acknowledging vulnerability to Spectre flaw”) the following:
AMD . . . shares drop following a Yahoo Finance interview with CEO Lisa Su, who acknowledges again that the company’s chips were affected by the Spectre security flaw.
Key quote: “To clarify, for Meltdown, AMD is not susceptible. We don’t have a susceptibility to that variant. But with Spectre, AMD is susceptible.”
As Google outlined in a blog post earlier today, the Spectre flaw comes in two variants Google called Variant 1 and Variant 2 while Meltdown was Variant 3. Variant 2 was the hardest problem to resolve.
AMD shares are down 3.6% aftermarket.
Intel . . . shares are down 1.6%.
AMD Stock Price Falls Sharply During January 12, 2018 Intraday Trading
On the news of AMD’s January 11, 2018 post-market announcement that AMD’s chips were, in fact, susceptible to both variants of the Spectre security flaw, AMD’s share price dropped sharply during intraday trading on January 12, 2018.
AMD Stock – Yahoo Finance Reports About AMD & Intel Chip Security Flaws
According to the Yahoo Finance story (“AMD CEO on chip security flaws: ‘We’re absolutely all over this’”) reported by SeekingAlpha:
Indeed, all AMD chips are susceptible to Spectre, however the company clarified in a blog post . . . that its AMD Radeon graphics processors are not. [AMD’s] stock dipped nearly 3.8% on [January 9, 2018] after some users with older AMD chips in their computers complained that a Microsoft (MSFT) Windows software patch caused those users’ computers to freeze up and become unusable. AMD expects Microsoft to resume rolling out software patches for those older AMD processors by next week.
The Yahoo Finance story also stated that “nearly every Intel . . . computer processor made starting in 1995 is vulnerable to both Meltdown and Spectre,” and “Intel’s stock has plunged more than 7% this year since the news first hit, in part because its chips are vulnerable to both security flaws but also due to its relative lack of transparency with the public.” Further, according to Yahoo Finance:
Meltdown and Spectre represent two of the largest, most fundamental flaws in computer processor designs in the past 20 years. In the short-term, computers with Intel chips are more likely to suffer from performance issues, leading to compromised servers for cloud platforms, however, it’s still unclear what the longer-term, more far-flung ramifications are for computer users overall. But for AMD and Intel, moving quickly to address these security flaws is vital not only for its stock but more importantly, in maintaining trust with computer owners around the world concerned for their data security and privacy.
AMD Stock – AMD Stock Price (January 8, 2018 – January 12, 2018)
AMD Stock Shareholders – Securities Investigation
Kehoe Law Firm, P.C. is investigating whether AMD and certain of its officers or directors have engaged in securities fraud or other unlawful business practices. If you are an AMD stockholder with questions or concerns, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
Kehoe Law Firm, P.C.
Jan 13, 2018 | Securities Class Action Archive
AZZ Inc. Securities Class Action Lawsuit Filed on Behalf of AZZ Stock Holders
AZZ’s Energy Segment Accounting – “Notification of Late Filing” & Form 8-K Disclosure
Kehoe Law Firm, P.C. previously reported about AZZ’s “Notification of Late Filing” regarding AZZ’s inability to file its Form 10-Q for the quarter ended November 30, 2017 without unreasonable effort or expense for the following reasons:
As previously disclosed in a Form 8-K filed with the Commission on January 9, 2018, [AZZ], upon the recommendation of [AZZ’s] management and in consultation with [AZZ’s] Audit Committee and [AZZ’s] independent registered public accounting firm, BDO USA, LLP, determined that [AZZ] historically should have accounted differently for certain contracts within its Energy Segment. As part of the review, [AZZ] is currently evaluating if there are any significant impacts to [AZZ’s] audited consolidated financial statements for the fiscal years ended February 28, 2015 and 2017, and the fiscal year ended February 29, 2016, as contained in its 2017 Annual Report on Form 10-K and the previously issued unaudited financial statements contained in its Quarterly Reports on Form 10-Q for the quarters ended May 31, 2017 and August 31, 2017. The analysis is ongoing, and [AZZ] cannot yet estimate when it will be completed. [Emphasis added]
[AZZ] is working diligently and expeditiously towards completion of the review. However, due to the time and effort involved and the potential carryover effects of the review on future periods, [AZZ] is unable file its Quarterly Report on Form 10-Q for the quarter ended November 30, 2017 until such review is completed. [Emphasis added]
Securities Class Action Filed on Behalf of AZZ Common Stock Investors Who Purchased, or Otherwise Acquired, AZZ Stock Between April 22, 2015 and January 8, 2018, Inclusive (the “Class Period”)
On January 11, 2018, a class action complaint was filed against AZZ Inc. and certain AZZ officers in United States District Court, Northern District of Texas, Fort Worth Division, for alleged violations of the Securities Exchange Act of 1934. The initial complaint filed in the class action lawsuit (Mullins v. AZZ, Inc., et al, No. 18-00025-Y) alleges that
. . . [t]hroughout the Class Period, [AZZ] Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about [AZZ’s] business, operations, and prospects. Specifically, [AZZ] Defendants made false and/or misleading statements and/or failed to disclose (i) that it misstated revenues for its Energy Segment for the duration of the Class Period; (ii) that it had failed to report revenues in compliance with FASB’s Accounting Standards Codification 605-35-25-92, which says that “the completed contract method may be used as an entity’s basic accounting policy in circumstances in which financial position and results of operations would not vary materially from those resulting from use of the percentage-of completion method (for example, in circumstances in which an entity has primarily short-term contracts),” (iii) that [AZZ] lacked adequate internal controls over financial reporting; (iv) that its purported efforts – over more than two years – to evaluate revenue recognition standards had been an apparent failure; and that (v) as a result of the foregoing, AZZ’s publicly disseminated financial statements were materially false and misleading. [Emphasis added]
AZZ’s Accounting Methodology – AZZ “Historically Should Have Accounted Differently for Certain Contracts Within Its Energy Segment”
On January 9, 2018, AZZ filed SEC Form 8-K with an accompanying press release, “AZZ Inc. to Review Accounting Methodology Resulting in a Delay of the Issuance of its Fiscal Year 2018 Third Quarter Form 10-Q. AZZ Inc. Updates Guidance for Fiscal 2018 Revenue and Earnings per Share,” which stated:
AZZ Inc. . . . a global provider of metal coating services, welding solutions, specialty electrical equipment and highly engineered services, today announced upon the recommendation of [AZZ’s] management and in consultation with [AZZ’s] Audit Committee and [AZZ’s] independent registered public accounting firm, BDO USA, LLP, on January 4, 2018 determined that [AZZ] historically should have accounted differently for certain contracts within its Energy Segment. As disclosed in [AZZ’s] 2017 Annual Report on Form 10-K, revenue was historically recognized for the Energy Segment upon transfer of title and risk to customers or based upon the percentage of completion method of accounting for electrical products built to customer specifications. [AZZ] has determined that, in the case of contracts for which revenue was recorded upon contract completion and transfer of title, [AZZ] instead should have applied the percentage of completion method. [Emphasis added]
Consequently, according to the press release:
. . . [AZZ] is currently reviewing whether its historical accounting for these contracts differs materially from the percentage-of-completion method and if there are any significant impacts to [AZZ’s] audited consolidated financial statements for the fiscal years ended February 28, 2015 and 2017, and the fiscal year ended February 29, 2016, as contained in its 2017 Annual Report on Form 10-K and the previously issued unaudited financial statements contained in its Quarterly Reports on Form 10-Q for the quarters ended May 31, 2017 and August 31, 2017. The analysis is ongoing, and [AZZ] cannot yet estimate when it will be completed. However, [AZZ] is working diligently and expeditiously to complete the review and will provide any updates when and if they become available. Accordingly, [AZZ] cannot yet conclude upon the materiality of any potential adjustments. As the review is ongoing, [AZZ] is currently unable to file its Quarterly Report on Form 10-Q for the quarter ended November 30, 2017. [Emphasis added]
Steep Decline of AZZ Stock Share Price
On the news pertaining to AZZ’s late filing, AZZ’s share price fell sharply $3.14, or 6.20%, to close at $47.50 on January 9, 2018, down from a $50.64 close on January 8, 2018.
AZZ Stock Shareholders – Purchasers or Acquirers of AZZ Stock
If you purchased, or otherwise acquired, AZZ stock shares during the Class Period April 22, 2015 through January 8, 2018, inclusive, and have questions or concerns about your potential rights or legal claims, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
Jan 11, 2018 | Securities Class Action Archive
Matthews International Corp. (NASDAQ:MATW)
On January 11, 2018, AlphaWeek reported (“Spruce Point Shorts Matthews International”) that Spruce Point Capital Management (“Spruce Point”) released a statement detailing a “strong sell” position for Matthews International Corp.
Spruce Point on Matthews International: “Poorly Organized,” “Declining Financial Performance,” “Accounting and Financial Control Weakness,” & “Nearly $1 Billion of Debt”
As reported by AlphaWeek from Spruce Point’s January 11, 2018 MATW statement:
Spruce Point has conducted a forensic financial review of MATW and believes it to be a poorly organized company suffering from operational problems, declining financial performance, accounting and financial control weakness, and is excessively levered with nearly $1 billion of debt and limited covenant cushion. Based on our research opinions, [Spruce Point Capital] believe[s] investors and the public would be best served with the immediate resignation of MATW’s CEO, CFO and Controller. [Emphasis added]
As a result, [Spruce Point Capital] . . . issued a “Strong Sell” opinion and a long-term price target of approximately $18.50 – $24.50 per share, or approximately 55% to 65% downside risk. [Emphasis added]
Further, as reported by AlphaWeek from Spruce Point’s MATW release:
Poorly Organized Company With Significant Fundamental Headwinds:
Matthews Int’l . . . is comprised of three unrelated businesses in the death care (“Memorialization”), branding and packaging services (“SGK Brand Solutions”), and Industrial Technologies. In [Spruce Point’s] view, each business is mediocre and struggling from a variety of issues, resulting in organic sales to decline in aggregate. In Memorialization, cremation rates are rising causing less casket sales, cheaper imports from China are causing price and margin compression, while virtual memorials are an easy substitute for MATW’s bronze/granite structures. Matthews SGK business is being weighed down by spending deferrals of consumer packaging companies and FDA regulatory delays. Its Industrial Technology business (just 9% of sales) has margins near all-time lows while management has been investing for years into R&D for “new product development” with little details provided to investors; at best, it is a carrot to bait investors for some upside amongst its portfolio of lagging businesses[.] [Emphasis Added]
Recent Acquisitions Have Failed To Deliver:
Hoping to spark growth, MATW has completed 10 acquisitions since FY 2013 and spent $1.0 billion. Its two largest acquisitions were Schawk ($616m/Brand Solutions/2014) and Aurora Products ($219m/Memorialization/2015). Based on our research, these deals have failed miserably to meet expectations. As a result, MATW is bloated and saddled with declining organic growth of 1-3% in Memorialization and 3-5% in Branding. All along, MATW has been promoting how its ERP investment would yield great benefits and allow for seamless acquisitions, but after six years of implementation (average implementation time is 21 months), investors have no clue how much MATW has spent on this project, and not a single accounting disclosure has been made on its software amortization policies. Don’t be shocked that years ago Schawk admitted software capitalization accounting issues[.] [Emphasis added]
Mounting Evidence of Dubious Financial Results:
MATW has taken classic measures to obscure its problems such as realigning segment reporting and promoting highly “adjusted” figures. MATW has reported $176.8m of pre-tax charges since 2012 (with ~$165m related to acquisitions and strategic cost reductions). Charges have totaled a whopping 16% of its deal costs. When put into context of other successful calls Spruce Point has made identifying companies struggling to integrate targets (eg. NCR, ACM, ECHO, CECE, GEF), MATW is the worst we’ve ever seen! When we look closer at its operational footprint, we find little evidence that it has accomplished anything. SG&A margin is rising as are other fixed cost of operations. Not surprisingly, management is now touting “adjusted free cash flow” metrics, which we think overstates 3yr cumulative cash flow by nearly 30%. With sales slowing, and accounts receivables ballooning, Matthews quietly initiated an accounts receivable securitization facility in April 2017; in our view, a tacit admission by the Company its cash flow isn’t as robust as it appears[.] [Emphasis added]
AlphaWeek also reported about Spruce Point’s discussion of MATW’s “debt ballooning to near a billion dollars with little covenant cushion,” MATW’s “serious financial control issues,” and Spruce Point’s view that its “sum-of-parts valuation implies $18.50-$24.50 or approximately 55% – 65% downside.”
Matthews International Share Price Decline
On the news of Spruce Point’s information, MATW’s share price fell sharply during intraday trading on January 11, 2018.
Matthews International Shareholders
On behalf of Matthews International Corp. investors, Kehoe Law Firm, P.C. is investigating whether MATW engaged in securities fraud or other unlawful business practices. MATW investors with questions or concerns can contact John Kehoe, Esq, (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
Jan 11, 2018 | Consumer Protection, Employment & Technology Archive
ACMA: Vodafone Breaches Verification Rules Before Activating Prepaid Mobile Services
Kehoe Law Firm is investigating claims on behalf Vodafone Group plc investors (NASDAQ:VOD) to determine whether Vodafone and certain of its officers or directors have engaged in securities fraud or other unlawful business practices.
On January 10, 2018, post-market, the Australian Communications and Media Authority (“ACMA)” announced that “Vodafone Network Pty Limited will significantly improve its processes for verifying the identity of prepaid mobile customers under an enforceable undertaking accepted by the Australian Communications and Media Authority,” subsequent to an investigation by the ACMA which disclosed that Vodafone “failed to verify the identity of at least 1,028 customers before activating their prepaid mobile services.” According to the ACMA media release, “[t]he breaches occurred between 6 January 2015 and 6 January 2016. They resulted from changes to Vodafone’s IT systems that allowed customers to self-select online that their identity had been verified in store, without any further check that this had actually occurred.”
The ACMA’s Final Investigation Report stated:
After completing its investigation, the ACMA finds that Vodafone Hutchison Australia Pty Limited [VHA] . . . has contravened section 2.3 of the Telecommunications (Service Provider – Identity Checks for Prepaid Mobile Carriage Services) Determination 2013 (the Prepaid Determination) on at least 1,028 occasions. As a consequence of these contraventions, the ACMA also finds that VHA contravened subsection 101(1) of the Telecommunications Act 1997 (the Act) on at least 1,028 occasions as it did not comply with the service provider rules that apply to it, namely the rules set out in the Prepaid Determination in force under section 99 of the Act. [Emphasis added]
Further, the ACMA report stated that “[i]n February 2016 the ACMA became aware of an option on VHA’s website which allowed customers of its prepaid mobile carriage services to select that their identity had been verified in a store and then proceed to activate their service through use of the website,” and “[t]he ACMA was concerned that the ID-checked in store option appeared to allow customers to activate their prepaid mobile carriage service using the website without VHA necessarily having checked the customer’s identity at the time of sale . . . of the service or at the time of activation as required by the Prepaid Determination.” [Emphasis added]
The ACMA’s Final Investigation Report referred to “ID-checked in store option” as the option which allowed VHA customers to self-select on VHA’s website that their identity had been verified in store followed by activation of their prepaid mobile carriage service.
On this news, Vodafone’s American Depositary Receipt price fell sharply during intraday trading on January 11, 2018.
Vodafone ADR Investors
If you have questions or concerns about Kehoe Law Firm’s investigation, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].
