Antitrust Law Daily FTC goes after non-disparagement provisions in property rental contracts, negative option scams
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Monday, June 3, 2019

FTC goes after non-disparagement provisions in property rental contracts, negative option scams

By Jeffrey May, J.D.

FTC announces settlements over form contracts that allegedly violated the Consumer Review Fairness Act. Separately, the agency continues pursuit of purported negative option scams.

Two companies, one that rented vacation properties in Florida, and one that managed rental homes in Maryland, have agreed to settle FTC allegations that they violated the Consumer Review Fairness Act (CRFA) by using form contract terms that contained non-disparagement provisions, which barred consumers from writing or posting negative reviews online. Proposed FTC consent order would prohibit the companies from using these alleged violations. The orders also contain fencing-in provisions that would reach similar and related conduct involving the use of contract terms that prohibit, restrict, penalize, or transfer rights in consumer reviews or evaluation of the respondents, their goods, or their services, according to the agency (Staffordshire Property Management, LLC, FTC File No. 182-3084Shore to Please Vacations LLC, FTC File No. 182-3088).

The agency alleged that Staffordshire Property Management, LLC, which operates a residential property management service and processes consumer applications to rent properties that it manages, used form contracts between February 2016 and October 2018 in the course of processing the rental applications of hundreds of consumers that violated the CRFA. The FTC’s complaint against Shore to Please Vacations LLC alleged that between June 2017 through at least August 2017 the company's contracts offered to prospective customers in the course of renting vacation properties prohibited those customers from leaving negative reviews in any print form or on any website. The owners of both companies also were named and are parties to the settlements.

These actions only allege a violation of the CRFA. They do not include allegations of FTC Act violations. This follows a similar effort announced on May 8, which involved the agency’s first actions exclusively enforcing the CRFA.

Negative option scams. Separately, on May 31, the FTC announced settlements with operators of a purported worldwide negative option scam and an amended complaint in a federal district court case, alleging a multi-national scheme to defraud consumers via deceptive "free trial" offers and negative-option continuity plans. The first consent decree settles the FTC’s charges against San Diego-based defendants Triangle Media Corp. and its CEO and Jasper Rain Marketing LLC, and contains both conduct and monetary relief. The second consent decree settles the FTC’s charges against defendants corporate and individual defendants, who helped operate the scheme from outside the United States.

The amended complaint names a Latvian financial institution, SIA Transact Pro, and its CEO as additional defendants in a suit filed in 2018, alleging that the new defendants participated in the scheme by processing $40 million in consumer payments. They allegedly engaged in credit card laundering by approving and maintaining merchant accounts in the name of shell companies with straw owners, and that they manipulated chargeback levels in those merchant accounts to evade credit card chargeback monitoring programs (FTC v. Triangle Media Corp., FTC File No. 172 3108, Civil Action No. 18cv1388-MMA (NLS)FTC v. Apex Capital Group, LLC, FTC File No. 172 3189, Civil Action No. CV18-09573-JFW(JPRx)).

Attorneys: Carl H. Settlemyer, III for FTC. Arthur Hawgood (Hawgood Hawgood & Moran, LLP) for Staffordshire Property Management, LLC and Aaron Fischer. Daniel W. Uhlfelder (Daniel W. Uhlfelder, P.A.) for Shore to Please Vacations LLC and Robert Aaron Stephens. Matthew Hart Wernz for the FTC. Frederick K. Taylor (Procopio Cory Hargreaves and Savitch LLP) for Triangle Media Corp. and Jasper Rain Marketing, LLC. Ari N. Rothman (Venable LLP) for Hardwire Interactive, Inc.

Companies: Apex Capital Group, LLC; SIA Transact Pro; Shore to Please Vacations LLC; Staffordshire Property Management, LLC; Triangle Media Corp.; Jasper Rain Marketing, LLC; Hardwire Interactive, Inc.

MainStory: TopStory ConsumerProtection FederalTradeCommissionNews

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