by John J. Tollefsen | Aug 24, 2010 | Blog, Federal Law, Federal Trade Commission
Predatory Lending Schemes Affecting Small Business Anyone can be a victim of predatory lending. The schemes often target the most vulnerable including seniors, borrowers facing foreclosure, and businesses in desperate need of funds. They work because the perpetrators are believable and the victims want and need to believe that help is on the way. Small business is vulnerable because of the need for financing that is not available from banks. The perpetrators promise the money you need then stretch the time by making excuses. Somewhere through the process they receive payment from the victim. Advance Payment Schemes In over thirty years of observing financing which required payment of any fees in advance has convinced us that these types of financings are almost always a fraud. There is no reason payment cannot be made from the financing in a honest transaction. There are at least four reasons these schemes continue to work: There is no other source of financing. You are almost desperate. You want to believe. You need to believe. There is someone in the chain of finders who you know. That person is convinced the person at the top of the chain will perform. There is something exotic about the financing making it hard to debunk. For example, the mythical bank in Europe is wiring funds from Amsterdam, based on a letter of credit drawn on a Philippine bank. You are urged to believe the “expert money broker” rather than your “inexperienced” local attorney or accountant. There is usually one easy method of exposing the scheme: ask for references that have been financed in a similar manner. You will...
by Justin Tollefsen | Jul 24, 2002 | Administrative US, Federal Law, Federal Trade Commission
by Bob Lipson State and federal statutes prohibit unfair and deceptive business acts and practices.1 Washington’s Consumer Protection Act, R.C.W. 19.86 et seq., passed in 1961, can be enforced either by the attorney general acting on behalf of all state consumers, or by private counsel acting on behalf of individual or class clients.2 The Federal Trade Commission Act, 15 U.S.C.§ 41-58, passed in 1914, is enforced exclusively by the Federal Trade Commission (FTC).3 While unfair behavior and deceptive behavior are both prohibited, historically most consumer protection actions have focused on deception.4 Few unfairness cases are brought. Although most complaints allege both unfair and deceptive business practices, despite this form of pleading, most cases are usually litigated as deception cases. What deception means is firmly rooted in case law. Judges, juries and lawyers have little trouble understanding and applying it. In contrast, the meaning of unfairness is less certain, although it is not so uncertain as to be unconstitutional.5 The purpose of this article is to explore what unfairness means in the context of consumer protection cases. The article will look at historical development of the concept at the FTC, examine types of unfairness cases brought by the FTC over the years, review significant state and federal cases, and reflect on how related concepts might inform our understanding. The FTC’s First 50 Years: 1914-1964 Congress passed the Federal Trade Commission Act in 1914. The act’s original language outlawed “unfair methods of competition.” Passed primarily due to Congress’s dissatisfaction with judicial interpretation of the anti-trust provisions in the Sherman Act, which Congress thought the courts were interpreting too restrictively, Congress wanted...
