Tag Archives: FTC

Why The FTC Won't Take Bill Ackman's Advice To Prosecute Herbalife (Even Though It Should)

By Matt Stroud, Contributor

The following is a diversion from typical “Prison Complex” posts, but it certainly falls within Forbes’ wheelhouse. Plus, it’s fascinating. Don’t fret: we’ll be back to dissecting U.S. prison spending soon. — Matt Stroud ——— In case you haven’t been following along, Wall Street hedge fund manager Bill Ackman has been saying very publicly since December that Herbalife, the multi-billion dollar nutritional supplement multi-level marketing company (MLM), is a sham. Ackman is so convinced of Herbalife’s fraudulence that he’s placed a billion-dollar Wall Street bet that the company’s dishonest business practices will eventually kill it. To bolster his public outrage, Ackman has repeatedly invited the U.S. Federal Trade Commission to conduct an investigation into the company’s inner workings. He’s not alone on that front. California congresswoman Linda Sanchez made a similar call recently. New York City Councilwoman Julissa Ferreras did the same. So did the National Consumers League in March. And while FTC representatives have said they find the company’s business practices “disturbing” — and rumors continue to swirl about an Herbalife probe — an official investigation has yet to be launched. Ackman, Rep. Sanchez, Ferreras, and others hope that’ll change. But if the U.S.’s historical approach to MLMs is any indication, they may have to wait a long time. The Amway Decision The landmark MLM case in the U.S. occurred way back in 1975. At that time, the FTC went after Amway for many of the same reasons Ackman and others want the FTC to go after Herbalife today. Amway is a Michigan-based multi-level marketing company (MLM). It’s international — one of the first MLMs to become a household name in the US and one of the first to expand successfully abroad. It’s got a vast product line (including home and personal care products, electronics, jewelry, even insurance and dietary supplements) but its business model is indistinguishable from MLMs all over the world: its non-employee distributors are paid small commissions to sell products and recruit as many new distributors as possible. While the eventual ruling in the 1979 Amway case didn’t make Amway look very good, it also shielded other MLMs from prosecution. As the FTC saw it, Amway had two main problems. First, its distributors weren’t really selling anything. Amway’s distributors would receive a percentage of what they sold, a bonus percentage for what their recruits sold, another bonus percentage of what their recruits’ recruits sold, and so on. But they could only maximize and maintain those percentages by remaining “active” — by selling a certain amount of product every month. So they took the easy way out: instead of selling products, distributors would just buy the minimum number of products every month and stash it somewhere. Second, Amway made unprovable claims about distributors’ income. The FTC decision — a 121-page document that describes years of arguments and questions about Amway’s sales practices — walks readers through a litany of Amway-approved pitch lines: “What are some of your dreams?” “Do you want a new car, a new house, college …read more

Source: FULL ARTICLE at Forbes Latest

FTC Cracks Down on Cell Phone Bill 'Cramming' Scam

By Matt Brownell

Filed under: , ,

Alamy

Cell phone bills are steep enough as it is, but many consumers have had to deal with bills further inflated by scammers who use spam text messages to cram fraudulent charges onto them. Fortunately, the government is finally doing something about those spamming, cramming scammers.

The Federal Trade Commission said Wednesday that it was filing a lawsuit against Wise Media LLC to halt what it says are deceptive business practices. According to the complaint, Wise Media signed consumers up for subscription services costing $9.99 a month, then sent them horoscopes, love tips and other unsolicited content. These consumers were billed regardless of whether they responded to the texts.

As the FTC notes in a statement, many people don’t bother to check the details of their cell phone bills, so the extra charges often went unnoticed. And those customers who did notice the charges weren’t always able to dispute them.

The agency is seeking to freeze the company’s assets, and has requested that the court order it halt its “deceptive and unfair practices,” and require it to issue refunds to the scam’s victims.

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While this marks the first time that the FTC has gone after mobile scammers, the agency has tangled with crammers before: In January, it went after eVoice, which it said was sneaking monthly charges of up to $25 onto consumers’ landline phone bills.

Fighting these scams can be difficult: As the FTC notes, third-party businesses are able to add charges to your cell phone bill for what they say are legitimate subscription services. And as this lawsuit makes clear, simply responding to a text saying that you didn’t subscribe isn’t enough to make sure you aren’t charged. The agency recommends that you ask your carrier to block any number that tries to charge you. And if you find a mystery charge on your bill, be sure to report it to the FTC and follow your carrier’s instructions for disputing the charge.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

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From: http://www.dailyfinance.com/on/ftc-cracks-down-on-cell-phone-bill-cramming-scam/

Gift card SMS spam drops after FTC action, Cloudmark finds

The volume of mobile spam messages touting free gift cards sharply fell after the U.S. Federal Trade Commission (FTC) filed complaints in early March against eight companies, according to antispam vendor Cloudmark.

The fraudulent messages told users they could get a free gift card for retailers such as Best Buy, Walmart and Target in exchange for people’s personal information. The messages are illegal under U.S. law.

The FTC filed eight complaints in various U.S. courts against 29 defendants, accusing them of sending upwards of 180 million messages that confused consumers and often asked them to pay in order to receive the gift cards.

Gift card spam comprised more than 50 percent of all mobile spam messages in the U.S. around Feb. 18, according to Cloudmark’s report, which covers the first three months of this year. It sharply dropped to less than 10 percent following the FTC‘s March 7 announcement.

To read this article in full or to leave a comment, please click here

From: http://www.pcworld.com/article/2035656/gift-card-sms-spam-drops-after-ftc-action-cloudmark-finds.html#tk.rss_all

ACLU complains to FTC that mobile carriers leave Android phones unsecured

Smartphones with custom versions of Android offered by large mobile operators in the U.S. are not getting security updates as regularly as phones from Google, or smartphones from other vendors like Microsoft, according to a complaint by the American Civil Liberties Union to the Federal Trade Commission.

“Android smartphones that do not receive regular, prompt security updates are defective and unreasonably dangerous,” ACLU said in the complaint on Tuesday.

The complaint against AT&T, Verizon Wireless, Sprint Nextel and T-Mobile USA states that “all of the major wireless carriers have failed to deliver regular, prompt updates to Android phones which they have sold to their customers,” citing results from a survey in December last year by technology news site Ars Technica.

The sale of mobile computing devices such as smartphones and the software updates to the devices are not part of common carrier activities, and are hence subject to FTC authority, according to the complaint, a copy of which is on the ACLU website.

To read this article in full or to leave a comment, please click here

From: http://www.pcworld.com/article/2035386/aclu-complains-to-ftc-that-mobile-carriers-leave-android-phones-unsecured.html#tk.rss_all

Obama Signs Law Limiting Disclosure Requirements

By Breaking News

Chris Matthews SC Let the Left keep talking...

WASHINGTON — President Barack Obama has signed into law a bill that repeals some financial disclosure requirements for higher paid federal officials.

The legislation, passed by Congress last week, addressed fears that publishing such personal holdings could lead to identity theft and create a national security risk.

Open government groups called the legislation an overreaction.

The president, vice president, members of Congress and numerous presidential appointees still must disclose their information.

The provision was part of the Stop Trading on Congressional Knowledge act, aimed at curbing perception that lawmakers were trading on insider information.

Read More at OfficialWire .

From: http://www.westernjournalism.com/obama-signs-law-limiting-disclosure-requirements/

How to Take Down the Leading Mobile OS: Complain

By Chris Neiger, The Motley Fool

Filed under:

It may not prove to be the most effective strategy, but some the world’s leading technology companies have filed a complaint to the EU Commission that Google‘s Android operating system is giving the company a monopoly on mobile, search advertising, and consumer data. 

Microsoft , Nokia , Oracle, and TripAdvisor are teaming up against Google, saying that the company is using Android as a “Trojan horse” to monopolize the mobile marketplace. When it comes to Microsoft and Nokia, it’s pretty clear why the two aren’t exactly happy with Google’s OS dominance. 

Why Nokia’s upset
It’s not difficult to figure out why Nokia might not be too happy with Android’s current position in the mobile market. Nokia has bet the farm on the Windows Phone platform and it’s currently battling it out with BlackBerry for more market share in both the U.S. and Europe. You can see below how far the Windows Phone platform has to go in Europe:

Source: TechCrunch. 

The more market share that the Windows Phone platform takes up, the more Nokia benefits. The EU Commission hasn’t even agreed to hear the official compliant by the companies, but in theory it could hear the complaint and come down on Google, and break up some of Android’s monopoly. That’d be great news for Nokia, but it’s also an unlikely scenario.

What Microsoft has to gain
Obviously Microsoft wants to see its mobile platform compete against Android and gain more ground, but that’s not all it’s concerned with. The big problem Microsoft has with the don’t-be-evil company is that Google uses its Android platform to tap mobile users for advertisements. Google is expected to snag $3.36 billion in mobile search advertising in the U.S. this year alone. Microsoft is trying to gain more mobile search advertising through Bing and it’s been very public about its thoughts on Google’s search advertising practices.

If the complaint can prove that Google has a monopoly on mobile advertising, Microsoft stands to benefit by being the next best option for mobile users. Part of Microsoft’s strategy is to topple Google’s advertising tower through lawsuits and complaints. The EU Commission is currently looking into another complaint about Google’s advertising practices, and this new complaint is just another attempt to unseat the advertising king. 

Easier said that done
It’s not likely this complaint, even if it’s heard by the EU Commission, will somehow flip Android’s OS domination in Europe. But one thing that lawmakers seem keen on listening to is consumer data protection. The latest complaint says that back in April six European data protection agencies began investigating if Google broke EU laws when it consolidated its Google account online policies. It also says that Google had to pay the FTC back in August to settle charges that it misled Safari browser users.

If Google’s already painted in a bad light for how it handles user data, the Commission may be more apt to hear the complaint and do something about it —

Source: FULL ARTICLE at DailyFinance

Home Depot Dreams California Lawsuits Go Away

By Rich Duprey, The Motley Fool

Filed under:

If someone is going to claim their products are “free of” a certain chemical, then the Federal Trade Commission requires it actually not have the chemical in the product or at best have just trace amounts of it. It’s a reasonable assumption that goes beyond the boastful claims marketers are allowed to make, such as that their products are “best” or “most loved.”

But if you’re a store owner that simply sells products that claim to be free of those chemicals, how far are you required to go to prove the manufacturer’s claims are true? If you’re in California, apparently pretty far.

The desolation of smog
In yet another instance of why it’s difficult to do business in the state, do-it-yourself superstore Home Depot just reached an $8 million settlement in a lawsuit with California’s South Coast Air Quality Management District, admitting that it knowingly sold paint, wood lacquers, and other coatings containing excessive levels of smog-forming chemicals.

The SCAQMD says paints and coatings are a major source of air pollution, equal to an amount greater than that emitted by 1.5 million cars. Volatile organic compounds, or VOCs, combine in the atmosphere with nitrogen oxides to form ground-level ozone, also known as smog, which can cause a wide range of illnesses.

Something’s in the air
According to its lawsuit, the agency checked the claims made on paints Home Depot sold by reading the labels and then tested the contents. When the retailer was notified of the violations, the stores continued selling the paints and even discounted the cans for a quick sale. Home Depot says it fully cooperated after being advised of the violations.

Whereas similar VOC-related lawsuits in southern California have been also brought against Lowe’s and Wal-Mart totaling more than $3 million, the SCAQMD sought more than $30 million against Home Depot. In the annual report filed just ahead of the holiday weekend, Home Depot said a tentative settlement had been reached for $6.9 million plus $1.1 million in fees and costs.

It’s not the DIY chain’s first run-in with the law in California, though. It paid $10 million to the city of Los Angeles in 2007 for improper handling of hazardous waste.

Tainted paint tint
The FTC itself has pursued VOC complaints against paint manufacturers like Sherwin-Williams and PPG Industries . In those cases, the paint makers’ base paints were VOC-free as claimed, but once retailers tinted the base, it no longer met the definition. Both manufacturers settled with the FTC and were allowed to state that it was their base paints that were VOC-free.

Yet for both Home Depot and the paint makers, the defendants were caught in a hard spot not necessarily of their making. Sherwin-Williams and PPG were correct that their paints were VOC-free, but retailer actions put them out of compliance. In Home Depot‘s case, the retailer was being held liable for trusting the claims of the product makers.

Of course, it could be argued that a base paint isn’t meant to …read more
Source: FULL ARTICLE at DailyFinance

The Top 10 Consumer Complaints of 2012

By Selena Maranjian

The top complaints in America

Filed under: , , , , ,

Alamy / AOL

If you’re fed up with hearing people complain, imagine being the Consumer Sentinel Network. This online database for law enforcement compiled and categorized more than 2 million complaints in 2012 — instances of fraud, scams, schemes, and violations consumers reported to everyone from the FTC to the Better Business Bureau to the U.S. Postal Inspection Service.

So which industries or groups of people cause us the most grief? Here are the CSN‘s findings for the top 10 complaint categories and the percentage of the total complaints that each represents:

1. Identity theft (18 percent)
2. Debt collection (10 percent)
3. Banks and lenders (6 percent)
4. Shop-at-home and catalog sales (6 percent)
5. Prizes, sweepstakes, and lotteries (5 percent)
6. Impostor scams (4 percent)
7. Internet services (4 percent)
8. Auto-related complaints (4 percent)
9. Telephone and mobile services (4 percent)
10. Credit cards (3 percent)

Stolen identities
It makes sense that identity theft tops the list. Detecting, uncovering and correcting the fallout from identity theft is a long, labyrinthine process. Sure, it’s terrible if you lose, say, $500 or $1,000. But with identity theft, some people have not only lost a lot of money but have spent years trying to undo the damage done, encountering many frustrations along the way.

Most of us know to shred documents containing personal information before discarding them, and to be careful to whom we divulge personal information. It can be easy to imagine that identity theft won’t happen to us. But according to the CSN, nearly one-fifth of all complaints — a whopping 369,132 — were about identity theft.

Military variations
The distribution of complaints was different among military personnel than other Americans. For example, while their top two complaints were the same as the overall results, their No. 6 complaint category was mortgage foreclosure relief and debt management, while it was just 15th for the overall nation.

Foreclosures and debt problems have been major issues for many service members. That’s because they often receive orders to pick up and move to a new location and assignment, but with our economy struggling and home prices depressed, they can end up owing more than their homes are worth. Worse still, hundreds have had their homes illegally foreclosed upon by big banks — JPMorgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC), and Citigroup (C) — as has been reported by The New York Times. Military members should know that settlements have been struck with big banks to address these and other wrongs, and that entities such as the Consumer Financial Protection Bureau are looking out for their interests.

Fraud
This wonderful digital age has ushered in new ways for scammers to scam us. The most common method …read more
Source: FULL ARTICLE at DailyFinance

That Faux Fur Was Real Fur: 3 Retailers Busted Over Mislabeling

By Matt Brownell

Neiman Marcus faux fur is real

Filed under: , , , ,

Federal Trade CommissionA Revolve Clothing ad on the Web for a Marc Jacobs coat, which falsely said its hood was made of faux fur.

Businesses get in trouble all the time for trying to pass off counterfeit items as the real thing. But in a strange reversal, a few retailers have been busted for selling real fur, but claiming that it was fake.

The Federal Trade Commission announced Tuesday that three companies — Neiman Marcus, DrJays.com and Revolve Clothing — had agreed to settle charges that they misrepresented real fur products as faux fur. Several products were involved in the fur scandal, including Burberry jackets, Eryn Brinie vests, and some boots and shoes.

By misrepresenting real fur as faux fur, the companies were in violation of the Fur Act. And while it might seem unusual to bust a company for passing off an authentic product as a phoney one, it’s not hard to understand why some people might be upset by the deception: Many shoppers deliberately steer clear of real fur out of concern for animal rights, and we imagine a few customers might be horrified to learn that they’d purchased a genuine rabbit pelt.

“By not disclosing the products contained real fur, that means the companies also didn’t honor their obligation under the law to truthfully tell people the kind of fur and its country of origin,” wrote FTC attorney Lesley Fair in a blog post about the settlement.

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In a few cases, the companies involved in the settlement simply failed to indicate the animal name or country of origin for the product. Neiman Marcus, for instance, said that a rabbit fur boot was actually made with mink fur, which is bad news for any rabbit lovers who bought the boots thinking they were only abetting the slaughter of minks.

The retailers won’t be fined for their misrepresentations. But stiffer penalties could be in the offing if any of the three knowingly violate the Fur Act again in the next 20 years.

Interestingly, this is the second time this year that a company got in trouble for selling a fake-ish product that turned out to be a bit too authentic. Back in January, a New Jersey-based dietary supplement company that sold “all-natural herbal extract” pills promising “enhanced erections” and other sexual benefits was forced to issue a recall after it was discovered that they contained actual erectile-dysfunction drugs.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

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Source: FULL ARTICLE at DailyFinance

Less Than One Quarter of Taxpayers Very Concerned about Identity Theft when Filing Returns

By Business Wirevia The Motley Fool

Filed under:

Less Than One Quarter of Taxpayers Very Concerned about Identity Theft when Filing Returns


LifeLock Study Shows Consumers Need Education on Identity Theft

TEMPE, Ariz.–(BUSINESS WIRE)– Despite recent reports showing increases in identity theft, consumers’ knowledge on identity theft is not keeping pace with the crime. According to the new 2013 LifeLock Tax Fraud Survey, conducted online by Harris Interactive on behalf of LifeLock in February, among 2,090 U.S. adults age 18 and older, less than one quarter (24 percent) of taxpayers selected the top 2 points of concern on a 5 point scale about identity theft when filing their returns. Additionally, 70 percent of Americans think it is possible for a fraudster to use their name and Social Security Number (SSN) to file a return before they do, blocking the actual taxpayer’s refund from the IRS. Yet despite this concern, 38% of those who have previous years’ returns saved on their computer do not have password protection for these files.

In February 2013 the Federal Trade Commission (FTC) released their annual “Consumer Sentinel Network Data Book” that looked at consumer complaints from January 1 through December 21, 2012. Identity theft was the number one complaint category in the Consumer Sentinel Network, and of those more than 369,000 complaints, Government Documents and Benefits fraud accounted for 46% of all complaints. As noted by the FTC, identity theft related to Government Documents and Benefits includes Tax or Wage Related Fraud, accounting for 43% of the complaints.

“As a company that sees identity theft threats 24/7, we are concerned about the large disconnect between this growing threat and consumer education. This is really playing into the hands of identity thieves,” said LifeLock President Hilary Schneider.

The survey examined Americans’ identity fraud concerns and tax return filing behavior for tax season.

The 2013 LifeLock Tax Fraud Survey highlights include:

  • No Password = No Protection – Nearly three in ten (29 percent) Americans keep copies of previous years’ tax returns on their computer, but 38 percent of this group do not protect their returns with a password. This makes these returns more vulnerable to criminals through peer-to-peer file sharing programs or lost devices.
  • …read more
    Source: FULL ARTICLE at DailyFinance

Anheuser-Busch InBev Pronounces Progress in DOJ Suit

By Rich Duprey, The Motley Fool

Filed under:

Citing significant progress made in joint talks over its proposed acquisition of Grupo Modelo, brewing giant Anheuser-Busch InBev said all the parties, including the Justice Department, jointly asked the court to extend a stay due to expire March 19, as they will probably complete their negotiations.

Anheuser-Busch, which is trying to acquire the remaining 50% stake in the Mexican brewer it doesn’t already own for $20.1 billion, originally agreed to sell Modelo’s existing 50% interest in Crown Imports to co-owner Constellation Brands , but the FTC objected because of antitrust and anti-competitiveness concerns.

AB InBev subsequently modified the proposal and agreed to sell Compania Cervecera de CoahuilaGrupo Modelo‘s brewery in Piedras Negras, Mexico, and grant perpetual brand licenses to Constellation for $2.9 billion. Modelo’s U.S. business would be completely divested to ensure independence of supply for Crown Imports. It would also provide Constellation with complete control of the production of the Modelo brands for marketing and distribution in the United States.

ABGrupo Modelo, Constellation, Crown, and Justice have been in discussions to resolve the antitrust concerns. They requested that the court extend the stay until April 9. If the parties reach an agreement, they will file a proposed consent judgment and related documentation with the court, though Anheuser-Busch InBev offers a reminder that it cannot guarantee the discussions will be successful. 

The article Anheuser-Busch InBev Pronounces Progress in DOJ Suit originally appeared on Fool.com.

Fool contributor Rich Duprey and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Ackman Fires Another Round at Herbalife

By 24/7 Wall St.

Herbalife Logo

Filed under:

William Ackman and Pershing Square Capital Management have released another presentation backing Ackman’s claim that Herbalife Ltd. (NYSE: HLF) is indeed a pyramid scheme. This time Ackman compares Herbalife to Fortune Hi-Tech Marketing, a multilevel marketing company that has been charged by the Federal Trade Commission (FTC) with operating an illegal pyramid scheme and falsifying earnings.

The latest presentation from Ackman offers a side-by-side comparison between Fortune and Herbalife, which lifts bits of reports and findings about Fortune and attempts to demonstrate how these accusations apply to Herbalife. The presentation does not include a summary or narrative, and it is a little difficult to follow. Ackman includes documentation that he believes supports his view.

Yesterday a consumer group, the National Consumers League (NCL), sent a letter to the FTC requesting that the agency initiate an investigation into Herbalife, saying that Ackman’s claims suggest that “Herbalife’s business practices may run afoul of many of the ‘red flags’ of pyramid scheme activity in NCL‘s guide.”

A third intervention came in the form of a lawsuit filed by a New York attorney, who wants the federal court to prevent Bank of America Corp. (NYSE: BAC), J.P. Morgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) from providing $1.2 billion in financing for Herbalife. In a separate lawsuit, the attorney asks the court to force activist investor Carl Icahn to pay damages and divest his stake in Herbalife on the grounds that Icahn is aiding the alleged fraud. The attorney is a shareholder in the banks and claims they are breaching their fiduciary responsibility to him by not withdrawing the financing to Herbalife. The attorney also holds a short position in Herbalife.

More heat, but more light? Maybe, but the continuing pressure on the FTC works to Ackman’s advantage. If the FTC agrees to investigate Herbalife, the shorts are in line for a nice payday.

Ackman’s new presentation on Herbalife is available here.

Herbalife’s shares are trading down about 1.5% this morning, at $38.33 in a 52-week range of $24.24 to $73.00.

Filed under: 24/7 Wall St. Wire, Activist Investor, Food, Regulation Tagged: BAC, HLF, JPM, WFC

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…read more
Source: FULL ARTICLE at DailyFinance

Ackman's Firm Applauds Group's Call for Herbalife Probe

By Eric Volkman, The Motley Fool

Filed under:

Activist investor Bill Ackman’s Pershing Square Capital says it is pleased by a consumer advocacy group’s request for an investigation into the business practices of Herbalife .

The group, the National Consumers League, on Tuesday said it had asked the Federal Trade Commission to launch a probe into allegations — made by Ackman and others — that Herbalife operates what is tantamount to a pyramid scheme. The National Consumers League describes itself on its website as a private, nonprofit advocacy group representing consumers on marketplace and workplace issues.

It said in its letter to the FTC that it had recently met separately with representatives of Pershing Square, the Direct Selling Association, and Herbalife. “We believe that only the Federal Trade Commission has the resources and expertise to investigate …” the group wrote.

In its statement, Pershing Square said that “We are pleased that the National Consumers League, the nation’s oldest and one of the most respected consumer protection organizations, has requested that the FTC launch an investigation of Herbalife. We believe that a thorough investigation of Herbalife will reveal it to be a pyramid scheme that has harmed millions of consumers in more than 80 countries around the world.”

link

The article Ackman’s Firm Applauds Group’s Call for Herbalife Probe originally appeared on Fool.com.

Fool contributor Eric Volkman has no position in Herbalife. The Motley Fool has the following options: Long Jan 2014 $50 Calls on Herbalife Ltd.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Consumer Group Boosts Ackman's Bet Against Herbalife

By 24/7 Wall St.

Herbalife Logo

Filed under:

In a press release this morning, the National Consumers League (NCL) called on the Federal Trade Commission (FTC) to “investigate recent allegations that the multi-level marketing company Herbalife [Ltd. (NYSE: HLF)] is, in actuality, a sophisticated pyramid scheme.” The NCL is seeking an examination both of the charges leveled against Herbalife by Pershing Square Capital Management and its chief, William Ackman, and Herbalife’s response to those charges.

In its letter to the FTC, the NCL notes:

Pershing Square‘s research suggests that Herbalife’s business practices may run afoul of many of the “red flags” of pyramid scheme activity in NCL‘s guide.

For its part, Herbalife responded to the NCL‘s letter in a statement to The Wall Street Journal:

We regret that the National Consumers League has permitted itself to be the mechanism by which Pershing Square continues its attack on Herbalife. If anything, it is Pershing Square that should be investigated by appropriate authorities. Its actions are motivated by a reckless $1 billion bet against the company based on knowingly false statements about Herbalife.

So far Carl Icahn has not weighed in, but don’t be surprised if the activist investor raises his stake in Herbalife again.

Ackman, as might have been expected, praised the NCL:

We are pleased that the National Consumers League, the nation’s oldest and one of the most respected consumer protection organizations, has requested that the FTC launch an investigation of Herbalife. We believe that a thorough investigation of Herbalife will reveal it to be a pyramid scheme that has harmed millions of consumers in more than 80 countries around the world.

We’ve said before that Ackman’s goal here has got to be to force the FTC to launch an investigation into Herbalife. If that happens, his short bet against the company will pay off. The outcome of such an investigation would hardly matter.

Shares of Herbalife are down about 2% at $39.60 in a 52-week range of $24.24 to $73.00.

The NCL letter is available here.

Filed under: 24/7 Wall St. Wire, Activist Investor, Food, Law, Regulation, Shareholder Issues Tagged: HLF

Read | Permalink | Email this | Linking Blogs | Comments

…read more
Source: FULL ARTICLE at DailyFinance

Intermec Receives Request for Additional Information from FTC Regarding Proposed Merger with Honeywe

By Business Wirevia The Motley Fool

Filed under:

Intermec Receives Request for Additional Information from FTC Regarding Proposed Merger with Honeywell

EVERETT, Wash.–(BUSINESS WIRE)– On March 11, 2013, Intermec, Inc. (NYSE: IN; “Intermec”) and Honeywell International Inc. (“Honeywell”) each received a request for additional information (the “Second Request“) from the U.S. Federal Trade Commission (“FTC“) in connection with Intermec’s previously announced proposed merger with Honeywell pursuant to the agreement and plan of merger, dated December 9, 2012, by and among Intermec, Honeywell, and Hawkeye Merger Sub Corp., a wholly owned subsidiary of Honeywell. The Second Request was issued pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”).

The effect of the Second Request is to extend the waiting period imposed by the HSR Act until 30 days after Intermec and Honeywell have substantially complied with the Second Request, unless that period is extended voluntarily by the parties or terminated sooner by the FTC.

Intermec intends to respond expeditiously to this request and to continue to work cooperatively with the FTC in connection with its review. Completion of the transaction remains subject to Intermec stockholder approval, regulatory approvals (including the expiration or termination of the waiting period under the HSR Act), and other customary closing conditions. Intermec continues to expect that the transaction will close by the end of the second quarter of 2013.

About Intermec

Intermec Inc. (NYS: IN) is the workflow performance company. We design the leading data capture and information management solutions at the interface between mobile workers, assets, and customers. For more information about Intermec, visit www.intermec.com (which website is not incorporated herein by reference).

Important Additional Information about the Merger Transaction

Intermec filed with the Securities and Exchange Commission (“SEC“) a definitive proxy statement in connection with the proposed merger transaction with Honeywell on February 14, 2013. This press release is not a substitute for the definitive proxy statement (including any supplements or amendments thereto) and other documents related to the merger transaction. The definitive proxy statement and any other documents that may be filed with the SEC related to the merger transaction or incorporated by reference into the definitive proxy statement contain important information about Intermec, Honeywell, the merger transaction and related matters. Investors and security holders are urged to carefully read the definitive proxy statement and any other documents …read more
Source: FULL ARTICLE at DailyFinance

Pokerstar's Bid to Buy Casino Could Signal Gambling Gold Rush

By ABC News

The Atlantic Club Casino and Hotel is seen Thursday, Feb. 14, 2013, in Atlantic City. (AP Photo/Mel Evans)

Filed under: , ,

The Atlantic Club Casino and Hotel is seen Thursday, Feb. 14, 2013, in Atlantic City. (Mel Evans, AP)

By COLLEEN CURRY

A move by the online gaming giant Pokerstars to buy an Atlantic City casino could signal a gold rush for the gambling industry, according to industry watchers.

Online companies are expected to be scrambling for land and casinos in states like Nevada, New Jersey, and Delaware, which recently passed laws allowing online gambling if it is affiliated with in-state casinos. Similar bills have also been introduced in Pennsylvania and Illinois.

Pokerstars, part of the online gambling corporation Rational Group, based in the U.K., struck a deal earlier this year to buy the Atlantic Club, an 800-room hotel and casino on the Atlantic City boardwalk, according to paperwork filed with the state’s division of gaming enforcement.

The move came after New Jersey Gov. Chris Christie signed a law Feb. 26 allowing online gambling for residents as long as the games were hosted by in-state casinos located in Atlantic City.

Sponsored Links

The company, which was previously indicted by the Department of Justice for offering online gambling to U.S. residents, wants to legally operate its website and the casino, according to its owners. They reportedly paid about $30 million for the casino.

“In a nutshell, the future of gaming will require a mix of online and offline expertise,” Eric Hollreiser, spokesman for Pokerstars, told ABCNews.com in an email. “We are the world’s largest online poker company and one of the largest producers of live poker tournaments in the world, which we produce in many of the world’s best known casinos.”

Hollreiser said that the proposed business model would help drive online gamers into casinos for live tournaments, and remind casino-goers to log on and game at home until their next visit.

“We drive traffic from our online tournaments to our major casino partners around the world. This drives a poker tourism business in cities such as London, Monte Carlo, Barcelona, (and) Rio,” he said. “The traffic runs both ways as we introduce new audiences to poker in these live tournaments.”

Precedent-Setting Decision

Pokerstars is awaiting approval from the Division of Gaming Enforcement and the state’s Casino Control Commission. If it goes through, it could represent the first time a gaming website has transformed into owning and operating a hotel and casino.

The development could send waves through the gaming industry.

“The casino-going population is older. You have this huge bubble of younger people who have never gone to a casino or intend to go to one, but spend half their waking life on smartphones or computers, playing games, social networking. So how does the gaming industry respond?” said Joe Brennan, director of the Interactive Media Entertainment and Gaming Association (iMega), who has studied the effects of disruption on the gaming industry.

Because states are requiring …read more
Source: FULL ARTICLE at DailyFinance

Scientific Games/WMS Merger Gets Antitrust Clearance

By Rich Duprey, The Motley Fool

Filed under:

The waiting period for Scientific Games acquisition of WMS Industries  under the Hart-Scott-Rodino Antitrust Improvements Act (HSR) was terminated early, the companies announced yesterday, allowing the transaction to move to the next phase. 

Scientific offered to buy WMS for $26 a share, or $1.5 billion, on Jan. 31. At the time, Scientific Games Chairman and CEO A. Lorne Weil said the purchase would be transformational for the lottery and gaming products and services company. “We expect to combine our game content, technology, operational capabilities, and respective geographic footprints to create an enterprise poised to capitalize on significant growth opportunities around the globe,” Weil was quoted as saying.

The HSR requires merging companies to file detailed reports with the FTC and the Justice Department to see whether the combination violates antitrust laws. There is a 30-day waiting period (15 days for all-cash transactions) before the merger can be completed. The companies can request the waiting period be terminated early, which will be granted if both antitrust agencies complete their reviews and determine no enforcement action is necessary.

The acquisition still requires approval of WMS shareholders and receipt of required gaming approvals.

link

The article Scientific Games/WMS Merger Gets Antitrust Clearance originally appeared on Fool.com.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Herbalife: Dog, or Just an Underdog?

By Rich Duprey, The Motley Fool

Filed under:

Short-sellers and hedge funds may be shadowy, but sometimes they’re the smartest guys in the room. They’ve done their homework, and they’re willing to bet their capital against the crowd — an investing strategy that can be as lucrative as it is contrarian.

On Motley Fool CAPS, the 180,000-member-driven investor community where informed opinion is translated into stock ratings of one to five stars, we also have investors who find the chinks in a company’s armor and correctly call its fall. We call them “Underdogs” if they’ve earned 100 or more CAPS points by correctly predicting that one or more stocks would underperform the market.

Today I’m looking at nutritional supplements maker Herbalife , which lost more than a third of its value after becoming the centerpiece of an argument between dueling hedge fund operators. Investors remain wary of its multi-level marketing structure, so there’s little doubt why the nutritionals seller carries the lowest one-star CAPS rating.

It’s been a bit of a wild ride, so if there are any who’ve scored big by correctly predicting which stocks will fail, it may be worth our while to check out those they think will ultimately succeed. And CAPS All-Star Valyooo is one who’s earned the underdog moniker and recently predicted that Herbalife would rout the shorts.

Herbalife snapshot

Market Cap

$4.3 billion

Revenues (TTM)

$4.1 billion

1-Year Stock Return

(35%)

Return on Investment

50.6%

Estimated 5-Year EPS Growth

14.8%

Dividend and Yield

$1.20/2.9%

Recent Price

$41.50

CAPS Rating (out of 5)

*

Source: FinViz.com.

Of course, not every short sale goes as planned, which makes shorting a risky proposition. Stock prices can be irrational longer than you have money to stay in the game. And you don’t want to end up with fleas by lying down with the dogs, so make sure you do your homework.

A scary opportunity
Not that there haven’t been doubts before about Herbalife and its MLM business model, but when David Einhorn of Greenlight Capital appeared on the supplement maker’s conference call early last year asking some tough questions about its operations, investors immediately suspected the worst and bolted for the exits. Einhorn never did take a position in Herbalife — short or long — and it seemed to be on its way to a comeback when Pershing Capital’s Bill Ackman made a very public splash of his very large short position, raising all the same fears and once again plunging the stock into chaos.

That itself turned into a bit of a melodrama when Daniel Loeb and Third Point Capital went very long on Herbalife, saying it was ludicrous to think the FTC would shut down the company. Then Ackman’s longtime arch-nemesis, Carl Icahn, came out and disparaged his rival’s position, with the two getting into a verbal sparring match on CNBC.

The MLM …read more
Source: FULL ARTICLE at DailyFinance