|
•Advertising Disclosures
•Auctions
•Car Ads
•Car Loans
•Children's Ads
•Comparative Ads
•Consumer Lease
•Cotton
•Dairy
•Deceptive Pricing
•Diamonds
•Diet Programs
•Diet Supplements
•Down
•E-Mail Ads
•Endorsements
•Environment/Guide
•Environment/Mail
•Eye Care
•Eye Surgery
•Food Ads
•Fur
•Gems
•Health Claims
•Hearing Aids
•Home Financing
•Indoor Tanning
•Internet Ads
•Internet Mktng.
•Infertility Svcs.
•Jewelry
•Made in USA #1
•Made in USA #2
•Made in USA #3
•Made in USA #4
•Milk
•MLM #1
•MLM #2
•Pearls
•Precious Metals
•Recycling
•Retail Electricity
•Spam
•Testimonials
•Timeshare Tips
•Unfairness
•Use of Word "Free"
•Vacation Plans
•Varicose Veins
•Wool
•Yellow Pages
Our Related Websites
Advertising Compliance Service
Advertising Substantiation
Ad Substantiation
Green Advertising Law
Political Advertising Law
|
FTC CHARGES COMPANY OPERATING A WORK-AT-HOME BUSINESS OPPORTUNITY WITH ENGAGING IN FRAUDULENT ACTIVITIES
A company that advertised for home workers to help assemble "Native American" or "hand-crafted bracelets" has been shut down temporarily by a federal district court as a result of charges by FTC that the company misled consumers about their prospects for profits in making the jewelry. FTC alleged that National Crafters Corp. and its owner, Thomas F. Diaz, Jr., engaged in deceptive practices by falsely advertising that the assembly work was easy and required no prior experience, and that prospective assemblers could reasonably expect to earn $360 to $720 or more per week. FTC also alleged that defendants falsely advertised that they would provide all of the supplies the prospective assemblers would need to make the bracelets.
FTC asked the court to freeze the defendants' assets for possible
consumer redress and to issue a permanent injunction against them to
halt the allegedly deceptive practices.
In its complaint, FTC alleged that National Crafters directly
solicited consumers nationwide, sending consumers a letter, claiming
to be looking for bracelet assemblers to supplement the company's
workforce during its peak season. In the letter, the defendants
represented that the prospective assemblers could "easily" or
"potentially earn $360 weekly up to $720 or more per week." The
defendants also said that they would provide the home assemblers with
the necessary tools and materials to make the bracelets. To become an
assembler, however, the consumer was required to pay approximately
$44.00 as a "reimbursable" deposit for the materials and
instructions.
In fact, FTC said, few, if any, of the work-at-home assemblers ever
realized the earnings promised. FTC also alleged that defendants
often provided materials that were inadequate in quality and
quantity, which prohibited the assemblers from making commercially
salable bracelets in accordance with the defendants' instructions and
specifications. On numerous occasions, according to the complaint,
the defendants rejected the bracelets sent to them by the
work-at-home assemblers, stating that the bracelets didn't meet
defendants' specifications, and then refused to pay for the work
completed or to issue a refund for the materials deposit.
Specifically, the complaint alleges that National Crafters violated
the FTC Act by misrepresenting:
the amount of money a person can reasonably expect to earn from the
bracelet-making opportunity; and
that prospective work-at-home assemblers will receive adequate
materials and instructions to be able to construct commercially
salable bracelets.
The complaint was filed in the U.S. District Court, Southern District
of Florida, Miami Division, on November 27, 2001 under seal. The seal
was lifted on December 4, 2001.
NOTE: The Commission authorizes the filing of a complaint when it has
"reason to believe" that the law has been or is being violated, and
it appears to the Commission that a proceeding is in the public
interest. The complaint is not a finding or ruling that the defendant
actually has violated the law. The case will be decided by the court.
(National Crafters Corp., FTC File No. 002-3317, Civil Action No:
01-4826-CIV-Graham-Turnoff, December 5, 2001.)
FTC: CANDY VENDING MACHINE FRANCHISORS MADE FALSE AD CLAIMS
A company that sold peppermint patty vending machines nationwide
settled FTC charges that it deceived consumers by telling them they
could expect a 750% yearly return on their initial investment.
According to FTC, Hi Tech Mint Systems, Inc., and its principals,
Larry Lind and Ron DePung, made many false claims in their ads, sales
pitches and promotional materials to induce consumers to invest
between $3,000 and $14,999 for their candy vending machine business
opportunities. FTC charged that defendants violated provisions of
FTC's Franchise Rule, a pre-purchase disclosure rule intended to give
potential buyers key information about a business opportunity,
including the legal and financial history of the seller and its
principal officers. As part of the settlement, individual defendant
Larry Lind would have to post a $250,000 performance bond before
engaging in the selling of any franchise or other business venture.
Also, the defendants would be barred from violating the Franchise
Rule and from making false and misleading representations in
connection with the sale of business opportunities. They also would
have to pay some $233,000 for consumer redress.
The proposed settlement, which requires court approval, also contains
an "avalanche clause" that would require them to pay a $2 million
suspended judgment if the court finds that they made
misrepresentations or omissions on their financial statements
submitted to FTC.
The Commission vote to authorize staff to file the stipulated final
judgment and order for permanent injunction was 5-0. It was filed in
the U.S. District Court, Southern District of New York, in Manhattan,
on December 6, 2001.
NOTE: This stipulated final judgment and order for permanent
injunction is for settlement purposes only and does not constitute an
admission by the defendants of a law violation. Stipulated final
judgments have the force of law when signed by the judge.
(Hi Tech Mint Systems, Inc., FTC Matter No. X980075, Civil Action No.
98 Civ. 5881 (JES), December 10, 2001.)
FTC SETTLEMENTS HALT ALLEGED ADVANCED FEE CREDIT CARD SCAM
A husband and wife agreed to settle FTC charges that they deceived customers by
promising, for a fee, guaranteed approval of major credit cards
regardless of credit history. Philip and Allyson Pestrichello, Credit
Services of America, Inc. (CSA), and First Credit Alliance (FCA)
promised consumers who responded to their ads that they were likely,
for advance fees typically ranging from $45 to $105, to receive a
MasterCard or Visa regardless of past credit history. Defendants also
advertised that if consumers didn't get the promised credit card,
they'd get a refund. In fact, FTC alleged, consumers received neither
credit cards nor refunds as promised.
Under two separate settlements, defendants are barred from
misrepresenting, among other things, that consumers who paid advance
fees were highly likely to obtain unsecured Visa or MasterCard credit
cards without credit history review. Also, the FCA Order permanently
bans Philip Pestrichello from any involvement in credit-related goods
or services. The A. Pestrichello Order requires Allyson Pestrichello
to pay approximately $81,000 in consumer redress.
FTC sued defendants as part of "Operation Advance Fee Loan 2000," an
aggressive law enforcement sweep targeting corporations and
individuals that falsely promised consumers loans and credit cards
for an advance fee.
FTC's vote to authorize staff to file the two stipulated final
judgments and orders was 5-0. They were filed in the U.S. District
Court for the District of Connecticut, in Hartford, on December 3,
2001 and approved by the court on December 5, 2001.
NOTE: These stipulated final judgments and orders are for settlement
purposes only and do not constitute an admission by the defendants of
a law violation. Stipulated final judgments have the force of law
when signed by the judge.
(Credit Services of America, Inc., and First Credit Alliance,, FTC
Matter No. 000077, Civil Action No. CV:3:00CV1049 (CFD), December 12,
2001.)
FTC REPORT HIGHLIGHTS BATTLE TO DETECT AND PROSECUTE VIOLATORS OF
FTC-OBTAINED COURT ORDERS
An FTC law enforcement initiative launched five years ago to detect and prosecute violators of FTC-obtained
court orders has resulted in 27 civil and/or criminal contempt
prosecutions. As a result of these prosecutions, 12 defendants have
been convicted, serving a combined 28 years of incarceration or home
detention, and almost $4 million in penalties, fines and redress have
been ordered. On January 8, 2002, a report was released highlighting
the first five years of the FTC initiative called "Project Scofflaw."
That report describes these and other results. The report also
discusses Project Scofflaw's origins, model order language that helps
FTC monitor order compliance, and the ongoing cooperation and
coordination between FTC and the Department of Justice, which brings
criminal contempt matters on the Commission's behalf.
According to Howard Beales, Director of FTC's Bureau of Consumer
Protection,
"Project Scofflaw signals to would-be scofflaws that they risk
incarceration if they violate FTC-obtained court orders. When we
obtain an order, we expect defendants to comply and conform their
behavior to the law. Those that don't can expect to hear from us."
FTC's vote authorizing staff to issue the Project Scofflaw Report was
5-0.
(Project Scofflaw Report, FTC Matter No. P964910, January 8, 2002.)
FTC CHAIRMAN ESTABLISHES MILES W. KIRKPATRICK AWARD
On December 11, 2001, FTC Chairman Timothy J. Muris established the Miles W.
Kirkpatrick Award for Lifetime FTC Achievement. Basil J. Mezines, a
partner in the law firm of Stein, Mitchell & Mezines, whose service
to FTC and on behalf of the public interest was honored as the first
winner of this award.
"The creation of this award honors two of the individuals most
intimately involved in the evolution of the FTC we know today, the
nation's premiere agency for protecting consumers," Chairman Muris
said. "Both Miles Kirkpatrick and Basil Mezines devoted their lives
to being steadfast FTC defenders and advocates. While with the FTC,
they both worked tirelessly to achieve the reform and revitalization
of the Commission, and I am proud to have the opportunity to
memorialize Miles and honor Basil with this award."
Having spent a total of 23 years with FTC, as a trial attorney,
director of the Bureau of Competition, and Executive Director,
Mezines retired from FTC in 1973 to become a partner in the law firm
of Stein, Mitchell and Mezines. From his position in private
practice, he continued to be a public supporter of FTC. Mezines is a
specialist in antitrust and trade regulation and practices before
administrative agencies and the courts.
(FTC Release, December 11, 2001.)
|
Main Archived News Index:
1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
2002
Archived 2001 News:
January |
February |
March |
April |
May |
June |
July |
August |
September |
October |
November |
December
Advertising Compliance Service...
|
