Summary of Enforcement Action Announcements for January 2003 - July 2003
During the first half of 2003, the Federal Trade Commission aggressively combated telemarketing fraud. The scope of the Commission's enforcement efforts is reflected in the following summaries of press releases that announced significant developments in federal district court cases filed by the FTC. These developments include: new actions filed by the Commission; amendments to prior complaints; and final resolutions of enforcement actions such as settlements, default and summary judgments, and redress distribution orders. Many of the complaints filed in these cases allege violations of the Telemarketing Sales Rule. All of the cases involve the use of the telephone to market goods or services. Links to the relevant press releases are included.
Federal Trade Commission v. 1st Beneficial Credit Services, et al.
The Federal Trade Commission authorized the filing of a second amended complaint, adding another defendant in the matter. The complaint alleges the defendants telemarketed nonexistent credit cards and concerns the debiting of consumers' checking accounts. The Commission initially filed this case as part of "Operation No-Credit," a coordinated crackdown on the telemarketing of nonexistent credit cards.
Federal Trade Commission v. Yad Abraham, et al.
The Federal Trade Commission authorized the filing of a complaint in this matter. The complaint alleges that the defendants conducted a nationwide scheme to sell worthless international driver's permits. This complaint was filed as part of "Operation License for Trouble." The FTC also announced the filing of an amended complaint. [TEXT 1] [TEXT 2]
Federal Trade Commission and State of Maryland v. Accent Marketing, Inc., et al.
The Federal Trade Commission announced the settlement of a case charging that the defendants deceptively sold bulk-candy vending machine business opportunities and a business opportunity involving a coin-operated game. Among other things, the settlement bans the defendants from advertising, promoting, or selling any business ventures, and prohibits them from owning or working for any entity that engages in those activities. The case was filed by the Federal Trade Commission and the State of Maryland as part of "Project Busted Opportunity."
Federal Trade Commission v. Affordable Media, LLC, et al.
The Federal Trade Commission established a redress fund for eligible consumers who purchased blocks of "Media Units" - blocks of television commercials that promoted various products - from Affordable Media. The fund stems from a complaint filed in 1998 charging the defendants with making false representations concerning likely investment returns. This case initially stemmed from "Project Risky Business," an investment fraud sweep.
Federal Trade Commission v. Ambus Registry, Inc. et al.
The Federal Trade Commission announced the filing of a complaint against the defendants and entry of a stipulated preliminary injunction. The complaint alleges that the defendants trained their telemarketers to use deceptive sales tactics to convince U.S. businesses that someone in their company had authorized its listing in the directory, as well as the purchase of the directory itself. The defendants, all based in Calgary, Canada, allegedly billed the businesses and, despite a supposed trial period, systematically rejected requests for a full refund.
Federal Trade Commission v. Assail, Inc, et al.
The Federal Trade Commission filed charges against Assail, Inc. et al., alleging that the defendants engaged in deceptive and unfair activities in the marketing of advance-fee credit card packages. The complaint alleges that the defendants operated an advance-fee credit card scam through a network of boiler rooms, Canadian front men, and outsourced fulfillment and customer service centers. A federal court subsequently issued a preliminary injunction. [TEXT 1] [TEXT 2]
Federal Trade Commission v. Associated Record Distributors, Inc., et al.
The Federal Trade Commission announced settlements in this matter. The initial complaint alleged that the defendants made false earning claims, used "shills," and made other misleading representations in the sale of a music business opportunity. Among other things, the settlements bar one defendant from engaging in any business opportunity or franchise businesses in the future, bar the other defendants from misrepresenting franchise or business opportunities, and provide $300,000 in consumer redress. This case was originally filed as part of "Project Busted Opportunity."
Federal Trade Commission v. Tamara Bell, et al.
The Federal Trade Commission filed a complaint alleging that defendant Tamara Bell created six nonprofit corporations to use as vehicles for soliciting donations from consumers. Among other things, the complaint further alleges that the corporations are sham nonprofits created and controlled by unscrupulous fundraisers for personal profit. This case was filed as part of the fundraising fraud sweep, "Phoney Philanthropy."
Federal Trade Commission v. Brent Chivers
The Federal Trade Commission announced the filing of a settlement in this matter. The complaint alleged that the defendant violated the FTC Act and the Telemarketing Sales Rule (TSR) by offering consumers major credit cards, such as a MasterCard or Visa, for a one-time up-front fee. In addition to paying redress, the settlement prohibits the defendant from misrepresenting any fact material to a consumer's decision to purchase any good or service marketed by the defendant. This case was filed a part of "Operation No-Credit."
Federal Trade Commission v. Community Affairs, Inc. et al.
The Federal Trade Commission filed a complaint alleging that Community Affairs, Inc. et al., mislead donors during its telephone solicitations by falsely representing that: the caller is a member of a law enforcement, police, or firefighter organization; the contributor has a current or previous relationship to the charitable organization for which the defendants are soliciting funds; and all, or substantially all, of the money raised goes to the charity or to specific programs. This case was filed as part of the fundraising fraud sweep, "Phoney Philanthropy."
Federal Trade Commission v. Corporate Marketing Solutions, Inc. et al.
The Federal Trade Commission announced the settlement of this matter. The complaint alleged the defendants telemarketed nonexistent advance-fee, low-interest credit cards, and bogus identity theft and telemarketing fraud protection services, often on behalf of third-party client companies. In addition to a lifetime ban from telemarketing, the settlement requires the payment of a $525,000 judgment.
Federal Trade Commission v. DPS Activity Publishing, Ltd., et al.
The Federal Trade Commission filed a complaint alleging that, when telemarketing books, the defendants falsely represent that they are affiliated with or authorized by local hospitals to solicit sales of the books on their behalf and that children in those hospitals would actually receive the books purchased. The complaint also alleged that the books purchased from defendants for donation were either never delivered to the hospitals or would never be distributed to children because the hospitals to which they were donated have no use for them. This case was filed as part of the fundraising fraud sweep, "Phoney Philanthropy."
Federal Trade Commission v. Nanda Kumar Duraisami
The Federal Trade Commission filed suit in U.S. District Court to shut down the operation of a cross-border con artist who targeted elderly U.S. citizens in a bogus foreign lottery scheme. The complaint seeks a permanent ban on the operator's deceptive and illegal practices and redress for consumers.
Federal Trade Commission v. Efficient Telesales Services Inc., et al.
The Federal Trade Commission announced entry of a default judgment in this matter, permanently barring the defendants from selling advance-fee credit cards and requiring them to pay $1.3 million for consumer redress. The complaint in this action alleged that the defendants deceptively marketed advance-fee credit cards to citizens with no credit or bad credit. According to the complaint, the Canadian company promised consumers a major credit card, charged for it in advance, but never delivered the credit card.
Federal Trade Commission v. Electronic Financial Group, Inc. et al.
The Federal Trade Commission filed a complaint alleging that the defendants violated the TSR by providing substantial assistance and support to numerous client telemarketers who they knew were engaged in business practices that violated the TSR. The complaint further alleges that in providing automated clearing house ("ACH") payment processing services to merchants engaged in outbound telemarketing, the defendants engaged in an unfair practice by systematically breaching a contractual provision with its bank that required EFG to adhere to the National Automated Clearing House Association Operating Rules ("NACHA Rules") governing the ACH Network.
Federal Trade Commission v. Electronic Medical Billing, Inc., et al.
The Federal Trade Commission announced the settlement of this matter. The settlement bars the defendants from selling any work-at-home business opportunity and requires payment of $50,000 for consumer redress. The complaint in this matter alleged that the defendants used deceptive means to market and sell medical billing work-at-home business opportunities to consumers. This case was originally filed as part of "Operation Dialing for Deception."
Federal Trade Commission v. end70 Corporation, et al.
The Federal Trade Commission announced the filing of a complaint against the defendants alleging that they made deceptive claims in the sale of Internet home-business opportunities. A temporary restraining order has been entered by the court.
Federal Trade Commission v. Forum Marketing, et al.
The Federal Trade Commission announced a settlement in this matter. The complaint alleged that the defendants defrauded thousands of consumers nationwide through a deceptive telemarketing scheme selling credit card loss protection and debt-consolidation services. Among other things, the settlement order requires the defendants to post a $50,000 performance bond before engaging in any telemarketing activities. This case was filed as part of "Operation Protection Deception."
Federal Trade Commission v. General Supply Centers, Inc., et al.
The Federal Trade Commission announced a settlement in this matter. The settlement permanently bars the defendants from collecting on past shipments and requires them to fully repay customer claimants through a court-appointed receiver. The settlement also permanently bans one defendant from engaging in telemarketing and from selling non-durable office supplies. The complaint alleged that the defendants failed to disclose their true identity in telephone solicitations, and misrepresented, among other things, that they were the consumers' regular supplier of photocopy toner. This case was filed as part of "Operation Misprint."
Federal Trade Commission v. Mitchell D. Gold, et al.
The Federal Trade Commission issued three announcements regarding this matter. Two of these announcements related to settlements with certain defendants in this case. The other announced entry of a default judgment against two of the defendants. In its initial complaint the FTC alleged that the defendants and their more than 70 fundraising subcontractors engaged in deceptive telephone solicitations for nonprofit organizations purporting to support, police, fire fighters, veterans and sick children. This case was originally filed as part of "Operation Missed Giving." [TEXT 1] [TEXT 2] [TEXT 3]
Federal Trade Commission v. Grant Search, Inc., et al.
The Federal Trade Commission announced the settlement of this matter. The complaint alleged that the defendants operated a grant-matching business in which they falsely represented that consumers easily could obtain grants from charitable foundations for virtually any reason. The settlement bans the defendants from selling any product or service that purports to provide or assist consumers in obtaining a grant. In addition, the defendants have agreed to pay $296,000 in consumer redress. The FTC filed the complaint as part of the "Operation No Credit" financial fraud sweep.
Federal Trade Commission v. Clinton R. Greenwell
The Federal Trade Commission filed a complaint alleging, among other things, that the defendant, operating under a host of assumed names, misrepresented that the businesses authorized the ads to be placed in his publications, and therefore were obligated to pay for the ads, and misrepresented that he was a member of, or associated with, a police force or organization. This case was part of the fundraising fraud sweep "Phoney Philanthropy."
Federal Trade Commission v. Greeting Cards of America, Inc., et al.
The Federal Trade Commission announced the filing of a complaint against these defendants, charging them with using deceptive tactics in selling their greeting card business opportunity. According to the complaint, the defendants marketed and sold a greeting card business opportunity that defrauded consumers out of almost $3 million. The complaint seeks to bar further misrepresentations and to obtain consumer redress.
Federal Trade Commission v. Healthcare Claims Network, Inc., et al.
The Federal Trade Commission announced the settlement of this matter. The settlement bans the defendants from promoting or selling work-at-home business opportunities. The settlement also requires one defendant to pay $10,000 and prohibits both defendants from making any deceptive claims in connection with the sale of any goods or services. This case was originally filed as part of "Project Busted Opportunity."
Federal Trade Commission v. Thomas Gregg Holloway, First Freedom Financial Corp., et al.
The Federal Trade Commission announced the settlement of this matter. The settlement prohibits the defendants from engaging in deception in the future and requires them to pay approximately $1.4 million for consumer redress. The case, brought through the FTC's "Dialing for Deception" law enforcement sweep, targeted defendants who allegedly placed ads in magazines or mailed postcards to consumers in order to pitch advance-fee credit cards deceptively.
Federal Trade Commission v. Icon America, Inc., et al
The Federal Trade Commission announced the settlement of this matter. The complaint alleged that the defendants deceptively used telemarketing to sell credit card loss protection services to consumers, telling consumers that the company's loss protection services would cover any unauthorized charges due to card theft. Under the terms of the stipulated final order, the defendants and their principals are barred from: (1) making the types of misrepresentations alleged in the complaint; (2) violating the TSR or assisting others in doing so; and (3) selling or transferring their customer lists. The order also contains a suspended judgment for $1.5 million and requires the defendants to pay $25,000 for consumer redress.
Federal Trade Commission v. Jaguar Business Concepts, LP, et al.
The Federal Trade Commission announced the filing of a complaint alleging the defendants conducted a scheme to sell worthless international driver's permits. This case was part of "Operation License for Trouble," a law enforcement sweep that targeted sellers who, under the guise of "international law," pitched their worthless documents to immigrants and other consumers who were seeking an alternative to a government-issued driver's license or identification document.
Federal Trade Commission v. Jordan Maxwell, et al.
The Federal Trade Commission filed a complaint alleging that the defendants sold worthless international driver's permits. The complaint also alleges that the defendants deceptively marketed credit repair services and "debt termination programs. This case was filed as part of "Operation License for Trouble," a law enforcement sweep that targeted sellers who, under the guise of "international law," pitched their worthless documents to immigrants and other consumers who were seeking an alternative to a government-issued driver's license or identification document.
United States of America (for the Federal Trade Commission) v. Nationwide Premium Cigar & Distributors Corp.
The Federal Trade Commission announced a settlement in this matter. Among other things, the settlement prohibits the defendants from violating the Franchise Rule and making false and misleading representations in connection with the sale of business opportunities. In addition, the settlement contains a $90,000 judgment, which will be suspended upon payment of $5,000. The Department of Justice (DOJ), at the request of the FTC, filed a suit against the defendants as part of "Project Busted Opportunity," a nationwide crackdown on fraudulent work-at-home and business opportunities.
Federal Trade Commission v. NexGen3000.Com Inc., et al
The Federal Trade Commission announced the filing of a complaint against these defendants alleging that the Internet-based business opportunity they sold was an illegal pyramid scheme and that they sold it making the representation that participants were likely to receive substantial income. The FTC seeks consumer redress and to bar the defendants from engaging in future pyramid operations, making misleading earnings claims, and providing others with the means to make deceptive claims.
United States of America (for the Federal Trade Commission) v. Merchant Payment Solutions, Inc. et al.
The Federal Trade Commission announced the settlement of this matter. The settlement requires the defendants to pay a $22,000 civil penalty and it prohibits them from making any future material misrepresentations in connection with the sale of any business opportunity or any income-generating good or service. The Department of Justice, at the request of the FTC, filed a suit against the defendants as part of "Project Busted Opportunity," a nationwide crackdown on fraudulent work-at-home and business opportunities.
Federal Trade Commission v. One or More Unknown Parties Doing Business As the Institute For International Licensing, Aladdin Financial Management, University Systems, and Wheelie International Limited
The Federal Trade Commission announced the filing of a complaint alleging that these defendants sold worthless driving permits and bogus academic degrees via the Internet and telemarketing. This complaint was filed as part of "Operation License for Trouble." The Commission subsequently approved the filing of an amended complaint in this action. [TEXT 1] [TEXT 2]
Federal Trade Commission v. Physicians Healthcare Development, Inc., et al.
The Federal Trade Commission announced the settlement of this matter. The complaint in this matter alleged that the defendants deceptively pitched a work-at-home medical billing opportunity to consumers. The settlement order bars the defendants from selling any business venture, employment opportunity, or work-at-home opportunity. It also requires the defendants to provide the FTC with approximately $65,000 in frozen assets and it requires the defendant to post a bond before engaging in telemarketing activities in the future. The order further requires the defendants to cease all collection efforts and return any uncashed checks they collected to consumers. This case was filed as part of "Dialing for Deception."
Federal Trade Commission v. Preferred Alliance, Inc., et al.
The Federal Trade Commission filed a complaint charging these defendants with a range of illegal activities related to the company's sale of buying club memberships through third-party telemarketers. The complaint alleges that in pitching their supposedly "free" no obligation trial offers to consumers nationwide, the defendants failed to tell consumers that the offer was actually a "negative option" plan, under which the defendants would automatically charge the purchasers an annual fee if the purchasers did not cancel by the end of the trial period and in a prescribed manner. In addition, the Commission alleged that defendants had engaged in unfair billing practices.
United States of America (for the Federal Trade Commission) v. Richard L. Prochnow, et al.
The Federal Trade Commission announced settlements with Cross Media Marketing, Media Outsourcing, dba Consolidated Media Services (CMS) and one individual defendant in this matter. The complaint alleged that the defendants deceptively telemarketed magazine subscription packages, violated a 1996 FTC order, and deceptively upsold buying club memberships. The companies agreed to extensive injunctive relief, and a $1 million penalty, suspended upon payment of $350,000 because of their financial status. The separate settlement with the individual includes injunctive relief, a $1 million bond requirement, and a $100,000 penalty, suspended upon payment of $10,000, based on his financial status.
Federal Trade Commission v. Skybiz.com, Inc., et al.
The Federal Trade Commission announced a settlement in this matter. The settlement provides for distribution of $20 million dollars in consumer redress that will begin in the near future for victims of SkyBiz, an alleged massive international pyramid operation. The settlement also bars the defendants from participating in pyramid schemes in the future, and bars them from misrepresenting business ventures.
Federal Trade Commission v. STF Group, Inc., et al.
The Federal Trade Commission filed a complaint alleging these defendants sold phony credit card loss protection and discount medical cards. The complaint also alleged that the defendants charged consumers' credit cards and debited their bank accounts without authorization.
United States of America (for the Federal Trade Commission) v. Turnkey Vending, Inc.
The Federal Trade Commission authorized the Department of Justice to file an amended complaint in this action. The case was initially filed as part of "Busted Opportunity."
United States of America (for the Federal Trade Commission) v. Univend, LLC, et al.
The Federal Trade Commission announced a settlement in this matter. The initial complaint alleged that the defendants violated the Commission's Franchise Rule while selling vending machine business opportunities. The settlement: requires the defendants to pay an $11,000 civil penalty; prohibits them from making false and misleading representations in connection with the sale of business opportunities; prohibits them from providing prospective business opportunity purchasers with the names of references other than those that the FTC's Franchise Rule requires; and requires compliance with the Franchise Rule. This case was originally filed by the Department of Justice on behalf of the Federal Trade Commission as part of "Project Busted Opportunity."
Federal Trade Commission v. Universal Greeting Card Corp., et al.
The Federal Trade Commission announced settlements in this matter. The defendants have agreed to settle charges that they made false earnings claims, used shills, and made other misleading representations to sell greeting card business ventures. The settlements permanently ban the defendants from participating in the sale of any business venture and require them to give up their ill-gotten gains. This case was originally filed as part of "Project Busted Opportunity."
The Federal Trade Commission announced settlement of this matter as to two of the defendants and the entry of a default judgment against another defendant. The settlement bars the two individual defendants from making certain misrepresentations alleged in the complaint. This case was originally filed with the State of Washington as a co-plaintiff as part of "Operation No Credit," a joint law enforcement campaign targeting a wide range of credit-related frauds.
Federal Trade Commission v. West Coast Advertising & Marketing, Inc., et al.
The Federal Trade Commission announced the filing of a complaint against these defendants alleging that the defendants' telemarketers falsely claim that donations made will benefit these nonprofits and that they are associate with legitimate organizations. This case was filed as part of the fundraising fraud sweep, "Phoney Philanthropy."