U.S. Hotline, Inc.

The defendants in a Federal Trade Commission case chal- lenging three deceptive "money-making" schemes they allegedly ran have signed settlement agreements that contain broad prohibitions against future misrepresentations regarding any product or service they sell, and that could make up to $4 million available for consumer redress. The agreements settle FTC allegations that the defendants deceptively promoted a series of "guides" for $20 to $50 each that supposedly ex- plained how to buy government-seized cars at "giveaway prices," or how to find work-at-home jobs that involved reading manuscripts or books or performing piece-work.

The settlements are with U.S. Hotline, Inc., which did business as U.S. Car Buyers Alliance, U.S. Job Finders and U.S. Publishers Advocates; Jay H. Peterson, an officer of U.S. Hotline; Ads Across America, Inc.; Tel-Source, Inc.; and Kaleidoscope Holding Corporation. At the time the FTC filed its charges in 1993, the corporate defendants were based in the Provo, Utah, area.

Upon filing its charges, the FTC won a court order tem- porarily halting the alleged schemes, freezing the defendants' assets, and appointing a receiver to manage the firms. The court-appointed receiver now holds more than $5.25 million in assets, and after other debts are paid (including $578,000 in back taxes), a little more than $4 million should be available for refunds to customers who filed written complaints against the defendants and who have not already received refunds. In addition, the receiver will be mailing claim forms to all cus- tomers on the defendants' database, so that dissatisfied customers who have not previously complained can file for refunds. The settlement containing the redress provisions, which requires the court's approval to become binding, would allow for the liquidation of other assets if additional redress funds are needed.

The settlement including the injunctive provisions, which also requires court approval, would prohibit the defendants from misrepresenting any fact material to a consumer's deci- sion to buy the defendants' publications, products or services in the future. In addition, this settlement specifically would prohibit misrepresentations of the type the defendants allegedly engaged in as a part of their schemes, including deceptive claims about the working condition of vehicles to be sold by governmental entities, how easily or frequently con- sumers can purchase such vehicles for a fraction of their wholesale value, that consumers will get lists of specific auctions and personal bidders' numbers to make it easier for them to participate, and that publishers will pay inex- perienced readers to review manuscripts or books. This set- tlement also would prohibit the defendants from misrepresent- ing consumers' possible or actual profits or earnings, the defendants' refund policies, how long the defendants have been in business, or that a particular consumer's experience is typical of all the defendants' customers.

This proposed settlement also includes disclosure require- ments designed to give the defendants' future customers impor- tant information about government auctions or about work-at- home opportunities such as those described in the defendants' guides, as well as about the defendants' refund policies. Finally, this settlement contains various reporting provisions that would assist the FTC in monitoring the defendants' compliance.

The settlements were filed in U.S. District Court for the District of Utah, Central Division, in Salt Lake City, late yesterday. The Commission vote to approve the settlements for filing was 5-0.

NOTE: The agreements are for settlement purposes only and do not constitute admissions by the defendants of law violations. The agreements will have the force of law when signed by the judge.

Copies of the settlement agreements, as well as other documents associated with this case, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.; 202-326- 2222; TTY for the hearing impaired 1-866-653-4261.

(FTC Matter No. X930044)

(Civil Action No. 93C-444B)