Business Opportunity Telemarketer Agrees to Pay $100,000 to Settle FTC Fraud Charges

For Release

Star Publishing Group, Inc., doing business as National Consumer Services, and its president, Kent Hopkins, have agreed to pay $100,000 in redress to settle Federal Trade Commission charges that they used deceptive and illegal practices in marketing a work-at-home employment guide on how to start a business as an HUD/FHA mortgage insurance refund tracer. The case was filed in February 2000 as part of "Project Biz-illion$," a multi-prong attack by the FTC, the Justice Department and law enforcement officials from 29 states on business opportunity scams. The FTC alleged that the defendants' advertisements led consumers to believe that their guide on starting a home-based business as a refund tracer was an employment opportunity for processing mortgage insurance refunds for the U.S. government. The proposed settlement would prohibit the defendants from making the kinds of deceptive claims alleged in the complaint.

According to the FTC's complaint, the defendants placed small classified ads in local weekly newspapers promising "$800 WEEKLY POTENTIAL!!." The ads told consumers to call a toll-free number for information. When they did, consumers reached a pre-recorded message that misrepresented the amount of money consumers would earn; that the defendants' were affiliated with the U. S. government; that full refunds were available after 90 days; and that the defendants' program contained everything needed to start a refund tracer business.

The proposed settlement, which requires the court's approval, would prohibit the defendants, in connection with the advertising, promotion, offering for sale, or sale of any work-at-home, employment, or business opportunity, from:

  • falsely representing that the defendants are affiliated with the U.S. government or that consumers who pay the defendants a fee will be employed by the U.S. government;
  • failing to adequately disclose that any work-at-home employment guide or income generating product or service offered by the defendants is not an employment opportunity unless that is the case, and to adequately disclose that additional costs are necessary if that is the case; and
  • making, or assisting in making, any statement or representation of material fact that is false, misleading, or not supported by a reasonable basis, including any false, misleading or unsubstantiated representation about the pay or earnings a person is likely to make, the availability of employment opportunities, and the defendants' refund policy.

The proposed settlement would require the defendants to pay $100,000 in consumer redress within 10 days of the order's entry by the court. The defendants also would be prohibited from disclosing the name, address, telephone number, credit card number, bank account number, e-mail address or other identifying information of any person who paid money to them before February 16, 2000, in connection with the marketing and sale of their work-at-home employment guide.

Finally the proposed settlement contains various record-keeping requirements to assist the FTC in monitoring the defendants' compliance.

The Commission vote to authorize staff to file the proposed settlement was 5-0. The stipulated final judgment and order was filed in the U.S. District Court for the District of Wyoming, in Cheyenne, on August 1, 2000.

NOTE: This stipulated final judgment and order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the release and proposed settlement will be available shortly from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

Brenda Mack

Office of Public Affairs

202-326-2182

Charles Harwood or Mary Benfield

Northwest Region - Seattle

206-220-6350

(FTC Matter No. X000028)
(Civil Action No. 00CV 023D)

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