Internet Pyramid Artists Settle FTC Charges

Elaborate Scheme Posed As Work-At-Home Opportunity

For Release

Defendants in a pyramid scheme that disguised itself as a legitimate work-at-home operation have agreed to settle Federal Trade Commission charges that the scheme violated federal laws. The settlement bans the defendants from engaging in pyramid schemes in the future, bars misrepresentations about the availability and profitability of jobs and requires that the defendants pay $72,000 in consumer redress.

On July 7, 1999, the FTC alleged that DP Marketing and its principals, David Martinelli, Jr. (a/k/a David Martin) and Deana Plourde, sent consumers unsolicited commercial e-mail -- "spam" -- with messages such as:

"National Marketing Company seeks individuals to handle office duties from home. This is a full or part-time position with a salary of $13.50/hr. The position consists of processing applications for credit, loans or employment, as well as online consumer service."

Consumers responded by visiting DP Marketing's web site or by calling them. Whichever route they took, they were informed that the $13.50 per hour jobs were for processing orders for DP Marketing from the comfort of their own homes. They were told that no experience was necessary, and that for a "registration fee" ranging from $9.95 to $28.72 they would be sent everything they would need to get started, including telephone scripts, product sheets, time sheets and an ID number. What the consumers actually got was a kit instructing them first to place advertisements identical to the ones they had responded to, and then to read the same script to people who responded to their ads. Instead of $13.50 per hour, the money consumers could earn was based on the number of new victims they could recruit.

The FTC charged that the defendants violated federal law by misrepresenting to consumers that DP Marketing offers jobs at a specified salary; by failing to disclose that they are offering a pyramid work-at-home scheme; and by providing the "means and instrumentalities" to others to commit deceptive acts that violate federal law.

The Stipulated Final Judgment and Order to settle the charges bars future participation in pyramid schemes, bars misrepresentation of earnings and income potential, and requires that if the defendants make earnings claims in connection with a multilevel marketing program, they clearly and conspicuously disclose the actual profits made by participants and the percentage of participants who have made such profits before accepting payment from investors. It prohibits false or misleading statements or misrepresentations in the marketing, sale, or distribution of any product or service and prohibits the defendants from providing others with the means and instrumentalities to commit deceptive acts. The settlement also contains various record keeping and reporting requirements designed to assist the FTC in monitoring the defendants' compliance. The order imposes a judgment of $72,312 for consumer redress, based on financial declarations provided by the defendants. Should the court find that the defendants misrepresented their financial situations, $430,140, the total amount paid by consumers to DP Marketing, becomes due.

The Commission's vote to approve the filing of the proposed consent judgment was 5-0. It was filed by the FTC in the United States District Court for the District of Connecticut, and entered by the Court on November 14, 2000.

NOTE: A 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 Stipulated Final Judgment and Order are available 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. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at https://www.ftc.gov/ftc/complaint.htm The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.

Media Contact:

Claudia Bourne Farrell,
Office of Public Affairs
202-326-2181  

Staff Contact:

Katie Harrington McBride,
Bureau of Consumer Protection
202-326-2452

(FTC File No X99 0068)

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