California Defendants that Deceptively Marketed and Sold Auction Information Guides for Homes and Cars Agree to Pay Consumer Redress to Settle FTC Charges

Two of the Individual Defendants Will Also Be Permanently Banned from Telemarketing Any Home or Vehicle Information Guides

For Release

Productive Marketing, Inc., based in Santa Barbara, California, and its principals, Matthew B. Hyman, Zachary A. Hyman, and Joshua Hyman, have agreed to settle Federal Trade Commission charges that they deceptively marketed and sold guide materials for auctions of foreclosed homes and repossessed vehicles. As part of the settlement, Matthew Hyman and Zachary Hyman are permanently banned from engaging in any business that sells or telemarkets home or vehicle information guides, or assisting others who sell or telemarket such guides. They have also agreed to pay $100,000 in consumer redress. The defendants already had paid $80,000 to the court-appointed receiver to be used as consumer redress. In addition, all of the defendants are prohibited from making deceptive claims that consumers could purchase repossessed or seized vehicles and foreclosed homes at government and private auctions for incredibly low prices and from engaging in practices that result in unauthorized credit card charges.

The FTC sued the defendants as part of its "Operation Auction Guides II" sweep, which targeted telemarketers that sold lists of foreclosed homes and car auction locations. In its June 2000 complaint, the FTC named Productive Marketing, Inc., doing business as Data Information Services, Data Services, National Property Services; Matthew B. Hyman and Zachary A. Hyman, also doing business as Formula Solutions and Foreclosure Solutions; and Joshua Hyman. In its complaint, the FTC alleged that the defendants debited or charged consumers' checking and credit card accounts without authorization; charged consumers for two sets of materials even if consumers had only authorized the charge for one set or none; failed to disclose material conditions and restrictions of their refund policy; and made false and unsubstantiated claims that late model cars sold at public auto auctions for an average price of $1,400. The court immediately issued a temporary restraining order, freezing the defendants' assets and appointing a receiver.

In two separate settlements announced today, the defendants are prohibited from making the types of misrepresentations charged in the complaint. Specifically, the defendants are prohibited from:

  • debiting and charging consumers' bank and credit card accounts without authorization;
  • misrepresenting their refund policies;
  • making misrepresentations regarding the marketing and sale of information guides; and
  • making misrepresentations in the marketing and sale of any product or service, which will cover telemarketing of any product or service the defendants may attempt in the future.

The settlements prohibit all of the defendants from disseminating their customer lists.

The proposed settlement with Productive Marketing, Inc., and Matthew and Zachary Hyman further permanently bans them from advertising, marketing, offering for sale or selling information guides, and requires them to pay $100,000 in consumer redress, in addition to $80,000 already paid to the receiver for refunding defrauded consumers of Formula Solutions and Foreclosure Solutions. The settlement contains an avalanche clause which triggers a $16 million judgment if it is found that the defendants made any material misrepresentations or omissions on their financial disclosures to the FTC.

The settlement with defendant Joshua Hyman does not require him to pay consumer redress but contains a right to reopen provision should the FTC find that he made material omissions in his financial statement. Finally, both settlements contain various reporting requirements to assist the FTC in monitoring the defendants' compliance.

The Commission vote authorizing staff to file the proposed settlements was 5-0. The stipulated orders were filed on January 16, 2001, in the U.S. District Court, Central District of California, Western Division, in Los Angeles, and requires the court approval. The FTC's Northwest Region - Seattle - handled this matter.

NOTE: These stipulated orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated order have the force of law when signed by the judge.

Copies of the settlements, previous documents relating to this case, and Operation Auction Guides II, 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 online complaint form. 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:

Brenda Mack

Office of Public Affairs

202-326-2182  

Staff Contact:

Nadine Samter or Mary Benfield

FTC Northwest Region - Seattle

206-220-4479 or 206-220-4472

(FTC Matter No. X000091)
(Civil Action No. 00-06502NM (BQRx)

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