FTC Announces That $2 Million Consumer Redress and Business Education Program Underway

Refunds to Businesses Who Purchased Office Supplies from Modern Concept

The Federal Trade Commission this month is sending $2 million in refunds to more than 28,000 businesses who were victims of an alleged office supply scam by Reseda, California-based Modern Concept Marketing, Inc., also known as Central Data Supply or Supreme Business Products. Along with the checks, the FTC is sending business education fact sheets explaining how office supply scams work and how to avoid being duped by them.

The redress fund was established by a stipulated final judgment with Modern Concept, its president, Joseph Moadeb, and its vice president, Sam Jenkala, which settled FTC allegations that the defendants operated a fraudulent "toner-phoner business" - involving the billing, marketing and shipping of office supplies. According to the FTC, this is one of the largest redress settlements in a toner-phoner fraud case. Copies of the fact sheet, and a list by state of the number of companies receiving refunds, are available on the FTC's Web site.

The FTC filed its case against Modern Concept in December 1999, as part of "Operation Misprint," a multi-agency effort to crack down on bogus office and maintenance supply telemarketing schemes that targeted large and small businesses, as well as schools, government agencies, and nonprofit institutions all over the U.S. In its complaint, the FTC alleged that the defendants' telephone sales presentations included promises that Modern Concept's laser toner cartridges would have a much longer life than the products that the consumers were currently using and that the consumers would save money by using their products. In fact, the defendants principally sold "remanufactured" - that is, used and refilled - laser cartridges that did not have a longer life. The FTC alleged that the defendants also charged substantially higher prices for their cartridges than similar or new office supplies sold by regular suppliers and added substantial, undisclosed shipping and handling charges, sometimes hundreds of dollars.

The stipulated final judgment, in addition to requiring the defendants to pay $2 million in redress, prohibits the defendants from engaging in violations of the FTC Act and the Telemarketing Sales Rule, and requires them to post a $1 million bond before doing any further telemarketing of office supplies. The stipulated final judgment was filed in the U.S. District Court, Central District of California, Western Division, in May 2001. The FTC's Northwest Regional Office in Seattle handled the investigation.

Copies of the stipulated final judgment, as well as the fact sheet, and list by state of the number of companies receiving refunds, 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, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC Matter No. X000011)
(Civil Action No.: CV-99-13003-HLH (Mcx))

Contact Information

Media Contact:
Brenda Mack
Office of Public Affairs
202-326-2182
Staff Contact:
Robert Schroeder or Randy Brook
Northwest Region - Seattle
206-220-4477 or 206-220-4487