The Federal Trade Commission today announced that it has reached settlements in three of the seven cases it filed in March 1996 against firms selling business opportunities consisting of various 900-number lines with entertainment programs purportedly popular with consumers. One of the settlements includes $25,000 for redress and all three prohibit false earnings claims and misrepresentations in connection with selling any future franchise or business venture. In each case, the defendants were charged with violating the FTC’s Franchise Rule, which requires franchisors to give potential buyers a document that includes important details about the venture including, for instance, information about past and present franchisees. The FTC filed charges against the firms as part of "Project Buylines," a targeted campaign against what it said was the latest and hottest business opportunity fraud.
The FTC’s Jodie Bernstein, Director of the Bureau of Consumer Protection, said the Franchise Rule "essentially is an anti-fraud rule and the information it mandates might have alerted investors to earnings claim and other discrepancies about the businesses." One firm also was charged with violating the FTC’s 900-Number Rule in using a "collect callback" payment option, wherein a caller telephones a toll-free 800 number and receives in return a collect call with the information or entertainment program.
Specifically, under the settlements:
All three settlements also contain various reporting and record keeping requirements designed to assist the FTC in monitoring the defendants’ compliance. The Commission vote to accept these settlements was 5-0. They were filed in federal district courts as noted below, and require the courts’ approval to become binding.
NOTE: These consent judgments are for settlement purposes only and do not constitute admissions by the defendants of law violations. Consent judgments have the force of law when signed by a judge.
Copies of documents associated with these cases 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. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov
Bureau of Consumer Protection
FTC Matter Nos./Civil Action Nos.:
Bureau 2000 -- Matter No. X960042 / U.S. District Court for the Central District of California, Los Angeles, Civil Action No. 96-1473-WMB (RMCx), filed this morning
J.P. Meyers -- Matter No. X960045 / U.S. District Court for the Eastern District of Pennsylvania, Philadelphia, Civil Action No. 96-CV-1671, filed this morning
Ad-Com -- Matter No. X960041 / U.S.-WMB-(RMCx), U.S. District Court for the Central District of California, Los Angeles, Civil Action No. 96-1472, filed this morning