Three telemarketing operations that were sued in a Federal Trade Commission sweep of scams that bilked small businesses have agreed to settle charges that their business practices were deceptive and violated federal laws. The companies were part of "Operation CopyCat," a July initiative by the FTC, the U.S. Postal Inspection Service, state Attorneys General and local law enforcers that targeted allegedly fraudulent business supply telemarketing operations. In the settlements announced today, two of the defendants will pay consumer redress in excess of $500,000, and all will be required to post performance bonds and will be barred from the business practices cited in the FTC complaints.
National Business Distributors and its owners, Raphael and Deborah Azari, are based in Van Nuys, California. Sparta Chem, Inc. and Compu-Kleen Inc. of Elmwood Park, and their owner, Dennis J. Saccurato, are based in Bergen County, New Jersey. Commercial Electrical Supply, Inc., and its owner, Michael C. Spence, are located in Baltimore, Maryland. All three operations did business nationwide.
Operation CopyCat targeted telemarketing companies that typically misrepresented that they were a business’s regular supplier of goods, according to the FTC. Further, the FTC said, the telemarketers frequently claimed to be calling to send a free gift; misrepresented their products; frequently sent merchandise that wasn’t ordered; charged highly inflated prices for merchandise; and threatened to ruin the credit of people who disputed the orders.
Sparta, National Business Distributors and Commercial Electrical Supply were charged with using a variety of deceptive practices to get orders for their products or to get information they later used to claim unordered merchandise had been ordered. The companies shipped merchandise at highly inflated prices and added exaggerated additional fees, including "handling" or insurance fees that were unauthorized by the consumers, the FTC alleged. Typically, when victims tried to return unordered goods they were told they would have to pay substantial "restocking" fees and shipping costs, according to the FTC.
The consent judgments to settle these charges require that the defendants comply with the Telemarketing Sales Rule. The judgments prohibit the defendants from making false statements or misrepresentations, including the specific misrepresentations detailed in the complaints, and prohibit them from making unfounded threats about ruining consumer credit or taking legal action. Two of the companies are required to pay consumer redress: the Azaris will pay $200,000 and will relinquish rights to National Business Distributors assets now held by a receiver. In addition the Commission will make a claim against the defendants’ $100,000 Telephonic Seller Surety Bond required by California law. Should either Raphael or Deborah Azari obtain an interest in or direct any telemarketing business in the future, he or she also will be required to secure a bond of $200,000. Saccurato and Sparta Chem will pay $305,000. In addition, Saccurato must secure a $100,000 performance bond before engaging in telemarketing, which will be forfeited if he fails to abide by the terms of the settlement. Spence will also be required to obtain a $100,000 performance bond.
The states of Michigan and New Jersey were co-plaintiffs in the case against Sparta and Saccurato. The consent judgment prohibits the defendants from violating New Jersey State law. Additionally, they are required to pay $50,000 in costs to New Jersey and Bergen County.
The settlements also include various reporting and record-keeping provisions designed to assist the FTC in monitoring the defendants’ compliance.
The Commission votes to authorize filing of the stipulated judgments were 5-0.
NOTE: Consent judgments are for settlement purposes only and do not constitute admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the complaints, consent judgments and other materials associated with these cases are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, NW, Washington, D.C. 20580; 202-326-2222; TRY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC News phone 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
Claudia Bourne Farrell
Office of Public Affairs
(Sparta-- X96 0071; Civil Action No 96-3228 (AMW)(D.N.J.))
(National Business -- X96 0087; Civil Action No. 96-4470 JGD (Mcx))
(Commerce Electric -- X96 0097; Civil Action No. 96-1982 (WMN))