The Federal Trade Commission has settled a case against Parade of Toys, Inc. The case was one of 18 enforcement actions initiated under "Operation Trade Name Games" in August 1997. This cooperative law enforcement effort between the FTC and several state Attorneys General targets swindlers who conjure up images of sure and generous profits through ownership of carousels for displaying and selling stuffed toys, t-shirts and trinkets that bear of the names of some of the most popular manufacturers today -- Disney, Warner Brothers, Coca-Cola, Pepsi and the national and collegiate sports associations.
According to the FTC, the fraudulent telemarketing companies that promote these businesses promise consumers fantastic inventory and incomes of up to $100,000 and more a year for initial investments typically ranging from $10,000 to $20,000. In fact, an FTC analysis shows that few, if any, consumers who bought business opportunities from these firms even made back the initial investment. The FTC estimates that consumers nationwide have lost in excess of $50 million to these scams since the beginning of 1995.
Among the allegations made against the three defendants -- Parade of Toys, Inc. and its principal, Robert E. Bouckhout; Wonderful World of Toys, Inc. and its officer, Dennis W. Vaughan; and Megan N. Wall -- were that they misrepresented their affiliation with well-known companies; their access to thousands of hot, licensed products; and the earnings consumers would make. The FTC also alleged that the defendants used phony references or shills to endorse the businesses and to repeat the earnings claims made by the defendants.
The order bans Bouckhout from selling business ventures and requires him to pay redress in an amount to be determined based upon the resolution of a state court action involving Parade of Toys. The order also bans Vaughan from advertising, promoting or selling any franchise or business venture and prohibits Wall from making misrepresentations in the sale of franchises or business ventures and from violating the FTC's Franchise Rule.
While the defendants have settled the FTC charges, they still face charges in the state of Kansas.
The Commission vote to accept these settlements was 4-0, with Commissioner Mozelle W. Thompson not participating. The consent agreements were filed in United States District Court, District of Kansas, and approved by the court on January 6, 1998.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions.
Copies of the complaint and consent agreement are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-3128; 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 File No. X97 0067)