A company that claimed consumers could earn big money by investing in its home-based medical "billing center" business opportunity has agreed to settle Federal Trade Commission charges that its earnings claims were false and that it failed to give investors disclosure documents required by federal law. To settle the FTC charges, National Consulting Group (NCG) and its principal, Brian G. Fischer, will pay approximately $100,000 in consumer redress and will be barred from misrepresenting income, profits or sales of any franchise or business venture, from violating the FTC’s Franchise Rule, and from aiding anyone else in violating that Rule.
In January, 1998, the FTC filed charges against three companies and their officers alleging that they were making false and misleading claims about the profitability of their medical billing business opportunities. At the same time, the FTC asked the U.S. District Court for the Northern District of Illinois to enjoin permanently Fischer and National Consulting from violating the Franchise Rule and the FTC Act, and to order consumer redress. The court granted a Temporary Restraining Order, pending trial, appointed a receiver to manage the firm’s assets and froze the defendants assets. This Stipulated Order and Final Judgment settles that court action.
The FTC alleged that NCG placed ads in newspapers across the country claiming that consumers could earn as much as $10,000 per month -- or $3,000 per month part time -- by purchasing software that would allow them to set up medical "billing centers." NCG ads claimed that there was "no selling" associated with the medical billing business -- that NCG would provide investors with experienced medical sales professionals who would generate business for the start-up "billing centers," which sold for $7,995.
In fact, the FTC alleged, few, if any, consumers earned the amount of money advertised by NCG and Fischer. The agency also alleged that NCG falsely claimed that purchasers would not have to do any selling themselves and that NCG did not provide the sales professionals it had promised to generate business for the "billing centers." In addition, the FTC alleged that NCG and Fischer had failed to provide prospective purchasers with the detailed disclosure statement required by the FTC’s Franchise Rule or to provide them with a document, as required by the Franchise Rule, that substantiated the earnings claims made by NCG.
The settlement of the charges will bar Fischer from misrepresenting material facts about the income, profits or sales volume of any franchise or business venture and from misrepresenting the degree and types of services or assistance they will provide franchise or business venture purchasers. It also will bar the defendants from violating or assisting others to violate the Franchise Rule -- specifically those provisions which relate to earnings claims. In addition, Fischer will pay $90,000 in consumer redress and will turn over personal assets, including an airplane, which will be liquidated to pay consumer redress. The Commission retains the right to reopen the judgment if it has reason to believe the financial statement filed by the defendant was inaccurate or incomplete.
The Commission vote to approve the proposed consent judgment was 5-0. It is subject to court approval.
NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the complaint, consent judgment and a consumer brochure, "Medical Billing Business Opportunity Schemes," 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-FTC-HELP (202- 382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. X980 010 (972-3092))
(Civil Action No. 98 C 0144)