A defendant who used a sham better business bureau -- the National Bureau of Better Business, Inc. (NBBB) -- to promote a display rack business opportunity business that misrepresented earnings potential, availability of profitable locations and used phony references has agreed to settle FTC charges that he violated federal laws. The settlement with David Bennett will bar him from operating the sham better business bureau, bar him from misrepresenting earnings potential in the sale of business opportunities and ban the use of aliases in his business dealings.
In March 1998, six other individual defendants in a display-rack business opportunity for greeting cards and perfumes agreed to settle Federal Trade Commission charges that they misrepresented the earnings potential and availability of profitable locations for their racks and used phony references to tout the scheme. One defendant is banned from telemarketing for life; another is required to post a $2 million bond before engaging in telemarketing; and three defendants are barred from selling business opportunities. The settlements prohibit all individual defendants from misrepresenting business opportunities in the future and from engaging in any business activities with one another. The settlements also impose a total of $3.9 million in monetary judgments on the six individual defendants, although the FTC said it is unclear what, if any, of that amount can be collected because of the defendants’ financial condition.
In August 1997, the FTC charged seven individuals and four corporations -- collectively called the Urso Group -- that marketed display rack business opportunities with engaging in a host of deceptive practices that violated the FTC Act and the FTC’s Franchise Rule.
According to the FTC, the advertisements for the "profitable" business opportunity carried a phone number that led consumers to a Miami telemarketing boiler room where defendants enticed consumers to invest in the business opportunity by making numerous false statements concerning the amount of money they could reasonably expect to earn. They also urged interested consumers to call "successful distributors" to learn how profitable the existing distributorships were. The "successful distributors" were actually "singers" or phony references who lied about their purported success. Finally, consumers were directed to the National Bureau of Better Business, which purported to be an independent agency but which was operating in collaboration with the group. The NBBB was an "institutional singer" -- a sham organization that promoted the business opportunity scheme.
The Commission vote to accept the settlement was 4-0.
The NBBB has been placed in a permanent receivership. The FTC’s settlement with David Bennett was approved by the court on June 19,1998.
NOTE: Consent judgments are for settlement purposes only and do not constitute an admission of a law violation. Consent agreements have the force of law when signed by the judge.
Copies of the complaint and stipulated final judgment and order 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. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. X97 0068)