A U.S. District Court has ordered a temporary halt to the operations of three Fort Wayne-based telemarketers charged by the Federal Trade Commission with deceptively convincing small businesses they owe for unordered advertisements in publications purported to be affiliated with "civic" or "charitable" organizations. Business owners often were told that someone had authorized that an ad be placed, and that advertising in, or supporting or contributing to their publications - with titles such as Substance Abuse Activity Guide, and Health and Child Safety Guide -- provide the businesses with the opportunity to support important community causes and that the publications are widely distributed in the businesses' local areas. According to the FTC, not only were the advertisements unordered, but the publications are rarely, if ever, distributed and lack the implied affiliation with a community organization. In addition, the small businesses often face repeated billings for more ads -- whether authorized or not -- and aggressive collection tactics for unauthorized invoices -- including threats that the bill will be turned over to a collection agency. One of the companies, according to the FTC, sends a "collector" every week to deliver invoices and demand payment.
"Taking advantage of the civic-minded nature of small businesses and individuals is a public disservice," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Legitimate community service efforts will suffer if these tactics are not stopped," Bernstein said, "and the FTC is sending a clear message to those who would perpetrate such frauds - federal and state enforcement efforts against you will continue."
Named by the FTC in three separate complaints are: Omni Advertising, Inc., and company officers Christopher Ehrhorn and Stacey Stanley, doing business as FRI, Inc., American Deputy Sheriffs' Association, and Disabled Firefighters; T.E.M.M. Marketing, Inc., and Rodney L. Turner, Brian A. Edwards, and Michael D. Merryman, all officers of the company; and Tristate Advertising Unlimited, Inc., company officer Jerome Anthony Wilkins, and Daryl Allen Bender. All of the complaints allege that the defendants misrepresent that organizations had previously ordered or authorized the advertisements, that their booklets enjoy a widespread distribution in the businesses' local communities, and that advertising proceeds will support a local, civic purpose. The complaints against T.E.M.M. and Tristate further allege that they falsely claimed that payment for an advertisement constituted a donation. In addition, the FTC charged that T.E.M.M. misrepresented that they incurred the cost of printing a business' ad in reliance on the business' agreement to pay for it.
In addition to the temporary restraining orders, the FTC has asked the court for and has obtained asset freezes, as well as the appointment of receivers to take charge of the companies. The Commission votes to file the cases were 4-0. The FTC filed the complaints under seal in the U.S. District Court for the District for the Northern District of Indiana, in Fort Wayne, on Oct. 5. The seals were lifted late this morning. A hearing on the FTC's request for preliminary injunctions that would continue the conduct prohibitions pending trial is scheduled for Oct. 19.
The FTC received invaluable assistance in this investigation from the Charitable Frauds Section of the Ohio Attorney General's Office.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually has violated the law. The cases will be decided by the courts.
The FTC and the National Association of Attorneys General (NAAG), have prepared a series of consumer and business education materials with tips on reducing the risk of being victimized by deceptive solicitations. Included are fact sheets and publications for consumers and businesses about public safety fundraising appeals and charitable donations. Also available is a brochure for non-profit organizations that may be considering hiring a professional fundraiser. Copies of these publications are available from the FTC's Web site at: http://www.ftc.gov and from the FTC's Consumer Response Center, located at the address below -- as well as from each state's charities regulator, typically the Attorney General or the Secretary of State.
Copies of the complaints, and the consumer and business education materials 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.
(Omni: Civil Action No.: 1:98CV0301; FTC File No. 982 3512)
(T.E.M.M.: Civil Action No. 1:98CV0300 ; FTC File No. 982 3513)
(Tristate: Civil Action No. 1:98CV0302; FTC File No. 982 3514)