Century Direct Marketing (CDM), a Santa Barbara, California-based company that, under the name Consumer Information Services, sold information packages about the auction sale of automobiles, houses and other property, and New Concepts Communications, LLC (NCC), a company that marketed and sold an employment opportunity that involved selling long distance telephone service, but that was advertised as a delivery job, have agreed to settle Federal Trade Commission charges.
The FTC had alleged that CDM, NCC and their principals made a variety of misrepresentations to induce consumers to pay $50 to $100 or more for auction or business opportunity information. As part of the settlement, the defendants are prohibited from failing to disclose material information in connection with the sale of auction packages and job opportunities, and are required to pay a $200,000 monetary judgment. In addition, three of the individual defendants must post a $100,000 bond before owning or operating a telemarketing business in the future.
The charges against CDM, NCC and the individual defendants, Christian Hunter, Antoine Bourdeaux, Thomas Adams III, Sven Klein and Lisa Sultan were announced in November 1998 as part of "Operation Auction Guides," a law enforcement and consumer education campaign whose goal was to shut down fraudulent operations that deceptively marketed "how to" guides and to inform consumers about the need for caution when dealing with companies that market auction guides.
The FTC's complaint alleged that the defendants made false and unsubstantiated claims that consumers who purchased the defendants' publications about automobile auction sales often could purchase vehicles for a fraction of their wholesale values, including as little as $100 and that consumers who purchased the defendants' publications on foreclosed homes often could purchase properties at prices substantially below their market value. The complaint also alleged that the defendants failed to substantiate both these claims. The complaint also alleged that the defendants billed charges to consumers' credit card accounts without authorization, charged consumers double the stated price without the consumers' authorization, and failed to disclose the terms and conditions of their refund policy.
The settlement prohibits the defendants from engaging in any of the practices challenged in the complaint and prohibits them from violating the law in connection with the telemarketing of any good or service. The settlement also requires individual defendants Christian Hunter, Thomas Adams III and Antoine Bourdeaux to post a $100,000 performance bond before engaging in telemarketing activities in the future. The settlement requires the defendants to pay a monetary judgment of $200,000 and includes a "right to reopen" clause increasing the judgment to $7,000,000 in the event the defendants misrepresented or omitted information on their financial statements.
The Commission vote to authorize staff to file the proposed settlement was 5-0. The stipulated order was filed in the U.S. District Court, Central District of California, Western Division, in Los Angeles, on April 20, 2000 and entered by the court on May 2.
NOTE: This stipulated order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated orders have the force of law when signed by the judge.
Copies of the news release are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. Copies of the stipulated order are also available from the FTC's Consumer Response Center, Room 130. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. X990009)
(Civil Action No. 98-9257 AHM (RCx))