Vending Communications, Inc. (VCI), Interactive Communication Services, Inc. (ICS), and their president, Alberto Susi, have agreed to settle Federal Trade Commission charges that they misrepresented the earnings that prospective purchasers of their business opportunities could realize. VCI sold payphone business opportunities and ICS sold snack and soda vending machine opportunities. The Department of Justice, at the request of FTC, filed a suit against the defendants as part of "Project Biz-illion$," a nationwide crackdown on fraudulent business opportunities. The complaint alleged that the defendants failed to give consumers critical pre-purchase information about their business opportunities, as required by the FTC's Franchise Rule. Under the settlement, the defendants are prohibited from making false and misleading representations in connection with the sale of business opportunities, and required to pay $34,500 in consumer redress.
The settlement announced today ends the litigation in this case, which was among 22 cases the FTC referred to the Department of Justice for filing as part of "Project Biz-illion$," a multi-prong state/federal attack on traditional business opportunity scams. This case, like most of "Project Biz-illion$" actions, was launched against defendants that advertised in the classified section of daily newspapers to peddle payphone, vending machine, display rack, and work-at-home scams. According to the FTC, the defendants, based in Maimi, Florida, failed to provide earnings claim documents providing written substantiation for their extensive written and oral earnings claims. The defendants' classified advertisements also made claims that purchasers could earn specific amounts of money, such as: "Earn $16K/yr," without disclosing the number and percentage of prior purchasers who had made that much, as the Franchise Rule requires. The complaint alleged that although the defendants gave prospective purchasers a basic disclosure document, it omitted the disclosure of the names, addresses and telephone numbers of prior purchasers, as required by the Franchise Rule to help potential purchasers protect themselves from false profitability claims. VCI's "Total Turn-key Package" of payphones cost $12,500. ICS's minimum package of one combination snack and soda machine cost $3,285.
Under the settlement, which requires the court's approval, the defendants are prohibited from future violations of the Franchise Rule; from making false and misleading representations in connection with the sale of business opportunities; and from selling their customer lists. The defendants are also barred from enforcing any judgment against consumers for nonpayment. The settlement requires the defendants to ask credit bureaus to remove any prior reports of non-payment from their customers' credit records. Finally, the settlement contains various recordkeeping and reporting requirements designed to assist the FTC in monitoring the defendants' compliance.
The Commission vote authorizing staff to file the proposed settlement was 5-0. The consent order was filed in the U.S. District Court for the Southern District of Florida, Miami Division, on February 8, 2001 and was approved by the court.
Copies of the news release and consent order are available from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. Copies of other documents associated with "Project Biz-illion$" 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. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
(FTC Matter Mo. X000047)
Civil Action No. 00-00596-CIV-MORENO/LUBE)