A U.S. District Court judge has halted the deceptive claims of an operation that promised one fee, turn-key get-rich-quick Internet home-business opportunities, but tacked on requirements that cost hundreds or thousands of dollars more, and that consumers rarely recovered. At the request of the Federal Trade Commission, the judge also has ordered an asset freeze, pending a preliminary injunction hearing, to provide for consumer redress.
In May 2003, the FTC charged that End70 Corporation and its principal, Damien Zamora, used a Web site and infomercials to claim that their Internet Treasure Chest (ITC) business opportunity was very profitable and very inexpensive. Infomercials and a Web site claimed:
“Starting an Internet business can cost hundreds even thousands of dollars. But the Internet Treasure Chest will give you everything you need to start your own exciting Internet Business including your own worldwide Web site all for the unbelievable price of only $59.95;”
“Why spend hundreds even thousands of dollars to start an Internet Business? When the Internet Treasure Chest can give you everything you need to start your own worldwide Web site . . . All for the unbelievable price of only $59.95!”
The FTC asserts that these claims are false.
The Web site and infomercials also made earnings and income claims and testimonials such as:
“You don’t need a lot of money to start an Internet Business. In fact, we started out of our home and now we’re on track to do $1 million in sales this year,”
“Makes up to $200,000 a Year!”
“Makes up to $10,000 a Month!”
“Makes up to $9,000 a Week!”
The FTC asserts that these claims are without any basis in fact.
The operation offers a 30-day, money-back guarantee.
According to the FTC, after consumers purchased their ITC Home Business System the defendants directed them to call ITC to activate their Web site. The defendants then allegedly told consumers that they must make numerous additional purchases to operate their new Internet home business. According to the FTC consumers also may have received additional calls urging them to purchase even more features, upgrades, and services for substantially more money. In addition, the FTC alleged that the defendants denied refunds to many consumers who did not specify that they wanted expedited shipping, and therefore received their ITC Home Business System after the 30 day money-back guarantee had expired. Consumers – even consumers who invested hundreds or thousands of dollars on expensive upgrades to the $59.95 system – allegedly were unable to make the substantial earnings the defendants promised.
The FTC charged the defendants with deceptive and misleading advertising and violations of the Telemarketing Sales Rule.
At the request of the FTC, Judge David C. Godbey of the U.S. District Court for the Northern District of Texas, Dallas Division, has issued a temporary restraining order barring the defendants from misrepresenting the total cost of purchasing a business opportunity or the ITC products; barring misrepresentations that purchasers are likely to earn substantial income; freezing the defendants’ assets; and ordering the defendants to repatriate assets held abroad, pending trial. The judge has ordered the defendants to stop airing the deceptive infomercial and required that FTC review telemarketing scripts for future infomercials. In addition, the order requires the defendants to tell consumers about additional fees that they charge for certain payment options and Web hosting.
NOTE: The Commission authorizes the filing of 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 actually have violated the law. The case will be decided by the court.
Copies of the complaint 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 at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
James R. Golder
FTC Southwest Region