Georgia Business Opportunities Company Settles Federal Charges

Merchant Payment Solutions (MPS) and its principal, Steven Todd Knight, have agreed to settle charges that they violated federal laws by operating and promoting a fraudulent business opportunity. In June 2002, as part of its "Project Busted Opportunity" sweep, the Department of Justice (DOJ), at the request of the Federal Trade Commission, filed a complaint against the defendants alleging they violated the FTC Act and the Franchise Rule in the sale and marketing of mini-ATM machine business opportunities. Under the terms of the proposed settlement, the defendants are required to pay a civil penalty and are prohibited from making any future material misrepresentations in connection with the sale of any business opportunity or any income-generating good or service.

"Project Busted Opportunity" was a law enforcement sweep launched by the FTC, the DOJ, and 17 state law enforcement agencies targeting fraudulent business opportunities and work-at-home scams. In its complaint, the FTC alleged that MPS deceptively marketed and sold mini-ATM business opportunities to consumers nationwide beginning in late 2001. The complaint stated that the defendants promoted their business opportunity through a Web site and a toll-free number, claiming that consumers could earn up to $450 a month by placing a mini-ATM in a location that 500 visitors per month would visit. The FTC alleged that the defendants did not substantiate their earnings claims, and that consumers actually lost significant sums of money in this venture.

Under the terms of the settlement, the defendants are: required to pay a $22,000 civil penalty; prohibited from making false and misleading representations in connection with the sale of business opportunities; and required to comply with the Franchise Rule. The settlement contains various recordkeeping provisions to assist the FTC in monitoring the defendants' compliance.

The proposed settlement announced today prohibits the defendants from future violations of the Franchise Rule, specifically by:

falsely representing the income, profit, or sales volume a consumer is likely to receive, or making any earnings claim without reasonable substantiation for the claim;falsely representing the income, profit, or sales volume achieved by other consumers;falsely representing the length of time it is likely to take for a consumer to earn back the amount he or she spent on the mini-ATM opportunity;failing to disclose their refund policy, or comply with any stated refund policy; andselling their consumer lists.

The proposed settlement further requires the defendants to pay over $22,000 in consumer redress. Finally, the settlement contains various recordkeeping provisions to assist the FTC in monitoring the defendants' compliance.

The Commission vote to authorize staff to file the proposed stipulated final judgment and order was 5-0. It was entered by the U.S. District Court, Middle District of Georgia, Columbus Division on June 16, 2003.

NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated final judgments have the force of law when signed by the judge.

Copies of the stipulated final judgment 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.