| STEPHEN CALKINS General Counsel CHARLES A.
HARWOOD PATRICIA A. HENSLEY ATTORNEYS FOR PLAINTIFF UNITED STATES
DISTRICT COURT
Plaintiff, the Federal Trade Commission ("Commission"), for its complaint alleges as follows: 1. The Commission brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), to obtain preliminary and permanent injunctive relief, and rescission, restitution, disgorgement and other equitable relief to redress purchasers of defendant's work-at-home job program for the injury resulting from defendant's deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). JURISDICTION AND VENUE 2. Subject matter jurisdiction is conferred upon this Court by 15 U.S.C. §§ 45(a) and 53(b) and 28 U.S.C. §§ 1331, 1337(a), and 1345. 3. Venue in the District of Idaho is proper under 28 U.S.C. § 1391(b) and (c) and 15 U.S.C. § 53(b). THE PARTIES 4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. § 41 et seq. The Commission enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission may initiate federal district court proceedings to enjoin violations of the FTC Act and to secure such equitable relief as is appropriate in each case, including redress and disgorgement. 15 U.S.C. § 53(b). 5. Defendant Ed Boehlke ("Boehlke") is an individual, trading and doing business as Advantage Marketing Company ("Advantage"), an unincorporated business entity with its principal office and place of business located at 690 Yellowstone, Suite F, Pocatello, Idaho 83201. Boehlke is the sole owner of Advantage. Individually or in concert with others, he formulates, directs, and controls the policies, acts and practices of Advantage, including the acts and practices set forth in this complaint. He resides and transacts business in the District of Idaho. COMMERCE 6. At all times relevant to this complaint, defendant has maintained a substantial course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANT'S COURSE OF CONDUCT 7. Since at least 1995, defendant has disseminated or caused the dissemination of advertisements in the business opportunities or careers section of newspapers and other publications in many states offering work-at-home job opportunities. These advertisements include, but are not limited to, the following statements: EARN $200-$1,000 WEEKLY! Assembling products at
home. 8. Consumers calling the 800 telephone number listed in the advertisement speak with an Advantage sales representative who describes defendant's work-at-home job program and invites consumers to enroll in the program for a one-time, lifetime fee of $38.95. Advantage guarantees that consumers who enroll in defendant's program will get jobs. Typical statements made during telephone conversations between Advantage and consumers include, but are not limited to, the following:
9. During the initial telephone conversation, Advantage's sales representatives tell consumers they will not have to incur any additional costs beyond the initial enrollment fee to get started in a work-at-home job. Typical statements include, but are not limited to, the following:
10. Advantage's sales representatives provide consumers with information about specific dollar amounts they can earn from the various jobs offered in Advantage's work-at-home program. Typical statements include, but are not limited to, the following:
11. Advantage's sales representatives assure consumers that defendant's job program is backed by the company's 90-day money back guarantee. Typical statements include, but are not limited to, the following:
12. Contrary to defendant's representations, defendant is not offering a work-at-home job program, does not guarantee consumers a job, and has no reasonable basis for the earnings claims. In fact, consumers receive only a thin pamphlet listing the name and address of approximately 80 companies, along with a brief description of the assembly projects each company is purportedly offering. It is entirely up to consumers to contact each company they are interested in for more information and, in most instances, consumers must send each company an additional $30-40 in order to receive a start-up kit. Finally, in order to get their money back from defendant, consumers must satisfy several undisclosed requirements, the effect of which is to discourage consumers from applying for a refund. DEFENDANT'S VIOLATIONS OF THE FTC ACT 13. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits unfair or deceptive acts or practices in or affecting commerce. 14. As alleged herein, defendant has engaged in numerous material misrepresentations and deceptive failures to disclose material facts in violation of Section 5(a) of the FTC Act. COUNT ONE 15. Paragraphs 1 through 12 are incorporated herein by reference. 16. Through the use of the statements referred to in Paragraphs 7 and 8, and others not specifically set forth herein, defendant has represented, directly or by implication, that it has actual job openings at the salaries listed in the classified advertisements. 17. In truth and in fact, defendant does not have actual job openings at the salaries listed in the classified advertisements. 18. Through the use of the statements referred to in Paragraph 8, and others not specifically set forth herein, defendant has represented, directly or by implication, that consumers who pay the fee to defendant will be enrolled in a work-at-home job program through which they will obtain an actual job paying $200 or more per week. 19. In truth and in fact, consumers who pay the fee to defendant are not enrolled in a work-at-home job program through which they will obtain an actual job paying $200 or more per week. 20. Through the use of the statements referred to in Paragraphs 7 and 10, and others not specifically set forth herein, defendant has represented, directly or by implication, that consumers who pay the fee to defendant typically earn between $200-1,000 per week, and that most consumers earn $250 per week. 21. Through the use of the representations set forth in Paragraphs 7 and 10, and others not specifically set forth herein, defendant has represented, directly or by implication, that defendant possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 20 at the time the representations were made. 22. In truth and in fact, defendant did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 20 at the time the representations were made. 23. Therefore, defendant's representations as set forth in Paragraphs 16, 18, and 21 are false and misleading and constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. §45(a). COUNT TWO 24. Paragraphs 1 through 23 are incorporated herein by reference. 25. Through the use of the statements referred to in Paragraph 9, and others not specifically set forth herein, defendant has represented, directly or by implication, that consumers who pay the fee to defendant do not have to pay additional fees to pursue a work-at-home job. 26. In truth and in fact, consumers who pay the fee to defendant do have to pay additional fees to pursue a work-at-home job. 27. Therefore, defendant's representation as set forth in Paragraph 25 is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. §45(a). COUNT THREE 28. Paragraphs 1 through 27 are incorporated herein by reference. 29. Through the use of the statements referred to in Paragraph 11, and others not specifically set forth herein, defendant has represented, directly or by implication, that the only conditions for refund of the fee paid to defendant are that dissatisfied consumers participate in the program for 60 days and return the package. 30. Defendant has failed to adequately disclose that consumers must meet additional refund conditions, including the conditions that the consumer must send to defendant proof of purchase date, a copy of the purchase receipt, the name and telephone number of two contacts made using the pamphlet, a copy of one application form the consumer completed by using the pamphlet, and a statement of the consumer's actions resulting from using the pamphlet. These additional conditions would be material to consumers in their decisions to pay a fee to defendant. 31. Defendant's failure to disclose material facts as alleged in Paragraph 30 constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). INJURY 32. Consumers throughout the United States who have paid fees to defendant for defendant's work-at-home job program have suffered and are suffering monetary loss as a result of defendant's deceptive acts or practices as alleged herein in violation of Section 5(a) of the FTC Act. Absent injunctive relief by this Court, defendant is likely to continue to injure consumers and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 33. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to issue a permanent injunction against defendant's violations of the FTC Act and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary injunction, rescission, restitution, disgorgement of profits resulting from defendant's unlawful acts or practices, and other remedial measures. PRAYER FOR RELIEF WHEREFORE the Commission respectfully requests that this Court, as authorized by 15 U.S.C. § 13(b) and pursuant to its own equitable powers: (1) Award the Commission such temporary and preliminary injunctive and ancillary relief, including but not limited to temporary and preliminary injunctions and an order freezing assets, as may be necessary to avert the likelihood of injury to consumers who enroll in defendant's work-at-home job program during the pendency of this action, and to preserve the possibility of effective final relief; (2) Permanently enjoin defendant from violating Section 5(a) of the FTC Act as alleged in this complaint; (3) Award such relief as the Court finds necessary to remedy the defendant's violations of Section 5(a) of the FTC Act including, but not limited to, rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten gains; and (4) Award the Commission the costs of bringing this action, as well as such other and additional equitable relief as the Court may determine to be proper and just DATED: , 1996 Respectfully submitted, STEPHEN CALKINS CHARLES A. HARWOOD Patricia A. Hensley Kathryn C. Decker Robert J. Schroeder |