United States of America vs. Robert M. Oliver

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF FLORIDA
PENSACOLA DIVISION

UNITED STATES OF AMERICA
Plaintiff

ROBERT M. OLIVER,
individually, doing business as
U.S. CONSUMER PROTECTION AGENCY,
and, CONSUMER PROTECTION AGENCY
of BAY COUNTY,
Defendant.

COMPLAINT FOR CIVIL PENALTIES, CONSUMER REDRESS, PERMANENT INJUNCTION, AND OTHER EQUITABLE RELIEF

Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission ("FTC" or "the Commission"), pursuant to Section 16(a)(1) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 56(a)(1), for its complaint alleges:

Plaintiff brings this action under Sections 5(a)(1), 5(m)(1)(A), 13(b), 16(a) and 19 of the FTC Act, 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 53(b), 56(a), and 57b, to secure civil penalties, permanent injunctive relief, consumer redress, and other equitable relief for the defendant's deceptive acts and practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a), and the FTC's Trade Regulation Rule entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures" ("the Franchise Rule" or "the Rule"), 16 C.F.R. Part 436.
JURISDICTION AND VENUE
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345, and 1355, and 15 U.S.C. §§ 45(m)(1)(a), 53(b), 56(a), and 57b. This action arises under 15 U.S.C. § 45(a)(1).
Venue in the United States District Court for the Northern District of Florida is proper under 15 U.S.C. § 53(b), and 28 U.S.C. §§ 1391(b) and (c), and 1395(a).
DEFENDANT
Defendant ROBERT M. OLIVER ("Oliver"), an individual, does business as U.S. Consumer Protection Agency ("USCPA") and as Consumer Protection Agency of Bay County ("Bay County CPA"). USCPA and Bay County CPA are unincorporated entities. Oliver conducts business from his residence located at 428 McKenzie Avenue, Suite 7, Panama City, Florida 32401.
At all material times, defendant has been in the business of promoting, offering for sale, and selling "consumer protection agency" franchises, as "franchise" is defined in the Franchise Rule, 16 C.F.R. § 436.2(a)(1) and (2), and business memberships.
COMMERCE
At all material times relevant to this complaint, defendant has maintained a substantial course of trade or business, including the promotion, offering for sale, and selling of services and "consumer protection agency" franchises, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.
DEFENDANT'S BUSINESS ACTIVITIES
Since at least March, 1998, defendant has been holding himself out to the public as the U.S. Consumer Protection Agency through promotional materials posted on World Wide Web home-pages on the Internet. Through these promotional pages, defendant solicits "those individuals interested in owning and operating a local agency." In exchange for a minimum investment of $6,000, defendant promises training, licensing, certification, and support to become the "Consumer Protection Agency" for the city or county chosen by the purchaser. Upon successful completion of a training course, purchasers also receive the right to use defendant's trademark and logo and other identifying information in their sale of USCPA membership services to local businesses. According to defendant's promotional materials on the Internet, this offer is made available to the public pursuant to the U.S. Consumer Protection Agency's "directive to decentralize its responsibilities nationally. . ."
Defendant represents that purchasers of a USCPA franchise can earn a profit by selling their membership services to businesses within their franchise area for an initial charge of $149 plus a yearly fee of $250. According to defendant's promotional materials, even a small "agency" should initially earn $6,000 weekly gross income, for a total yearly gross income of $303,240. Defendant claims this figure is based on the experience of an actual "agency."
To induce potential franchisees to purchase an "agency," defendant, throughout his promotional materials, falsely implies that USCPA is an agency of the Federal Government. Defendant masquerades as a government agency through the prominent and repeated display of the name "U.S. Consumer Protection Agency" and a seal which is closely modeled upon that of the Federal Trade Commission, as well as claims that purchasers will be issued certification, licenses, "one set of respective area vehicle seals (City or County specific)," a badge, and other claims of government affiliation.
Defendant designed his web site to accept instantaneous applications to purchase a USCPA franchise. Once an application is completed and electronically submitted by an applicant, the applicant is immediately presented with a payment page. Prospective franchisees are strongly urged to use "SPEEDPAY," an electronic demand draft, to submit their payment -- a minimum of $6,000 -- over the Internet. An address is also provided to prospective franchisees to submit payment by check, "[f]or those that feel they must take the chance of lost or misdirected mail." Defendant does not provide franchisees any additional information prior to submission of payment through "SPEEDPAY."
Defendant and his franchisees sell to individual businesses the right to place a "U.S. Consumer Protection Agency" seal of approval on their Internet web pages and other promotional materials.
VIOLATIONS OF SECTION 5 OF THE FTC ACT
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits unfair or deceptive acts or practices in or affecting commerce.COUNT ONE
In the course of advertising, offering for sale, and selling USCPA franchises, defendant has represented, expressly or by implication, that USCPA, Bay County CPA, and his franchises are agencies of the United States, city, and/or county governments.
In truth and in fact, USCPA, Bay County CPA, and defendant's franchises are not agencies of the United States or any state or local government.
Therefore, defendant's representations set forth in paragraph 12 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).
VIOLATIONS OF THE FRANCHISE RULE
On December 21, 1978, the FTC promulgated the Franchise Rule, 16 C.F.R. Part 436, with a Statement of Basis and Purpose, 43 Fed. Reg. 59614. The Franchise Rule became effective on October 21, 1979, and has remained in full force and effect ever since. A copy of the Franchise Rule is attached hereto as Appendix A, and is incorporated herein by reference as if fully set forth verbatim.
Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), and 16 C.F.R. § 436.1, violations of the Franchise Rule constitute unfair and deceptive acts or practices, in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
The business venture sold by the defendants is a franchise, as "franchise" is defined in Section 436.2(a) of the Franchise Rule, 16 C.F.R. § 436.2(a).
Defendant's promotional materials represent that purchasers of a USCPA franchise sell services that are identified by a trademark or other commercial symbol belonging to the defendant.
In the course of offering for sale and selling business ventures, defendant has provided, or represented that he will provide, significant assistance to the purchaser in the purchaser's method of operation.
Defendant requires purchasers to pay him an amount in excess of $500 as a condition of obtaining or commencing a USCPA franchise operation.
The Franchise Rule requires a franchisor to provide to a prospective franchisee a complete, accurate, and timely basic disclosure document containing 20 categories of information, 16 C.F.R. § 436.1(a).
The Franchise Rule additionally requires that the franchisor have a reasonable basis for any oral, written, or visual sales, income, gross or net profit representation made by a franchisor to a prospective franchisee, 16 C.F.R. §§ 436.1(b)(2), (c)(2), and (e)(1), and when the franchisor makes a sales, income, gross or net profit representation, the franchisor must provide the prospective franchisee with an earnings claim document containing certain required information, 16 C.F.R. § 436.1(b)-(e).
COUNT II
In connection with the promotion, offering for sale, and selling of franchises, as "franchise" is defined in the Franchise Rule, 16 C.F.R. § 436.2(a)(1) and (2), the defendant has failed to provide prospective franchisees with complete and accurate franchise disclosure documents within the time period required by the Franchise Rule, thereby violating Section 436.1(a) of the Franchise Rule, 16 C.F.R. § 436.1(a), and Section 5 of the FTC Act, 15 U.S.C. § 45(a).
COUNT III
In connection with the promotion, offering for sale, and selling of franchises, as "franchise" is defined in the Franchise Rule, 16 C.F.R. § 436.2(a)(1) and (2), the defendant has made earnings claims, within the meaning of Sections 436.1(b)-(e) of the Franchise Rule, but has failed to provide the earnings claims document required by the Franchise Rule, thereby violating Sections 436.1(b)-(e) of the Franchise Rule, 16 C.F.R. § 436.1(b)-(e), and Section 5 of the FTC Act, 15 U.S.C. § 45(a).
CONSUMER INJURY
On information and belief, consumers in the United States will suffer substantial monetary loss as a result of defendant's unlawful acts or practices. Absent injunctive relief by this Court, defendant is likely to injure consumers and harm the public interest.
THE COURT'S POWER TO GRANT RELIEF
Defendant has engaged in the acts and practices described above in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
Defendant has engaged in the acts and practices described above in violation of the Franchise Rule, 16 C.F.R. Part 436.
Under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), this Court is authorized to issue a permanent injunction against defendant for violating the FTC Act, as well as other equitable relief, including relief to redress injury resulting from violations of the FTC Act.
Under Section 19 of the FTC Act, 15 U.S.C. § 57b, this Court is authorized to grant such relief as the Court finds necessary to redress injury resulting from violations of the Franchise Rule by defendant.
Under Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A), this Court is authorized to award civil penalties of not more than $11,000 for each violation of the Franchise Rule. The defendant's violations of the Rule were committed with the knowledge required by Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A).
This Court, in the exercise of its equitable jurisdiction, may award ancillary relief to remedy injury caused by the defendant's violations of the FTC Act and the Franchise Rule.
PRAYER

WHEREFORE, plaintiff requests that this Court, as authorized by Sections 5(a)(1), 5(m)(1)(A), 13(b), and 19 of the FTC Act, 15 U.S.C. §§ 45(a) (1), 45(m)(1)(A), 53(b), and 57b, and pursuant to its own equitable powers:

(1) Award plaintiff such preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action and to preserve the possibility of effective final relief;

(2) Enter judgment against the defendant and in favor of plaintiff for each and every violation alleged in this complaint;

(3) Permanently enjoin the defendant from violating the FTC Act, as alleged herein, in connection with the offering, promotion, and sale of franchises and in connection with the sale of "consumer protection" services;

(4) Permanently enjoin defendant from violating the Franchise Rule, as alleged herein, in connection with the offering, promotion, and sale of franchises;

(5) Award plaintiff monetary civil penalties for every violation of the Franchise Rule;

(6) Find the defendant liable and award such relief as the Court finds necessary to redress injury to consumers resulting from defendant's violations of Section 5 of the FTC Act and of the Franchise Rule, including but not limited to, recision of contracts, the refund of monies paid, and the disgorgement of ill-gotten monies; and,

(7) Award plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.

Dated this day of May, 1998.

Respectfully submitted,

OF COUNSEL:
EILEEN HARRINGTON

Associate Director for

Marketing Practices

Federal Trade Commission

FRANK M. GORMAN
JAMES KAMINSKI

Attorneys

Federal Trade Commission

Washington, DC 20580

FOR THE UNITED STATES OF AMERICA:

_________________________
Assistant United States Attorney

_________________________
Trial Attorney
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
P.O. Box 386
Washington, DC 20044