UNITED STATES DISTRICT COURT FEDERAL TRADE COMMISSION Civil Action No.: COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF Plaintiff, the Federal Trade Commission ("FTC" or "the Commission"), for its complaint alleges: 1. The FTC brings this action under Sections 5(a) and 13(b) of the FTC Act, 15 U.S.C. §§ 45(a) and 53(b), to obtain temporary, preliminary, and permanent injunctive relief, rescission of contracts, restitution, disgorgement, and other equitable relief for defendants' violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). JURISDICTION AND VENUE 2. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345, and 15 U.S.C. §§ 53(b). This action arises under 15 U.S.C. § 45(a)(1). 3. Venue in the United States District Court for the Northern District of Texas 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 is charged, inter alia, with enforcement of 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 is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act in order to secure such equitable relief as may be appropriate in each case, and to obtain consumer redress. 15 U.S.C. § 53(b). 5. Defendant Innovative Productions, a Nevada corporation using a mailing address at 18352 N. Dallas Parkway, #136, PMB 518, Dallas, TX 75287, promotes and sells envelope stuffing employment opportunities. Innovative Productions transacts or has transacted business in the Northern District of Texas. 6. Defendant Shane D. Walls is the President of Innovative Productions. At all times material to this complaint, acting alone or in concert with others, he has formulated, directed, controlled, or participated in the acts and practices of the corporate defendant, including the acts and practices set forth in this complaint. He transacts or has transacted business in the Northern District of Texas. COMMERCE 7. At all times relevant to this complaint, the defendants have maintained a substantial course of trade in the offering for sale and sale of envelope stuffing employment opportunities, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS' BUSINESS ACTIVITIES 8. Since at least February of 1998, and continuing thereafter, defendants have offered and sold envelope stuffing employment opportunities to consumers. The defendants have promoted their employment opportunities to prospective purchasers in a variety of media, including classified advertisements in newspapers and unsolicited commercial e-mail ("UCE"). 9. In their newspaper advertisements, defendants offer to pay $4,000 per 1,000 envelopes stuffed, and refer consumers to a recorded telephone message for additional information. In the recorded message, a person identifying himself as Shane Walls asks if the caller can find time to stuff and mail 500 to 1,000 envelopes each month for $2,000 to $4,000, and represents:
In numerous instances, consumers who leave their names and addresses in response to defendants' message receive by mail an advertisement that includes the following representations:
Defendants offer consumers "50% off" if they complete a "50% Off Risk-Free Order Form" and send it to defendants with $34.95, plus $5.00 for shipping and handling. The form includes the following statements:
10. Beginning in or about August, 1999, defendants have disseminated and caused to be disseminated numerous UCE messages which include the following representations:
Some consumers have received a UCE message that states the cost of the system as $60 and represents that consumers will recover their investment after stuffing 15 envelopes. Consumers are then induced to purchase defendants' program by completing a "50% Off Risk-Free Order Form" and mailing it to defendants with payment of either $34.95 plus $5.00 for shipping and handling or $30.00 plus $4.95 shipping and handling. The order form includes the following language:
11. After collecting the "registration fee," contrary to their representations, defendants do not provide envelope stuffing employment for consumers. Instead, defendants tell consumers to place advertisements in weekly newspapers and on bulletin boards and telephone poles, offering information about "Work From Home" opportunities in exchange for $4 and a stamped, self-addressed envelope. The defendants do not pay any money to consumers for the envelopes that the consumers stuff and send out. The only money consumers make is the $4 that they receive from each individual who responds to the advertisement that consumers place about "Work From Home" opportunities. Thus, if the consumers receive any responses to the advertisements, they collect the $4 and send the defendants' flyer offering defendants' "Work at Home Employment Guide." 12. Although Innovative Productions advertises that success with its program is unconditionally "guaranteed," consumers learn after they pay their registration fees that the program is "guaranteed" only if they can prove that they incurred advertising expenses in their attempts to implement defendants' program. Moreover, consumers who attract as few as 20 responses are deemed to have succeeded in defendants' program and are not entitled to refunds. In numerous instances, consumers who unsuccessfully attempted to obtain refunds from the defendants have been given such refunds only after complaining to a consumer protection organization, such as the Dallas Better Business Bureau. VIOLATIONS OF SECTION 5 OF THE FTC ACT 13. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), provides that "unfair or deceptive acts or practices in or affecting commerce are hereby declared unlawful." COUNT I 14. In numerous instances in the course of offering for sale and sale of envelope stuffing employment opportunities, defendants or their employees or agents have represented, expressly or by implication, that consumers will make a substantial amount of money after sending the registration fee to defendants. 15. In truth and in fact, few, if any, consumers will earn a substantial amount of money after sending the registration fee to defendants. 16. Therefore, defendants' representations as set forth in Paragraph 14 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 II 17. In numerous instances in the course of offering for sale and selling their envelope stuffing employment opportunities, defendants or their employees or agents have represented, expressly or by implication, that defendants will pay consumers $4 for every envelope stuffed. 18. In truth and in fact, defendants do not pay consumers $4 for every envelope stuffed. 19. Therefore, defendants' representations as set forth in Paragraph 17 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 III 20. In numerous instances in the course of offering for sale and selling their envelope stuffing employment opportunities, defendants or their employees or agents have represented, expressly or by implication, that they will provide unconditional, unrestricted refunds within 90 days if consumers are not satisfied. 21. In truth and in fact, in numerous instances, defendants have not provided unconditional, unrestricted refunds within 90 days if consumers are not satisfied. 22. Therefore, defendants' representations as set forth in Paragraph 20 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). CONSUMER INJURY 23. Consumers have suffered or will suffer substantial monetary loss as a result of defendants' violations of Section 5(a) of the FTC Act. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 24. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and other ancillary relief, including consumer redress, disgorgement and restitution, to prevent and remedy any violations of any provision of law enforced by the Federal Trade Commission. 25. This Court, in the exercise of its equitable jurisdiction, may award ancillary relief to remedy injury caused by the defendants' law violations. PRAYER FOR RELIEF WHEREFORE, plaintiff requests that this Court, as authorized by Section 13(b) of the FTC Act, 15 U.S.C. §§ 53(b) and pursuant to its own equitable powers:
Respectfully submitted, DEBRA A. VALENTINE Judith A. Shepherd Susan E. Arthur Attorneys for Plaintiff |