Laser Express of Tennessee, Limited., Inc., based in Nashville, and its owner, Jeff Richfield, have agreed to pay $374,000 in consumer redress to settle Federal Trade Commission charges that they engaged in the deceptive sale of office supplies. Named as defendants in "Operation Misprint," the FTC alleged that Laser Express misrepresented that consumers had ordered the office supplies that they shipped and/or billed to consumers. In addition to paying consumer redress, the defendants are permanently banned from engaging in the telemarketing and selling of non-durable office supplies, including toner cartridges.
In December 1999, the FTC announced "Operation Misprint"-- a multi-agency effort to crack down on bogus office and maintenance supply telemarketing schemes that targeted large and small businesses and non-profit organizations. In "Operation Misprint," the Commission alleged that the defendants duped their victims into accepting and paying for shipments of unordered merchandise. The FTC filed a complaint against Laser Express of Tennessee, Ltd., Inc., doing business as Laser Express Limited, Data Supply International, Cartridge Express Limited, International Cartridge Supply, International Data Supply Company, and International Supply Company, and Jeff Richfield. The complaint alleged that the defendants violated the FTC Act and the Telemarketing Sales Rule (TSR).
According to the FTC, Laser Express sold non-durable office supplies to large and small businesses, as well as to government agencies and nonprofit institutions, that used ink toner or other office supplies. The defendants routinely sent unordered merchandise. In some instances, they shipped merchandise even after the business refused to place an order. In other instances, they obtained an order by using deceptive claims and then sent additional unordered shipments. Laser Express often falsely claimed that a current or former employee had ordered the supplies and tried to find someone else within the company to accept the shipment of "ordered" supplies. On occasion, they even misrepresented that an employee in another department had ordered the toner cartridges but could no longer use them, thereby getting an employee to accept the shipment by using false pretenses.
The FTC further alleged that Laser Express used a variety of other false and misleading statements over the telephone to induce businesses to order office supplies, often stating that they were the regular supplier or were affiliated with the regular supplier. In addition, Laser Express billed the businesses at prices substantially higher than the regular price that the business had been paying, after stating that the supplies would come with a discount or special pricing. Laser Express would sometimes justify its higher price by falsely claiming that its toner lasted one-and-a-half to two or three times longer than ordinary toner. The settlement announced today resolves the case.
The settlement, which required the court's approval, prohibits the defendants from engaging in violations of the FTC Act and the TSR. The defendants are prohibited from, among other things:
shipping unordered goods;
billing for unordered goods;
misrepresenting any association with the consumer or their regular supplier, the price of good or services, including discounts or special prices, how long any goods or services will last; and
misrepresenting the purpose of telemarketing calls, or that a person had ordered the supplies the defendant had shipped, or that consumers have an obligation to pay for merchandise they did not order.
The settlement permanently bans the defendants from selling non-durable office supplies. In the event that Richfield does sell other products in the future, the settlement requires him to make sales calls or pitches to the Purchasing Department or to the highest purchasing official in any target business.
In addition, the settlement requires the defendants to pay $374,000 in consumer redress. The settlement contains an avalanche clause for $7 million to be paid if the FTC finds that the defendants made any misrepresentations or omissions in financial statements submitted to the FTC. The settlement also prohibits the defendants from selling their customer lists and from transferring business information. The settlement contains various recordkeeeping requirements to assist the FTC in monitoring the defendant's compliance.
The Commission vote authorizing staff to file the stipulated final judgment and order was 5-0. It was filed in the U.S. District Court for the Middle District of Tennessee, Nashville Division, and entered by the court on December 28, 2000. The FTC's Southeast Region Office - Atlanta handled the investigation.
NOTE: This stipulated final judgment and order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. The stipulated order is subject to court approval and has the force of law when signed by the judge.
Copies of the Stipulated Order 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 online complaint form. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
(FTC Matter No. X000015)
(Civil Action No. 3-99-1135)
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