Phoney Location Service Provider Settles FTC Charges

American Eagle Placements, based in Stone Mountain, Georgia, and its owner, Forrest Adams entered into a settlement with the Federal Trade Commission that bans them from advertising or selling location services in connection with any franchise, business venture, or business opportunity venture. The FTC alleged that the American Eagle Placement and Forrest Adams (the “American Eagle defendants”), as well as Greeting Cards of America (GCA) and its officers, used deceptive tactics in selling greeting card business opportunities. The American Eagle defendants have agreed to the settlement, which also prohibits them from making any misrepresentation that would influence a consumer’s decision to purchase any goods or services.

In April 2003, the FTC filed a complaint in federal district court against GCA, based in Plantation, Florida; husband-and-wife team, Gerald (Jerry) Towbin and Susan Towbin; and the American Eagle defendants. The FTC alleged that Gerald Towbin also was known as Alex Carr, and used the alias “John Grant” to pose as a reference for GCA. The complaint alleged that the defendants were engaged in the marketing and sale of a greeting card business opportunity that defrauded consumers out of at least $3 million. According to the FTC, in their ads, the GCA defendants made earnings and success claims that overstated the amount consumers could expect to make from a GCA business opportunity. In addition, the American Eagle defendants operated a locator service that consumers paid for separately to place the greeting card racks sold to them by GCA. The complaint alleged that the American Eagle defendants misrepresented the quality of location that could be obtained by them and the assistance they would provide.

The settlement announced today bans the American Eagle defendants from selling or advertising location services in connection with franchises, business ventures, or business opportunities in the future. The case against GCA is still pending.

The settlement prohibits the defendants from making misrepresentations about the income, sales volume, or profit that a prospective purchaser could make; the income, sales volume, or profit achieved by other purchasers of the goods or services; the authenticity of any reference; the territorial rights to, or amount of, competition within any geographic territory; and the existence or quality of locations for machines or racks used to dispense goods. In addition, the settlement prohibits the defendants from misrepresenting any material restriction, limitation, or condition to purchase, receive, or use any goods or services; any material aspect of the performance, efficacy, nature, or central characteristics of any goods or services; any material aspect of the nature or the terms of the seller’s refund, cancellation, exchange, or repurchase policies; and the total costs to purchase, receive, or use; and the quality of any goods or services. The settlement further prohibits the defendants from selling their customer lists.

The settlement does not provide for consumer redress, but contains an avalanche clause for $345,000, which represents the total funds paid by consumers to the defendants for their services. Finally, the settlement contains various recordkeeping provisions to assist the FTC in monitoring the defendants’ compliance.

The Commission vote to authorize the staff to file the proposed stipulated final judgment and order was 5-0. The order was sent to the U.S. District Court, Southern District of Florida, in Miami, on January 23, 2004 and signed by the Judge on January 26, 2004. The FTC’s Southeast Region - Atlanta handled the investigation.

NOTE: This stipulated final judgment and order 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 and 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 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.

(FTC File No. X030044) (Civil Action No. 03-60746-Civ-Gold)