Two Las Vegas-based firms and two individuals, charged by the Federal Trade Commission with running a deceptive prize- promotion scheme to market vitamins, diet products and other items to consumers, would be barred from engaging in interstate telemarketing in the future, under settlements of the FTC charges. A third individual would be barred from engaging in any prize-promotion telemarketing scheme and from misrepresenting material facts about any products or services he markets in the future. In addition, in order to protect victims of the scam from being targeted again by a "recovery room" operation, the settlements in the case would bar the defendants from trans- ferring their customer lists.
The settlements are with Fitness Express, Inc., Fitness Express Enterprises, Inc., Frank LoPinto, Gino T. LoPinto and Vincent S. Andrich. They stem from a complaint filed by the FTC in federal district court in June 1993. The complaint laid out a nationwide scheme that involved certificates mailed to consumers inducing them to call a number to obtain a "major award." Consu- mers who called were persuaded to purchase vitamins or other merchandise in order to receive their award based on a variety of false claims including that the value of their award would exceed the amount consumers paid for the merchandise, the FTC charged.
Upon filing of the complaint, the court granted the FTC's request for a temporary restraining order halting the scheme, freezing the defendants' assets and appointing a receiver to oversee the corporate defendants.
The proposed consent judgments to settle the FTC charges require the court's approval to become binding. The settlement with the two corporations and the LoPintos would permanently ban them from engaging in interstate telemarketing -- that is, soli- citing purchases over the phone when more than one interstate call is involved. Catalog marketing by these defendants would not be prohibited under this ban, so long as the telephone calls to purchase goods in the catalogs are initiated by consumers and the catalogs contain specified information including the business address of the seller and written descriptions or illustrations of the goods or services.
The settlement with Andrich would bar him from engaging in any prize-promotion telemarketing scheme to induce consumers to purchase goods or services. It also would prohibit Andrich from misrepresenting any material fact about any product or service he offers in the future, including the price, the odds of receiving a prize in connection with the offer, any refund policy, or any purchase necessary to receive a premium. He also would have to disclose all material terms of a sales transaction before asking a consumer to purchase something, and before asking for a con- sumer's credit card number or payment.
Both settlements would prohibit the defendants from trans- ferring the name, address or telephone number of any person who purchased goods from the defendant corporations. Finally, the consent judgments contain various reporting provisions to assist the FTC in monitoring their compliance. Based on their financial statements, the settlements do not call for redress. They would permit the FTC to reopen the cases should it find that the defen- dants misrepresented their financial condition.
The Commission vote to accept the settlements for filing in court was 5-0. They will be filed this morning in U.S. District Court for the District of Nevada, in Las Vegas.
NOTE: The consent judgments are for settlement purposes only and do not constitute admissions by the defendants of law violations. Consent judgments have the force of law when signed by a judge.
Copies of the consent judgments, as well as other documents associated with this case, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
(FTC File No. X930049)
(Civil Action No. Cv-S-93-561 (LDG))