First prize-promo case alleging Telemarketing Rule violation
A federal district court has ordered a temporary halt to the allegedly deceptive prize-promotion solicitation scheme run by Silver State Western Publishing, Inc., doing business as Prime Time Marketing, a Las Vegas-based telemarketer, and its president John A. Pieri. The order follows Federal Trade Commission charges that the defendants lured consumers into purchasing “Say No To Drugs” materials or magazine subscriptions by telling consumers they would receive “extremely valuable” prizes or awards in exchange for their purchase. The telemarketers claimed that the awards were worth more than the amount the consumer would pay. In fact, some consumers received nothing at all, while consumers who did receive “awards” received items worth a small fraction of what the consumers had paid. The FTC said the telemarketing scheme was deceptive and that the company violated provisions of the FTC’s Telemarketing Sales Rule, which went into effect last January.
“This is another example of a telemarketer using a deceptive prize promotion to 'hook' unsuspecting victims -- many of whom are elderly,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “These scams bilk consumers out of millions of dollars with promises of fabulous prizes or awards. The promises are false and the scams are illegal,” she said.
According to the complaint detailing the charges, Prime Time’s telemarketers told consumers throughout the country that in order to receive their prize or award they must purchase “Say No To Drugs” materials such as pens or bumper stickers with the phrase “Say No to Drugs” imprinted on them, or magazine subscriptions. Consumers typically paid between $300 and $2,500 for their purchases. Some paid more. In fact, the FTC alleges, the “prizes” or “awards” the consumers received were not worth more than the consumers paid Prime Time for their purchases and the representations to the contrary were false and misleading.
In addition, the FTC alleges, Prime Time’s telemarketers violated three provisions of the FTC’s Telemarketing Rule: (1) misrepresenting any material aspect of a prize promotion, including the value of the prize; (2) using false or misleading statements to induce any person to pay for goods or services; and (3) failing to disclose in a prize promotion, in a clear and conspicuous manner, that no purchase or payment is required to win a prize or to participate in a prize promotion. This is the first FTC case alleging a violation of those provisions of the Telemarketing Rule.
In addition to the injunction, the court also has frozen the defendants' assets to preserve funds for consumer redress, and appointed a receiver to manage the defendants' business operations.
The FTC's complaint asks the court to order a permanent halt to the alleged deceptive practices and to order that redress be paid for injured customers.
The Commission vote to authorize the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Nevada, in Las Vegas on May 15, under seal. The seal was lifted May 20. A hearing on the FTC's request for a preliminary injunction continuing the conduct prohibitions and asset freeze is scheduled for May 29 at 1 p.m. The FTC's San Francisco Regional Office handled the investigation with assistance from the Nevada Attorney General's office and the Las Vegas Telemarketing Task Force.
NOTE: The Commission files a complaint when it has "reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.
Copies of the FTC's complaint are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov
(FTC Matter No. 962 3075)
(Civil Action No. CV-S-96-00417-LDG)
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