First Case Alleging Violations of "Prize Promotion"Sections of Telemarketing Sales Rule
Silver State Western Publishing, Inc., doing business as Prime Time Marketing, a Las Vegas-based telemarketer, and its president John A. Pieri, have agreed to pay $65,000 to settle Federal Trade Commission charges that they engaged in an allegedly deceptive prize-promotion solicitation scheme. Under the terms of the settlement, in addition to paying redress, the defendants would be banned from engaging in, or assisting others in any telephone premium promotion, prize promotion or recovery service. The defendants have also agreed to an injunction against future violations of the FTC's Telemarketing Sales Rule. The Commission's complaint, filed in May 1996 in federal district court, alleged that the defendants lured consumers into purchasing, for $300 to $2,500, "Say No To Drugs" materials or magazine subscriptions by telling consumers they would receive, in exchange for their purchases, "extremely valuable" prizes or awards worth more than the amount the consumer would pay for the purchases. In fact, the complaint alleged, the awards or prizes, if delivered at all, were worth much less than what consumers paid Prime Time.
The Commission's complaint also alleged that the defendants violated three provisions of the FTC's Telemarketing Sales 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 was the first case filed by the Commission charging violations of the "Prize Promotion" section of the Telemarketing Sales Rule.
Under the settlement order, the defendants would be required to pay $65,000 to the court-appointed receiver for possible consumer redress. If the receiver determines that redress to consumers is impracticable, the money will be deposited into the U.S. Treasury.
The Commission vote to authorize the staff to file the proposed settlement was 5-0. The stipulated final judgment was filed in the U.S. District Court for the District of Nevada, in Las Vegas, on November 26, 1996. 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: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Judgments have the force of law when signed by the judge.
Copies of the stipulated final judgment, 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; 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 202-326-2710. 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
Brenda A. Mack
Office of Public Affairs
(FTC Matter No. X960053)
(Civil Action No. CV-S-96-00417-LDG)