Promoters of home-based medical billing businesses sold on the basis of fabulous earnings claims have agreed to settle FTC charges that the earnings claims were deceptive. The settlement bars the promoters from making misrepresentations about business opportunities, potential earnings or endorsements and requires that they offer consumers who signed up for their software the option of canceling their contracts.
On January 12, 1998, the Commission filed its complaint in U.S. District Court for the District of Arizona alleging that Electronic Filing Associates, Ltd., Electronic Filing Academy, Inc. and Edward E. Epstein advertised medical and dental billing center business opportunities in newspaper ads across the country. The ads listed a toll free number. When consumers called the toll-free number, they were sent promotional material and encouraged to invest in a medical billing business. The FTC charged that the defendants misrepresented the income potential consumers could reasonably expect to earn to induce them to make the investment. At the FTC’s request, the court issued a Temporary Restraining Order, pending trial, and an asset freeze. The settlement announced today would end that suit.
The settlement requires that the defendants notify investors that they may cancel their contracts and promissory notes with Epstein and his companies. Epstein is also required to cease any collection efforts and to notify credit reporting agencies that have been given negative credit information about investors that the information should be removed.
The settlement also bars Epstein, his companies and his employees from misrepresenting businesses opportunities in the future, including misrepresenting:
- the income, profits or sales volume projected for prospective purchasers;
- the income, profits of sales volume that has been achieved by previous purchasers;
- the market demand and the market value of any product or service; and
- the ability or likelihood of an investor to find customers for his service.
In addition, they are barred from misrepresenting testimonials or endorsements and from using any testimonial or endorsement that does not reflect the typical or ordinary experience of investors who have purchased the business venture. It also bars them from representing that they have received any type of approval or endorsement from the Federal Trade Commission and would bar violations of the Franchise Rule. Finally, the settlement contains record keeping provisions to allow the Commission to monitor compliance.
The Commission vote to accept the settlement was 4-0. The FTC’s Denver Regional Office 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 complaint, final judgment and order and a consumer publication, "Medical Billing Business Opportunity Schemes: A Bitter Pill," 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; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. X98 0008)
(Civil Action No. 98-0054-PHX-EHC)
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