Agency Alleged Office Supply Scams Targeted Small Businesses, Charities
A suburban Chicago-area telemarketing company charged with sending unordered merchandise to small businesses around the country and then billing them for it has agreed to settle FTC charges that it was violating federal law. The settlement bars Southern Maintenance Supplies, Inc., and its owner Don Ashley, from any future telemarketing of office or cleaning supplies and requires payment of $110,000 in consumer redress.
In a similar case, the FTC has joined in litigation brought by the state of Illinois in charging National Maintenance Supply, Inc., and Jack F. Nugent with violations of the Telemarketing Sales Rule and has added charges that they also violated the FTC Act. The FTC has asked the court to issue preliminary and permanent injunctions to halt the violations and to order redress for consumers.
Southern Maintenance is located in Blue Island, Illinois; National Maintenance is located in nearby Orland Park, Illinois. Both companies were initially sued as part of "Operation Clean Sweep," a joint law enforcement operation by the FTC, the Illinois and Indiana Attorneys General, and the U.S. Postal Inspection Service aimed at fraudulent telemarketers in the Chicago area who target small businesses.
In February 1999, the FTC alleged that Southern Maintenance Supplies targeted charities, not-for-profit organizations and small businesses. According to the FTC, Ashley and his employees contacted the organizations offering to send "free samples" of their cleaning supplies. They sent the supplies, and later billed the companies for them at prices many times the market value of the products. When consumers complained that they hadn't ordered and didn't want the merchandise, the telemarketers dunned them for full payment or demanded payment of a stiff "restocking" fees if consumers wanted to return the merchandise. At the request of the FTC, a U.S. District Court judge froze Ashley's assets and issued a temporary restraining order pending trial. The settlement announced today resolves the case. The FTC made similar allegations against National Maintenance and Nugent, and is asking for similar relief.
To settle the FTC charges, Ashley and Southern Maintenance have paid $110,000 in consumer redress and are barred from advertising, promoting, marketing, or telemarketing office or cleaning supplies in the future. They are barred from shipping unordered goods, from billing for unordered goods, and from misrepresenting the purpose of their phone calls, the fact that samples are free, that a person has ordered supplies, or that consumers have an obligation to pay restocking fees for merchandise they didn't order. The settlement also bars defendants from selling, renting or leasing the lists of consumers they targeted and from attempting to collect money from people who received unordered merchandise.
NOTE: A Stipulated Final Judgment and Order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. The consent judgment was signed by the court and has the force of law.
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 defendant has actually violated the law. The case will be decided by the court.
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; 877-FTC-HELP (877-382-4357); 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.
(Civil Action No. 99 C 0975 - Southern Maintenance)
(Civil Action No. 99 C 1057 - National Maintenance Supply)
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