Principals to Pay $800,000 in Consumer Redress
Federal Data Service, Inc. (FDS), a Margate, Florida company, and its principals, Stephen Tate, Spencer Golden and Dawn Johnson will be permanently banned from promoting or selling employment services, and will pay approximately $800,000 in consumer redress as part of a settlement with the Federal Trade Commission. In addition, the proposed settlement would require the defendants to obtain a performance bond in the amount of $100,000 before engaging in, or assisting others engaged in, any telemarketing activities.
The case against FDS was filed in April 2000 as part of "Stamp Out Job Fraud," a joint effort between the FTC and the U.S. Postal Service to stop the fraudulent sale of employment services. According to the FTC's complaint, FDS placed classified ads in the employment sections of newspapers across the United States falsely claiming that entry-level Postal Service positions and federal wildlife jobs were locally available. The ads announced that jobs were available at generous wages and invited consumers to call a toll-free number to receive application and exam information. When consumers called, they were told that for a fee ranging from $46 to $80, they would receive a list of available jobs, information on when and where required exams would be held, and practice tests to prepare for the exams. FDS's telemarketers falsely promised consumers that the fee was fully refundable if consumers did not obtain a job, as long as they applied for one in good faith. Additionally, the FTC alleged that FDS charged or debited consumers' credit cards, debit cards or checking accounts without their consent.
The proposed settlement would permanently ban the defendants from promoting or selling any employment good or service in the future. In addition, the proposed settlement would require the defendants to obtain a performance bond in the amount of $100,000 before engaging in any future telemarketing activity; and would prohibit the defendants, in connection with the advertising, promoting, offering for sale, or selling, any product, good, or service, from misrepresenting:
- that postal or government wildlife positions for which little or no experience is required are available in particular geographic areas;
- that consumers who purchase and review the materials will be able to apply for and are likely to obtain permanent positions;
- the starting salaries for those jobs;
- consumers' ability to obtain refunds; and
- any material fact regarding any item, product, good, or service, or charitable contribution solicited, sold or offered for sale.
The proposed settlement also would prohibit the defendants from:
- debiting consumers' credit cards, debit cards or checking accounts without consumers' authorization;
- violating any provisions of the Telemarketing Sales Rule; and
- selling their consumer lists.
Further, the proposed settlement would require the individual defendants to turn over approximately $800,000 in personal assets for consumer redress.
Finally, the proposed settlement contains a number of recordkeeping and reporting requirements designed to assist the FTC in monitoring the defendants' compliance with its terms.
The Commission vote to file the proposed settlement was 5-0, with Commissioner Orson Swindle issuing a separate statement concurring in part and dissenting in part with the settlement.
Commissioner Swindle dissented as to a provision in the order which covers claims made while soliciting charitable donations. He concluded that, because the defendants made false claims in selling postal employment materials and because there are "substantial differences between selling goods and services and seeking charitable donations," an order provision covering charitable solicitations is not reasonably related to the alleged illegal conduct. Commissioner Swindle stated that, while he "support[s] tough relief against those who engage in deception," the order provision "covering charitable solicitation is a disproportionate response to the alleged illegal conduct in this case."
The settlement, filed in the U.S. District Court for the Southern District of Florida, Fort Lauderdale Division, was approved by the Court and entered on January 9, 2001.
NOTE: The Stipulated Final Order for Permanent Injunction is for settlement purposes only and does not constitute an admission by the defendants of a law violation. The Stipulated Final Orders have the force of law when signed by the judge.
Copies of the settlement, previous documents related to this case, Commissioner Swindle's statement, and a Consumer Alert about Federal and Postal job scams, 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. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form. 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. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
(Civil Action No.: 00-6462-CIV-FERGUSON)
(FTC File No.: 992 3028)
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