FTC Enforcement Action, Education Helping to Stamp Out Work-at-Home Fraud
A Texas-based defendant who promised to pay consumers $5 for every envelope they stuffed as part of a home-based "business opportunity" program has settled Federal Trade Commission charges that he misled consumers regarding how much he would pay, what similar business owners made, and how much consumers could expect to earn. Under the terms of the stipulated final judgment and order announced today by the FTC, Terrence Maurice Howard, doing business as True Techniques and Absolute Mailers, will be banned from any future sale or promotion of work-at-home opportunities, will be prohibited from engaging in deceptive conduct in connection with the advertising or sale of other business ventures, and will pay $12,000 in consumer redress.
According to the FTC’s complaint, filed as part of April 2002’s "Dialing for Deception" joint federal-state law enforcement sweep, Howard, based in San Antonio, violated Section 5 of the FTC Act by misrepresenting that consumers would make a substantial amount of money after sending him a registration fee and that he would pay them $5 for every envelope they stuffed.
Howard allegedly marketed the envelope-stuffing business through print and online ads to consumers throughout the United States, in which he promised consumers $2,000 for mailing 400 brochures, with free postage and supplies. After calling a toll-free number, consumers heard a recorded message that promised them between $2,000 and $4,000 for stuffing the envelopes. The recorded message instructed interested consumers to leave their name and address to get more information. They then received a letter claiming they would earn $5 for every envelope stuffed, after they paid a $35 registration fee to participate in the program. Contrary to Howard’s claims, consumers who paid the $35 fee either received nothing at all or received instructions for placing ads in newspapers and on bulletin boards offering the same envelope-stuffing opportunity to others.
The stipulated final judgment and order bans Howard from any future involvement in the advertising, promotion, or sale of work-at-home opportunities. It also prohibits him from making misrepresentations in connection with the advertising, promotion, or sale of other business ventures. Specifically, the order enjoins Howard from misrepresenting: 1) that consumers will make a substantial amount of money from the venture; 2) that Howard will pay consumers for stuffing envelopes; 3) the income, profit, or sales volume that consumers are likely to achieve; 4) the income, profit, or sales volume that previous business venture purchasers received; and 5) the length of time it will take for consumers to recoup the original purchase price. The order also prohibits Howard from misrepresenting any fact material to a customer’s decision to purchase any goods or services from him. In addition, the order requires Howard to pay $12,000 in consumer redress. The order contains a $225,000 suspended judgment, which the court can reinstate if Howard is found to have misrepresented his financial condition.
Consumer Education/Filing a Complaint
The FTC has a consumer brochure, Could 'Biz Opp' Offers Be Out For Your Coffers?, with tips on how to spot and avoid these types of scams. Copies of the brochure are available from the FTC’s Consumer Response Center or at If consumers suspect a business opportunity promotion is fraudulent, they can file a complaint with the FTC’s Consumer Response Center by calling toll-free: 1-877-FTC-HELP (382-4357). The FTC also has a booklet for classified ad managers, Screening Advertisements: A Guide for The Media.
The Commission vote authorizing the staff to file the settlement was 5-0. The court approved the settlement, which was filed in the U.S. District Court for the Western District of Texas, San Antonio Division, on August 30, 2002.
NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated judgments have the force of law when signed by the judge.
Copies of the complaint and stipulated final judgment and order for permanent injunction 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 at http://www.ftc.gov . The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
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