FTC Stops Second Nevada-Based Medical Home-billing Scheme

The Federal Trade Commission today announced it has settled a complaint alleging that unscrupulous marketers misled thousands of consumers into paying $480 apiece for a worthless medical billing work-at-home business opportunity. The settlement is the second law enforcement action of its type in the last three weeks. Today's action brings to a close the FTC's case against Nevada-based Electronic Processing Services, Inc. (EPS) and its principal David Stewart. The FTC alleged that these defendants defrauded consumers by misrepresenting their relationship with physicians, how willing those physicians would be to sign up for medical billing help, and what consumers could expect to earn by working at home. The complaint was filed as part of the FTC's "Operation Dialing for Deception" anti-telemarketing fraud law enforcement sweep.

"Companies claiming that consumers can make easy money rarely deliver on their promise," said Howard Beales, III, Director of the FTC's Bureau of Consumer Protection. "Unfortunately, the purveyors of fraudulent medical billing work-at-home scams continue to trap unwary consumers in their web of misrepresentations. We urge all consumers to look very carefully at these pitches before spending their hard-earned money."

Terms of the Stipulated Order

According to the FTC's complaint, EPS and Stewart violated Section 5 of the FTC Act through a variety of misrepresentations to consumers. The final order announced today prohibits EPS and Stewart from misrepresenting that they have job openings or work-at-home positions to fill, that work-at-home opportunities are available in particular parts of the country, that they will provide consumers with the names of doctors who are likely to become billing clients, or that they have established relationships with doctors. The order also prohibits the defendants from telling consumers that they can earn a specific level of income through work-at-home medical billing and from failing to disclose material information concerning refunds or guarantees.

The stipulated order further prohibits the defendants from making misrepresentations of any material fact in connection with the marketing or sale of any item, product, good, service, business opportunity, employment opportunity, or work-at-home opportunity. It also prohibits the defendants from violating the Telemarketing Sales Rule (TSR), as well as from assisting others in engaging in any activity prohibited by the order. The final conduct-related term prohibits them from distributing any of their customer information and from collecting any payments due from past purchasers of their work-at-home business opportunity scheme.

The order requires the defendants to pay $23,400 in redress, plus an estimated $5,000 from merchant account reserves. However, as the cost of administering any redress program would far exceed funds available for redress, the FTC does not anticipate that defrauded consumers will obtain reimbursements.

The Commission vote to accept the proposed settlement of the court action was 5-0. The court approved the settlement, which was signed on September 25, 2002 in the U.S. District Court for the District of Nevada and entered on September 27, 2002.

Copies of the complaint and proposed 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.