Defendants Were Part of Project Busted Opportunity Sweep
Turnkey Vending, Inc., headquartered in Kaysville, Utah, Michael Burnett, and Jeffrey Marsh have agreed to settle Federal Trade Commission charges that they failed to provide the pre-sale disclosure documents required by the FTC's Franchise Rule to prospective purchasers of their various vending machine business opportunities. The settlement requires the defendants to pay a $22,000 civil penalty, requires them to comply with the Franchise Rule, and prohibits them from making misrepresentations when marketing business ventures.
In June 2002, the Department of Justice (DOJ) filed a complaint against the defendants on behalf of the FTC as part of “Project Busted Opportunity,”a law enforcement sweep targeting fraudulent business opportunities, alleging that the defendants violated the FTC’s Franchise Rule. According to the FTC, Turnkey Vending sold various vending machine business opportunities including tabletop “coin shooter” machines. The package price included the machines, locating company phone numbers and contact names, “Lifetime Personal Coaching,” and warranties on the machines. The defendants allegedly placed ads in various business opportunity magazines stating a “Money Making Machine” with “Prime Locations” and “Professional Locators.” The ads stated that the machines were easy to place and led to “instant money.” The complaint alleged that the defendants failed to provide prospective franchisees with a complete and accurate basic disclosure document and made earnings claims without having a reasonable basis for the claims.
The settlement announced today prohibits the defendants from misrepresenting:
- the income, profit, or sales volume that a purchaser is likely to achieve, or actually achieved by prior purchasers;
- the length of time that it is likely to take a purchaser to recoup the entire purchase price;
- the independence or authenticity of any third party references;
- the amount of competition within, or a purchaser’s territorial rights to, any geographic territory;
- the availability or existence of profitable locations in a purchaser’s geographic area; and
- the terms and conditions of any refunds or guarantees of profitability that relate to any location service or company to which the defendants refer purchasers.
In addition, the settlement prohibits the defendants from violating the Franchise Rule and from selling their customer lists. Finally, the settlement contains various recordkeeping provisions to assist the FTC in monitoring the defendants’ compliance with the final order.
Consumers looking for more information about the Commission's efforts to combat telemarketing fraud can find information at: 1. http://www.ftc.gov/bcp/cases/telemarkfraudenforcement/index.shtml
The Commission vote referring the matter to the Department of Justice for filing was 5-0. The stipulated judgment and order for permanent injunction was filed by the Department of Justice at the request of the FTC in the U.S. District Court, District of Utah, Northern Division, and requires the court’s approval.
NOTE: This stipulated judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated judgments and orders have the force of law when signed by the judge.
Copies of the stipulated judgment and order, as well as other documents relating to Operation Busted Opportunity 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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