Charged with Engaging in Deceptive Sales of Advertisements
The FTC has settled an action against a California-based company charged with deceptive sales of advertisements appearing in “minority business publications.” According to the FTC’s complaint, the defendants marketed these ads to businesses, schools, government agencies, non-profit organizations, and others, and represented that the ads would appear in publications geared to specific demographic groups. The FTC alleged that ArtMart Publications, Inc., and its owner, Arthur Nidetz, made several misrepresentations to their victims – primarily that the entity had already ordered the advertisements and that payment was due. The settlement prohibits the defendants, among other things, from misrepresenting any material fact that would affect a consumer’s decision to purchase any good or service.
ArtMart, which operated in Canoga Park, California, sold advertisements in various publications to businesses and other organizations throughout the United States. According to the FTC, the defendants represented that their publications, which included Black American Digest, Black American Journal, Veteran’s Voice, and Saludos Amigos, were geared to specific demographic groups. The cost of the ads typically ranged from $500 to $5,000. The FTC complaint filed in U.S. district court alleges that the defendants engaged in deceptive sales practices by misrepresenting that: (1) entities already had purchased, or agreed to purchase, ads with the defendants and that payment was now due; and (2) the circulation or dissemination of the entities’ advertisements in the publication was targeted to specific demographic groups to which the title of the publications refer.
The stipulated final judgment and order to settle the charges prohibits the defendants from various practices, including:
- misrepresenting that consumers ordered, purchased, or agreed to purchase advertisements in the defendants’ publication;
- misrepresenting any prior business relationship with a consumer; and
- selling their customer lists.
The settlement requires the defendants to disclose subscription and circulation figures for their publications. The settlement also requires the defendants to pay a $125,000 judgment. The settlement contains an avalanche clause that requires the defendants to pay $3.4 million in the event that it is found that they misrepresented their financial condition. Further, the settlement contains various recordkeeping requirements to assist the FTC in monitoring the defendants’ compliance.
The Commission vote to authorize the staff to file the complaint and stipulated final order was 5-0. They were filed in the U.S. District Court for the Central District of California, in Los Angeles, on October 9, 2003, and the final order was signed by the court on October 14, 2003.
NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated final orders have the force of law when signed by the judge.
Copies of the complaint and the stipulated final 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. 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.
(FTC File No. 012 3093; Civil Action No. CV-03-7262 NM (MANx)
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