Defendants to Pay Civil Penalty for Franchise Rule Violations

Commissions Complaint Brought Through Project Biz Opp Flop Enforcement Sweep

For Release

The Federal Trade Commission today announced a stipulated final order settling charges against two defendants targeted in February 2005's “Project Biz Opp Flop” law enforcement initiative for allegedly violating the FTC’s Franchise Rule. According to the Commission, the defendants sold consumers cashless ATM and Internet kiosk franchises without providing them with disclosures identifying prior franchisees or justifying purported earnings. The final order announced today settles the FTC’s complaint and court action against defendants American Merchant Technologies, Inc. and the company’s principal, Lawrence B. Albano, bars them from similar violations in the future, and requires them to pay an $11,000 civil penalty.

The Commission’s Complaint

According to the Commission, the defendants sold cashless ATM and Internet kiosk business opportunities in violation of the FTC’s Franchise Rule. The complaint specifically alleged that they failed to provide prospective franchisees with a complete and accurate basic disclosure document about the business opportunity or an earning claim disclosure document as required by the Rule. The Department of Justice filed the complaint on behalf of the FTC in February 2005, as part of Project Biz Opp Flop, a multi-agency law enforcement sweep targeting fraudulent business opportunities.

Terms of the Settlement

The court order settling the charges bans the defendants from selling franchises or business opportunities and contains other relief to ensure they do not violate the Franchise Rule

in the future. In addition, it requires them to pay a civil penalty of $11,000 and includes an avalanche clause that would require the payment of $1.17 million if the defendants are found to have misrepresented their financial condition to the Commission. Finally, the order contains standard monitoring and compliance provisions to ensure the defendants’ compliance with its terms.

The Commission vote approving the stipulated final order was 4-0. The order was filed in the U.S. District Court for the Southern District of Florida and has been signed by the judge in this case.

NOTE: The stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated final orders have the force of law when signed by the judge.

Copies of the complaint and stipulated 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 in English or Spanish (bilingual counselors are available to take complaints), 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. X050032)
(Civil Action No. 05-20443-CIV-HUCK)

Contact Information

Media Contact:

Mitchell Katz
Office of Public Affairs
202-326-2161

Staff Contact:
Michael Davis
Bureau of Consumer Protection
202-326-2458