ANALYSIS OF PROPOSED CONSENT ORDER
TO AID PUBLIC COMMENT
The Federal Trade Commission has accepted an agreement to a proposed consent order from LS Enterprises, LLC, Internet Promotions, LLC, and Louis Salatto. The proposed respondents promoted and sold various products and services through the Internet via unsolicited commercial E-Mail ("UCE"). In particular, the proposed respondents promoted and sold UCE products and services, whereby the proposed respondents offered to assist in sending bulk UCE on behalf of other companies or individuals who were selling products or services, and sold UCE software and mailing lists so that other companies or individuals could send their own bulk UCE. The proposed respondents also promoted and sold various work-at-home and business opportunities via UCE.
The proposed consent order has been placed on the public record for sixty (60) days for reception of comments by interested persons. Comments received during this period will become part of the public record. After sixty (60) days, the Commission will again review the agreement and the comments received and will decide whether it should withdraw from the agreement and take other appropriate action or make final the agreement's proposed order.
The Commission's complaint alleges several unfair or deceptive acts or practices related to the proposed respondents' promotion and sale of various products and services via UCE. The complaint charges that, with respect to the promotion and sale of UCE products and services, the proposed respondents: falsely represented that they acted as an E-Mail Internet Service Provider; falsely represented their experience in providing UCE services; made false and unsubstantiated earnings claims for purchasers of their UCE products and services; and made false and unsubstantiated claims about the receptivity of consumers on their E-Mail recipient lists towards receiving UCE.
The complaint further charges that the proposed respondents made several false or unsubstantiated claims in the promotion and sale of various work-at-home and business opportunities via UCE. The complaint charges that in a promotion concerning setting consumers up with jobs as "mystery shoppers," the proposed respondents: falsely represented that they acted as contractors for major corporations to hire consumers to work as "mystery shoppers," have hired thousands of consumers to work as "mystery shoppers," have actual job openings for "mystery shoppers" all over the country, and will give consumers as many "mystery shopper" assignments from the proposed respondents as they want or need; and made false and unsubstantiated earnings and free merchandise claims. The complaint also charges that in a general work-at-home promotion, the proposed respondents: falsely claimed that they have helped thousands of consumers to find home-based work; and made false and unsubstantiated claims about earnings, when consumers can begin work, and when and for how long they can receive paychecks. Finally, in a promotion concerning the sale of reproduction and distribution rights for various consumer manuals, the complaint charges that the proposed respondents: falsely related their experience in selling consumer manuals; and made false and unsubstantiated earnings claims associated with the sale of these manuals.
The proposed consent order contains provisions designed to remedy the violations charged and to prevent the proposed respondents from engaging in similar acts in the future. Parts I and II of the proposed order apply to the promotion of any UCE product or service, or any product or service concerning business opportunities or work-at-home opportunities. Part I prohibits the proposed respondents from misrepresenting in any manner, expressly or by implication: (A) their ability to provide any such product or service; (B) their experience in providing any such product or service; (C) that they act as contractors for other companies to hire consumers for any type of work; or (D) the availability of actual job openings or any other type of employment opportunities, or the level of assistance provided by them in securing any job or other type of employment opportunity. Part II prohibits the proposed respondents from making any claim about: (A) the amount of earnings, income, or sales that a prospective purchaser could reasonably expect to attain; (B) the amount of time within which a prospective purchaser could reasonably expect to: (1) begin earning money; (2) continue earning money; (3) attain any amount of earnings, income, or sales; or (4) recoup his or her investment; (C) the availability of free merchandise; or (D) the receptivity of persons on any type of mailing list towards receiving commercial solicitations, unless the representation is true and, at the time it is made, the proposed respondents possess and rely upon competent and reliable evidence that substantiates the representation.
Part III of the proposed order prohibits misrepresentations in UCEs, including, but not limited to, misrepresentations in the subject line or the text of the UCE. Part IV applies to the sale of any product or service, and prohibits the proposed respondents from making any representation, in any manner, expressly or by implication, about the benefits, performance, efficacy, or success rate of such product, unless such representation is true and, at the time the representation is made, the proposed respondents possess and rely upon competent and reliable evidence, which when appropriate must be competent and reliable scientific evidence, that substantiates the representation.
Part V of the proposed order contains a bond provision requiring the proposed respondents to post a $100,000 bond before advertising, promoting, offering for sale, selling, or distributing any UCE product or service via any media, or any other product or service via UCE.
Part VI of the proposed order contains record-keeping requirements for materials that demonstrate the compliance of the proposed respondents with the proposed order. Part VII requires distribution of a copy of the consent decree to certain current and future personnel who have responsibilities related to the subject matter of the order. Part VIII provides for Commission notification upon any change in the corporate respondents affecting compliance obligations arising under the order. Part IX provides for Commission notification upon any change in the individual respondent's employment status. Part X requires the filing of compliance report(s). Finally, Part XI provides for the termination of the order after twenty years under certain circumstances.
The purpose of this analysis is to facilitate public comment on the proposed order, and it is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms.