Summary of Enforcement Action Announcements for July 2003 - October 2003

Between July 2003 and October 2003, the Federal Trade Commission continued to aggressively combat telemarketing fraud. The scope of the Commission’s enforcement efforts over this three-month period is reflected in the following summaries of announcements regarding significant developments in 25 federal district court cases. The significant developments may include: new actions filed by the Commission; amendments to prior complaints; and final resolutions of enforcement actions such as settlements, default and summary judgments, and redress distribution orders. Several of the complaints filed in these cases allege violations of the Telemarketing Sales Rule. All of the cases involve the use of the telephone to market goods or services.

Federal Trade Commission v. 1st Beneficial Credit Services, et al.
The Federal Trade Commission announced the settlement of this matter. The settlement bans the defendants from selling or distributing advance-fee credit cards, via any mechanism, and prohibits them from telemarketing credit-related goods and services. The order prohibits the defendants from future violations of the FTC Act and the Telemarketing Sales Rule. The order also requires the defendants to pay approximately $190,000 for consumer redress. The Commission initially filed this case as part of “Operation No-Credit,” a coordinated crackdown on the telemarketing of nonexistent credit cards. The complaint charged the defendants with telemarketing major unsecured credit cards, such as Visa and MasterCard, to U.S. consumers in exchange for an advance fee.

Federal Trade Commission v. Yad Abraham, et al.
The Federal Trade Commission announced a settlement with one of the defendants in this matter and entry of a default judgment against another defendant. The FTC’s complaint alleged that the defendants deceptively sold fake international driving permits via a Website, e-mail solicitations, and in-bound telemarketing. This case was initially filed as part of “Operation License for Trouble.”

Federal Trade Commission v. America’s Shopping Network, Inc. , et al.
The Federal Trade Commission announced two settlements in this case. According to the FTC’s complaint, the defendants deceptively advertised their work-at-home opportunities through newspaper ads and direct mail. Under the settlements, the defendants are banned from selling certain work-at-home opportunities. This matter was initially filed as part of “Project Busted Opportunity,” a law enforcement sweep targeting fraudulent business opportunities.

Federal Trade Commission v. ArtMart Publications, Inc. et al.
The Federal Trade Commission announced a stipulated agreement settling charges that this company engaged in the deceptive sale of “equal employment opportunity” advertisements. The FTC’s complaint alleged that 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 also alleged that the defendants 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, and requires payment of a $125,000 judgment.

Federal Trade Commission v. Assail, Inc, et al.
The Federal Trade Commission announced settlements with several of the defendants in this matter. In its initial complaint, the FTC alleged that the Assail telemarketing network perpetrated widespread telemarketing fraud including a massive scam involving advance-fee credit card packages in violation of the FTC Act and the Telemarketing Sales Rule. Under the terms of the stipulated orders, the Assail defendants and the Infinium defendants are permanently banned from engaging in any future telemarketing and from making certain misrepresentations. The orders also include provisions requiring payment of judgment amounts and turning over certain personal property. The FTC also announced the filing of an amended complaint adding a defendant and dismissing others.

Federal Trade Commission v. Blair Publications Group
The Federal Trade Commission announced a stipulated agreement settling charges that this company engaged in the deceptive sale of “equal employment opportunity” advertisements. The FTC complaint alleged that the defendant misrepresented that entities already had purchased, or agreed to purchase, the ads in their publications and that payment was owed, that entities had previously purchased ads from them that were up for renewal, and that the circulation or dissemination of their publication was targeted to specific demographic groups. Under the settlement order, the defendant must obtain prior written authorization for all future advertising orders and provide affirmative disclosures regarding the nature of its advertising and its prior contacts with the customer.

Federal Trade Commission v. Canada Prepaid Legal Services, Inc., et al.
The FTC announced a settlement with one of the defendants in this case. The initial complaint alleged that the defendants violated the FTC Act and the Telemarketing Sales Rule in a telemarketing scam targeting senior citizens. The stipulated order enjoined the defendant from promoting, selling, or participating in the sale of any lottery or bond program with a lottery feature to any U.S. consumer. The order also required the defendant to relinquish certain assets, valued in excess of $1 million, to be used for consumer redress.

Federal Trade Commission v. Capital Choice Consumer Credit, Inc., et al.
The Federal Trade Commission announced a final court settlement with several defendants in this matter, barring them from the sale of advance-fee credit cards and requiring payment of more than $600,000 in redress to defrauded consumers. The initial complaint in this matter alleged violations of the FTC Act and the Telemarketing Sales Rule. This matter was filed as part of the “Operation Dialing for Deception” law enforcement sweep.

Federal Trade Commission v. Datatech Communications, Inc. et al.
The Federal Trade Commission announced the filing of a complaint alleging that these Canadian defendants violated the FTC Act in the deceptive telemarketing of business directory listings. The complaint alleges that the defendants call U.S. small businesses and tell them that they are calling to “renew” a listing in a business directory, sometimes stating or implying that these are listings in a telephone directory. The FTC alleges that the defendants employ deceptive practices in order to get consumers to agree to these “renewals.” A federal court has issued a temporary restraining order prohibiting deceptive claims and freezing the defendants’ assets.

Federal Trade Commission v. E.M. Publishing Enterprises
The Federal Trade Commission announced a stipulated agreement settling charges that this company engaged in the deceptive sale of “equal employment opportunity” advertisements. The complaint alleged that the defendants misrepresented that entities already had purchased or agreed to purchase ads in their publications and that payment was owed, and that entities had previously purchased ads from them that were up for renewal. Under the settlement order, the defendant must obtain prior written authorization for all future advertising orders and provide affirmative disclosures regarding the nature of its advertising and its prior contacts with the customer.

Federal Trade Commission v. Morgan Engle
The Federal Trade Commission announced a settlement with the defendant in this matter. The FTC's complaint alleged that the defendant advertised items for sale on various Internet auction sites; avoided the auction house process by e-mailing consumers or telephoning them directly to induce purchases; and then rarely delivered the goods or provided refunds. Under the terms of the final order, the defendant was banned from using Internet auction sites and he must pay $5,820 in consumer redress. The order also requires the defendant to post a bond before engaging in future telemarketing and comply with the FTC Act and the Mail Order rule in any future sales of goods and services. This case was filed as part of "Operation Bidder Beware," a law enforcement crackdown targeting Internet auction fraud.

Federal Trade Commission v. First Financial Debt Consolidation, Inc. et al.
A federal court has entered a default judgment against the defendants in this matter. The FTC’s complaint alleged that the defendants violated the FTC Act and the Telemarketing Sales Rule in the deceptive sale of credit cards. The final order bans the defendants from engaging in the sale of credit-related goods and services, requires a $1.4 million bond for future telemarketing, prohibits various misrepresentations under Section 5 and the Telemarketing Sales Rule in the sale of good and services, and enters a judgment of $1,341,248.15. This case was originally filed as part of “Operation No Credit.”

United States (for the Federal Trade Commission) v. Global Vending Services, Inc., et al.
The Federal Trade Commission announced a settlement in this matter filed by the United States Department of Justice on the Commission’s behalf. The defendants settled charges that they failed to provide the pre-sale disclosure documents required by the FTC's Franchise Rule to prospective purchasers of their snack and soda vending machine business opportunities. The settlement requires the individual defendants to post a $500,000 performance bond before engaging in the sale of business opportunities. This case was filed as part of “Project Busted Opportunity,” a law enforcement sweep targeting fraudulent business opportunities.

Federal Trade Commission v. Healthcare Claims Network, Inc., et al.
The Federal Trade Commission announced a settlement in this matter. Under the terms of the agreement, the corporate defendant’s assets will be liquidated and the remaining individual defendant will pay $10,000. In addition, the settlement prohibits the defendants from making any deceptive claims in connection with the sale of any goods or services. This case was filed as part of “Project Busted Opportunity,” a law enforcement sweep targeting fraudulent business opportunities.

Federal Trade Commission v. ICR Services, Inc., et al.
The Federal Trade Commission announced a $1.15 million settlement with these defendants resolving charges that they violated the FTC Act and the Credit Repair Organizations Act. The Commission’s complaint alleged that the defendants, who sell credit-repair services through a multilevel marketing organization, falsely claimed that they could remove derogatory information from consumers’ credit reports, even if that information was accurate and not obsolete. The Commission also authorized the staff to file an amicus brief and to appear as amicus curiae in Carter v. ICR Services, Inc. [TXT] [TXT#2]

Federal Trade Commission v. Jaguar Business Concepts, LP, et al.
The Federal Trade Commission announced a settlement with these defendants of charges that they deceptively sold phony International Driver’s Permits (IDPs). The two companies have stipulated to a final order and the Court entered a default judgment against the individual defendant. Under the terms of the orders, the defendants are barred from promoting or selling IDPs or any type of identification document. The FTC’s complaint was part of “Operation License for Trouble,” a law enforcement sweep.

Federal Trade Commission v. Jubilee Financial Services, Inc. et al.
The Federal Trade Commission announced two settlements in this case. The initial complaint was filed as part of “Operation No-Credit,” a law enforcement sweep targeting a wide range of credit-related frauds. The complaint charged the defendants with deceptively marketing debt-negotiation services in violation of the FTC Act. Under the terms of the final orders, the individual defendants are permanently banned from participating in debt-negotiation services and are prohibited from misrepresenting any material fact in connection with the sale of any good or service. They also are required to cease any collection efforts arising from the activities alleged in the complaint and to return any uncashed checks to consumers. One of the individual defendants also has turned over certain assets, including his personal residence valued at more than $500,000.

Federal Trade Commission v. Mercury Marketing of Delaware, Inc. et al.
The Federal Trade Commission filed suit charging these defendants with contempt. The action alleges that the defendants continue to bill consumers for Internet-related services without consumers’ authorization, in violation of federal law and a previous FTC order. The underlying order stemmed from a previous case brought by the FTC alleging that the defendants’ telemarketers cold-called small businesses nationwide offering to create a Web page, or advertisement on the Internet, for consumers and then billed them without their authorization.

Federal Trade Commission v. Mountain View Systems, Ltd., et al.
The Federal Trade Commission announced a settlement with one of the defendants in this matter. The FTC’s complaint alleged that the defendant participated in a scheme to market and sell phony International Driver’s Permits (IDPs) and academic degrees via a Website, e-mail solicitations, and in-bound telemarketing. Under the terms of the settlement, the defendant is barred from providing financial processing services to any person or entity that promotes or sells fraudulent IDPs or any type of bogus identification document, and from misrepresenting the uses and benefits of IDPs and other identification documents. The order required the defendant to surrender certain funds. This case was initially filed as part of “Operation License for Trouble.”

Federal Trade Commission v. Sherif, et al.
The Federal Trade Commission announced a settlement with one of the defendants in this matter. The FTC’s complaint alleged that these British Columbia-based defendants targeted elderly consumers, sometimes claiming to sell them shares in foreign lottery tickets, and at other times claiming that consumers had won millions in a foreign lottery or a “give-away.” The FTC charged the defendants with violating the FTC Act and the Telemarketing Sales Rule. The settlement banned the defendant from selling lottery materials in the U.S. and required her, among other things, to relinquish certain assets acquired during the operation of the deceptive telemarketing operation. The FTC also announced a default judgment obtained against another defendant in this case in the amount of $1.8 million.

Federal Trade Commission v. Star Credit, Inc., et al.
The Federal Trade Commission announced the settlement of this matter. The FTC’s initial complaint alleged that the defendants operated an unlawful advance-fee loan scheme by falsely guaranteeing, for an up-front fee, a loan to any consumer, regardless of their credit history, and falsely promising a full refund if the consumer did not get the promised loan. The settlement prohibits the defendants from misrepresenting material aspects of the goods or services they are offering for sale and misrepresenting any material aspect of the refund policy. The order also requires payment of $120,000. The FTC filed charges against the defendants as part of “Operation No Credit.” The complaint alleged violations of the FTC Act and the Telemarketing Sales Rule.

Federal Trade Commission v. Trek Alliance, Inc., et al.
A federal district court judge has issued a preliminary injunction halting the allegedly illegal activities of the defendants, freezing assets pending trial, and appointing a receiver to oversee their business assets. The Federal Trade Commission sued the California-based operation for using deceptive earnings claims to lure recruits into investing hundreds or thousands of dollars in their illegal scheme.

United States of America (for the Federal Trade Commission) v. Turnkey Vending, Inc. et al.
The Federal Trade Commission announced a settlement of this matter, which was filed by the Department of Justice on behalf of the Commission. The complaint alleged that the defendants 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. This matter was filed as part of “Project Busted Opportunity,” a law enforcement sweep targeting fraudulent business opportunities.

Federal Trade Commission v. Tyme Lock 2000, Inc., et al.
The Federal Trade Commission announced the settlement of this matter. The complaint charged the defendants with falsely representing that consumers would receive a credit card and various electronic items in exchange for a fee. The Commission alleged that the defendants’ practices violated the Telemarketing Sales Rule and FTC Act. Under the terms of the agreement, the defendants are banned from advertising, marketing, or selling any credit-related goods or services. Among other things, the settlement order prohibits the defendants from misrepresenting any fact material to a consumer’s purchasing decision. This case was filed as part of “Operation No-Credit.”

Federal Trade Commission v. United Media Publishing Group
The Federal Trade Commission announced a stipulated agreement settling charges that this company engaged in the deceptive sale of “equal employment opportunity” advertisements. The FTC complaint alleged that the defendant misrepresented that entities already had purchased or agreed to purchase ads in their publications and that payment was owed, that entities had previously purchased ads from them that were up for renewal, and that the circulation or dissemination of their publication was targeted to specific demographic groups. Under the settlement order, the defendant must obtain prior written authorization for all future advertising orders and provide affirmative disclosures regarding the nature of its advertising and its prior contacts with the customer.