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Business Opportunity Telemarketer Agrees to Pay
$100,000 to Settle FTC Fraud Charges
Star
Publishing Group, Inc., doing business as National Consumer
Services, and its president, Kent Hopkins, have agreed to pay
$100,000 in redress to settle Federal Trade Commission charges
that they used deceptive and illegal practices in marketing a
work-at-home employment guide on how to start a business as an
HUD/FHA mortgage insurance refund tracer. The case was filed in
February 2000 as part of "Project Biz-illion$," a
multi-prong attack by the FTC, the Justice Department and law
enforcement officials from 29 states on business opportunity
scams. The FTC alleged that the defendants' advertisements led
consumers to believe that their guide on starting a home-based
business as a refund tracer was an employment opportunity for
processing mortgage insurance refunds for the U.S. government.
The proposed settlement would prohibit the defendants from
making the kinds of deceptive claims alleged in the complaint.
According
to the FTC's complaint, the defendants placed small classified
ads in local weekly newspapers promising "$800 WEEKLY
POTENTIAL!!." The ads told consumers to call a toll-free
number for information. When they did, consumers reached a
pre-recorded message that misrepresented the amount of money
consumers would earn; that the defendants' were affiliated with
the U. S. government; that full refunds were available after 90
days; and that the defendants' program contained everything
needed to start a refund tracer business.
The
proposed settlement, which requires the court's approval, would
prohibit the defendants, in connection with the advertising,
promotion, offering for sale, or sale of any work-at-home,
employment, or business opportunity, from:
- falsely representing that the
defendants are affiliated with the U.S. government or that
consumers who pay the defendants a fee will be employed by
the U.S. government;
- failing to adequately
disclose that any work-at-home employment guide or income
generating product or service offered by the defendants is
not an employment opportunity unless that is the case, and
to adequately disclose that additional costs are necessary
if that is the case; and
- making, or assisting in
making, any statement or representation of material fact
that is false, misleading, or not supported by a reasonable
basis, including any false, misleading or unsubstantiated
representation about the pay or earnings a person is likely
to make, the availability of employment opportunities, and
the defendants' refund policy.
The
proposed settlement would require the defendants to pay $100,000
in consumer redress within 10 days of the order's entry by the
court. The defendants also would be prohibited from disclosing
the name, address, telephone number, credit card number, bank
account number, e-mail address or other identifying information
of any person who paid money to them before February 16, 2000,
in connection with the marketing and sale of their work-at-home
employment guide.
Finally
the proposed settlement contains various record-keeping
requirements to assist the FTC in monitoring the defendants'
compliance.
The
Commission vote to authorize staff to file the proposed
settlement was 5-0. The stipulated final judgment and order was
filed in the U.S. District Court for the District of Wyoming, in
Cheyenne, on August 1, 2000.
Copies
of the release and proposed settlement will be available shortly
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; 877-FTC-HELP
(877-382-4357); TDD for the hearing impaired 202-326-2502. To
find out the latest news as it is announced, call the FTC News
Phone recording at 202-326-2710.
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