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FTC CHAIRMAN TIMOTHY J. MURIS TO LEAVE THIS SUMMER
FTC Chairman, Timothy J. Muris, will leave the Federal Trade Commission this summer. In announcing his decision, Chairman Muris said:
"Serving as Chairman of the Commission has been the greatest honor of
my professional career. I deeply appreciate the trust that President
Bush placed in me by providing this opportunity to serve. As I have
said repeatedly, the mission of the agency is vital; the issues are
fascinating; and the people are outstanding. It is a great pleasure
to work with such superb fellow Commissioners and staff."
President Bush's nominee to replace Muris is Deborah P. Majoras.
Muris said that Majoras is "a highly talented and experienced lawyer,
and, if confirmed by the Senate, would be an excellent Chairman."
(Statement of Federal Trade Commission Chairman Timothy J. Muris, May
DEFENDANTS BANNED FROM ADVERTISING GREETING CARD BUSINESS OPPORTUNITIES
Greeting Cards of America, Inc. (GCA), and its owners,
Gerald Towbin and Susan Towbin, are banned from advertising or
selling any franchise, business venture, or business opportunity as
part of a settlement with FTC. The Commission alleged that the
defendants, as well as American Eagle Placements and its owner,
Forrest Adams, used deceptive tactics in selling greeting card
display rack business opportunities. In addition to the ban, the
settlement bars the GCA defendants from making material
misrepresentations in connection with the sale of any goods or
services, and requires them to pay more other $400,000 in consumer
NOTE: This stipulated final judgment and order is for settlement
purposes only and does not constitute an admission by the defendant
of a law violation. Stipulated final judgments have the force of law
when signed by the judge.
(Federal Trade Commission. v. Greeting Cards of America. Inc., et
al., United States District Court for the Southern District of
Florida, Case No. 03-60746-civ-gold, FTC File No. X030044, Civil
Action No. 03-60746-Civ-Gold, May 13, 2004.)
FTC FINALIZES TWO CONSENT ORDERS CONCERNING AD CLAIMS FOR SUPPLEMENTS
By a vote of 5-0, FTC approved two final consent orders
related to its case against Vital Basics, Inc., Robert B. Graham, and
Michael B. Shane; and Creative Health Institute, Inc., and Kyl L
Smith. In these cases, marketers of certain supplements agreed to
settle FTC charges that they made many unsubstantiated advertising
claims for the products.
FTC's action comes after a public comment period on the proposed
consent orders, during which FTC didn't receive any comments.
(FTC Announced Action for May 4, 2004; see also, Advertising
Compliance Service, Tab #17, Food, Drugs, Cosmetics, Article #98.)
CONSUMERS TO SHARE $20 MILLION IN REDRESS OVER ALLEGED PYRAMID SCAM
"Tens of thousands of consumers who were victims of SkyBiz.com,
an Internet pyramid scam disguised as a legitimate business
opportunity, may qualify to share in a $20 million court-ordered
redress fund," according to FTC. Consumers who invested in SkyBiz.com
will be notified by e-mail from the court-appointed fund
administrator that they may qualify to share in the redress fund.
In June 2001, FTC filed suit charging that the defendants promoted a
work-at-home business opportunity with claims of quick riches. In
sales presentations, seminars, teleconferences, website
presentations, and other marketing material, defendants touted the
opportunity to earn thousands of dollars a week by recruiting new
"Associates" into the program. The cost to join the SkyBiz Program
was as much as $125, supposedly used to buy an "e-Commerce Web Pak"
but in reality it was to buy the right to receive compensation for
recruiting additional participants. According to FTC, defendants
urged participants to invest in more than one "Web Pak" to maximize
their earning potential.
FTC charged that--
the claims that consumers who invested in SkyBiz would make
substantial income were false;
failure to disclose that most people in pyramid schemes lose money
defendant provided the means and instrumentalities for others to
deceive consumers by providing speakers and promotional materials
that made the false and misleading claims; and
SkyBiz was actually an illegal pyramid scheme.
All four acts violate the FTC Act.
Defendants agreed to a settlement that provided $20 million for
consumer redress and bars all the defendants from taking part in
pyramid schemes or misrepresenting the amount of sales, income,
profits or rewards of any future business venture.
The settlement permanently bars Nanci Corporation from engaging in,
advertising, or selling any multilevel marketing program. The
settlement bars Elias F. Masso from engaging in any aspect of
multilevel marketing for 22 years, James S. Brown for 10 years, and
Kier E. Masso for seven years.
The settlement bars all of the defendants from providing others with
the means and instrumentalities to make false and misleading
statements. In addition, the settlement requires that when the
defendants make any claims regarding earnings, profits, or sales
volume for future marketing programs, they disclose the number and
percentage of participants who have made a profit through the program
and disclose the average and median amount of money made.
(FTC. v. Skybiz.Com, Inc., et al., (Dist. Ct., N.D. Oklahoma, FTC
File No. X01 0046, May 14, 2004.)
FTC GAINS PERMANENT INJUNCTION IN ALLEGED BOGUS CREDIT CARD OFFER
A federal district court granted FTC's motion for summary
judgment in its case against Peter J. Porcelli, II and several of his
companies, including Bay Area Business Council, Inc. and American
Leisure Card Corp., and issued a permanent injunction against the
defendants. The defendants offered consumers guaranteed low-interest
unsecured MasterCard credit cards for an advance fee. The defendants,
in their sales calls to consumers, specified a certain amount for a
"one-time processing" fee, but charged consumers additional
undisclosed fees, according to FTC. The judge granted FTC's request
for summary judgment, and ordered the defendants to pay
The court order stems from FTC charges filed in August 2002.
In his ruling, U.S. District Judge John W. Darrah found that "the
undisputed facts established" that the defendants:
made false or misleading statements to induce consumers to purchase
credit cards with substantial credit limits for an advance fee,
never provided, nor intended to provide, any credit cards, and
demanded payment of additional undisclosed fees, all in violation of
the FTC Act and the Telemarketing Sales Rule.
The court also found that Peter Porcelli and Bonnie Harris were
intimately involved in the enterprise and knew about the deceptive
The court's final order bans the defendants from telemarketing, and
from selling credit-related products. The order bars defendants from
making the types of misrepresentations cited in FTC's complaint. The
order further bars defendants from misrepresenting any fact material
to a consumer's decision to purchase the defendants' products or
(Federal Trade Commission v. Bay Area Business Council, Inc., et al.,
(Northern District of Illinois, Eastern Division), FTC File No.
X020103, Civil Action No. 02 C 5762, May 13, 2004.)
NOTE: A consent agreement is for settlement purposes only and does
not constitute an admission of a law violation. When the Commission
issues a consent order on a final basis, it carries the force of law
with respect to future actions. Each violation of such an order may
result in a civil penalty of $11,000.
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