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Note:This website is where you can find advertising law information based on archived news briefs from past issues of Advertising Compliance Service. These archived advertising law-related news briefs were published in Advertising Compliance Service in March 2003.





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Distribution of $20 million dollars in consumer redress will begin in the near future for alleged victims of SkyBiz, an alleged massive international pyramid operation. The money for consumer redress is part of a settlement between the pyramid's promoters and FTC. The settlement also bars defendants from (1) participating in pyramid schemes in the future, and misrepresenting business ventures. It bars one defendant from engaging in any multilevel marketing programs for life and bars three others from engaging in multilevel marketing programs for periods ranging from seven to 22 years.

In May 2001, FTC filed suit in U.S. District Court in Tulsa, Oklahoma charging that SkyBiz and its principals promoted a pyramid scheme with claims of quick riches. FTC alleged that in sales presentations, seminars, teleconferences, Web site presentations and other marketing material, the 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 $125, ostensibly used to buy an "e-Commerce Web Pak." The company's sales presentations, however, focused on the huge sums of money that could be made by recruiting additional participants. Participants were urged to invest in more than one "Web Pak" to maximize their earning potential.

FTC claimed that the program was a classic pyramid scheme. The agency charged that the claims that consumers who invested in SkyBiz would make substantial income were deceptive; that the defendants' failure to disclose that most people in pyramid schemes lose money is deceptive; that the defendants provided the means and instrumentalities for others to deceive consumers by providing speakers and promotional materials that made the false and misleading claims; and that SkyBiz was actually an illegal pyramid scheme. The FTC alleged that all four actions violate the FTC Act.

Defendants agreed to a settlement, reached in principle January 4, 2003, and entered by the court on January 28, 2003, to end the litigation as to nine defendants.

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

(SkyBiz, et al., FTC File No. X010046, March 24, 2003.)


Univend, LLC, and its owner Paul Hall, agreed to settle FTC charges that they failed to provide the pre-sale disclosure documents required by FTC's Franchise Rule to prospective purchasers of their vending machine business opportunities. In its complaint, FTC alleged that defendants solicited consumers primarily through classified ads, touting statements such as: "$400+MONTH Vending Route" with "Prime Locations."

According to FTC, defendants, when advertising their vending machines, made specific earnings claims without providing an earnings claim document and without having a reasonable basis for those claims.

Under the settlements' terms, defendants are:

required to pay an $11,000 civil penalty;

barred from making false and misleading representations in connection with the sale of business opportunities;

barred from providing prospective business opportunity purchasers with the names of references other than those that the Franchise Rule requires; and

required to comply with the Franchise Rule.

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

(Univend, LLC, et al., FTC Matter No. X020084, Civil Action No. 02-0433-P-L, March 31, 2003)
















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