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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 news briefs were published in Advertising Compliance Service in December 2001.





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A company that advertised for home workers to help assemble "Native American" or "hand-crafted bracelets" has been shut down temporarily by a federal district court as a result of charges by FTC that the company misled consumers about their prospects for profits in making the jewelry. FTC alleged that National Crafters Corp. and its owner, Thomas F. Diaz, Jr., engaged in deceptive practices by falsely advertising that the assembly work was easy and required no prior experience, and that prospective assemblers could reasonably expect to earn $360 to $720 or more per week. FTC also alleged that defendants falsely advertised that they would provide all of the supplies the prospective assemblers would need to make the bracelets.

FTC asked the court to freeze the defendants' assets for possible consumer redress and to issue a permanent injunction against them to halt the allegedly deceptive practices.

In its complaint, FTC alleged that National Crafters directly solicited consumers nationwide, sending consumers a letter, claiming to be looking for bracelet assemblers to supplement the company's workforce during its peak season. In the letter, the defendants represented that the prospective assemblers could "easily" or "potentially earn $360 weekly up to $720 or more per week." The defendants also said that they would provide the home assemblers with the necessary tools and materials to make the bracelets. To become an assembler, however, the consumer was required to pay approximately $44.00 as a "reimbursable" deposit for the materials and instructions.

In fact, FTC said, few, if any, of the work-at-home assemblers ever realized the earnings promised. FTC also alleged that defendants often provided materials that were inadequate in quality and quantity, which prohibited the assemblers from making commercially salable bracelets in accordance with the defendants' instructions and specifications. On numerous occasions, according to the complaint, the defendants rejected the bracelets sent to them by the work-at-home assemblers, stating that the bracelets didn't meet defendants' specifications, and then refused to pay for the work completed or to issue a refund for the materials deposit.

Specifically, the complaint alleges that National Crafters violated the FTC Act by misrepresenting:

the amount of money a person can reasonably expect to earn from the bracelet-making opportunity; and

that prospective work-at-home assemblers will receive adequate materials and instructions to be able to construct commercially salable bracelets.

The complaint was filed in the U.S. District Court, Southern District of Florida, Miami Division, on November 27, 2001 under seal. The seal was lifted on December 4, 2001.

NOTE: The Commission authorizes the filing of a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant actually has violated the law. The case will be decided by the court.

(National Crafters Corp., FTC File No. 002-3317, Civil Action No: 01-4826-CIV-Graham-Turnoff, December 5, 2001.)


A company that sold peppermint patty vending machines nationwide settled FTC charges that it deceived consumers by telling them they could expect a 750% yearly return on their initial investment. According to FTC, Hi Tech Mint Systems, Inc., and its principals, Larry Lind and Ron DePung, made many false claims in their ads, sales pitches and promotional materials to induce consumers to invest between $3,000 and $14,999 for their candy vending machine business opportunities. FTC charged that defendants violated provisions of FTC's Franchise Rule, a pre-purchase disclosure rule intended to give potential buyers key information about a business opportunity, including the legal and financial history of the seller and its principal officers. As part of the settlement, individual defendant Larry Lind would have to post a $250,000 performance bond before engaging in the selling of any franchise or other business venture.

Also, the defendants would be barred from violating the Franchise Rule and from making false and misleading representations in connection with the sale of business opportunities. They also would have to pay some $233,000 for consumer redress.

The proposed settlement, which requires court approval, also contains an "avalanche clause" that would require them to pay a $2 million suspended judgment if the court finds that they made misrepresentations or omissions on their financial statements submitted to FTC.

The Commission vote to authorize staff to file the stipulated final judgment and order for permanent injunction was 5-0. It was filed in the U.S. District Court, Southern District of New York, in Manhattan, on December 6, 2001.

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

(Hi Tech Mint Systems, Inc., FTC Matter No. X980075, Civil Action No. 98 Civ. 5881 (JES), December 10, 2001.)


A husband and wife agreed to settle FTC charges that they deceived customers by promising, for a fee, guaranteed approval of major credit cards regardless of credit history. Philip and Allyson Pestrichello, Credit Services of America, Inc. (CSA), and First Credit Alliance (FCA) promised consumers who responded to their ads that they were likely, for advance fees typically ranging from $45 to $105, to receive a MasterCard or Visa regardless of past credit history. Defendants also advertised that if consumers didn't get the promised credit card, they'd get a refund. In fact, FTC alleged, consumers received neither credit cards nor refunds as promised.

Under two separate settlements, defendants are barred from misrepresenting, among other things, that consumers who paid advance fees were highly likely to obtain unsecured Visa or MasterCard credit cards without credit history review. Also, the FCA Order permanently bans Philip Pestrichello from any involvement in credit-related goods or services. The A. Pestrichello Order requires Allyson Pestrichello to pay approximately $81,000 in consumer redress.

FTC sued defendants as part of "Operation Advance Fee Loan 2000," an aggressive law enforcement sweep targeting corporations and individuals that falsely promised consumers loans and credit cards for an advance fee.

FTC's vote to authorize staff to file the two stipulated final judgments and orders was 5-0. They were filed in the U.S. District Court for the District of Connecticut, in Hartford, on December 3, 2001 and approved by the court on December 5, 2001.

NOTE: These stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final judgments have the force of law when signed by the judge.

(Credit Services of America, Inc., and First Credit Alliance,, FTC Matter No. 000077, Civil Action No. CV:3:00CV1049 (CFD), December 12, 2001.)


An FTC law enforcement initiative launched five years ago to detect and prosecute violators of FTC-obtained court orders has resulted in 27 civil and/or criminal contempt prosecutions. As a result of these prosecutions, 12 defendants have been convicted, serving a combined 28 years of incarceration or home detention, and almost $4 million in penalties, fines and redress have been ordered. On January 8, 2002, a report was released highlighting the first five years of the FTC initiative called "Project Scofflaw." That report describes these and other results. The report also discusses Project Scofflaw's origins, model order language that helps FTC monitor order compliance, and the ongoing cooperation and coordination between FTC and the Department of Justice, which brings criminal contempt matters on the Commission's behalf.

According to Howard Beales, Director of FTC's Bureau of Consumer Protection,

"Project Scofflaw signals to would-be scofflaws that they risk incarceration if they violate FTC-obtained court orders. When we obtain an order, we expect defendants to comply and conform their behavior to the law. Those that don't can expect to hear from us."

FTC's vote authorizing staff to issue the Project Scofflaw Report was 5-0.

(Project Scofflaw Report, FTC Matter No. P964910, January 8, 2002.)


On December 11, 2001, FTC Chairman Timothy J. Muris established the Miles W. Kirkpatrick Award for Lifetime FTC Achievement. Basil J. Mezines, a partner in the law firm of Stein, Mitchell & Mezines, whose service to FTC and on behalf of the public interest was honored as the first winner of this award.

"The creation of this award honors two of the individuals most intimately involved in the evolution of the FTC we know today, the nation's premiere agency for protecting consumers," Chairman Muris said. "Both Miles Kirkpatrick and Basil Mezines devoted their lives

to being steadfast FTC defenders and advocates. While with the FTC, they both worked tirelessly to achieve the reform and revitalization of the Commission, and I am proud to have the opportunity to memorialize Miles and honor Basil with this award."

Having spent a total of 23 years with FTC, as a trial attorney, director of the Bureau of Competition, and Executive Director, Mezines retired from FTC in 1973 to become a partner in the law firm of Stein, Mitchell and Mezines. From his position in private practice, he continued to be a public supporter of FTC. Mezines is a specialist in antitrust and trade regulation and practices before administrative agencies and the courts.

(FTC Release, December 11, 2001.)
















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