Markets Wired

An operator who used more than 5,500 copycat Web addresses to divert surfers from their intended Internet destinations to one of his sites, and held them captive while he pelted their screens with a barrage of adult-oriented ads, has agreed to settle FTC charges that he was in contempt of a court order requiring him to halt the practices. Under the new FTC order, the defendant must give up $164,000 in ill-gotten gains, conform to enhanced compliance and monitoring requirements, and transmit a copy of the new order to his probation officer.

In October 2001, the FTC charged that John Zuccarini was registering Internet domain names that were misspellings of legitimate domain names or that incorporated transposed or inverted words or phrases. For example, the defendant registered 15 variations of the popular children’s cartoon site, www.cartoonnetwork.com, and 41 variations on the name of pop star Britney Spears. Surfers who looked for a site but misspelled its Web address or inverted a term – using cartoonjoe.com, for example, rather than joecartoon.com – were taken to the defendant’s sites. They then were allegedly bombarded with a rapid series of windows displaying ads for goods and services ranging from Internet gambling to pornography. In some cases, the legitimate Web site the consumer was attempting to access also was launched, so consumers thought the series of ads was from a legitimate Web site. It was difficult or impossible for consumers to close the windows or escape.

In May 2002, at the request of the FTC, the court permanently barred Zuccarini from redirecting or obstructing consumers on the Internet in connection with the advertising, promoting, offering for sale, selling, or providing any goods or services on the Internet, the World Wide Web or any Web page or Web site; misrepresenting that any Web pages, Web sites, domain names, or goods or services, are endorsed by, affiliated or associated with, any third parties; and participating in any affiliate marketing programs (revenue-sharing arrangements involving the marketing of goods or services through the use of online banners, ads, and text links). Zuccarini was required to give up $1.8 million in ill-gotten gains. The court also ordered certain bookkeeping and record-keeping requirements to allow the FTC to monitor his compliance with the court’s order.

In August 2003, the United States Attorney for the Southern District of New York criminally prosecuted Zuccarini for the misleading use of domain names and possession of child pornography. He was sentenced to 30 months in prison and 36 months of supervised release.

In December 2006, the FTC charged that Zuccarini violated the 2002 FTC order by redirecting consumers on the Internet, misrepresenting that his domain names were affiliated or associated with third parties, and participating in affiliate marketing programs. The agency also charged that the defendant did not comply with record-keeping and reporting requirements in the original order.

The court issued a temporary restraining order to halt the defendant’s prohibited practices, freeze the defendant’s assets, and require records preservation.

In January 2007, the court approved a stipulated preliminary injunction halting the defendant’s illegal conduct pending resolution of the contempt proceedings. On May 31, 2007, the court approved a stipulated order ending that litigation.

The defendant stipulates that he was in contempt of the original FTC order. The new order imposes a judgment of $164,000 – his ill-gotten gain from engaging in the prohibited practices. The original order remains in place, and the new order updates and enhances the compliance and monitoring requirements. Finally, the new order requires that Zuccarini transmit a copy of the new order to his probation officer.

The FTC order names John Zuccarini, individually and doing business as Cupcake Party, et al.

The Commission vote to accept the stipulated judgment and order was 5-0.

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

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

An operator who used more than 5,500 copycat Web addresses to divert surfers from their intended Internet destinations to one of his sites, and held them captive while he pelted their screens with a barrage of adult-oriented ads, has agreed to settle FTC charges that he was in contempt of a court order requiring him to halt the practices. Under the new FTC order, the defendant must give up $164,000 in ill-gotten gains, conform to enhanced compliance and monitoring requirements, and transmit a copy of the new order to his probation officer.

In October 2001, the FTC charged that John Zuccarini was registering Internet domain names that were misspellings of legitimate domain names or that incorporated transposed or inverted words or phrases. For example, the defendant registered 15 variations of the popular children’s cartoon site, www.cartoonnetwork.com, and 41 variations on the name of pop star Britney Spears. Surfers who looked for a site but misspelled its Web address or inverted a term – using cartoonjoe.com, for example, rather than joecartoon.com – were taken to the defendant’s sites. They then were allegedly bombarded with a rapid series of windows displaying ads for goods and services ranging from Internet gambling to pornography. In some cases, the legitimate Web site the consumer was attempting to access also was launched, so consumers thought the series of ads was from a legitimate Web site. It was difficult or impossible for consumers to close the windows or escape.

In May 2002, at the request of the FTC, the court permanently barred Zuccarini from redirecting or obstructing consumers on the Internet in connection with the advertising, promoting, offering for sale, selling, or providing any goods or services on the Internet, the World Wide Web or any Web page or Web site; misrepresenting that any Web pages, Web sites, domain names, or goods or services, are endorsed by, affiliated or associated with, any third parties; and participating in any affiliate marketing programs (revenue-sharing arrangements involving the marketing of goods or services through the use of online banners, ads, and text links). Zuccarini was required to give up $1.8 million in ill-gotten gains. The court also ordered certain bookkeeping and record-keeping requirements to allow the FTC to monitor his compliance with the court’s order.

In August 2003, the United States Attorney for the Southern District of New York criminally prosecuted Zuccarini for the misleading use of domain names and possession of child pornography. He was sentenced to 30 months in prison and 36 months of supervised release.

In December 2006, the FTC charged that Zuccarini violated the 2002 FTC order by redirecting consumers on the Internet, misrepresenting that his domain names were affiliated or associated with third parties, and participating in affiliate marketing programs. The agency also charged that the defendant did not comply with record-keeping and reporting requirements in the original order.

The court issued a temporary restraining order to halt the defendant’s prohibited practices, freeze the defendant’s assets, and require records preservation.

In January 2007, the court approved a stipulated preliminary injunction halting the defendant’s illegal conduct pending resolution of the contempt proceedings. On May 31, 2007, the court approved a stipulated order ending that litigation.

The defendant stipulates that he was in contempt of the original FTC order. The new order imposes a judgment of $164,000 – his ill-gotten gain from engaging in the prohibited practices. The original order remains in place, and the new order updates and enhances the compliance and monitoring requirements. Finally, the new order requires that Zuccarini transmit a copy of the new order to his probation officer.

The FTC order names John Zuccarini, individually and doing business as Cupcake Party, et al.

The Commission vote to accept the stipulated judgment and order was 5-0.

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

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

Planning to cap off your Halloween costume with a pair of cat-eye contact lenses? The Federal Trade Commission wants you to know that all contacts — even those that are cosmetic or theatrical — require a prescription.

A new publication from the nation’s consumer protection agency, “Avoiding an Eyesore: What to Know Before You Buy Cosmetic Contacts,” says that businesses that sell cosmetic contacts without requiring a prescription are violating the law, and that eye care professionals who provide eye exams must give consumers a copy of their prescription. These requirements of the Contact Lens Rule address health concerns: lenses that don’t fit properly can cause problems such as conjunctivitis (pink eye) and scratches and sores on the cornea.

In 2003, Congress enacted the Fairness to Contact Lens Consumers Act, which imposed new prescription release and verification requirements on prescribers and sellers of contact lenses. In July 2004, the Commission issued the Contact Lens Rule to implement the Act. On November 9, 2005, Congress amended the law to state that all contact lenses, including cosmetic or colored contacts, are restricted medical devices. A prescription from a medical professional is required to purchase a restricted medical device. According to the Food and Drug Administration, “[d]ecorative contact lenses present significant risks of blindness and other eye injury if they are distributed without a prescription or without proper fitting by a qualified eye care professional.”

Other Business and Consumer Education Materials: To educate contact lens prescribers, sellers, and consumers about the Contact Lens Rule, the FTC staff has issued “The Contact Lens Rule: a Guide for Prescribers and Sellers,” and “The Eyes Have It – Get Your Prescription.”

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

Planning to cap off your Halloween costume with a pair of cat-eye contact lenses? The Federal Trade Commission wants you to know that all contacts — even those that are cosmetic or theatrical — require a prescription.

A new publication from the nation’s consumer protection agency, “Avoiding an Eyesore: What to Know Before You Buy Cosmetic Contacts,” says that businesses that sell cosmetic contacts without requiring a prescription are violating the law, and that eye care professionals who provide eye exams must give consumers a copy of their prescription. These requirements of the Contact Lens Rule address health concerns: lenses that don’t fit properly can cause problems such as conjunctivitis (pink eye) and scratches and sores on the cornea.

In 2003, Congress enacted the Fairness to Contact Lens Consumers Act, which imposed new prescription release and verification requirements on prescribers and sellers of contact lenses. In July 2004, the Commission issued the Contact Lens Rule to implement the Act. On November 9, 2005, Congress amended the law to state that all contact lenses, including cosmetic or colored contacts, are restricted medical devices. A prescription from a medical professional is required to purchase a restricted medical device. According to the Food and Drug Administration, “[d]ecorative contact lenses present significant risks of blindness and other eye injury if they are distributed without a prescription or without proper fitting by a qualified eye care professional.”

Other Business and Consumer Education Materials: To educate contact lens prescribers, sellers, and consumers about the Contact Lens Rule, the FTC staff has issued “The Contact Lens Rule: a Guide for Prescribers and Sellers,” and “The Eyes Have It – Get Your Prescription.”

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

Spammers must stop sending unwanted and illegal e-mail messages about hoodia weight-loss products and human growth hormone anti-aging products that the Federal Trade Commission alleges don’t work. At the FTC’s request, a district court judge ordered a halt to the e-mails and to product claims that the FTC charges are false and unsubstantiated. The law enforcement action, announced today at an international meeting of government authorities and private industry about spam, spyware, and other online threats, is the first brought by the agency using the U.S. SAFE WEB Act to share information with foreign partners.

The FTC alleged that the international enterprise, with defendants in the United States, Canada, and Australia, used spammers to drive traffic to Web sites selling two kinds of pills. One kind, called “HoodiaLife” and “HoodiaPlus,” was supposed to contain hoodia gordonii and cause significant weight loss. The other, called “HGHLife” and “HGHPlus,” was supposed to be a “natural human growth hormone enhancer” that would dramatically reverse the aging process. The FTC’s spam database received over 175,000 spam messages sent on behalf of the operation.

The FTC alleges that the claims made for the products were false and unsubstantiated. According to the FTC complaint, the defendants falsely claimed that their supposed “hoodia” products cause rapid and substantial weight loss, including as much as 25 pounds in a month; cause users to lose safely three or more pounds per week for multiple weeks; and cause permanent weight loss. The complaint also charges that the defendants falsely claimed that their supposed HGH products would contain human growth hormone and/or cause a clinically meaningful increase in a consumer’s growth hormone levels. According to the FTC, the defendants also falsely claimed that their HGH products would turn back or reverse the aging process, including: reducing cellulite, improving hearing and vision, causing new hair growth, improving emotional stability, increasing muscle mass, and causing fat and weight loss. The FTC charges that the defendants made all of these claims without evidence to support them.

In addition, the FTC alleges that the operation violated the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”) by initiating commercial e-mails that contained false “from” addresses and deceptive subject lines, and failed to provide an opt-out link or physical postal address.

This is the first agency law enforcement action where FTC staff employed the U.S. SAFE WEB Act to share information with foreign partners. Passed by Congress last year, the Act recognizes that spam, spyware, fraud, and other practices harmful to consumers are increasingly global in nature, and strengthens the FTC’s ability to cooperate with foreign counterparts. In addition to sharing key information for law enforcement efforts, it also gives the FTC enhanced authority in investigative assistance, protecting the confidentiality of information from foreign sources, and strengthening enforcement relationships.

FTC Chairman Deborah Platt Majoras announced the complaint and temporary restraining order today in Arlington, Virginia during her keynote address at the third joint workshop between the London Action Plan (LAP) and the European Union’s Contact Network of Spam Authorities (CNSA). This is the first LAP-CNSA meeting held in the United States. The LAP, created in 2004, is a global network of industry representatives and law enforcement agencies involved in the fight against spam, phishing, and other online threats. The CNSA, which the European Commission created in the same year, is a network of spam enforcement authorities from EU Member States.

As part of the joint LAP-CNSA workshop, which has participants from more than 20 countries, the organizations will hold joint sessions with the Messaging Anti-Abuse Working Group, a global organization that includes network operators, e-mail service providers, and vendors, and works against abuse and online exploitation on existing networks and emerging services.

The complaint was filed against Spear Systems, Inc., Bruce Parker, Lisa Kimsey, and Xavier Ratelle, doing business as eHealthylife.com. The federal district court judge ordered an ex parte temporary restraining order and asset freeze. A hearing is scheduled for October 11, 2007 to determine whether to extend the halt to the defendants’ claims and the asset freeze until the Commission’s case is resolved. The FTC ultimately seeks to permanently bar them from further violations and make them forfeit their ill-gotten gains. The product at issue in the complaint was the subject of a referral by Electronic Retailing Self-Regulatory Program to the FTC.

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois.

NOTE: The Commission files 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 has actually violated the law. The case will be decided by the court.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

Spammers must stop sending unwanted and illegal e-mail messages about hoodia weight-loss products and human growth hormone anti-aging products that the Federal Trade Commission alleges don’t work. At the FTC’s request, a district court judge ordered a halt to the e-mails and to product claims that the FTC charges are false and unsubstantiated. The law enforcement action, announced today at an international meeting of government authorities and private industry about spam, spyware, and other online threats, is the first brought by the agency using the U.S. SAFE WEB Act to share information with foreign partners.

The FTC alleged that the international enterprise, with defendants in the United States, Canada, and Australia, used spammers to drive traffic to Web sites selling two kinds of pills. One kind, called “HoodiaLife” and “HoodiaPlus,” was supposed to contain hoodia gordonii and cause significant weight loss. The other, called “HGHLife” and “HGHPlus,” was supposed to be a “natural human growth hormone enhancer” that would dramatically reverse the aging process. The FTC’s spam database received over 175,000 spam messages sent on behalf of the operation.

The FTC alleges that the claims made for the products were false and unsubstantiated. According to the FTC complaint, the defendants falsely claimed that their supposed “hoodia” products cause rapid and substantial weight loss, including as much as 25 pounds in a month; cause users to lose safely three or more pounds per week for multiple weeks; and cause permanent weight loss. The complaint also charges that the defendants falsely claimed that their supposed HGH products would contain human growth hormone and/or cause a clinically meaningful increase in a consumer’s growth hormone levels. According to the FTC, the defendants also falsely claimed that their HGH products would turn back or reverse the aging process, including: reducing cellulite, improving hearing and vision, causing new hair growth, improving emotional stability, increasing muscle mass, and causing fat and weight loss. The FTC charges that the defendants made all of these claims without evidence to support them.

In addition, the FTC alleges that the operation violated the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”) by initiating commercial e-mails that contained false “from” addresses and deceptive subject lines, and failed to provide an opt-out link or physical postal address.

This is the first agency law enforcement action where FTC staff employed the U.S. SAFE WEB Act to share information with foreign partners. Passed by Congress last year, the Act recognizes that spam, spyware, fraud, and other practices harmful to consumers are increasingly global in nature, and strengthens the FTC’s ability to cooperate with foreign counterparts. In addition to sharing key information for law enforcement efforts, it also gives the FTC enhanced authority in investigative assistance, protecting the confidentiality of information from foreign sources, and strengthening enforcement relationships.

FTC Chairman Deborah Platt Majoras announced the complaint and temporary restraining order today in Arlington, Virginia during her keynote address at the third joint workshop between the London Action Plan (LAP) and the European Union’s Contact Network of Spam Authorities (CNSA). This is the first LAP-CNSA meeting held in the United States. The LAP, created in 2004, is a global network of industry representatives and law enforcement agencies involved in the fight against spam, phishing, and other online threats. The CNSA, which the European Commission created in the same year, is a network of spam enforcement authorities from EU Member States.

As part of the joint LAP-CNSA workshop, which has participants from more than 20 countries, the organizations will hold joint sessions with the Messaging Anti-Abuse Working Group, a global organization that includes network operators, e-mail service providers, and vendors, and works against abuse and online exploitation on existing networks and emerging services.

The complaint was filed against Spear Systems, Inc., Bruce Parker, Lisa Kimsey, and Xavier Ratelle, doing business as eHealthylife.com. The federal district court judge ordered an ex parte temporary restraining order and asset freeze. A hearing is scheduled for October 11, 2007 to determine whether to extend the halt to the defendants’ claims and the asset freeze until the Commission’s case is resolved. The FTC ultimately seeks to permanently bar them from further violations and make them forfeit their ill-gotten gains. The product at issue in the complaint was the subject of a referral by Electronic Retailing Self-Regulatory Program to the FTC.

The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois.

NOTE: The Commission files 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 has actually violated the law. The case will be decided by the court.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

Four members of a South Carolina family have settled Federal Trade Commission charges that they operated “location services” companies that falsely promised to find locations for their customers’ vending machines and display racks and made false earnings claims.

The defendants promised customers they would secure “profitable locations,” charging from $150 to as much as $6,000, depending on the number and types of locations they were paid to find. According to a complaint filed by the FTC, they often did little or nothing for their customers, and often failed to find any locations, or not as many as they had been hired to find. They also were charged with falsely claiming that customers were likely to achieve significant sales and earn substantial income by using locations the company could secure. Customers rarely, if ever, made the kind of sales promised in the pitches or ever achieved a full return of their investment.

The defendants are Cornerstone Marketing LLC; Sidney Putnam, individually and d/b/a Prime Time Marketing, Prestige Marketing, Metropolitan Placement Services, and Best Locations; his wife, Carol Putnam, individually and d/b/a Prestige Marketing and Best Locations; their son, Christopher Putnam, individually and as a member, organizer, or manager of Cornerstone Marketing LLC; and his wife, Melanie Putnam, individually and d/b/a Prestige Marketing and Best Locations.

Under the settlement, the defendants are permanently prohibited from failing to secure locations for consumers within 90 days after the consumers pay, and they must refund payments for any location not secured within 90 days. They also are permanently prohibited from making misrepresentations about the availability or profitability of locations in a purchaser’s geographic area; the income, profits, or sales volume a purchaser is likely to achieve or that have been achieved by others; how long it is likely to take to recoup an investment; that the defendants already have obtained or identified specific locations; that they have a locator operating in a purchaser’s geographic area; the amount of competition within, or a purchaser’s territorial rights to any geographic territory; the terms and conditions of any refund, relocation, cancellation, exchange, repurchase, or guarantee policy; or that the defendants will provide the goods or services they claim.

The settlement contains a suspended monetary judgment of $3 million. Based on the defendants’ financial condition, the order requires them to pay $55,000, plus the net proceeds of the sale of a house that Christopher and Melanie Putnam are required to sell. The full judgment will be imposed if the defendants are found to have misrepresented their financial condition.

The Commission vote to authorize staff to file the proposed stipulated permanent injunction and final order was 5-0. The order was filed in the U.S. District Court for the District of South Carolina, Beaufort Division.

Copies of the proposed stipulated final orders are available 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. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

Four members of a South Carolina family have settled Federal Trade Commission charges that they operated “location services” companies that falsely promised to find locations for their customers’ vending machines and display racks and made false earnings claims.

The defendants promised customers they would secure “profitable locations,” charging from $150 to as much as $6,000, depending on the number and types of locations they were paid to find. According to a complaint filed by the FTC, they often did little or nothing for their customers, and often failed to find any locations, or not as many as they had been hired to find. They also were charged with falsely claiming that customers were likely to achieve significant sales and earn substantial income by using locations the company could secure. Customers rarely, if ever, made the kind of sales promised in the pitches or ever achieved a full return of their investment.

The defendants are Cornerstone Marketing LLC; Sidney Putnam, individually and d/b/a Prime Time Marketing, Prestige Marketing, Metropolitan Placement Services, and Best Locations; his wife, Carol Putnam, individually and d/b/a Prestige Marketing and Best Locations; their son, Christopher Putnam, individually and as a member, organizer, or manager of Cornerstone Marketing LLC; and his wife, Melanie Putnam, individually and d/b/a Prestige Marketing and Best Locations.

Under the settlement, the defendants are permanently prohibited from failing to secure locations for consumers within 90 days after the consumers pay, and they must refund payments for any location not secured within 90 days. They also are permanently prohibited from making misrepresentations about the availability or profitability of locations in a purchaser’s geographic area; the income, profits, or sales volume a purchaser is likely to achieve or that have been achieved by others; how long it is likely to take to recoup an investment; that the defendants already have obtained or identified specific locations; that they have a locator operating in a purchaser’s geographic area; the amount of competition within, or a purchaser’s territorial rights to any geographic territory; the terms and conditions of any refund, relocation, cancellation, exchange, repurchase, or guarantee policy; or that the defendants will provide the goods or services they claim.

The settlement contains a suspended monetary judgment of $3 million. Based on the defendants’ financial condition, the order requires them to pay $55,000, plus the net proceeds of the sale of a house that Christopher and Melanie Putnam are required to sell. The full judgment will be imposed if the defendants are found to have misrepresented their financial condition.

The Commission vote to authorize staff to file the proposed stipulated permanent injunction and final order was 5-0. The order was filed in the U.S. District Court for the District of South Carolina, Beaufort Division.

Copies of the proposed stipulated final orders are available 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. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

Two persons who operated a business opportunity scam have agreed to settle Federal Trade Commission charges that they tricked more than 1,300 consumers into paying between $5,000 and $25,000 for a bogus business opportunity.

The settlement is a result of last year’s Project Fal$e Hope$, an FTC-led effort that targeted bogus business opportunities and work-at-home scams, producing more than 100 law enforcement actions by the FTC, the Department of Justice, the U.S. Postal Inspection Service, and law enforcement agencies in 11 states.

In November 2006, the FTC charged Business Card Experts, Inc. d/b/a BCE Media, BCE, Inc., Scott R. Boardman, and Stewart P. Grandpre with using false and deceptive earnings claims and phony references to lure consumers into buying dealerships to sell business cards and other materials produced by BCE. Using Internet and classified advertisements, telemarketers, and income projection spreadsheets, BCE claimed that consumers could earn $150,000 in their first year and recoup their initial investments within three to five months. In May 2007, the FTC named Boardman’s wife, Kelley P. Boardman, as a relief defendant to ensure the recovery of assets stemming from the business that were held individually by her or jointly with her husband.

Under the proposed settlement orders, judgments of more than $16 million against the original defendants, and an order of disgorgement of more than $3.5 million against the relief defendant, will be suspended once they have relinquished assets subject to an asset freeze, including Scott Boardman’s accounts in financial institutions totaling approximately $5 million, the Boardmans’ condominium in Florida, and the balance of Grandpre’s accounts in financial institutions totaling more than $35,000, as well as Grandpre’s two snowmobiles, a snowmobile trailer, and a motorcycle trailer.

Under the proposed settlements, Scott Boardman and Stewart Grandpre are permanently prohibited from making material misrepresentations to any potential purchaser of any goods or services. Boardman is permanently banned from engaging in or benefitting from any aspect of commerce involving business ventures or investment opportunities, and from telemarketing or assisting others engaged in telemarketing. In connection with the sale of business ventures or investment opportunities, Grandpre is permanently prohibited from making misrepresentations, including the potential earnings, the number of investors, the fact that anyone has invested or can report about their investment experience, or failing to disclose any personal relationship with an investor or consideration he has promised or paid them. Grandpre also is prohibited from violating the Telemarketing Sales Rule, and, in any telemarketing business he controls or has a majority interest in, from failing to take steps to ensure that all telemarketing personnel comply with the order. Both Boardman and Granpdre also are permanently prohibited from using the name, address, account numbers, or other identifying information of any consumer who purchased business ventures or investment opportunities from them.

The Commission vote to authorize staff to file the stipulated final orders was 5-0. The documents were filed in the U.S. District Court for the District of Minnesota.

NOTE: These stipulated final orders are for settlement purposes only and do not constitute admissions by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the proposed stipulated final orders are available 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. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.