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June 20, 2001 FTC Seeks Injunction Against Streamline International, Inc. The Federal Trade Commission is suing Streamline International, Inc., an internet-based money-making scheme, in the Southern District Court of Florida. The FTC charges that the multi-level marketing scheme is actually an illegal pyramid scheme. More. . . June 18, 2001 FTC obtains injunction against Skybiz.com In an action announced today, the Federal Trade Commission has received a temporary injunction against Skybiz.com, sometimes known as Skybiz 2000, and the company's assets have been frozen. More. . . April 20, 2000 Equinox International, FTC, Eight States Enter Agreement Judge Orders Alpine Industries to Stop Making Unsupported Claims for Ozone Generating Air Cleaner A federal judge has ordered Alpine Industries, Inc., a Greenville, Tennessee, manufacturer of ozone generating air treatment machines, and its president, William J. Converse, to stop claiming that their machines provide relief from any medical condition or remove a wide variety of indoor air pollutants. The interim injunction follows a November 1, 1999, verdict where a Federal jury found unanimously that Alpine Industries and Converse violated a 1995 Federal Trade Commission order by failing to have "competent and reliable scientific evidence" to support hundreds of claims for their products. Alpine was also found to make unsupported claims that its products control indoor ozone levels. The injunction orders Alpine and Converse to notify their thousands of dealers that they cannot make any of these claims. December 21, 1999 In an ongoing sweep of pyramid scams on the Internet, the Federal Trade Commission and 26 state law enforcers have targeted over 600 Internet pyramid sites for law enforcement action. The massive law enforcement initiative was launched with an Internet "Surf Day" -- a simultaneous effort by state and federal enforcers to surf the Internet looking for specific types of fraud. The pyramid Surf Day was conducted March 10-11, 1999. The FTC and state law enforcers identified more than 600 Web sites that appeared to be promoting pyramid schemes, and e-mail warnings were sent to the sites, alerting them that pyramid schemes are illegal and the site might violate the law. As part of this enforcement, the FTC has identified Equinox International and 2Extreme. Additionally, the sweep identified about 70 targets by various state agencies. Some of these include:
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Agency Estimates Consumers Lost Millions; Will Ask Court To Order Consumer Redress
The Federal Trade Commission has asked a U.S. District Court Judge to halt the operation of a vast pyramid scheme promoted in part on the Internet, and to freeze the defendants' assets, pending trial, so they will be available for consumer redress. The agency alleges that the pyramid scam, disguising itself as a legitimate multi-level marketing plan, used deceptive earnings claims to lure consumers to enroll in the scheme. The company claims to have recruited more than 60,000 consumers. The FTC alleges that the earnings claims are false and that 2Xtreme's practices violated federal law.
Law enforcement authorities from Hawaii, Maryland, Nevada, North Carolina, Pennsylvania and South Carolina joined the FTC in requesting the shutdown.
The FTC alleges that defendants operated an illegal pyramid scheme, made deceptive earnings claims, and provided distributors with the means and instrumentalities to violate federal law. State law enforcers alleged violations of state securities laws, deceptive trade practices laws, false advertising laws, pyramid laws, and licensing requirements laws.
The defendants' assets have been frozen, and a receiver appointed, pending trial which is anticipated in April, 2000.
The Commission has granted Amway Corporation's request to set aside a 1986 compliance commitment. The compliance commitment specified how Amway will comply with a 1979 Cease and Desist Order issued by the Commission. The Commission set aside the compliance agreement in light of changes in Amway's business structure, including expansion to Internet sales. The Commission noted, however, that Amway will continue to be subject to the 1979 Cease and Desist Order.
This order refers to the order which forced Amway Corp. to ensure that all prospects received a disclosure statement regarding distributor income and earnings. This disclosure is known as the "SA4400." Because of Amway's venture onto the internet with Quixtar, this disclosure can now be made electronically. However, the order does not release Amway or its distributors from their obligation to disclose the information contained in the SA4400.
OneSource Worldwide Network, Inc., operating in Dallas, Texas, and its president, James Fobair, have settled Federal Trade Commission charges that they made false and unsubstantiated advertising claims for a laundry detergent substitute they sold. According to the FTC's complaint, OneSource and Fobair falsely touted their product, "The EarthSmart Laundry CD," as an effective substitute for laundry detergents that not only cleans laundry but does so without polluting the earth's waterways. The proposed settlement would prohibit OneSource and Fobair from claiming that the Laundry CD or any similar product cleans as well as conventional laundry detergent and would require them to pay $50,000 in disgorgement. These funds are to be divided equally among the FTC and six states that participated in this action: Arkansas, Illinois, Michigan, Missouri, Nevada and Texas.
According to the FTC's complaint detailing the charges, the defendants manufactured, marketed, and distributed The EarthSmart Laundry CD -- a plastic disc filled with allegedly "structured water"-- that could be used in washing machines instead of conventional laundry detergents. The product sold for approximately $80. The defendants advertised on the Internet, in promotional materials, and in face-to-face solicitations. Fobair also develop a multilevel marketing structure that sold the products through a network of distributors.
The Commission has voted to amend the complaint in FTC vs. Five Star Auto Club, Inc. et al (CivNo. 99-1693) to add as defendants: Thomas Lee Bewley, Judy E. Bewley individually and d/b/a Five Star Automotive Research and Information Consultants, Five Star Research and Information Consultants, and Five Star Auto Club Marketing Offices; Advance Funding, Inc.; and the original defendants d/b/a Five Star Automotive Research and Information Consultants and Five Star Consultants, Inc. The original complaint was filed in U.S. District Court for the Southern District of New York on March 8, 1999, and the amended complaint was filed in the same court on April 9, 1999. The Commission vote to file the amended complaint was 4-0. (See news release dated March 11, 1999; FTC File No. X990040; Staff contact is James Kohm, 202-326-2640.)
New Vision International, Inc., a multi-level marketing company that sells nutritional supplements, its affiliated company, NVI Promotions, L.L.C., and their principals, Jason P. Boreyko and Benson K. Boreyko (collectively "New Vision") have agreed to settle Federal Trade Commission charges that they made unsubstantiated claims in their advertisements for a combination of New Vision dietary supplements they called "God's Recipe." In a separate agreement, Max F. James, a high-level distributor of New Vision products, has also agreed to settle FTC charges over his role in selling God's Recipe. The ads claim that God's Recipe can cure Attention Deficit Disorder or Attention Deficit Hyperactivity Disorder ("ADD/ADHD").
The Federal Trade Commission has asked a U.S. District Court to impose civil penalties on two defendants who have failed to obey an FTC order requiring them to pay $500,000 in consumer redress.
Jeffery Salberg was one of nine marketers of self-help and health-related products promoted in radio and television infomercials who settled FTC charges earlier this year that ad claims for their products were false or unsubstantiated. The settlement barred Salberg and his company, Mega Systems International, Inc., from making deceptive claims relating to their products; required substantiation for claims about the benefits, performance or efficacy of products or programs they advertise, promote, sell, or distribute in the future; barred misrepresentations about the existence, contents, validity, results, conclusions or interpretations of any test, study or research; and required that future radio and television infomercials carry disclosure messages stating that the program was actually paid advertising. In addition, the settlement called for Salberg and Mega Systems to pay $500,000 in consumer redress by July 10, 1998.
A founder of FutureNet, a company that was promoted as a multi-level marketing program, has agreed to settle Federal Trade Commission charges that the program was actually an illegal pyramid scheme. The settlement would bar Larry Stephen Huff not only from any future involvement in illegal ponzi or pyramid schemes, but from involvement in any multi-level marketing.
A recent federal court contempt citation has cleared the way for the final mailing of refund checks to victims who invested in an Internet pyramid scheme called Fortuna Alliance. This mailing brings to 15,622 the total number of consumers receiving refunds. The FTC's case against Fortuna returned approximately $5.5 million to investors in the U.S. and 70 foreign countries. The contempt citation could provide an additional $2.2 million in consumer redress that will go to consumers who received partial refunds.
In its continuing attack on fraudulent unsolicited commercial e-mail (UCE), the Federal Trade Commission today announced that it was publishing for public comment a proposed consent agreement with Kalvin P. Schmidt, an alleged promoter and operator of a high-tech chain letter software program. According to the FTC's complaint, Schmidt, doing business as DKS Enterprises, DS Productions, DES Enterprises, www.mkt-american.com and www.mkt-usa.com, operated a web site promoting two chain or pyramid marketing programs, "Mega$Nets" and "MegaResources."
In its complaint, the agency alleges that the Waseca, Minnesota, resident offered consumers who visited the web sites copies of software programs that formed the basis of the pyramid marketing programs.
The Federal Trade Commission today released a list of the 12 most common scams found in unsolicited commercial e-mail -- spam. The list was culled from a sampling of more than 250,000 junk e-mail messages that consumers have forwarded to a special FTC mailbox (uce@ftc.gov) set up to collect spam.
"The Dirty Dozen list of junk e-mail is a tip-off to a rip-off," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Spam is a problem for practically everyone with a computer," Bernstein said. "It's annoying, it slows down the e-mail system and a lot of it is fraudulent," she said. "We have an e-mail box where consumers can send unwanted, unsolicited e- mail. We're receiving more than 1,000 complaints a day."
Operators of a company that used the allure of the Internet to peddle a fraudulent business opportunity have agreed to settle Federal Trade Commission charges that their scheme violated federal laws. The settlement would ban the defendants from operating or promoting any business opportunity, franchise or business venture in the future and would require that they rescind contracts with the consumers who invested in their "business opportunity."
Last February, the FTC filed suit in federal district court against TouchNet, Inc. and TouchTone Telecommunications and Advertising, Inc.
Three principals of a pyramid scheme promoted through the Internet had promised investors would earn up to $18,000 a month and receive an unsecured credit card with a high credit limit. These promoters have agreed to settle Federal Trade Commission charges that their claims were false and their scheme violated federal laws. The settlement, which requires approval of the court, provides nearly $2 million in consumer redress and would enjoin the defendants from operating pyramid or Ponzi schemes, or any program that promises income primarily from the recruitment of others, rather than the sale of a product. The order would prohibit misrepresentations in the sale of marketing opportunities and specifically prohibit misrepresentations about earnings and benefits, such as receiving unsecured credit cards, from participating in any such program. It also requires liquidation of the businesses through which the pyramid scheme operated.
In November 1997, the FTC charged that Nia Cano of Long Beach, California, also known as Nghia F. Cano, Nina DeCano and Nina S. Cano, doing business as Credit Development International (CDI) and Drivers Seat Network (DSN), and Charles Johnson of Lake Elsinore, California, marketed the pyramid scheme through recruitment seminars and sales meetings across the country. The Commission later added additional defendants, including Bryan McCord of Garden Grove, California. The defendants claimed that, for an initial investment of $130 and monthly payments of $30 a month, consumers could obtain unsecured Visa or MasterCard credit cards with high credit limits and make a much as $18,000 per month by recruiting participants for the program. The FTC alleged that these claims were false.
TrendMark International, Inc., a Memphis, Tennessee company, and its owners, have agreed to settle Federal Trade Commission charges that they made a host of unsubstantiated weight loss and health-related claims about their "THIN-THIN" Diet™ program. The THIN-THIN Diet™ is a combination of two weight loss products -- NEURO-THIN™ and LIPO-THIN™ -- that purportedly cause weight loss. The main ingredient in LIPO-THIN™ is chitin, a natural fiber made from the ground-up hydrolyzed exoskeletons of shellfish. NEURO-THIN™ is made primarily of various amino acids. The FTC alleges that the respondents did not have adequate substantiation for their ad claims that consumers using the "THIN-THIN" Diet™ program would lose significant amounts of weight or experience other health-related benefits without changing their diet, and that these claims were validated by scientific studies. The proposed settlement of the charges would prohibit TrendMark and its owners from misrepresenting the results of any weight loss program or product they offer, and require them to have scientific data to back up any claims about the health benefits, performance or efficacy of any food, drug or device.
The FTC's complaint which details the allegations names TrendMark Inc., doing business as TrendMark International, William McCormack and E. Robert Gates. TrendMark is a multi-level network marketing company that markets various dietary supplements and other products directly to consumers and through numerous individual distributors.
The Federal Trade Commission has filed suit in federal district court alleging that Alpine Industries, Inc., a company based in Tennessee and Minnesota, has violated a 1995 Commission order by continuing to claim, without adequate substantiation, that its ozone-generating indoor "air cleaner" devices remove numerous pollutants, do so better than other methods, and prevent or relieve medical or health related conditions. The FTC is seeking a court order against the firm and its president, William J. Converse, and civil penalties up to $11,000 per order violation. Alpine and Mr. Converse are bound by the 1995 order, which requires competent and reliable scientific evidence to back up such claims.
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