Markets Wired

Universal Advertising, Inc., and its owner, Paul E. Porter, have agreed to settle charges that they misled consumers into paying thousands of dollars for a venture they claimed would generate substantial earnings, without providing legally required substantiation for their claims.

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 than100 law enforcement actions by the FTC, the Department of Justice, the U.S. Postal Inspection Service, and law enforcement agencies in 11 states.

In print advertising in magazines and on their Web site, www.universaladsinc.com, the defendants sold business opportunities to consumers who paid at least $6,995 for 10 display racks, and then signed up business owners to pay them fees to display business cards and/or brochures in the racks.

According to a complaint filed by the Department of Justice on behalf of the Federal Trade Commission, the defendants violated the FTC’s Franchise Rule and the FTC Act by failing to provide prospective franchisees with accurate and complete basic disclosure documents; making earnings claims to prospective franchisees without a reasonable basis for each claim; by failing to disclose immediately, clearly, and conspicuously, that such proof is available to prospective franchisees; and/or by failing to provide an earnings claim document. The defendants also allegedly failed to disclose the number and percentage of prior purchasers who have achieved the same or better results.

Under the proposed settlement, the defendants are permanently prohibited from engaging in any aspect of commerce in business opportunities, business ventures, or franchises. They also are prohibited from making any material misrepresentations in connection with the advertising, promotion, or sale of any income-generating product or service, including misrepresentations concerning the income, profit or sales volume a purchaser is likely to receive, or that has been achieved by other purchasers; the likely length of time to recoup the purchase price; the independence or authenticity of third-party references; the amount of competition within, or a purchaser’s rights to, any geographic territory; the availability or existence of profitable locations; and the terms and conditions of any assurances, refunds, or guarantees of profitability.

The defendants also are permanently prohibited from using the name, address, account numbers, or other identifying information of any consumer who made purchases from them. The settlement contains a suspended judgment of $1,633,953. Based on Porter’s financial condition, the order requires him to pay $5,000. The full judgment will be imposed if he is found to have misrepresented his financial condition.

The Commission vote to authorize the Department of Justice to file the stipulated final order was 5–0. It was filed in the U.S. District Court for the District of Utah, Northern Division.

Note: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant 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 stipulated final order 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.

MEDIA CONTACT:

Frank Dorman
Office of Public Affairs
202-326-2674

STAFF CONTACT:

J. Ronald Brooke, Jr.
Bureau of Consumer Protection
202-326-3484