Markets Wired

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.