For Release: January 17, 2006
Telemarketers Settle FTC Charges of Costly "Free" Samples, Do Not Call
Violations, and Worthless Weight-Loss Patches
Defendants Will Pay $474,000 in Consumer Redress and Civil Penalties
A telemarketing operation selling tooth whitening kits and
weight-loss patches will pay $463,000 in consumer redress and $11,000
in civil penalties to settle Federal Trade Commission charges. The FTC
alleged that the defendants promised "free" samples of the tooth
whitening kits, then debited consumers’ accounts without their
authorization. The FTC further alleged that the defendants made false
and unsubstantiated claims about their weight-loss patches and called
consumers listed on the National Do Not Call Registry.
The FTC's amended complaint included seven counts of law violations
against defendants Conversion Marketing, Inc. and Adam Tyler
MacDonald. The FTC alleged that the defendants falsely represented
that consumers would get free samples of the Fast White tooth
whitening kit, but instead enrolled them in programs where consumers
would continue to receive monthly shipments. The defendants then
billed consumers without their express, informed consent. The FTC also
charged the defendants with making false and unsubstantiated claims
that their weight-loss patches, Pounds Off Patch and Carbs Off Patch,
cause substantial weight loss: in all users; when applied to skin; and
by blocking the absorption of carbohydrates. The Commission has
referred a second complaint to the Department of Justice for filing,
charging that the defendants called numbers listed on the National Do
Not Call (DNC) Registry, abandoned calls placed to consumers, and did
not pay the required annual fee to access numbers on the Registry.
To settle the charges in the
complaint filed by the FTC, the defendants are prohibited from
misrepresenting any material fact in connection with the sale of a
product or service, including: that consumers can obtain a free
product or service; that products or services are offered at no
obligation; the existence, amount, or manner of assessment of any
charge; the length of any trial period; the terms of any refund
program; that defendants do or do not possess consumers’ billing
information; or that consumers agreed to a purchase. Also, the
defendants must clearly and conspicuously disclose all fees, costs,
cancellation terms, material conditions, limitations, and refund
terms, and the material terms of any negative option offer before they
ask consumers to disclose billing information. Before submitting
billing information for payment, the defendants must have the express,
informed consent of the consumers. The settlement prohibits the
weight-loss misrepresentations alleged in the Commission's complaint
as well as violations of the Telemarketing Sales Rule. The settlement
contains a $979,204 judgment, which is suspended based on inability to
pay, except for $463,000.
To settle charges in the Do Not Call complaint, the defendants are
prohibited from calling consumers who have placed their numbers on the
DNC Registry or who placed themselves on the defendants’
company-specific DNC list. They also are prohibited from abandoning
telemarketing calls and from calling a telephone number in any area
code without first paying the DNC access fee. The settlement, which
has been referred to the Department of Justice for filing, contains a
$580,056 civil penalty, which is suspended except for $11,000.
The Commission vote to amend the FTC complaint and approve the
settlement and to refer the complaint to the Department of Justice for
filing and approve a consent in settlement was 4-0.
The amended complaint and stipulated final judgment and order were
entered in the U.S. District Court for the Central District of
California on January 12, 2006. The FTC has requested that the
Department of Justice file the complaint for civil penalties and
stipulated judgment and order in the U.S. District Court for the
Central District of California.
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.
NOTE: This judgment is for settlement purposes only and does not
constitute an admission by the defendant of a law violation. Judgments
have the force of law when signed by the judge.
Copies of the complaints and final judgments 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 in the marketplace and to
provide information to help consumers spot, stop, and avoid them. To
file a complaint in English or Spanish (bilingual counselors are
available to take complaints), or to get free information on any of
150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357),
or use the complaint form at http://www.ftc.gov. The FTC enters
Internet, telemarketing, identity theft, and other fraud-related
complaints into Consumer Sentinel, a secure, online database available
to hundreds of civil and criminal law enforcement agencies in the U.S.
and abroad.
Tooth whitening and bleaching products and services can be found in
most US and Canadian cities.
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