Court Slaps TRO on Alleged Web Scammers
Responding to FTC request, judge orders owners of Internet home business opportunities to halt bogus advertising claims.
A U.S. District Court judge has issued a temporary restraining order (TRO) to halt what the Federal Trade Commission (FTC) asserts are deceptive claims by an operation that promised a one fee, turn-key get-rich-quick Internet home-business opportunity.
At the request of the FTC, Judge David C. Godbey of the U.S. District Court for the Northern District of Texas also ordered an asset freeze, pending a preliminary injunction hearing, to provide for consumer redress.
In May 2003, the FTC charged that End70 Corporation and its principal, Damien Zamora, used a Web site and infomercials to claim that their Internet Treasure Chest (ITC) business opportunity was very profitable and very inexpensive.
End70’s commercial and Internet advertising claimed the “Internet Treasure Chest will give you everything you need” to start a Web business for the “unbelievable price of only $59.95.”
The Web site and infomercials also made earnings and income claims with testimonials saying the purchasers of the ITC could earn as much as $200,000 a year.
The FTC says these claims are false and the company tacked on requirements that cost hundreds or thousands of dollars more that consumers rarely recovered.
According to the FTC, after consumers purchased their ITC Home Business System the defendants directed them to call ITC to activate their Web site. The defendants then allegedly told consumers that they must make numerous additional purchases to operate their new Internet home business.
The FTC further claims consumers also may have received additional calls urging them to purchase even more features, upgrades, and services for substantially more money.
In addition, the FTC alleges that the defendants denied refunds to many consumers who did not specify that they wanted expedited shipping, and therefore received their ITC Home Business System after the 30 day money-back guarantee had expired.
Consumers — even consumers who invested hundreds or thousands of dollars on expensive upgrades to the $59.95 system — allegedly were unable to make the substantial earnings the defendants promised.
The FTC charged the defendants with deceptive and misleading advertising and violations of the Telemarketing Sales Rule.
At the request of the FTC, the court issued the TRO order barring the defendants from misrepresenting the total cost of purchasing a business opportunity or the ITC products. The TRO also bars misrepresentations that purchasers are likely to earn substantial income; freezes the defendants’ assets; and orders the defendants to repatriate assets held abroad, pending trial.
The judge ordered the defendants to stop airing the deceptive infomercial and required that FTC review scripts for future infomercials. In addition, the order requires the defendants to tell consumers about additional fees that they charge for certain payment options and Web hosting.
