[Federal Register Volume 59, Number 3 (Wednesday, January 5, 1994)]
[Notices]
[Pages 582-585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-155]
[[Page Unknown]]
[Federal Register: January 5, 1994]
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FEDERAL TRADE COMMISSION
[File No. 922 3266]
New Mexico Custom Designs, Inc., et al; Proposed Consent
Agreement With Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of Federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
prohibit, among other things, the New Mexico-based corporation and its
officer, who claimed to sell beaded earrings, from making any material
misrepresentations regarding earnings or profits of participants in any
work opportunity and from making misrepresentations about the
marketplace demand for any product or service. In addition, the
proposed settlement would require the respondents to pay $1.2 million
to the Commission for consumer redress or disgorgement.
DATES: Comments must be received on or before March 7, 1994.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Jeffrey Klurfeld or Gerald Wright, San Francisco Regional Office,
Federal Trade Commission, 901 Market St., suite 570, San Francisco, CA
94103. (415) 744-7920.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the
Commission's Rules of Practice (16 CFR 2.34), notice is hereby given
that the following consent agreement containing a consent order to
cease and desist, having been filed with an accepted, subject to final
approval, by the Commission, has been placed on the public record for a
period of sixty (60) days. Public comment is invited. Such comments or
views will be considered by the Commission and will be available for
inspection and copying at its principal office in accordance with
Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR
4.9(b)(6)(ii)).
Agreement Containing Consent Order To Cease and Desist
In the Matter of New Mexico Custom Designs, Inc., a corporation,
and Anthony L. Ingram, individually and as an officer of said
corporation.
The Federal Trade Commission having initiated an investigation of
New Mexico Custom Designs, Inc., a corporation, and Anthony L. Ingram,
individually and as an officer of said corporation (``proposed
respondents'' or ``respondents''), and it now appearing that proposed
respondents are willing to enter into an agreement containing an order
to cease and desist from the acts and practices being investigated,
It is hereby agreed by and between New Mexico Custom Designs, Inc.
by its duly authorized officer, and Anthony L. Ingram, individually and
as an officer of said corporation, and their attorney, and counsel for
the Federal Trade Commission that:
1. Proposed respondent New Mexico Custom Designs, Inc., is a
corporation organized, existing, and doing business under and by virtue
of the laws of the State of New Mexico, with its principal office and
place of business located at 8415 Washington Place, NE., suite D,
Albuquerque, New Mexico 87113.
Proposed respondent Anthony L. Ingram is an officer of said
corporation. He formulates, directs and controls the policies, acts and
practices of said corporation and his address is the same as that of
the corporation.
2. Proposed respondents admit all the jurisdictional facts set
forth in the draft complaint here attached.
3. Proposed respondents waive:
a. Any further procedural steps;
b. The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement;
and
d. All claims under the Equal Access to Justice Act.
4. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission, it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify the proposed respondents, in which
event it will take such action as it may consider appropriate, or issue
and serve its complaint (in such form as the circumstances may require)
and decision, in disposition of this proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondents that the law has been
violated as alleged in the draft of complaint, or that the facts
alleged in the draft complaint, other than the jurisdictional facts,
are true.
6. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Sec. 2.34 of the Commission's
Rules, the Commission may, without further notice to proposed
respondents, (1) issue its complaint corresponding in form and
substance with the draft of complaint here attached and its decision
containing the following order to cease and desist in disposition of
the proceeding, and (2) make information public in respect thereto.
When so entered, the order to cease and desist shall have the same
force and effect and may be altered, modified or set aside in the same
manner and within the same time provided by statute for other orders.
The order shall become final upon service. Delivery by the U.S. Postal
Service of the complaint and decision containing the agreed-to order to
proposed respondents' address as stated in this agreement shall
constitute service. Proposed respondents waive any right they may have
to any other manner of service. The complaint may be used in construing
the terms of the order, and no agreement, understanding,
representation, or interpretation not contained in the order or the
agreement may be used to vary or contradict the terms of the order.
7. Proposed respondents have read the proposed complaint and order
contemplated hereby. They understand that once the order has been
issued, they well be required to file one or more compliance reports
showing that they have fully complied with the order. Proposed
respondents further understand that they may be liable for civil
penalties in the amount provided by law for each violation of the order
after it becomes final.
Order
For purposes of this order, the following definitions shall apply:
``Work Opportunity'' means any offer to a person to earn income by
producing goods or providing services, where (1) the offeree must pay
to the offeror, or a person identified by the offeror, any amount of
money, whether in the form of a registration, application or other fee,
a payment for initial inventory or supplies, or in any other form, as a
condition of participating; and (2) the offeror represents that the
offeree will or could be compensated in any manner by the offeror or by
a person identified by the offeror.
``Participant'' means any person who pays the offeror of a work
opportunity, or a person identified by such offeror, any amount of
money, whether in the form of a registration, application or other fee,
a payment for initial inventory or supplies, or in any other form, as a
condition of participating in a work opportunity.
``Net Earnings or Profits'' means the compensation paid to a
participant in a work opportunity, less the costs to a participant of
materials, supplies and shipping.
I
It is ordered that, Respondents New Mexico Custom Designs, Inc., a
corporation, its successors and assigns, and its officers, and Anthony
L. Ingram, individually and as an officer of New Mexico Custom Designs,
Inc., a corporation, and respondents' agents, representatives and
employees, directly or through any corporation, subsidiary, division or
other device, in connection with the marketing, advertising, promotion,
offering, or sale of any work opportunity, in or affecting commerce, as
``commerce'' is defined in the Federal Trade Commission Act, do
forthwith cease and desist from:
A. Making any material misrepresentation, including but not limited
to:
1. Misrepresenting the past, present or potential future earnings
or profits of participants in any work opportunity; or
2. Misrepresenting the marketplace demand for any product or
service for which respondents are offering a work opportunity.
B. Making any earnings-related or profit-related claim which uses
the phrase ``up to'' or words of similar import or which states any
dollar amount, unless the stated level of earnings or profits
constitutes the net earnings or profits which can be achieved by an
appreciable number of participants; and further, in any instances where
consumers could not reasonably foresee the major factors or conditions
affecting the ability to achieve the stated level of earnings or
profits, cease and desist from failing to disclose clearly and
prominently the class of consumers who can achieve the stated level.
It is further ordered that, For three (3) years after the last date
of dissemination of any representation covered by this Order,
respondents, or their successors and assigns, shall maintain and upon
request make available to the Federal Trade Commission for inspection
and copying:
A. Specimen copies of all materials disseminated which contain such
representation;
B. All materials that were relied upon as substantiation in
disseminating such representation;
C. The names, addresses and telephone numbers of all work
opportunity participants who paid any money to respondents within the
previous three years; and
D. The names, addresses and telephone numbers of all work
opportunity participants who earned any income or profits from
respondents during the previous three years, and for each such
participant: All written agreements between respondents and each
participant during the previous three years; and the dates and amounts
of all payments paid to each participant for work completed pursuant to
the work opportunity during the previous three years.
III
It is further ordered:
A. That respondent Anthony L. Ingram shall pay to the FTC as
consumer redress the sum of one million two hundred thousand dollars
($1,200,000); provided however, that this liability will be suspended,
subject to the provisions of subpart B below.
B. That the Commission's acceptance of this Order is expressly
premised upon the representations regarding the financial condition of
the respective respondents made to the FTC in: A ``Financial Statement
of Debtor'' executed by Anthony L. Ingram on October 20, 1992; a
``Financial Statement of Corporate Defendant'' relating to New Mexico
Custom Designs, Inc. executed by Anthony L. Ingram, as president, on
October 20, 1992; the Federal income tax returns of New Mexico Custom
Designs, Inc., for 1989, 1990 and 1991; the federal income tax returns
of Anthony L. Ingram for 1990 and 1991; accounting statements for 1990,
1991 and 1992, referred to in, and enclosed with, a letter from Gary
Harrell, Esq., to the Federal Trade Commission, dated 22 march 1993;
and a letter from Gary Harrell, Esq., to the Federal Trade Commission,
dated 3 May 1993, After service upon respondents of an order to show
cause, the FTC may reopen this proceeding to make a determination
whether there are any material misrepresentations for omissions in said
representations regarding the financial condition of the respective
respondents. Respondents shall be given an opportunity to present
evidence on this issue. If, upon consideration of respondents' evidence
and other information before it, the FTC determines that there are any
material misrepresentations or omissions in the financial statements
and related documents, that determination shall cause the entire amount
of monetary liability of one million two hundred thousand dollars
($1,200,000) to become immediately due and payable to the Federal Trade
Commission, and interest computed at the rate prescribed in 28 U.S.C.
1961, as amended, shall immediately begin to accrue on the unpaid
balance. Proceedings initiated under Part III are in addition to, and
not in lieu of, any other civil or criminal remedies as may be provided
by law, including any proceedings the Federal Trade Commission may
initiate to enforce this Order.
IV
It is further ordered, That the corporate respondent shall notify
the Commission at least thirty (30) days prior to any dissolution,
assignment, or sale resulting in the emergence of a successor
corporation, the creation or dissolution of subsidiaries, or any other
change in the corporation that may affect compliance obligations
arising out of the Order.
V
It is further ordered that, The individual respondent shall
promptly notify the Commission of the discontinuance of his present
business or employment and, for a period of five (5) years after the
date of service of this order, shall promptly notify the Commission of
each affiliation with a new business or employment.
VI
It is further ordered that, Respondents shall, within sixty (60)
days after service of this Order on them, and on the first through the
fifth anniversaries of the effective date of this order, file with the
Commission a report in writing, setting forth in detail the manner and
form in which it has complied with this Order.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission has accepted, subject to final
approval, an agreement to a proposed consent order from New Mexico
Custom Designs, Inc. and Anthony L. Ingram (``proposed respondents'').
Both of the proposed respondents are located in Albuquerque, New
Mexico.
The proposed consent order has been placed on the public record for
sixty (60) days for reception of comments by interested persons.
Comments received during this period will become part of the public
record. After sixty (60) days, the Commission will again review the
agreement and the comments received and will decide whether it should
withdraw from the agreement and take other appropriate action, or make
final the proposed order contained in the agreement.
New Mexico Custom Designs, Inc. and Anthony L. Ingram disseminate
advertising seeking individuals to assemble craft items at home. They
sell instructional kits and craft materials, and/or charge registration
fees, to individuals wanting to perform such assembly work.
The complaint alleges that proposed respondents have misrepresented
the weekly earnings that are regularly realized by New Mexico Custom
Designs' home assemblers, through performing such assembly work and
submitting it to New Mexico Custom Designs for compensation. The
complaint further alleges that proposed respondents have misrepresented
that there is a significant marketplace demand for the products they
offer for assembly. The complaint alleges that these misrepresentations
violate section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C.
45(a)(1)).
The proposed order requires proposed respondents to cease making
any material misrepresentations, including specifically
misrepresentations regarding past, present or future earnings or
profits of participants in any work opportunity. The order further
prohibits misrepresentations regarding the marketplace demand for any
product or service for which proposed respondents are offering a work
opportunity.
The proposed order also prohibits proposed respondents from making
any earnings-related or profit-related claims through using phrases
such as ``up to,'' or through stating any dollar amount, unless the
stated earnings or profit figures can be achieved by an appreciable
number of participants. The latter prohibition also requires disclosure
of the class of consumers who can achieve stated earnings or profit
levels, where factors or conditions affecting earnings or profits are
not reasonably foreseeable by prospective workers.
The proposed order additionally requires proposed respondents to
retain specified records relating to their advertising of work
opportunities, the persons who paid money to participate in any work
opportunity, and the earnings or profits of participants.
Additionally, the proposed order requires the corporate respondent
to notify the Commission of changes cn Corporate structure, the
individual respondent to notify the Commission of his discontinuance of
his present business or employment and each new business or employment
affiliation, and all proposed respondents to file compliance reports
with the Commission. Proposed respondents would be subject to civil
penalties if they did not comply with any of the above other
provisions.
The proposed order also requires proposed respondents to pay to the
Federal Trade Commission $1,200,000 for consumer redress or
disgorgement. This liability is suspended, however, on the basis of
financial disclosures made by proposed respondents to the FTC, with the
proviso that the Commission can reopen the proceeding if it
subsequently determines that there are material misrepresentations or
omissions in the financial disclosures.
The purpose of this analysis is to facilitate public comment on the
proposed order. It is not intended to constitute an official
interpretation of the agreement and proposed order or to modify in any
way their terms.
Benjamin I. Berman,
Acting Secretary.
[FR Doc. 94-155 Filed 1-4-94; 8:45 am]
BILLING CODE 6750-01-M