[Federal Register Volume 61, Number 63 (Monday, April 1, 1996)]
[Notices]
[Pages 14315-14318]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7862]



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FEDERAL TRADE COMMISSION
[File No. 962-3016]


Lyle R. Larsen d/b/a Momentum; Consent Agreement With Analysis To 
Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: 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 the Bellevue, Washington-based respondent from 
misrepresenting, in his advertisements for a credit repair kit, any 
remedy for credit history problems available under the Fair Credit 
Reporting Act, including the ability to remove accurate but adverse 
information from credit reports. It would also prohibit the company 
from misrepresenting the legality of any credit repair product and 
would require it to disclose that consumers who follow the programs may 
violate federal criminal laws. The consent agreement settles 
allegations stemming from advertisements on the Internet for Larson/
Momentum's CreditPlus purported credit repair product.

DATES: Comments must be received on or before May 31, 1996.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pennsylvania Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

C. Steven Baker, Chicago Regional Office, Federal Trade Commission, 
Suite 1860, 55 East Monroe Street, Chicago, IL 60603. 312-353-8156
David Medine, Federal Trade Commission, S-4429, 6th and Pennsylvania 
Ave, NW., Washington DC 20580. 202-326-3224

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 and 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)).

    In the Matter of Lyle R. Larson, individually and doing business 
as Momentum.

[File No. 962-3016]

Agreement Containing Consent Order To Cease and Desist

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Lyle R. Larson individually and doing 
business as Momentum (hereinafter referred to as ``proposed 
respondent''), and it now appearing that proposed respondent is 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 Lyle R. Larson, individually and 
doing business as Momentum, and counsel for the Federal Trade 
Commission that:
    1. Proposed respondent Lyle R. Larson is an individual doing 
business as Momentum with his principal office or place of business at 
3033 127th Place SE, Suite I-21, Bellevue, Washington 98005.
    2. Proposed respondent admits all the jurisdictional facts set 
forth in the draft of complaint.
    3. Proposed respondent waives:
    (a) Any further procedural steps;
    (b) The requirement that the Commission's decision contain a 
statement of findings of fact and conclusion 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 a 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 the complaint contemplated hereby, 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 proposed 
respondent, in which event it will take such action a it may consider 
appropriate, or issue and serve its complaint (in such form as the 
circumstances may require) and decision, in disposition of the 
proceeding.
    5. This agreement is for settlement purposes only and does not 
constitute an admission by proposed respondent that the law has been 
violated as alleged in the attached draft complaint or that the facts 
as alleged in the attached 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 
respondent (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 decision containing the agreed-to order to proposed respondent's 
address as stated in this agreement shall constitute service. Proposed 
respondent waives any right he might 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 in the agreement may be 
used to vary or contradict the terms of the order.
    7. Proposed respondent has read the complaint and the order 
contemplated hereby. He understands that once the order has been 
issued, he will be required to file one or more compliance reports 
showing he has fully complied with the order. Proposed respondent 
further understands that he may be liable for civil penalties in the 
amount provided by law for each violation of the order after it becomes 
final.

Order

Definitions

    1. ``Credit Report'' means any written, oral, or other 
communication of information by a consumer reporting agency bearing on 
a person's credit worthiness, credit standing, credit capacity, 
character, general reputation, personal characteristics, or mode of 
living that is used or expected to be used or collected in whole or in 
part for the purpose of serving as a factor in establishing the 
consumer's eligibility for credit.
    2. ``Credit Repair Product'' means any product or service to 
improve a person's credit report by removing adverse information 
appearing therein, changing the rating of such information from

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negative to positive, or otherwise enhancing the person's credit 
report.

I

    It is ordered that respondent Lyle R. Larson, his agents, 
representatives, and employees, directly or through any corporation, 
subsidiary, division, or other device, in connection with the 
advertising, promotion, offering for sale, sale, or distribution of any 
credit repair product, in or affecting commerce, as ``commerce'' is 
defined in the Federal Trade Commission Act, do forthwith cease and 
desist from misrepresenting, either directly or indirectly, in writing, 
via a computer communications network, or by any other means:
    A. Any right of remedy available under the Fair Credit Reporting 
Act, 15 U.S.C. 1681 et seq., including, but not limited to, the ability 
to remove adverse information in any credit report; and
    B. The legality of any credit repair product.

II

    It is further ordered that respondent Lyle R. Larson, his agents, 
representatives, and employees, directly or through any corporation, 
subsidiary, division, or other device, in connection with the 
advertising, promotion, offering for sale, sale, or distribution of any 
credit repair product involving the creation of a new credit file or 
tax identification number, in or affecting commerce, as ``commerce'' is 
defined in the Federal Trade Commission Act, do forthwith cease and 
desist from failing to disclose in any advertisement or promotional 
material, including any advertisement or promotion via a computer 
communications network, that:
    A. Making misrepresentations to the Internal Revenue Service may be 
a federal crime;
    B. Misrepresenting one's social security number for any purpose may 
be a federal crime;
    C. Making misrepresentations for a loan application may be a 
federal crime; and
    D. Making misrepresentations to a financial institution may be a 
federal crime.

III

    It is further ordered that for five (5) years after the last date 
of dissemination of any representation covered by this Order, 
respondent, or his successors and assigns, shall maintain and upon 
request make available to the Federal Trade Commission for inspection 
and copying:
    A. All materials that were relied upon in disseminating such 
representation; and
    B. All tests, reports, studies, surveys, demonstrations, or other 
evidence in his possession or control that contradict, qualify, or call 
into question such representation, or the basis relied upon for such 
representation, including complaints from consumers.

IV

    It is further ordered that respondent shall:
    A. Within thirty (30) days from the effective date of this Order 
deliver a copy of this Order to each of his officers, agents, 
representatives, and employees who are engaged in the preparation or 
placement of advertisements, promotional materials or other such sales 
materials covered by this Order.
    B. For a period of ten (10) years from the effective date of this 
Order deliver a copy of this Order to each of his future officers, 
agents, representatives, and employees who are engaged in the 
preparation or placement of advertisements, promotional materials or 
other such sales materials covered by this Order, within three (3) days 
after the person assumes such position.

V

    It is further ordered that for a period of five (5) years from the 
date this Order becomes final, respondent shall notify the Commission 
within thirty (30) days of the discontinuance of his present business 
or employment and of each affiliation with a new business or employment 
involving the advertising, offering for sale, sale, or distribution of 
any credit repair product. Each notice of affiliation with any new 
business or employment shall include his new business address and 
telephone number, current home address, and a statement describing the 
nature of the business or employment and the duties and 
responsibilities.

VI

    It is further ordered that within sixty (60) days after service of 
this Order, and at such other times as the Commission may require, 
respondent shall file with the Commission a report, in writing, setting 
forth in detail the manner and form in which he has complied with this 
Order.

VII

    This Order will terminate twenty years from the date of its 
issuance, or twenty years from the most recent date that the United 
States or the Federal Trade Commission files a complaint (with or 
without an accompanying consent decree) in federal court alleging any 
violation of the Order, whichever comes later; provided, however, that 
the filing of such a complaint will not affect the duration of:
    A. Any paragraph in this Order that terminates in less than twenty 
years;
    B. This Order's application to any respondent that is not named as 
a defendant in such complaint; and
    C. This Order if such complaint is filed after the Order has 
terminated pursuant to this paragraph.

Provided further, that if such complaint is dismissed or a federal 
court rules that the respondent did not violate any provision of the 
Order, and the dismissal or ruling is either not appealed or upheld on 
appeal, then the Order will terminate according to this paragraph as 
though the complaint was never filed, except that the Order will not 
terminate between the date such complaint is filed and the later of the 
deadline for appealing such dismissal or ruling and the date such 
dismissal or ruling is upheld on appeal.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement, subject to 
final approval, to a proposed consent order from respondent Lyle R. 
Larson, individually and doing business as Momentum.
    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 agreement's proposed order.
    This matter concerns claims made by the respondent in his 
advertising, including advertising through the Internet, for the 
CreditPlus credit repair product. The Commission's complaint charges 
that the respondent's advertising represents, directly or by 
implication, that: (a) Consumers can remove bankruptcies, judgments, 
foreclosures, liens, repossessions, late payments, and other adverse 
items of information from their credit reports even where such 
information is accurate and not obsolete; and (b) respondent's product 
whereby consumers create new credit files is legal. The claims are 
alleged to be false and misleading, and in violation of section 5 of 
the Federal Trade Commission Act, 15 U.S.C. 45, because: (a) Most 
consumers cannot remove adverse items of information

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from their credit reports where such information is accurate and not 
obsolete; and (b) respondent's product whereby consumers create new 
credit files is not legal. The Commission's complaint also charges that 
the respondent's failure to disclose that consumers who follow 
respondent's product to create new credit files will violate certain 
federal criminal laws, is a deceptive practice in violation of section 
5 of the Federal Trade Commission Act, 15 U.S.C. 45.
    The proposed consent order contains provisions designed to remedy 
the violations charged and to prevent the respondent from engaging in 
similar acts and practices in the future. Part I of the proposed order 
prohibits the respondent from misrepresenting, directly or by 
implication in his advertising for any credit repair product: (a) Any 
right or remedy available under the Fair Credit Reporting Act, 15 
U.S.C. 1681 et seq., including, but not limited to, the ability to 
remove adverse information in any credit report; and (b) the legality 
of any credit repair product. Part II of the proposed order prohibits 
the respondent from failing to disclose in any advertisement for any 
credit repair product that: (a) Making misrepresentations to the 
Internal Revenue Service may be a federal crime; (b) misrepresenting 
one's social security number for any purpose may be a federal crime; 
(c) making misrepresentations for a loan application may be a federal 
crime; and (d) making misrepresentations to a financial institution may 
be a federal crime.
    Part III of the proposed order requires the respondent to maintain 
materials relied upon in disseminating any representation covered by 
the order. Part IV of the proposed order requires the respondent to 
distribute copies of the order to certain company officials and 
employees. Part V of the proposed order requires the respondent to 
notify the Commission of any discontinuance of his present business or 
employment and of each affiliation with a new business or employment. 
Part VI of the proposed order requires the respondent to file one or 
more compliance reports. Part VII of the proposed order is a provision 
whereby the order, absent certain circumstances, terminates twenty 
years from the date of issuance.
    The purpose of this analysis is to facilitate public comment on the 
proposed consent order. It is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify their 
terms in any way.
Donald S. Clark,
Secretary.
[FR Doc. 96-7862 Filed 3-29-96; 8:45 am]
BILLING CODE 6750-01-M