[Federal Register Volume 61, Number 63 (Monday, April 1, 1996)]
[Notices]
[Pages 14322-14324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-7865]



-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION
[File No. 952-3431]


Sherman G. Smith d/b/a Starr Communications; Consent Agreement 
With Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Consent Agreement.

-----------------------------------------------------------------------

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 Salt Lake City-based respondent from misrepresenting, in 
his advertisements for a work-at-home business, the income, earnings, 
or sales from any business opportunity and would prohibit any claims 
about past, present, or future earnings unless, at the time of making 
the representation, it possesses and relies upon competent and reliable 
evidence that substantiates the claim. The consent agreement settles 
allegations stemming from advertisements on the Internet for Smith/
Starr's ``U.S. Government Tracer Business Program'' business 
opportunity.

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 Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
C. Steve 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)).

Agreement Containing Consent Order To Cease and Desist

    In the Matter of: Sherman G. Smith, individually and doing 
business as Starr Communications.

[File No. 952-3431]

    The Federal Trade Commission having initiated an investigation of 
certain acts and practices of Sherman G. Smith, individually and doing 
business as Starr Communications (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 Sherman G. Smith, individually 
and doing business as Starr Communications, his attorney, and counsel 
for the Federal Trade Commission that:
    1. Proposed respondent Sherman G. Smith is an individual doing 
business as Starr Communications with his principal office or place of 
business at 78 West Broadway, No. 2007 North, Salt Lake City, Utah 
84101.
    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 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 a part of the public record of 
the

[[Page 14323]]
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 as 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 statue 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

I

    It is ordered that respondent Sherman G. Smith, 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 the 
``U.S. Government Tracer Business Program,'' or any other business 
opportunity, in or affecting commerce, as ``commerce'' is defined in 
the Federal Trade Commission Act, do forthwith cease and desist from 
misrepresenting, in any manner, the past, present, or future profits, 
earnings, income, or sales from such business opportunity.

II

    It is further ordered that respondent Sherman G. Smith, 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 the 
``U.S. Government Tracer Business Program,'' or any other business 
opportunity, in or affecting commerce, as ``commerce'' is defined in 
the Federal Trade Commission Act, do forthwith cease and desist from 
representing, in any manner, in the past, present, or future profits, 
earnings, income, or sales from such business opportunity, unless at 
the time of making such representation respondent possesses and relies 
upon competent and reliable evidence that substantiates the 
representation.

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 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. 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, 
respondents 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

[[Page 14324]]
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 Sherman G. 
Smith, individually and doing business as Starr Communications.
    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 his ``U.S. 
Government Tracer Business Program.'' The Commission's complaint 
charges that the respondent's advertising represents, directly or by 
implication, that the amount of money represented in the advertisements 
is representative, or typical, of what individuals who purchase 
respondent's program will generally achieve. The claim is alleged to be 
false and misleading, and in violation of section 5 of the Federal 
Trade Commission Act, 15 U.S.C. 45, because the amount of money 
represented in the advertisements is not representative, or typical, of 
what individuals who purchase respondent's program will generally 
achieve.
    The Commission's complaint also charges that the respondent falsely 
represented that he possessed and relied upon a reasonable basis that 
substantiated the above claim. The Commission's complaint alleges that 
this representation is false and misleading, and in violation of 
section 5 of the Federal Trade Commission Act, 15 U.S.C. 45, because at 
the time he made the representation respondent did not possess and rely 
upon a reasonable basis that substantiated the claim.
    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 the ``U.S. Government Tracer 
Business Program,'' or any other business opportunity, the past, 
present, or future profits, earnings, income, or sales from such 
business opportunity.
    Part II of the proposed order prohibits the respondent from 
representing, directly or by implication in his advertising for the 
``U.S. Government Tracer Business Program,'' or any other business 
opportunity, the past, present, or future profits, earnings, income, or 
sales from such business opportunity, unless at the time of making such 
representation respondent possesses and relies upon competent and 
reliable evidence that substantiates the claim.
    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. 96-7865 Filed 3-29-96; 8:45 am]
BILLING CODE 6750-01-M