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 charged 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.
According to the FTC, 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.