August 4, 2003
Americas Shopping Network Inc. and Consumer Services, Inc. have been barred from selling any work-at-home opportunities that are chain marketing schemes as part of a settlement with the Federal Trade Commission.
In June 2002, the FTC filed a complaint against the defendants alleging that they operated a deceptive work-at-home scheme selling consumers a work-at-home envelope stuffing opportunity for a registration fee ranging from $33 to $43.
According to the complaint, the defendants claimed that consumers could make a substantial amount of money from the envelope stuffing opportunity, and they offered an unconditional money back guarantee of the registration fee if consumers were not satisfied.
The companies operated under both names, Americas Shopping Network and Consumer Services, and advertised their work-at-home opportunities through newspaper ads and direct mail.
The pitch varied slightly; the ASN pitch was the old fashioned envelope stuffing scheme which falsely promised to pay consumers 50 cents to $1 for every envelope stuffed, and the CS version falsely promised to pay consumers $635 a week for processing mail, according to the FTC.
In fact, the FTC alleged that these schemes turned out to be chain marketing schemes, where consumers could only earn money through commissions for recruiting other consumers to pay defendants in response to the same pitch. The FTCs complaint alleged that, in the advertising and promotional materials, the defendants misrepresented that:
- consumers would make a substantial amount of money after sending the required payment to the defendants;
- they would pay consumers 50 cents or $1 for every envelope stuffed and mailed, and $30 for every order the defendants received in response to consumers mailings;
- they would pay consumers $365 weekly for processing mail; and
- they would provide unconditional refunds if consumers were not satisfied.
Under the terms of the proposed settlement announced today, the defendants are permanently banned from selling any work-at-home opportunities that are chain marketing schemes, and are prohibited from making misrepresentations in connection with the sale of any business venture, work-at-home employment opportunity, or any other good or service, including misrepresenting earnings, the types of employment opportunities promised, or the refund policy offered.
The defendants are required to pay $30,000 for consumer redress. The settlement includes an "avalanche" clause making all of the defendants liable for $18 million if it is found that they made any material misrepresentations or omissions on their financial statements. The settlement further prohibits the defendants from selling their customer lists.
