Vermont Attorney General William H. Sorrell says his office has settled a consumer fraud lawsuit filed against two related companies that ran "government grants" seminars in Vermont.
The companies are Proven Methods Seminars, LLC, of Boca Raton, Florida, and Proven Methods Customer Service, LLC, of Rochester, New York, doing business together as National Grants Conferences ("NGC"). The settlement offers consumers an opportunity to receive refunds totaling over $300,000 and requires payment to the state of $65,000.
In March 2006, the Attorney General sued in response to NGC's marketing of a government grants program without prior factual substantiation that it works; NGC's use of consumer testimonials to sell its program without disclosing the atypical nature of the consumers' success in obtaining government assistance; its failure to provide proper notice of consumers' right to cancel any purchase of program materials; and its refusal to comply with an investigative subpoena.
According to the court complaint filed with the Washington Superior Court in Montpelier, NGC claimed to offer a program that showed how to obtain "free" money from the government. Since 2001, the company conducted at least ten seminars at various hotels in Vermont, which were advertised through direct mail and infomercials on television. Attendance at NGC's seminars was free, but NGC sold "training" materials to consumers at the seminars for a "discounted" price of up to $999.00.
According to the court complaint, the brochure handed out at NGC's seminars bore a large-print headline that summarized what NGC claimed to offer: "How To Get Free Money From the U.S. Government!"
The direct mail piece used to entice consumers to attend NGC's seminars contained a similar headline, also in large print: "How To Qualify For FREE Grant Money And Guaranteed Loans Backed By The U.S. Government!" In addition, NGC made extensive use of consumer testimonials to market its program, supposedly from individuals who had purchased NGC's training materials and who, as a result, had been successful in obtaining grants or loans.
Despite this emphasis on consumer success, NGC admitted in papers filed with the court that it did not know how common it was for purchasers of its training materials to apply for, or to receive, a government grant or loan.
In addition, the small-print disclaimer accompanying the testimonials did not adequately warn prospective buyers of NGC's materials that the consumer-endorsers' experience was not typical of how consumers generally would fare if they bought NGC's program. This lack of factual substantiation for NGC's marketing claims, and the inadequate disclosures, violated the Vermont Consumer Fraud Act, according to the court complaint.
