Wyatt Marketing Corp., Inc., et al.; Proposed Consent Agreement With Analysis to Aid Public Comment
Federal RegisterMay 18, 1994
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FEDERAL EMERGENCY MANAGEMENT AGENCY
[File No. 892 3211]
Wyatt Marketing Corp., Inc., et al.; Proposed Consent Agreement
With Analysis to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreements.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, the two
consent agreements, accepted subject to final Commission approval,
would prohibit, among other things, a California-based company and its
owner from distributing an infomerical, from making false claims
regarding their book on the availability of government grants and
loans, and from making or selling any commercial that misrepresents it
as an independent program, rather than a paid advertisement. The
respondents would be required to have a disclosure statement for any
commercial 15 minutes or longer, and to have substantiation for future
claims regarding the availability of grants, loans or other benefits
from any source.
DATES: Comments must be received on or before July 18, 1994.
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:
Michael Bloom, FTC/New York Regional Office, 150 William St., 13th
Floor, New York, NY 10038. (212) 264-1207.
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 agreements containing consent orders to
cease and desist, having been filed with and accepted, subject to final
approval, by the Commission, have 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)).
Wyatt Marketing Corporation, Inc., a corporation, and James R. Wyatt,
Individually and as an Officer and Director of Said Corporation;
Agreement Containing Consent Order to Cease and Desist
[File No. 8923211]
The Federal Trade Commission having initiated an investigation of
certain acts and practices of Wyatt Marketing Corporation, Inc., a
corporation (``Wyatt Marketing'' or ``proposed respondent''), and it
now appearing that proposed respondent is willing to enter into an
agreement continuing an order to cease and desist from the acts and
practices being investigated,
It is hereby agreed by and between Wyatt Marketing, by John
Roberts, the trustee appointed to the Chapter 7 bankruptcy proceeding
of Wyatt Marketing, acting for and on behalf of proposed respondent
(``trustee''), and by Wyatt Marketing's duly authorized officer, and
counsel for the Federal Trade Commission, that:
1. Proposed respondent Wyatt Marketing (formerly doing business as
James R. Wyatt & Associates and Cornerstone Publishing) is a
corporation that was organized, existing, and doing business under and
by virtue of the laws of the State of California, and had its principal
office or place of business located at 4231 Pacific Street, suite 4,
Rocklin, California 95677.
2. On October 18, 1990, Wyatt Marketing filed a petition pursuant
to Chapter 11 of Title 11, United States Bankruptcy Code. On September
18, 1991, Wyatt Marketing's Chapter 11 bankruptcy filing was converted
to a Chapter 7 bankruptcy proceeding at the request of the proposed
respondent. Mr. John Roberts, 419 Main Street, suite 30, Placerville,
California 95667, is the trustee appointed to the Eastern District of
California's Wyatt Marketing Chapter 7 bankruptcy proceeding. In re
Wyatt Marketing Corp., No. 90-26755-C-7 (Bankr E.D. Cal.).
3. Proposed respondent admits all the jurisdictional facts set
forth in the attached draft complaint.
4. Proposed responeent 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) Any claim under the Equal Access to Justice Act, 5 U.S.C. 504.
5. This agreement shall not become 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 attached
draft complaint, 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 the
Commission 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.
6. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondent of facts, other than
jurisdictional facts, or of violations of law as alleged in the draft
of complaint here attached.
7. 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 attached draft complaint 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
complaint and decision containing the agreed-to order to the trustee's
address as stated in paragraph 2 of this agreement shall constitute
service to proposed respondent. The proposed respondent waives any
right it 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 the agreement may be used to vary or contradict the terms of
the order.
8. Proposed respondent has read the proposed complaint and order
contemplated hereby. Proposed respondent understands that once the
order has been issued it will be required to file one or more
compliance reports showing that it has fully complied with the order.
Proposed respondent further understands that it may be liable for civil
penalties in the amount provided by law for each violation of the order
after it becomes final.
Order
Definition
For purposes of this Order, ``grant'' shall mean any money or item
of value that is given or awarded without a concomitant obligation to
repay or to provide goods or services.
I
It is ordered that respondent Wyatt Marketing Corporation, Inc., a
corporation, its successors and assigns, and its officers, agents,
representatives, and employees, directly or through any partnership,
corporation, subsidiary, division, or other device, in connection with
the manufacturing, labelling, advertising, promotion, offering for
sale, sale, or distribution of any product or service in or affecting
commerce, as ``commerce'' is defined in the Federal Trade Commission
Act, do forthwith cease and desist from selling, broadcasting, or
otherwise disseminating, or assisting others to sell, broadcast or
otherwise disseminate, in part or in whole the program-length
television advertisement entitled ``Focus On Success'' for the book
entitled 101 Ways To Get Cash From The Government.
II
It is further ordered that respondent Wyatt Marketing Corporation,
Inc., a corporation, its successors and assigns, and its officers,
agents, representatives, and employees, directly or through any
partnership, corporation, subsidiary, division, or other device, in
connection with the manufacturing, labelling, advertising, promotion,
offering for sale, sale, or distribution of any product or service, in
or affecting commerce, as ``commerce'' is defined in the Federal Trade
Commission Act, do forthwith cease and desist from representing, in any
manner, directly or by implication, that:
A. The Farmers Home Administration has or had $5.7 billion in loan
money available for individuals for the purchase of single family homes
and apartments;
B. The book entitled 101 Ways To Get Cash From the Government gives
the reader a telephone number to call to find out whether she or he has
overpaid into the Social Security System and to determine whether she
or he is entitled to a refund from the Social Security Administration;
C. Individuals can or could retire before age 65 and still collect
full Social Security retirement benefits;
D. There is a federal agency that will or would loan an individual
with a good idea for a business up to $5 million to start a business or
expand an existing small business at terms of 3 percent to 7.5 percent
interest;
E. There is or was a federal government grant program available for
college educational purposes under which a student may or could obtain
up to $11,000 annually;
F. There is or was a government student loan available at 3 percent
interest;
G. The book entitled 101 Ways To Get Cash From The Government
contains information on seven different federally sponsored programs
that allow individuals to buy a house with $0 down and at loan terms of
1 percent annual interest; and
H. Consumers who make use of the book entitled 101 Ways To Get Cash
From The Government realize or can realize an average of $87,500 in
government grants and loans.
III
It is further ordered that respondent Wyatt Marketing Corporation,
Inc., a corporation, its successors and assigns, and its officers,
agents, representatives, and employees, directly or through any
partnership, corporation, subsidiary, division, or other device, in
connection with the manufacturing, labelling, advertising, promotion,
offering for sale, sale, or distribution of any product or service, in
or affecting commerce, as ``commerce'' is defined in the Federal Trade
Commission Act, do forthwith cease and desist from making any direct or
implied representation concerning:
A. The availability of grants, loans or other benefits from any
source for any purpose;
B. Whether any book or other writing contains information about a
particular subject or topic;
C. The terms or conditions upon which any person, firm, agency, or
institution will award a grant, loan or other benefit to any other
person, firm, or organization;
D. The terms or conditions of any government or private business
opportunity, business assistance program, grant program, educational
program, loan program, housing procurement or other procurement
program; or
E. Any method or technique for starting, operating, or financing
any profession or business;
unless, at the time of making such representation, respondent possesses
and relies upon competent and reliable evidence that substantiates the
representation; provided, however, that whenever respondent represents
that any book or other writing contains information about a particular
subject or topic, subpart B. shall not be construed to require
respondent to possess and rely upon evidence that such information in
said book or other writing is true, but only that it is present in said
book or other writing.
IV
It is further ordered that respondent Wyatt Marketing Corporation,
Inc., a corporation, its successors and assigns, and its officers,
representatives, agents, and employees, directly or through any
partnership, corporation, subsidiary, division, or other device, in
connection with the advertising, promotion, offering for sale, sale or
distribution of any product or service, in or affecting commerce, as ``
commerce'' is defined in the Federal Trade Commission Act, do forthwith
cease and desist from creating, producing, selling or disseminating:
A. Any advertisement that misrepresents, directly or by
implication, that it is not a paid advertisement; and
B. Any commercial or other video advertisement fifteen (15) minutes
in length or longer or intended to fill a broadcasting or cablecasting
time slot of fifteen (15) minutes in length or longer that does not
display visually, in a clear and prominent manner and for a length of
time sufficient for an ordinary consumer to read, within the first
thirty (30) seconds of the commercial and immediately before each
presentation of ordering instructions for the product or service, the
following disclosure:
``THE PROGRAM YOU ARE WATCHING IS A PAID ADVERTISEMENT FOR [THE
PRODUCT OR SERVICE].''
Provided that, for the purposes of this provision, the oral or
visual presentation of the telephone number or address for viewers to
contact to place an order for the product or service shall be deemed a
presentation of ordering instructions so as to require the display of
the disclosure provided herein.
V
It is further ordered that for five (5) years after the last date
of dissemination of any representation covered by this Order,
respondent or its successors and assigns shall maintain and upon
request make available to the Federal Trade Commission for inspection
and copying, within five (5) business days of such request:
A. All materials that were relied upon in disseminating such
representation; and
B. All tests, reports, studies, surveys, demonstrations or other
evidence in their possession or control that contradict, qualify, or
call into question such representation, or the basis relied upon for
such representation, including complaints from consumers.
VI
It is further ordered that respondent shall:
A. Within thirty (30) days after service of this Order, provide a
copy of this Order to each of respondent's current principals,
officers, directors, and managers, and to all persons, agents and
representatives having sales, advertising, or policy responsibility
with respect to the subject matter of this Order; and
B. For a period of ten (10) years from the date of entry of this
Order, provide a copy of this Order to each of respondent's principals,
officers, directors, and managers, and to all personnel, agents, and
representatives having sales, advertising, or policy responsibility
with respect to the subject matter of this Order who are associated
with the respondent or any subsidiary, successor, or assign, within
three (3) days after the person assumes his or her position.
VII
It is further ordered that respondent Wyatt Marketing Corporation,
Inc. shall notify the Federal Trade Commission at least thirty (30)
days prior to any proposed change in its corporate structure, including
but not limited to dissolution, assignment, or sale resulting in the
emergence of a successor corporation(s), the creation or dissolution of
subsidiaries or affiliates, the planned filing of a bankruptcy
petition, or any other corporate change that may affect compliance
obligations arising out of this Order.
VIII
It is further ordered that if the respondent is no longer the
subject of the Eastern District of California's Wyatt Marketing
Corporation, Inc. Chapter 7 bankruptcy proceeding (No. 90-26755-C-7),
it shall within sixty (60) days after it has ceased to be the subject
of such proceeding, file with the Federal Trade Commission a report, in
writing, setting forth in detail the manner and form in which it has
complied with this Order.
The Federal Trade Commission having initiated an investigation of
certain acts and practices of Wyatt Marketing Corporation, Inc., a
corporation, and James R. Wyatt (``proposed respondent''), individually
and as an officer and director of said corporation, and it now
appearing that the 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 James R. Wyatt, individually and
as an officer and director of Wyatt Marketing Corporation, Inc., and
counsel for the Federal Trade Commission, that:
1. Wyatt Marketing Corporation, Inc. (formerly doing business as
James R. Wyatt & Associates and Cornerstone Publishing) is a
corporation that was organized, existing, and doing business under and
by virtue of the laws of the State of California, and has had its
principal office or place of business located at 4231 Pacific Street,
Suite 4, Rocklin, California 95677.
2. Proposed respondent James R. Wyatt, at all times pertinent
herein, has been an officer and director of Wyatt Marketing
Corporation, Inc. Individually or in concert with others, he has
formulated, directed, and controlled the acts and practices of said
corporation, including the policies, acts and practices of said
corporation complained of herein. Proposed respondent's principal
office or place of business has been the same as that of the
corporation.
3. Proposed respondent admits all the jurisdictional facts set
forth in the attached draft complaint.
4. Proposed respondent waives:
(a) Any further procedural steps;
(b) The requirements 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) Any claim under the Equal Access to Justice Act, 5 U.S.C. 504.
5. This agreement shall not become 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 attached
draft complaint, 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 the 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.
6. This agreement is for settlement only and does not constitute an
admission by proposed respondent of facts, other than jurisdictional
facts, or of violations of law as alleged in the draft of complaint
here attached.
7. 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 attached draft complaint 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
complaint and 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 the agreement may be used
to vary or contradict the terms of the order.
8. Proposed respondent has read the proposed complaint and order
contemplated hereby. Proposed respondent understands that once the
order has been issued, he will be required to file one or more
compliance reports showing that 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
Definition
For purposes of this Order, ``grant'' shall mean any money or item
of value that is given or awarded without a concomitant obligation to
repay or to provide goods or services.
I
It is ordered that respondent James R. Wyatt, individually, and as
an officer and director of Wyatt Marketing Corporation, Inc., a
corporation, and respondent's agents, representatives, and employees,
directly or through any partnership, corporation, subsidiary, division,
or other device, in connection with the manufacturing, labelling,
advertising, promotion, offering for sale, sale, or distribution of any
product or service in or affecting commerce, as ``commerce'' is defined
in the Federal Trade Commission Act, do forthwith cease and desist from
selling, broadcasting, or otherwise disseminating, or assisting others
to sell, broadcast or otherwise disseminate, in part or in whole the
program-length television advertisement entitled ``Focus On Success''
for the book entitled 101 Ways to Get Cash From the Government.
II
It is further ordered that respondent James R. Wyatt, individually,
and as an officer and director of Wyatt Marketing Corporation, Inc., a
corporation, and respondent's agents, representatives, and employees,
directly or through any partnership, corporation, subsidiary, division,
or other device, in connection with the manufacturing, labelling,
advertising, promotion, offering for sale, sale, or distribution of any
product or service, in or affecting commerce, as ``commerce'' is
defined in the Federal Trade Commission Act, do forthwith cease and
desist from representing, in any manner, directly or by implication,
that:
A. The Farmers Home Administration has or had $5.7 billion in loan
money available for individuals for the purchase of single family homes
and apartments;
B. The book entitled 101 Ways To Get Cash From The Government gives
the reader a telephone number to call to find out whether she or he has
overpaid into the Social Security System and to determine whether she
or he is entitled to a refund from the Social Security Administration;
C. Individuals can or could retire before age 65 and still collect
full Social Security retirement benefits;
D. There is a federal agency that will or would loan an individual
with a good idea for a business up to $5 million to start a business or
expand an existing small business at terms of 3 percent to 7.5 percent
interest;
E. There is or was a federal government grant program available for
college educational purposes under which a student may or could obtain
up to $11,000 annually;
F. There is or was a government student loan available at 3 percent
interest;
G. The book entitled 101 Ways To Get Cash From The Government
contains information on seven different federally sponsored programs
that allow individuals to buy a house with $0 down and at loan terms of
1 percent annual interest; and
H. Consumers who make use of the book entitled 101 Ways To Get Cash
From The Government realize or can realize an average of $87,500 in
government grants and loans.
III
It is further ordered that respondent James R. Wyatt, individually,
and as an officer and director of Wyatt Marketing Corporation, Inc., a
corporation, and respondent's agents, representatives, and employees,
directly or through any partnership, corporation, subsidiary, division,
or other device, in connection with the manufacturing, labelling,
advertising, promotion, offering for sale, sale, or distribution of any
product or service, in or affecting commerce, as ``commerce'' is
defined in the Federal Trade Commission Act, do forthwith cease and
desist from making any direct or implied representation concerning:
A. The availability of grants, loans or other benefits for many
source for any purpose;
B. Whether any book or other writing contains information about a
particular subject or topic;
C. The terms or conditions upon which any person, firm, agency, or
institution will award a grant, loan or other benefit to any other
person, firm, or organization;
D. The terms or conditions of any government or private business
opportunity, business assistance program, grant program, educational
program, loan program, housing procurement or other procurement
program; or
E. Any method or technique for starting, operating, or financing
any profession or business;
unless, at the time of making such representation, respondent possesses
and relies upon competent and reliable evidence that substantiates the
representation; provided, however, that whenever respondent represents
that any book or other writing contains information about a particular
subject or topic, subpart B. shall not be construed to require
respondent to possess and rely upon evidence that such information in
said book or other writing is true, but only that it is present in said
book or other writing.
IV
It is further ordered that respondent James R. Wyatt, individually,
and as an officer and director of Wyatt Marketing Corporation, Inc.,
and respondent's agents, representatives, and employees, directly or
through any partnership, corporation, subsidiary, division, or other
device, in connection with the advertising, promotion, offering for
sale, sale or distribution of any product or service, in or affecting
commerce, as ``commerce'' is defined in the Federal Trade Commission
Act, do forthwith cease and desist from creating, producing, selling or
disseminating:
A. Any advertisement that misrepresents, directly or by
implication, that it is not a paid advertisement; and
B. Any commercial or other video advertisement fifteen (15) minutes
in length or longer or intended to fill a broadcasting or cablecasting
time slot of fifteen (15) minutes in length or longer that does not
display visually, in a clear and prominent manner and for a length of
time sufficient for an ordinary consumer to read, within the first
thirty (30) seconds of the commercial and immediately before each
presentation of ordering instructions for the product or service, the
following disclosure:
``THE PROGRAM YOU ARE WATCHING IS A PAID ADVERTISEMENT FOR [THE
PRODUCT OR SERVICE].''
Provided that, for the purposes of this provision, the oral or
visual presentation of the telephone number or address for viewers to
contact to place an order for the product or service shall be deemed a
presentation of ordering instructions so as to require the display of
the disclosure provided herein.
V
It is further ordered that for five (5) years after the last date
of dissemination of any representation covered by this Order,
respondent shall maintain and upon request make available to the
Federal Trade Commission for inspection and copying, within five (5)
business days of such request:
A. All materials that were relied upon in disseminating such
representation; and
B. All tests, reports, studies, surveys, demonstrations or other
evidence in their possession or control that contradict, qualify, or
call into question such representation, or the basis relied upon for
such representation, including complaints from consumers.
VI
It is further ordered:
A. That respondent shall pay to the Federal Trade Commission as
consumer redress the sum of two million and five hundred and sixty-
eight thousand and four hundred and forty-three dollars ($2,568,433);
provided however, that this liability will be suspended, subject to the
provisions of subparts B and C below.
B. That any funds paid by respondent pursuant to subpart A above
shall be paid into a redress fund administered by the Federal Trade
Commission and shall be used to provide direct redress to purchasers of
the book 101 Ways To Get Cash From The Government, by respondent James
R. Wyatt. If the Federal Trade Commission determines, in its sole
discretion, that redress to purchasers is wholly or partially
impracticable, any funds not so used shall be paid to the United States
Treasury. Respondent shall be notified as to how the funds are
disbursed, but shall have no right to contest the manner of
distribution chosen by the Commission.
C. That the Commission's acceptance of this Order is expressly
premised upon the financial statements and related documents provided
by respondent to the Federal Trade Commission, including the Financial
Statement of Debtor form that was executed by James R. Wyatt on
November 15, 1992, and respondent's written responses to Commission
inquiries, subsequently submitted in January 1993 to the Federal Trade
Commission (together designated as the ``Financial Statements''). After
service upon the respondent of an order to show cause, the Federal
Trade Commission may reopen this proceeding to make a determination
whether there are any material misrepresentations or omissions in said
financial statements and related documents. Respondent shall be given
an opportunity to present evidence on this issue. If, upon
consideration of respondent's evidence and other information before it,
the Commission determines that there are any material
misrepresentations or omissions in said financial statements and
related documents, that determination shall cause the entire amount of
monetary liability of two million and five hundred and sixty-eight
thousand and four hundred and forty-three dollars ($2,568,443) to
become immediately due and payable to the Federal Trade Commission, and
interest computed at the rate prescribed in 28 U.S.C. 1961, as amended,
shall immediately begin to accrue on any unpaid balance. Proceedings
initiated under Part VI are in addition to, and not in lieu of, any
other civil or criminal remedies as may be provided by law, including
any proceedings the Federal Trade Commission may initiate to enforce
this Order.
D. Any and all payments required under Paragraph A, including any
amounts that may be required pursuant to Paragraph C, constitute
compensation for money obtained by false pretenses, a false
representation, or actual fraud, and do not constitute a penalty of any
sort whatsoever.
VII
It is further ordered that respondent shall:
A. Within thirty (30) days after service of this Order, provide a
copy of this Order to each of respondent's current principals,
officers, directors, and managers, and to all persons, agents and
representatives having sales advertising, or policy responsibility with
respect to the subject matter of this Order; and
B. For a period of ten (10) years from the date of entry of this
Order, provide a copy of this Order to each of respondent's principals,
officers, directors, and managers, and to all personnel, agents, and
representatives having sales, advertising, or policy responsibility
with respect to the subject matter of this Order who are associated
with respondent directly or through any corporation, partnership,
subsidiary, or division, within three (3) days after the person assumes
his or her position.
VIII
It is further ordered that respondent shall, for a period of ten
(10) years from the date of entry of this Order, notify the Federal
Trade Commission within thirty (30) days of the discontinuance of his
present business or employment and of his affiliation with any new
business or employment. Each notice of affiliation with any new
business or employment shall include the respondent's new business
address and telephone number, and a statement describing the nature of
the business or employment and his duties and responsibilities.
IX
It is further ordered that respondent shall, within sixty (60) days
after the date of service of this Order, file with the Federal Trade
Commission a report, in writing, setting forth in detail the manner and
form in which he has complied with this Order.
Analysis of Proposed Consent Order to Aid Public Comment
The Federal Trade Commission has accepted agreements, subject to
final approval, to proposed consent orders from respondents James R.
Wyatt (``JRW'') and Wyatt Marketing Corporation, Inc. (``WMC'').
The proposed consent orders have been placed on the public record
for sixty (60) days for receipt 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
agreements and the comments received and will decide whether it should
withdraw from the agreements and take other appropriate action, or make
final the proposed orders contained in the agreements.
This matter concerns the program-length advertisement, Focus on
Success (the ``Wyatt infomercial''), for a book, 101 Ways to get Cash
From the Government (``the Government Benefits book'') which
purportedly instructs consumers how to obtain government grants and
loans for business and educational purposes.
The Commission's complaint alleges that the Wyatt infomercial
contains the following eight false representations concerning the
availability of government grants and loans for business and
educational purposes:
The Farmers Home Administration had $5.7 billion in loan
money available for individuals for the purpose of single family homes
and apartments;
The Government Benefits book gives the reader a telephone
number to call to find out whether she or he has overpaid into the
Social Security System and to determine whether she or he is entitled
to a refund from the Social Security Administration;
Individuals could retire before age 65 and still collect
full Social Security retirement benefits;
There was a federal agency that would loan an individual
with a good idea for a business up to $5 million to start a business or
expand an existing small business at terms of 3 percent to 7.5 percent
interest;
There was a federal government grant program for college
educational purposes under which a student could obtain up to $11,000
annually;
There was a government student loan available at 3 percent
interest;
The Government Benefits book contains information on seven
different federally sponsored programs that allow individuals to buy a
house with $0 down, and loan terms of 1 percent annual interest; and
Consumers who made use of the Government Benefits book
could realize an average of $87,500 in government grants and loans.
The complaint further alleges that the Wyatt infomercial is
deceptively misrepresented as an independent television program and not
paid advertising.
The proposed consent orders are designed to remedy the advertising
violations charged and to prevent the respondents from engaging in
similar acts and practices in the future.
Part I of the proposed orders prohibits the dissemination of the
Wyatt infomercial for the Government Benefits book.
Part II of the proposed orders prohibits the respondents from
making the specific misrepresentations alleged in the complaint.
Part III of the proposed orders prohibits the respondents from
representing the availability of grants, loans or other benefits from
any source for any purpose unless such representation is substantiated
by competent and reliable evidence. However, whenever respondents
represent that any book or other writing contains information about a
particular subject or topic, respondents shall only be required to
substantiate that such information is present in the book or other
writing, and shall not be required to substantiate the information.
Part IV of the proposed orders prohibits the respondents from
creating or disseminating any advertisement that misrepresents that it
is not a paid advertisement. Any commercial or other video
advertisement fifteen (15) minutes or longer must display in a clear
and prominent manner, and for a length of time sufficient for an
ordinary consumer to read, within the first thirty (30) seconds of the
commercial and immediately before each presentation of ordering
instructions (an oral or visual presentation of the telephone number or
address for viewers to contact to place an order), the following
disclosure: ``THE PROGRAM YOU ARE WATCHING IS A PAID ADVERTISEMENT FOR
[THE PRODUCT OR SERVICE].''
Part V of the proposed orders relates to the respondents'
obligations to maintain records.
Part VI of the proposed JRW order requires respondent JRW to pay to
the Federal Trade Commission as consumer redress (and if redress is
impracticable, the United States Treasury) the sum of $2,568,443.
However, this liability will be suspended subject to the Commission's
acceptance of the reliance of financial statements and related
documents provided by respondent JRW to the Federal Trade Commission.
Part VI of the proposed WMC order, Parts VII and VIII of both
proposed orders, and Part IX of the proposed JRW order, related to
respondents' obligations to distribute the order to current and future
officers and employees, to notify the Commission of changes in business
and corporate structure that might affect compliance with the order, to
notify the Commission of any changes in the business or employment of
the individual respondent, and to file one or more reports detailing
compliance with the order.
The purpose of this analysis is to facilitate public comment of the
proposed orders. It is not intended to constitute an official
interpretation of the agreements and proposed orders or to modify in
any way their terms.
Benjamin I. Berman,
Acting Secretary.
Concurring Statement of Commissioner Roscoe B. Starek III in the Matter
of James R. Wyatt & Associates
[File No. 892-3211]
Although I generally support this matter, I have reservations about
the proviso to one of the substantiation requirements set forth in the
proposed Order, Part III. That proviso is designed to accommodate the
Commission's Mirror Image Doctrine, which provides as follows:
The Commission, as a matter of policy, ordinarily will not
proceed against advertising claims which promote the sale of books
and other publications: Provided, The advertising only purports to
express the opinion of the author or to quote the contents of the
publication; the advertising discloses the source of statements
quoted or derived from the contents of the publication; and the
advertising discloses the author to be the source of opinions
expressed about the publication. Whether the advice being offered by
the publication will achieve, in fact, the results claimed for it in
the advertising will not be controlling if appropriate disclosures
have been made. This policy does not apply, however, if the
publication, or its advertising, is used to promote the sale of some
other product as part of a commercial scheme.
Advertising in Books, Enforcement Policy, 36 Fed. Reg. 13414 (1971).
The Order proviso, however, states as follows:
[W]henever respondent represents that any book or other writing
contains information about a particular subject or topic, [the
referenced substantiation provision] shall not be construed to
require respondent to possess and rely upon evidence that such
information in said book or other writing is true, but only that it
is present in said book or other writing.
Thus, the Order proviso does not require respondents to make the
disclosures required under the Mirror Image doctrine, and does not
include the exemption from protection for publications used to promote
the sale of other products.
An inventive respondent could devise a deceptive scheme that would
be protected by the Order proviso, but not by a proviso that tracked
verbatim the Commission's Mirror Image Doctrine. Accordingly, in order
to limit the possibility that our orders would protect deceptive
speech, I would prefer that, in the future, safe harbors designed to
accommodate the Mirror Image Doctrine simply track the Doctrine
verbatim.
[FR Doc. 94-12034 Filed 5-17-94; 8:45 am]
BILLING CODE 6750-01-M
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.