Lyle R. Larsen d/b/a Momentum; Consent Agreement With Analysis To Aid Public Comment

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FEDERAL TRADE COMMISSION

[File No. 962-3016]

Lyle R. Larsen d/b/a Momentum; Consent Agreement With Analysis To

Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Consent agreement.

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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 Bellevue, Washington-based respondent from

misrepresenting, in his advertisements for a credit repair kit, any

remedy for credit history problems available under the Fair Credit

Reporting Act, including the ability to remove accurate but adverse

information from credit reports. It would also prohibit the company

from misrepresenting the legality of any credit repair product and

would require it to disclose that consumers who follow the programs may

violate federal criminal laws. The consent agreement settles

allegations stemming from advertisements on the Internet for Larson/

Momentum's CreditPlus purported credit repair product.

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 Pennsylvania Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

C. Steven 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)).

In the Matter of Lyle R. Larson, individually and doing business

as Momentum.

[File No. 962-3016]

Agreement Containing Consent Order To Cease and Desist

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Lyle R. Larson individually and doing

business as Momentum (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 Lyle R. Larson, individually and

doing business as Momentum, and counsel for the Federal Trade

Commission that:

1. Proposed respondent Lyle R. Larson is an individual doing

business as Momentum with his principal office or place of business at

3033 127th Place SE, Suite I-21, Bellevue, Washington 98005.

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 conclusion 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 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 a 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 statute 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

Definitions

1. ``Credit Report'' means any written, oral, or other

communication of information by a consumer reporting agency bearing on

a person's credit worthiness, credit standing, credit capacity,

character, general reputation, personal characteristics, or mode of

living that is used or expected to be used or collected in whole or in

part for the purpose of serving as a factor in establishing the

consumer's eligibility for credit.

2. ``Credit Repair Product'' means any product or service to

improve a person's credit report by removing adverse information

appearing therein, changing the rating of such information from

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negative to positive, or otherwise enhancing the person's credit

report.

I

It is ordered that respondent Lyle R. Larson, 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 any

credit repair product, in or affecting commerce, as ``commerce'' is

defined in the Federal Trade Commission Act, do forthwith cease and

desist from misrepresenting, either directly or indirectly, in writing,

via a computer communications network, or by any other means:

A. Any right of remedy available under the Fair Credit Reporting

Act, 15 U.S.C. 1681 et seq., including, but not limited to, the ability

to remove adverse information in any credit report; and

B. The legality of any credit repair product.

II

It is further ordered that respondent Lyle R. Larson, 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 any

credit repair product involving the creation of a new credit file or

tax identification number, in or affecting commerce, as ``commerce'' is

defined in the Federal Trade Commission Act, do forthwith cease and

desist from failing to disclose in any advertisement or promotional

material, including any advertisement or promotion via a computer

communications network, that:

A. Making misrepresentations to the Internal Revenue Service may be

a federal crime;

B. Misrepresenting one's social security number for any purpose may

be a federal crime;

C. Making misrepresentations for a loan application may be a

federal crime; and

D. Making misrepresentations to a financial institution may be a

federal crime.

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 for a period of five (5) years 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

involving the advertising, offering for sale, sale, or distribution of

any credit repair product. 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,

respondent 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 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 Lyle R.

Larson, individually and doing business as Momentum.

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 the

CreditPlus credit repair product. The Commission's complaint charges

that the respondent's advertising represents, directly or by

implication, that: (a) Consumers can remove bankruptcies, judgments,

foreclosures, liens, repossessions, late payments, and other adverse

items of information from their credit reports even where such

information is accurate and not obsolete; and (b) respondent's product

whereby consumers create new credit files is legal. The claims are

alleged to be false and misleading, and in violation of section 5 of

the Federal Trade Commission Act, 15 U.S.C. 45, because: (a) Most

consumers cannot remove adverse items of information

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from their credit reports where such information is accurate and not

obsolete; and (b) respondent's product whereby consumers create new

credit files is not legal. The Commission's complaint also charges that

the respondent's failure to disclose that consumers who follow

respondent's product to create new credit files will violate certain

federal criminal laws, is a deceptive practice in violation of section

5 of the Federal Trade Commission Act, 15 U.S.C. 45.

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 any credit repair product: (a) Any

right or remedy available under the Fair Credit Reporting Act, 15

U.S.C. 1681 et seq., including, but not limited to, the ability to

remove adverse information in any credit report; and (b) the legality

of any credit repair product. Part II of the proposed order prohibits

the respondent from failing to disclose in any advertisement for any

credit repair product that: (a) Making misrepresentations to the

Internal Revenue Service may be a federal crime; (b) misrepresenting

one's social security number for any purpose may be a federal crime;

(c) making misrepresentations for a loan application may be a federal

crime; and (d) making misrepresentations to a financial institution may

be a federal crime.

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. 96-7862 Filed 3-29-96; 8:45 am]

BILLING CODE 6750-01-M