Sherman G. Smith d/b/a Starr Communications; Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 952-3431]

Sherman G. Smith d/b/a Starr Communications; 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 Salt Lake City-based respondent from misrepresenting, in

his advertisements for a work-at-home business, the income, earnings,

or sales from any business opportunity and would prohibit any claims

about past, present, or future earnings unless, at the time of making

the representation, it possesses and relies upon competent and reliable

evidence that substantiates the claim. The consent agreement settles

allegations stemming from advertisements on the Internet for Smith/

Starr's ``U.S. Government Tracer Business Program'' business

opportunity.

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 Pa. Ave., NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

C. Steve 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)).

Agreement Containing Consent Order To Cease and Desist

In the Matter of: Sherman G. Smith, individually and doing

business as Starr Communications.

[File No. 952-3431]

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Sherman G. Smith, individually and doing

business as Starr Communications (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 Sherman G. Smith, individually

and doing business as Starr Communications, his attorney, and counsel

for the Federal Trade Commission that:

1. Proposed respondent Sherman G. Smith is an individual doing

business as Starr Communications with his principal office or place of

business at 78 West Broadway, No. 2007 North, Salt Lake City, Utah

84101.

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 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) All claims under the Equal Access to Justice Act.

4. This agreement shall not become a part of the public record of

the

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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 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.

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 statue 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

I

It is ordered that respondent Sherman G. Smith, 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 the

``U.S. Government Tracer Business Program,'' or any other business

opportunity, in or affecting commerce, as ``commerce'' is defined in

the Federal Trade Commission Act, do forthwith cease and desist from

misrepresenting, in any manner, the past, present, or future profits,

earnings, income, or sales from such business opportunity.

II

It is further ordered that respondent Sherman G. Smith, 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 the

``U.S. Government Tracer Business Program,'' or any other business

opportunity, in or affecting commerce, as ``commerce'' is defined in

the Federal Trade Commission Act, do forthwith cease and desist from

representing, in any manner, in the past, present, or future profits,

earnings, income, or sales from such business opportunity, unless at

the time of making such representation respondent possesses and relies

upon competent and reliable evidence that substantiates the

representation.

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 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. 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,

respondents 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

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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 Sherman G.

Smith, individually and doing business as Starr Communications.

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 his ``U.S.

Government Tracer Business Program.'' The Commission's complaint

charges that the respondent's advertising represents, directly or by

implication, that the amount of money represented in the advertisements

is representative, or typical, of what individuals who purchase

respondent's program will generally achieve. The claim is alleged to be

false and misleading, and in violation of section 5 of the Federal

Trade Commission Act, 15 U.S.C. 45, because the amount of money

represented in the advertisements is not representative, or typical, of

what individuals who purchase respondent's program will generally

achieve.

The Commission's complaint also charges that the respondent falsely

represented that he possessed and relied upon a reasonable basis that

substantiated the above claim. The Commission's complaint alleges that

this representation is false and misleading, and in violation of

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

the time he made the representation respondent did not possess and rely

upon a reasonable basis that substantiated the claim.

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 the ``U.S. Government Tracer

Business Program,'' or any other business opportunity, the past,

present, or future profits, earnings, income, or sales from such

business opportunity.

Part II of the proposed order prohibits the respondent from

representing, directly or by implication in his advertising for the

``U.S. Government Tracer Business Program,'' or any other business

opportunity, the past, present, or future profits, earnings, income, or

sales from such business opportunity, unless at the time of making such

representation respondent possesses and relies upon competent and

reliable evidence that substantiates the claim.

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. 96-7865 Filed 3-29-96; 8:45 am]

BILLING CODE 6750-01-M