Jeanette L. Douglass; Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 942-3311]

Jeanette L. Douglass; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair or deceptive acts or practices and unfair methods of

competition, this consent agreement, accepted subject to final

Commission approval, would prohibit, among other things, Douglass, an

officer of Computer Business Services, Inc. (CBSI), from

misrepresenting the earnings or success rate of CBSI investors, the

existence of a market for CBSI's products or services, and the amount

of time it would take investors to recoup their investments. The order

also bars Douglass from making any representation about the

performance, benefits, efficacy, or success rate of any product or

service unless she possesses reliable evidence to substantiate the

claims. The agreement settles allegations that potential earnings and

profit claims made by CBSI were false and misleading.

DATES: Comments must be received on or before March 18, 1997.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:

C. Steven Baker, Federal Trade Commission, Chicago Regional Office, 55

East Monroe Street, Suite 1860, Chicago, IL 60603. (312) 353-8156.

Catherine R. Fuller, Federal Trade Commission, Chicago Regional

Office, 55 East Monroe Street, Suite 1860, Chicago, IL 60603. (312)

353-5576.

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 above-captioned 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. The following Analysis to Aid Public

Comment describes the terms of the consent agreement, and the

allegations in the accompanying complaint. An electronic copy of the

full text of the consent agreement package can be obtained from the

Commission Actions section of the FTC Home Page (for December 12,

1996), on the World Wide Web, at ``http://www.ftc.gov/os/actions/htm.''

A paper copy can be obtained from the FTC Public Reference Room, Room

H-130, Sixth Street and Pennsylvania Avenue, N.W., Washington, D.C.

20580, either in person or by calling (202) 326-3627. 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)).

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 Jeanette L.

Douglass.

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 earnings and success claims made regarding

business ventures promoted by respondent. The Commission's complaint

charges that respondent, in concert with Computer Business Services,

Inc. (``CBSI''), made false and unsubstantiated claims that consumers

who purchase or use CBSI's business ventures ordinarily succeed and

earn substantial income. In fact, the complaint alleges, the vast

majority of consumers never even recoup their initial investment. The

complaint also alleges that respondent falsely represented that

endorsements appearing in CBSI's advertisements reflect the actual

experiences of its customers and that those endorsements reflect the

typical or ordinary experience of purchasers of CBSI's business

ventures. Further, the complaint alleges that respondent represented

that consumers can successfully utilize automatic telephone dialing

systems to market their businesses but failed to disclose that federal

law prohibits the use of such systems in the unattended mode to

initiate a call to any residential telephone line in certain

circumstances.

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. The proposed order extends to

all business ventures and to all products or services that are part of

any business venture.

Part I of the proposed consent order prohibits the respondent from

misrepresenting the earnings or success of its purchasers, the

existence of a market for the products or services promoted by

respondent, or the amount of time within which a prospective purchaser

can reasonably expect to recoup his or her investment. Part II of the

proposed order prohibits the respondent from misrepresenting the

performance, benefits, efficacy or success rate of any product or

service that is a part of such business venture, unless at the time

such representation is made the respondent possesses and relies upon

competent and reliable evidence that substantiates the representation.

Part III of the proposed order prohibits the respondent from

misrepresenting that a user testimonial or endorsement is typical or

ordinary and from using, publishing or referring to any user

testimonial or endorsement unless respondent has good reason to believe

that at the time of such use, publication or reference, the person or

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organization named subscribes to the facts and opinions stated therein.

Part IV of the proposed order requires respondent to disclose, in close

proximity to any representation regarding the use or potential use of

an automatic telephone dialing system, that federal law prohibits the

use of an automatic telephone dialing system to initiate a telephone

call to any residential telephone line using an artificial or

prerecorded voice to transmit an unsolicited advertisement for

commercial purposes without the prior express consent of the called

party unless a live operator introduces the message.

The remaining parts of the proposed consent order require the

respondent to maintain materials relied upon to substantiate claims

covered by the order, to distribute copies of the order to each of its

operating divisions and to certain company officials, to notify the

Commission of any changes in corporate structure that might affect

compliance with the Order, and to file one or more compliance reports.

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 in any

way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 97-1238 Filed 1-16-97; 8:45 am]

BILLING CODE 6750-01-M