1554 Corp.; Brainerd L. Mellinger, III; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 952-3401]

1554 Corp.; Brainerd L. Mellinger, III; 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, the Woodland

Hills, California-based company and its president from making

unsubstantiated earnings claims and from using deceptive testimonials.

The Commission had alleged that 1554 and Mellinger advertised a work-

at-home course, called ``Mellinger World Trade Mail Order Plan,'' in an

infomercial which contained deceptive and misleading claims.

DATES: Comments must be received on or before April 7, 1997.

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

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

FOR FURTHER INFORMATION CONTACT:

Justin Dingfelder, Federal Trade Commission, S-4302, 6th and

Pennsylvania Ave, NW, Washington, DC 20580. (202) 326-3017.

Jonathan Cowen, Federal Trade Commission, S-4302, 6th and Pennsylvania

Ave, NW, Washington, DC 20580. (202) 326-2533.

Lemuel Dowdy, Federal Trade Commission, S-4302, 6th and Pennsylvania

Ave, NW, Washington, DC 20580. (202) 326-2981.

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 January 27, 1997),

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, NW, Washington, DC 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, subject to final

approval, an agreement to a proposed consent order from 1554

Corporation and its president Brainerd L. Mellinger, III (collectively,

``respondents''). The agreement would settle a proposed complaint by

the Federal Trade Commission that respondents engaged in unfair or

deceptive acts or practices in violation of section 5(a) of the Federal

Trade Commission Act.

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 or make final the agreement's proposed

order.

The Proposed Complaint

This matter concerns advertising practices related to the sale of

1554 Corporation's Mellinger World Trade Mail Order Plan (``Mellinger

Plan''). The administrative complaint, which the Commission has

proposed to issue, would allege that respondents promoted the sale of

the Mellinger Plan by creating and disseminating advertisements and

promotional materials, including a program-length television

advertisement entitled ``Mellinger's Secret Treasures.''

The complaint charges that through the use of statements contained

in their advertisements and promotional materials, respondents made

unsubstantiated representations that consumers who use the Mellinger

plan typically succeed in readily starting and operating profitable

businesses and that consumers who use the Mellinger Plan typically earn

substantial income. The complaint also charges that endorsements

appearing in respondents' advertisements and promotional materials were

represented, without substantiation, to be reflective of the typical or

ordinary experience of members of the public who have used the

Mellinger Plan.

The Proposed Order

The proposed consent order contains provisions that are designed to

remedy the alleged advertising violations and to prevent respondents

from engaging in similar acts and practices in the future. The order

prohibits respondents from making any unsubstantiated representations:

(1) that consumers who use the Mellinger plan typically succeed in

readily starting and operating profitable businesses, (2) that

consumers who use the Mellinger Plan typically earn substantial income,

or (3) about the performance, benefits, efficacy or success rate of any

product or service concerning business opportunities.

The proposed order also contains prohibitions about using or

misusing testimonials or endorsements. In particular, the order

prohibits respondents from using testimonials that do not reflect the

actual opinions, beliefs, or experiences of the endorser, and from

using testimonials to represent the typical experience of respondents'

customers unless respondents can substantiate that such claims are in

fact typical or respondents clearly disclose that the endorser's

experience is not typical. The order also contains standard provisions

regarding record-keeping, notification of changes in corporate or

employment status, distribution of the order, termination of the order,

and the filing of a compliance report.

The purpose of this analysis is to facilitate public comment on the

proposed order, and it is not intended to constitute an official

interpretation of

[[Page 5413]]

the agreement and the proposed order or to modify their terms in any

way.

Donald S. Clark,

Secretary.

[FR Doc. 97-2808 Filed 2-4-97; 8:45 am]

BILLING CODE 6750-01-P