LS Enterprises, LLC et al.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 9723149]

LS Enterprises, LLC et al.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or deceptive acts or

practices or unfair methods of competition. The attached Analysis to

Aid Public Comment describes both the allegations in the draft

complaint that accompanies the consent agreement and the terms of the

consent order--embodied in the consent agreement--that would settle

these allegations.

DATES: Comments must be received on or before July 6, 1999.

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

Room 159, 600 Pennsylvania Avenue, NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: John Dugan and Andrew Caverly, Boston

Regional Office, Federal Trade Commission, 101 Merrimac Street, Suite

810, Boston, MA 02114-4719, (617) 424-5960.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 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 complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for April 21, 1999), on the World Wide Web, at ``http://www.ftc.gov/

os/actions97.htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, 600 Pennsylvania Avenue, NW., Washington,

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

Public comment is invited. Comments should be directed to: FTC/

Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW,

Washington, DC 20580. Two paper copies of each comment should be filed,

and should be accompanied, if possible, by a 3\1/2\ inch diskette

containing an electronic copy of the comment. 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

Section 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 to a

proposed consent order from LS Enterprises, LLC, Internet Promotions,

LLC, and Louis Salatto. The proposed respondents promoted and sold

various products and services through the Internet via unsolicited

commercial E-Mail (``UCE). In particular, the proposed respondents

promoted and sold UCE products and services, whereby the proposed

respondents offered to assist in sending bulk UCE on behalf of other

companies or individuals who were selling products or services, and

sold UCE software and mailing lists so that other companies or

individuals could send their own bulk UCE. The proposed respondents

also promoted and sold various work-at-home and business opportunities

via UCE.

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.

The Commission's complaint alleges several unfair or deceptive acts

or practices related to the proposed respondents' promotion and sale of

various products and services via UCE. The complaint charges that, with

respect to the promotion and sale of UCE products and services, the

proposed respondents: falsely represented that they acted as an E-Mail

Internet Service Provider; falsely represented their experience in

providing UCE services; made false and unsubstantiated earnings claims

for purchasers of their UCE products and services; and made false and

unsubstantiated claims about the receptivity of consumers on their E-

Mail recipient lists towards receiving UCE.

The complaint further charges that the proposed respondents made

several false or unsubstantiated claims in the promotion and sale of

various work-at-home and business opportunities via UCE. The complaint

charges that in a promotion concerning setting consumers up with jobs

as ``mystery shoppers,'' the proposed respondents: falsely represented

that they acted as contractors for major corporations to hire consumers

to work as ``mystery shoppers,'' have hired thousands of consumers to

work as ``mystery shoppers,'' have actual job openings for ``mystery

shoppers'' all over the country, and will give consumers as many

``mystery shopper'' assignments from the proposed respondents as they

want or need; and made false and unsubstantiated earnings and free

merchandise claims. The complaint also charges that in a general work-

at-home promotion, the proposed respondents: falsely claimed that they

have helped thousands of consumers to find home-based work; and made

false and unsubstantiated claims about earnings, when consumers can

begin work, and when and for how long they can receive paychecks.

Finally, in a promotion concerning the sale of reproduction and

distribution rights for various consumer manuals, the complaint charges

that the proposed respondents: falsely related their experience in

selling consumer manuals; and made false and unsubstantiated earnings

claims

[[Page 24653]]

associated with the sale of these manuals.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent the proposed respondents from

engaging in similar acts in the future. Parts I and II of the proposed

order apply to the promotion of any UCE product or service, or any

product or service concerning business opportunities or work-at-home

opportunities. Part I prohibits the proposed respondents from

misrepresenting in any manner, expressly or by implication: (A) Their

ability to provide any such product or service; (B) their experience in

providing any such product or service; (C) that they act as contractors

for other companies to hire consumers for any type of work; or (D) the

availability of actual job openings or any other type of employment

opportunities, or the level of assistance provided by them in securing

any job or other type of employment opportunity. Part II prohibits the

proposed respondents from making any claim about: (A) The amount of

earnings, income, or sales that a prospective purchaser could

reasonably expect to attain; (B) the amount of time within which a

prospective purchaser could reasonably expect to: (1) begin earning

money; (2) continue earning money; (3) attain any amount of earnings,

income, or sales; or (4) recoup his or her investment; (C) the

availability of free merchandise; or (D) the receptivity of persons on

any type of mailing list towards receiving commercial solicitations,

unless the representation is true and, at the time it is made, the

proposed respondents possess and rely upon competent and reliable

evidence that substantiates the representation.

Part III of the proposed order prohibits misrepresentations in

UCEs, including, but not limited to, misrepresentations in the subject

line or the text of the UCE. Part IV applies to the sale of any product

or service, and prohibits the proposed respondents from making any

representation, in any manner, expressly or by implication, about the

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

unless such representation is true and, at the time the representation

is made, the proposed respondents possess and rely upon competent and

reliable evidence, which when appropriate must be competent and

reliable scientific evidence, that substantiates the representation.

Part V of the proposed order contains a bond provision requiring

the proposed respondents to post a $100,000 bond before advertising,

promoting, offering for sale, selling, or distributing any UCE product

or service via any media, or any other product or service via UCE.

Part VI of the proposed order contains record-keeping requirements

for materials that demonstrate the compliance of the proposed

respondents with the proposed order. Part VII requires distribution of

a copy of the consent decree to certain current and future personnel

who have responsibilities related to the subject matter of the order.

Part VIII provides for Commission notification upon any change in the

corporate respondents affecting compliance obligations arising under

the order. Part IX provides for Commission notification upon any change

in the individual respondent's employment status. Part X requires the

filing of compliance report(s). Finally, Part XI provides for the

termination of the order after twenty years under certain

circumstances.

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 the agreement and proposed order or to modify in any

way their terms.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 99-11492 Filed 5-6-99; 8:45 am]

BILLING CODE 6750-01-M