National Clearing House Inc.

A federal district court judge upheld Federal Trade Commission charges against NCH, Inc. and its principals for their roles in a fraudulent telefunding scheme. The FTC had alleged that the defendants deceptively offered "highly valuable" prizes to consumers in return for making a contribution to a charitable organization named Operation Life. In addition, the FTC alleged that the defendants misrepresented the charitable activities in which Operation Life was engaged. The judge granted the FTC's request for summary judgment, ordered the defendants to pay $2,645,760.36 in redress to consumers, and permanently banned the defendants from engaging in any prize-promotion telemarketing activities in the future.

The FTC's February 1994 complaint detailing the allegations in this case names as defendants NCH, Inc., doing business as National Clearing House, Robbin McLaurin, and James H. Hart. NCH is based in Las Vegas, Nevada.

According to the FTC's complaint, NCH, McLaurin, and Hart solicited donations for Operation Life by telling consumers that they would receive one of several specific valuable prizes, the least valuable prize purportedly being worth $3,500, according to the FTC complaint. The defendants also falsely represented, among other things, that Operation Life provided services to help drug addicts, shelter women, infants and children, or to help the homeless throughout the United States, the FTC alleged.

The FTC's complaint also alleged that consumers did not receive any of the valuable prizes or awards as promised by the defendants, or if consumers did receive any prize at all, it was worth far less than promised. In addition, Operation Life does not provide the charitable services represented.

U.S. District Court Judge Earl E. O'Connor upheld the FTC allegations that these representations made to consumers were unfair or deceptive, has found defendants NCH, McLaurin, and Hart liable for them and for restitution to consumers who made donations to Operation Life, and ordered the defendants to pay total redress in the amount of $2,645,760.36. In addition, Judge O'Connor permanently banned NCH, McLaurin, and Hart from engaging in any prize-promotion telemarketing activities in the future. Finally, the court directed the receiver in this case to maintain the consumer redress fund.

The judge granted the FTC's motion for summary judgment (without a trial) and entered the order on September 6, 1995. This case was handled by the FTC's San Francisco Regional Office.

Copies of the court order, as well as other documents associated with this case, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov

(FTC File No. X940023)
(Civil Action No. CV-S-94-138-LDG (LRL))