Magazine Telemarketers Agree To Settle FTC Charges of Debiting Consumers' Checking Accounts without Authorization

Genisis Marketing and Administration and the company's owner, Philip Edward Dill, have reached a settlement of charges filed by the Federal Trade Commission in March of this year. The settlement would prohibit these defendants from debiting consumers' checking accounts without advance written approval from the consumer, and would permanently ban Dill from engaging in any telemarketing activities in the future.

The FTC brought charges in federal court against Atlanta, Georgia, and Somerville, New Jersey-based defendants: Genisis Marketing and Administration, Inc., Mega Magazines, Inc., Windward Marketing Ltd., Crestwood Enterprises, Inc., Wholesale Capital Corporation, and company officers Philip Edward Dill, Ronald Jay Pepper, Matthew Corbitt Mizell, Jr., Sarfraz A. Tariq, and Sabir Saleem. (Crestwood Enterprises, Holbrook and Mizell settled the FTC's charges in June.)

The FTC alleged that the defendants sold their magazine subscription packages by placing "cold" sales calls to consumers and making a variety of misrepresentations. Using so-called "demand draft," or "phone checks," which, unlike conventional checks do not require a consumer's written signature on a document, the defendants debited consumers' checking accounts for a lump sum of around $300, according to the complaint detailing the charges in this case. The FTC charged that the defendants lied to consumers about the reason for needing their checking account numbers or told consumers that their accounts would not be debited without authorization. In fact, the complaint stated, the sole reason the defendants obtained the numbers was so that the consumers' accounts could be debited without their knowledge or for amounts much larger than they had authorized.

The defendants also allegedly promised consumers cash certificates for groceries as a prize, but instead sent consumers a survey. If consumers completed and returned the survey the complaint alleged, they received only grocery coupons, not cash.

The proposed settlement with Genisis and Dill would permanently ban Dill from any future involvement, in any capacity, in telemarketing activities. The proposed settlement also would prohibit Dill from obtaining or submitting for payment any demand draft without obtaining the consumer's signature on the demand draft. Further, under the proposed settlement, Dill and Genisis relinquish to the corporate receiver approximately $60,000 in assets that were frozen when the complaint was filed and a receiver was appointed. The proposed settlement also places Genisis under permanent receivership and gives the receiver authority to develop a plan for consumer redress.

The proposed settlement with Dill and Genisis was filed in the U.S. District Court for the Northern District of Georgia, in Atlanta, on October 10. The settlement is subject to approval by the judge. The Commission vote to file the proposed settlement was 5-0. The FTC's Atlanta Regional Office assisted in this case.

The FTC has a consumer brochure about Automatic Debit Scams. Copies are available from the address below.

NOTE: A consent judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the proposed settlement, the consumer brochure, and 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 news as it is announced, call the FTC 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: https://www.ftc.gov

or

Katharine B. Alphin
Atlanta Regional Office
1718 Peachtree Street, N.W., Room 1000
Atlanta, Georgia 30367
404-347-4837

(Civil Action No.: 1 96-CV-0615-FMH)

(FTC File No. X 96 0026)