FTC Says Defendants in Job Services Case to Turn Over Nearly $2.3 Million for Redress

Atlanta-based Career Information Services, Inc. and CIS Associates, Inc., and their senior officers, have agreed to settle charges that they defrauded consumers seeking federal jobs out of millions of dollars, the Federal Trade Commission announced today. The settlement the FTC negotiated in the case would result in nearly $2.3 million in redress and require each of the defendants to post a $1 million bond for the protection of future customers before marketing career advisory or pay-per-call services. The settlement also would prohibit them from violating the FTC 900-Number Rule’s cost-disclosure requirements and making deceptive statements about the availability and nature of federal and postal employment.

The FTC also announced a new federal job fraud consumer education campaign in partnership with the U.S. Office of Personnel Management. The FTC and OPM will feature consumer alerts on their World Wide Web pages, www.ftc.gov and usajobs.opm.gov, and an alert will be available through job information computers located at many federal facilities. The FTC also is urging newspapers to run public service messages in the employment sections of their classified advertisements to warn consumers about this kind of fraud. According to the FTC "Federal Job Fraud" alert, consumers don’t have to pay for information about job vacancies or exams with the U.S. Government or U.S. Postal Service and ads that offer information about "hidden" or unadvertised federal jobs are probably run by scam artists. Another tip off to fraud is a toll-free number that directs consumers to pay-per-call numbers. The FTC urged consumers to contact the National Consumers League’s National Fraud Information Center at www.fraud.org or 1-800-876-7060 if they think they have seen a fraudulent ad.

The FTC settlement announced today is with Career Information Services, CIS, and two corporate officers, David Lee Smith and William Phillips. If approved by the court, it would resolve charges the FTC filed in June 1996 as part of Project Career Sweep, an effort to shut down employment service scams that charge consumers up-front fees but supply very little of value, if anything, in return. In this case, the FTC said the defendants placed classified ads for what appeared to be specific and currently available Postal Service and government jobs with wages exceeding $20 an hour. Consumers who called the 800 number in the ads were directed to a 900 number to apply for a job, but were not told about the $34.95 charge for placing the 900- number call, the FTC charged.

Moreover, the FTC alleged, instead of giving consumers the opportunity to apply for a job, the pay-per-call service only instructed them to write for what turned out to be a general information package with little or no information about particular job openings.

Upon filing the charges, the FTC won a temporary restraining order prohibiting the challenged practices and freezing more than $2 million of the defendants’ corporate and individual assets. Those conduct prohibitions and the asset freeze were extended in a preliminary injunction issued by the court at the FTC’s request on June 21.

Under the consent judgment the defendants have signed to settle the FTC charges, they would be barred from making a variety of misrepresentations of the type they allegedly engaged in as part of this scheme, including misleading statements about the availability, location, type or salary of federal government job opportunities. The $1 million bond included in the settlement would have to be posted by each defendant prior to marketing any pay-per-call or career advisory service, or assisting any others in such a business.

The FTC’s 900 Number Rule requires advertisements for pay-per-call services to state the per-minute or per-call cost of the service. It also requires such services to begin with a free message stating the name of the service provider, the cost of the call, and the beginning of the billing period. The FTC settlement would bar violations of these provisions and also require the defendants to state in ads and the preamble message that any such service they offer is not endorsed by or affiliated with the federal government or U.S. Postal Service, if they imply that such a service is so endorsed or affiliated.

In addition, the settlement requires monetary redress to be paid by each of the defendants in the following amounts: David Lee Smith, $415,000; William L. Phillips, $140,000; Career Information Services and CIS, $2 million. Counting refunds and credits that consumers already have received (approximately $1 million) and various expenses that must be paid, the FTC estimated that consumer redress or disgorgement to the U.S. Treasury will total approximately $2.3 million.

The FTC settlement also contains various record keeping and reporting requirements that would assist the agency in monitoring the defendants’ compliance.

The FTC vote to approve this settlement for filing in court was 5-0. It was filed March 17 in U.S. District Court for the Northern District of Georgia, Atlanta Division.

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

Copies of the consent judgment and "Federal Job Fraud" consumer alert will be available shortly from the FTC’s web site at http://www.ftc.gov and also 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 File No. X960058)
(Civil Action No. 1:96-CV-1464-ODE)