FTC Halts Fraudulent Mail Order House Operation

The Federal Trade Commission has obtained a court order temporarily halting the operations of a Stamford, Connecticut mail order house that advertises inexpensive items such as small radios, calculators and magazine subscriptions, via "flap" inserts placed in consumers' credit card bills. The Commission charged that International Direct, Inc., and its alter ego American Security Products, Inc., defrauded thousands of consumers when they promptly processed consumers' payments, but did not ship any merchandise at all, issue refunds or notify consumers of delays. The FTC estimates the defendants have obtained millions through these practices given the wide distribution of their advertisements in millions of MasterCard and Visa bills. International Direct's scheme prompted over 400 complaints to the Postal Service, the Better Business Bureau, the Attorney General and the Commissioner of Consumer Protection of Connecticut, from consumers in 35 states, Washington, D.C. and Puerto Rico.

The court's temporary restraining order freezes the defendants' assets and appoints a receiver to take control of the company. The FTC also asked the court to issue a permanent injunction against the defendants in order to halt the scam and preserve funds for redress for consumer victims.

The FTC's complaint detailing the charges in this case, names International Direct, Inc., Daniel Connolly, Debra Connolly, American Security Products, Inc., Maier "Mike" Levine and Vivian Levine. International Direct, Inc. and American Security Products appear to operate interchangeably. Defendant Debra Connolly is also known as Debra Levine, Debra Levine Connolly, and Debra A. Connolly.

According to the complaint, the defendants have marketed and sold a variety of products throughout the United States since March 1993. The defendants advertised their products in inserts placed in major credit card bills under arrangements with the card issuers. The products were typically priced at less than $10 per item. Consumers could order the goods by phone or by mail using a personal check or credit card account number. The defendants immediately processed consumers' payments. After receiving consumers' orders and payment, however, in many instances, the defendants did not ship the ordered merchandise, or notify the consumer of a shipping delay and give the consumer the opportunity to cancel the order. When consumers asked about the order, the defendants often misrepresented the ordered items had been shipped on a specified date, or would be within a stated time period. When consumers asked for a refund, the FTC's complaint alleges, the defendants typically represented that they had mailed, or would promptly mail, the refund. Many consumers who made purchases dating back as far as 1993 have neither received their merchandise nor refunds, the FTC alleges.

The complaint also alleges that the defendants violated the Mail Order Rule by soliciting orders for the sale of merchandise when they had no reasonable basis to expect that they would be able to ship the merchandise within the time stated in the solicitation or within 30 days if no delivery time was stated.

A free FTC brochure for consumers, titled "Shopping by Phone or Mail," provides additional information about consumers' rights for goods ordered by mail, telephone, computer, and fax machine. Copies are available at the address below.

The Commission vote to authorize the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Connecticut, in New Haven, on April 16, under seal. The seal was lifted this afternoon. The court ordered a hearing on April 28, to consider the FTC's request for a preliminary injunction continuing the temporary relief until the case is completed.

The FTC's Cleveland Regional Office conducted the investigation, with invaluable assistance from the Office of the U.S. Attorney for the District of Connecticut, Connecticut Department of Consumer Protection, Connecticut Attorney General, U.S. Postal Inspection Service and the Better Business Bureau.

NOTE: The Commission authorizes the filing of a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.

Copies of the complaint and the FTC brochure 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

(Civil Action No. 397-CV00721 (PCD))
(FTC File No. 972 3095)