FTC Darkens the Runway Lights of Virginia-based Modeling Agencies

Four of the six defendants charged by the Federal Trade Commission with using deceptive tactics to lure consumers into making substantial investments for modeling and acting training by promising glamorous jobs in the movies and on the runway have agreed to write off approximately $3 million in payments owed by consumers. In addition, the settlement bans the defendants from using so-called "screen tests" to sell any product or service, and requires them to pay between $60,000 to $80,000 in monetary judgments. As of the date the settlement was entered, the defendants had ceased marketing their training classes. The settlement requires the defendants to post a $500,000 bond before they ever sell modeling or acting classes again.

In May 1999, the FTC charged Model 1, Inc., and its president, Jason Hoffman; Creative Talent Management, Inc. and its president, Ralph Edward Bell; and The Erickson Agency, Inc., and its president, Patricia Erickson, with misrepresenting their ability to get lucrative jobs for consumers who contracted for their modeling and acting courses. The Commission's complaint also alleged that the defendants misrepresented themselves as highly selective in scouting, screening and reviewing consumers for marketability as models or actors. Finally, the FTC alleged that, to further boost the consumer's interest, the defendants falsely claimed that their principal source of income was commissions they received on the fees paid for modeling and acting jobs they procure for consumers. Today's settlement is with Model 1, Inc., Jason Hoffman; Creative Talent Management, Inc. (CTM) and Ralph Edward Bell. Charges against The Erickson Agency and Patricia Erickson are still pending.

Under the terms of the settlement, the defendants are banned from advertising, marketing, promoting or offering screen tests, casting calls or auditions, when these activities are being offered in connection with the sale of any product or service. Under a separate settlement of contempt charges, Model 1 and CTM are required to offer refunds to consumers who contracted with them on or after June 1, 1999 and who were recruited via the screen test ruse. The total amount of screen test refunds is expected to be approximately $200,000.

Under the settlement, the corporate defendants are prohibited from collecting outstanding payments -- totaling approximately $3 million -- against consumers who contracted for training but who did not attend any classes. Ralph Bell will be required to pay between $50,000 and $70,000 and Jason Hoffman will be required to pay $10,000. The Commission relied upon financial statements submitted by the defendants in negotiating this monetary relief.

In addition, the settlement prohibits the defendants from falsely representing that:

• they are selective in scouting, screening and reviewing consumers for marketability as models or actors;
• consumers are likely to obtain substantial paid employment as models or actors through the defendants' efforts;
• their principal source of income is commissions on the fees paid to their models and actors by clients;
• individual talent scouts, Vice Presidents, sales personnel or other agents have industry expertise to assess consumers' marketability as models or actors; and,
• any person or entity has hired talent trained by the defendants.

Further, the defendants are prohibited from misrepresenting the availability of specific modeling assignments or that a screen test or audition is likely to lead to modeling or acting employment.

The settlement further prohibits the defendants from ever again engaging, participating or assisting others in any manner or capacity whatsoever in selling training classes for models or actors unless they first post a $500,000 surety bond. In addition, should the defendants reenter the business of selling training classes for models and actors, they must provide consumers, during each initial face-to-face contact, with a notice advising that defendants sell training courses for aspiring models and actors and that training is required for most nonprofessionals that Model 1 serves. This notice also must set forth the range of training costs, the fact that defendants' talent scouts may not have industry expertise to assess consumers' marketability as models or actors, that there are no guarantees of employment or earnings for Model 1 trainees, and that it is unlikely that consumers will receive substantial paid employment as a model or actor in the Washington, D.C. market.

The settlement also contains various record keeping requirements to assist the Commission in monitoring the defendants' compliance.

The Commission vote to authorize staff to file the proposed settlement was 4-0. The final consent order was filed in the U.S. District Court for the Eastern District of Virginia, in Alexandria, on August 26, 1999, and was entered by the court on August 27, 1999.

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

Copies of the news release and other documents relating to Model 1 are available from the FTC's web site at http://www.ftc.gov and copies of today settlement are also available from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580; 1-877-FTC-HELP (1-877-382-4357); TDD 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 Matter No. X990059)
(Civil Action No. 99-737-A)
(Model 1-2)