Santa Barbara Company Principals Agree to Settle FTC Charges of Making Fraudulent Claims About Government Auctions

Two defendants in one of six Santa Barbara, California, companies charged by the Federal Trade Commission with making fraudulent claims about government auctions and foreclosed properties have agreed to settle the agency's charges. The company, Infodirect, Inc., was charged as part of the Commission's "Operation Auction Guides," a law enforcement and consumer education campaign that is intended to shut down fraudulent operators who deceptively market "how to" guides that make a variety of misrepresentations about government auctions. Under the proposed settlement, Jason McComb and Thomas Fletcher, the two individual defendants in the case against Infodirect, generally would be banned from selling information guides and from telemarketing.

The complaint outlining the charges against Infodirect alleged that the defendants violated the FTC Act and the Telemarketing Sales Rule by misrepresenting the bargains that consumers could expect to find by purchasing the company's information guides, about the ease of obtaining a refund and about the purpose of seeking consumers' checking or credit card account information. It also alleges that the defendants violated the Telemarketing Sales Rule by submitting drafts drawn on consumers' checking or savings accounts without obtaining express verifiable authorization.

A U.S. District Court in California issued a temporary restraining order with an asset freeze against the defendants on November 19, 1998. On April 20, 1999 the court entered a default judgment against Infodirect.

The proposed settlement orders against McComb and Fletcher generally would ban them from engaging in the marketing and sale of information guides and telemarketing. It also would prohibit them from making false representations in connection with the sale of any good or service and from placing any charges on a consumer's credit card or telephone bill without first obtaining express verifiable authorization from the consumer.

The proposed order also would prohibit McComb and Fletcher from using or transferring Infodirect's customer data, books, records data or other documents to anyone else.

The proposed consent judgment was filed in the U.S. District Court, Central District of California, Western Division on December 20, 1999. It is subject to court approval.

The Commission vote to authorize the proposed consent order was 5-0.

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 complaint and proposed consent order are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (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 File No. 990011)