Cross-Border Lottery-Bond Scheme Alleged to Violate U.S. Laws; Targets U.S. Citizens

A Canadian telemarketing company targeting U.S. citizens in a lottery scheme has been temporarily shut down by the Federal Trade Commission and Canadian law enforcement officials. According to the FTC, B.B.M. Investments Inc., (B.B.M.) of Vancouver, British Columbia, and its owner, Timothy Ryan Atkinson, deceptively telemarketed British bonds, touting them as National Premium Savings Bonds issued by National Savings, the second largest savings institution in the United Kingdom. Allegedly, the defendants falsely represented that they were authorized to market these bonds and convinced consumers that the program was risk-free.

The defendants also told U.S. consumers, many of whom were elderly, that if they purchased the bonds from B.B.M., they would be eligible to receive tax-free dividends or prizes awarded in a monthly lottery drawing open to bond holders. What they did not tell consumers, the FTC said, is that B.B.M. was not authorized to sell or resell the bonds or hold them in trust for others. In addition, they failed to disclose that buying and selling foreign lottery tickets or bond instruments is illegal in the United States.

In its complaint against B.B.M., the FTC alleged that the defendants' misrepresentations and omissions violated the FTC Act and the FTC's Telemarketing Sales Rule. In response to an FTC motion filed with the complaint, a federal court in Seattle issued an order temporarily barring B.B.M. from selling or promoting its bond program to U.S. consumers. The Commission is seeking a permanent injunction barring the defendants' lottery telemarketing activities, as well as restitution to consumers.

In its court filing, the FTC asserted that the defendants' telemarketers made numerous misrepresentations to induce U.S. citizens to buy their purported National Savings Premium Bonds. The telemarketers told consumers that they were authorized by National Savings to market the Premium Savings Bonds, and, in other instances, consumers were told that if they bought the bonds from B.B.M. they would be entered into monthly drawings for cash prizes - a feature of the genuine National Savings Premium Bond program - and that the cash prizes from the monthly drawing are tax-free. Relying on such statements, consumers paid B.B.M. thousands of dollars expecting to receive tax-free, no-risk bonds, and ensuring that their registered bond numbers would be entered into the Premium Savings Bonds program monthly drawings for cash prizes. Instead, the FTC alleged, consumers, who typically paid B.B.M. between $1,000 and $3,000, received nothing at all. National Savings is the only organization authorized to sell Premium Bonds and Premium Bonds cannot be sold to U.S. consumers.

The Commission vote to file the complaint was 5-0. The case was filed by the FTC's Northwest Region in the U.S. District Court for the Western District of Washington in Seattle on Jan. 13, under seal. The seal was lifted on Jan. 20. The FTC received invaluable assistance from the British Columbia Ministry of Attorney General and the Royal Canadian Mounted Police, Vancouver Commercial Crime Section.

NOTE: The Commission files 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 a free Consumer Alert, "International Lottery Scams," 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; 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