New Mexico Vending Machine Franchisors Settle FTC Charges

National Vending Consultants, a New Mexico based-company, and its principals, Patrick Abeyta, Jr. and Debra Abeyta, have agreed to settle Federal Trade Commission charges that they failed to provide the required pre-sale disclosures to prospective purchasers of their snack and soda vending machine business opportunity. The Department of Justice, at the request of FTC, filed a suit against the defendants as part of "Project Biz-illion$," a nationwide crackdown on fraudulent business opportunities. Under the terms of the settlement, the defendants are prohibited from violating the FTC's Franchise Rule and making false and misleading representations in connection with the sale of business opportunity ventures.

The settlement announced today ends the litigation in this case, which was among 22 cases the FTC referred to the DOJ for filing as part of "Project Biz-illion$," a multi-prong state/federal attack on traditional business opportunity scams. This case, like most of the "Project Biz-illion$" actions, was launched against defendants that advertised in the classified section of daily newspapers to peddle payphone, vending machine, display rack, and work-at-home scams.

According to the FTC, for a minimum investment of $1,895 for a single vending machine, prospective purchasers were told that National would supply the snacks and soda for the machines and that the purchasers would service the machines. In addition, National also represented that they would provide significant assistance in securing locations for the machines. The defendants' promotional materials suggested that a single snack and soda machine would earn $7,339.80 a year, but they did not provide prospective purchasers with an earnings claim document containing written substantiation for the claims, as the Franchise Rule requires. The complaint also alleged that the defendants failed to provide prospective purchasers with a basic disclosure document that included the names, addresses and telephone numbers of prior purchasers, as required by the Rule to help potential purchasers protect themselves from false profitability claims.

Under the proposed settlement, which was approved by the court, the defendants are prohibited from future violations of the Franchise Rule; making false and misleading representations in connection with the sale of business opportunities; and selling their customer lists. The settlement does not require payment of any funds, but contain provisions that would allow the FTC to reopen the case if the defendants misrepresented their financial status. Finally, the proposed settlement contains various recordkeeping and reporting requirements designed to assist the FTC in monitoring the defendants' compliance.

The Commission vote authorizing staff to file the settlement was 5-0. The stipulated judgment and order for permanent injunction was filed in the U.S. District Court for the District of New Mexico, in Albuquerque, on April 13, 2001, by the Department of Justice, and approved by the court.

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

Copies of the legal documents associated with these cases 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. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to thousands of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC Matter No. X000039)
(Civil Action No. 00-0155 (D.N.M.)