California Telemarketers Banned from Selling Office Supplies as Part of FTC Settlement

Pacific Office Systems, Inc., based in Canoga Park, California, and its owner, Suzette Oppenheim, have agreed to settle federal charges that they engaged in deceptive sales practices in connection with the sale of non-durable office supplies. Named as defendants in "Operation CopyCon," the Federal Trade Commission alleged that the defendants duped their victims into accepting and paying for shipments of unordered office supplies. The Commission has amended its original complaint to add Suzette's spouse, Leslie Oppenheim, as a defendant. Under the terms of the settlement, Suzette and Leslie Oppenheim are barred from participating in or assisting others in the sale or distribution of non-durable office supplies, and from telemarketing any product or service. In addition, the settlement requires the individual defendants to pay $100,000 in consumer redress.

In September 2000, the FTC announced "Operation CopyCon"-- a multi-agency effort to crack down on bogus office and maintenance supply telemarketing schemes that targeted large and small businesses and non-profit organizations. The FTC filed a complaint against the defendants for their deceptive sales practices in connection with the sale of non-durable office supplies, principally toner cartridges. The complaint alleged that the defendants violated the FTC Act by misrepresenting that they were the regular supplier or were associated with the consumer's regular supplier or the manufacturer of the photocopier, and that the toner supplies had been ordered by the consumer.

In addition, the complaint alleged that the defendants violated the Telemarketing Sales Rule (TSR) by making false and misleading statements, failing to disclose the identity of the seller, and failing to disclose the sales purpose of the call.

According to the FTC, the defendants sold non-durable office supplies to small and medium-size businesses. The defendants routinely sent unordered merchandise. They used pretext calls to get information about the company's regular supplier and the name of the person responsible for ordering the supplies. They would then ship the unordered merchandise at prices substantially higher than the company's regular supplier. Once the consumer paid for the unordered and overpriced toner, the defendants would send additional shipments at even higher prices. The settlement announced today resolves the case.

The settlement, which required the court's approval, prohibits the defendants from engaging in violations of the FTC Act and the TSR. The defendants are prohibited from, among other things:

• shipping unordered goods;
• billing for unordered goods;
• misrepresenting any association with the consumer or their regular supplier, the price of goods or services, including discounts or special prices, and how long any goods or services will last; and
• misrepresenting the purpose of telemarketing calls, or that a person had ordered the supplies the defendants had shipped, or that consumers have an obligation to pay for merchandise they did not order.

The settlement permanently bans the defendants from selling non-durable office supplies and prohibits them from selling their customer lists and from transferring business information. In addition, the settlement requires the defendants to pay $100,000 in consumer redress. It contains a suspended judgment for $5 million to be paid if the FTC or the court finds that the defendants made any misrepresentations or omissions in financial statements. Finally, the settlement contains various recordkeeping requirements to assist the FTC in monitoring the defendants' compliance.

The Commission vote authorizing staff to file the amended complaint and the stipulated final judgment and order was 5-0. It was filed in the U.S. District Court for the Central District of California, on June 20, 2001, and signed by the judge on July 3, 2001. The FTC's East Central Region Office - Cleveland handled the investigation.

NOTE: This stipulated final judgment and order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. The stipulated order is subject to court approval and has the force of law when signed by the judge.

Copies of the amended complaint and Stipulated Order will be available shortly 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, 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 www.ftc.gov . The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
 

(FTC Matter No. X000106)
(Civil Action No. 00-10293 DDP (CTx))