Announced Actions for March 16, 2004

Commission approval of consent in settlement of court action: The Commission has approved a settlement in the court action currently pending against Bruno Faillace, related to the FTC’s case against Preferred Alliance, Inc. The complaint in this matter, announced by the Commission in February 2003, alleged that Atlanta, Georgia-based Preferred Alliance and its principal Faillace did business as VacantSun Travel Discounts and GenesisCard, engaging in a range of illegal activities related to the company’s sale of buying club memberships through third-party telemarketers. The FTC charged that in pitching their supposedly “free” no-obligation trial offers to consumers nationwide, defendants failed to tell consumers that the offer was actually a “negative option” plan, under which the defendants would automatically charge the purchasers a $99.95 annual fee, if the purchasers did not cancel by the end of the trial period and in a prescribed manner.

The stipulated final order announced today settles the FTC’s charges against defendant Faillace, imposing a permanent injunction that bars him from making any material misrepresentations or omissions whenever he sells or offers to sell any product or service – whether or not the sale or offer is made using telemarketing. Further, the order prohibits Faillace from any unauthorized billing and from failing to disclose any negative-option features of any goods or services he sells. The order also requires Faillace to comply with the Commission’s Telemarketing Sales Rule in the future and bars him from selling his customer lists. Finally, the order contains a suspended monetary judgment of $15.9 million that will be due if Faillace is found to have misrepresented his financial condition. The Commission vote to approve the settlement of the court action was 5-0. (FTC File No. X030022; staff contact is Stephen L. Cohen, Bureau of Consumer Protection, 202-326-3222.)

Copies of the documents mentioned in this release 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, DC 20580. Call toll-free: 1-877-FTC-HELP.