Two Companies Deceptively Marketing Computer Systems To the Hispanic Community Settle FTC Charges

The Federal Trade Commission has accepted two separate settlements against companies that, the Commission alleged, deceived Spanish-speaking consumers responding to ads for low-cost computer systems. The settlements are with California-based Unicyber Technology, Inc., and Florida-based Latin Shopping Network. In both cases, the FTC alleged that the defendants engaged in deceptive business practices that violated federal laws. The Unicyber defendants’ ads attracted consumers with offers of guaranteed financing with no credit check. The Latin Shopping Network ads offered computers for cash. The settlements prohibit the defendants from misrepresenting any fact material to a consumer’s decision to buy or accept computers or any other good or service. The Unicyber settlement requires the defendant to pay $100,000 in redress to consumers, to be added to the $400,000 already obtained from the corporate defendants. The Latin Shopping Network defendants must pay $45,000 in redress.
The cases are part of the FTC’s Hispanic Law Enforcement and Outreach Initiative – a comprehensive campaign started in early 2003 to identify and stop fraud targeting Spanish-speaking consumers in the U.S. The ongoing campaign involves: 1) active monitoring of Spanish-language media and complaints received in Spanish; 2) aggressive law enforcement actions against marketers defrauding Spanish-speaking consumers; and 3) extensive outreach to Spanish-speaking consumers to prevent fraud from occurring and encourage greater reporting of consumer fraud.

Unicyber Technology, Inc.

In March 2004, the FTC filed charges against Unicyber Technology, Inc., Unicyber Gilboard, Inc., Uri Technology, Inc., Uri Communications, Inc., and Chul K. Han, alleging that the defendants deceptively offered Spanish-speaking consumers a complete computer system for three payments of $199. According to the Commission, the defendants delivered only keyboards and parts that would be useless without the computer itself, rather than delivering the entire computer at the time the first payment was made. Consumers then allegedly learned that they would not receive the full computer until they sent more money. The complaint further states that those who made the payments ended up with computers that did not work properly, if at all.

The stipulated final judgment and order announced today is with defendant Chul K. Han. The order requires Han to pay $100,000 in consumer redress, and permanently prohibits him from making misrepresentations in connection with the advertising or sale of computer equipment or any other good or service. The order also prohibits Han from failing to disclose material facts in connection with the sale of computer equipment, including that the computer is salvaged, refurbished, or damaged. The order includes a $4.6 million avalanche clause – the estimated amount of consumer injury – which will become due if it is found that Han misrepre-sented his financial condition. Finally, the settlement contains various recordkeeping requirements to assist the FTC in monitoring the defendant’s compliance. In addition to the settlement announced today, the FTC has obtained default judgments against the four corporate defendants, and the receiver secured approximately $400,000 from the corporate defendants to use for redress.

The proposed stipulated final judgment and order was entered by the U.S. District Court, Central District of California, Western Division, on March 25, 2005. The FTC has set up a hotline for consumer inquiries on the Unicyber case. Consumers may call 1-866-535-1626 for more information.

Latin Shopping Network

The FTC filed a complaint and proposed stipulated final judgment and order against Crediamerica Group, Inc., doing business as Latin Shopping Network, America Communications Group, Inc., and their owner, Felipe Taveras. These defendants also advertised computer systems to Hispanic consumers on national Spanish-language television. The defendants’ commercials promised consumers the opportunity to buy a complete computer system for between $500 and $1000. Consumers were told that the computer system would arrive within 15 to 30 days. According to the FTC, many consumers never received their computers; many others received defective or incomplete products; others received neither computers nor refunds although they repeatedly contacted the defendants. The FTC alleges that the defendants violated the FTC Act by misrepresenting that consumers would receive a complete computer system, or any computer equipment or other product or service, by paying the advertised purchase price, and misrepresenting any material aspect of the performance, efficacy, nature, price, or central characteristics of the product or service offered for sale.

In addition, the complaint alleges that the defendants violated the Mail Order Rule by:

• failing to possess a reasonable basis to expect that they could deliver computer systems within the promised time frames, or at all;
  
  
• failing to give required delay or cancellation option notices to consumers; and
  
  
• failing to issues refunds in a timely manner.

The proposed stipulated final judgment and order prohibit the defendants from falsely representing that consumers will receive a complete computer system, or any computer equipment or other product or service, by paying the advertised price; and misrepresenting any material aspect of the performance, efficacy, nature, price, or central characteristics of the product or service. In addition, the order prohibits the defendants from: 1) soliciting orders for goods without a reasonable basis for believing that they can ship the goods within the time stated in the solicitation or, if no time is stated, within 30 days; 2) failing to give consumers the option to accept a delay or cancel the order if the defendants are unable to ship within the promised time frame; and 3) failing to deem an order canceled and make a prompt refund. Based on the defendants’ ability to pay, the order requires them to pay approximately $47,000 in consumer redress. The order includes a $2.9 million avalanche clause which would become due immediately if it is found that the defendants misrepresented their financial condition. Finally, the settlement contains various recordkeeping requirements to assist the FTC in monitoring the defendant’s compliance.

The complaint and proposed stipulated final judgment and order was entered by the U.S. District Court, Southern District of Florida, and signed by the judge on February 24, 2005.

NOTE: These stipulated final judgment and orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated final judgments and orders have the force of law when signed by the judge.

Copies of the legal documents filed in each case 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 hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(Unicyber Technology – FTC Matter No. X040032; Civil Action No. CV-04-1569 LGB (MANx)
(Latin Shopping Network – FTC File No. 032-03242; Civil Action No. 05-20504-CIV-Martinez)