FTC Acts to Stop Deceptive Ad Sales to Small Businesses

Two Oregon-based media production companies and their owner have agreed to settle Federal Trade Commission charges that they deceptively pitched “exclusive” advertising placements to small businesses and misled them about when the ads would be printed and distributed. The stipulated court order settling the FTC’s complaint bans the defendants from such deceptive conduct and requires them to pay $100,000.

According to the FTC’s complaint, since at least October 2014, defendants Production Media Company (PMC), The Ferraro Group Corp (Ferraro Group), and Jennifer Ferraro, president and CEO of PMC and sole shareholder of Ferraro Group, solicited ad placements from small businesses nationwide through telemarketing calls. During these calls, the defendants told these businesses that for a relatively small fee they could advertise to hundreds, if not thousands, of prospective customers, as their ad would appear in folders that real estate offices and schools would use to hold and transfer documents.

The complaint further alleges that small businesses were led to believe that the folders were going to be printed shortly, and that they would be “exclusive” to a folder. In many cases, the complaint alleges, a folder with a purchased ad was never printed, or printed only after a small businesses filed a complaint with the Better Business Bureau or a state Attorney General. Printed folders often included ads by more than one competitor.

Finally, when small businesses complained that their advertisements had not been printed in the time promised, the defendants typically refused to issue refunds, relying on fine print in the “reservation form” that contradicted the telephone solicitation.

The order settling the FTC’s complaint bans the defendants from the deceptive conduct and imposes a $22.2 million judgment against the defendants, which will be partially suspended if they either pay the FTC $100,000 within one year, or pay at least $100,000 towards their federal tax liabilities.

The Commission vote authorizing the staff to file the complaint and proposed order was 5-0. The FTC filed the complaint and proposed order in the U.S. District Court for the District of Oregon, and the judge has now signed the order.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.