David Del Dotto Agrees to Settle FTC Charges He Misrepresented "Money-Making" Real Estate Program; Will Pay $200,000 Judgment

Del Dotto Enterprises, Inc., NFN Inc., and David P. Del Dotto have agreed to settle Federal Trade Commission charges that Del Dotto and his companies made allegedly deceptive claims in marketing a set of books and audio tapes about purchasing real estate and obtaining credit -- known as the "Cash Flow System," -- including claims that it has helped hundreds of thousands of consumers make substantial sums of money buying and selling real estate. Under the proposed settlement the defendants would be prohibited from, among other things, misrepresenting the availability of government grants, loans, or credit, or the scope of any product or service concerning investments, real estate or other business opportunities. In addition, Del Dotto has agreed to pay a judgment of $200,000.

In February 1995, in a complaint filed in federal court, the FTC alleged that Del Dotto and DDE made false and unsubstantiated representations that consumers who attempt to use the Cash Flow System typically profit from investments in real estate and that hundreds of thous ands of customers have made substantial sums of money through the system. The complaint also alleged that Del Dotto, DDE and NFN Inc. misrepresented and failed to deliver other goods and services sold at NFN Inc.-sponsored seminars.

The complaint further alleged that David Del Dotto and NFN Inc. misrepresented the guarantee accompanying a home business package sold at the seminars by failing to inform purchasers that there were conditions to receiving a refund. The FTC also challenged as deceptive Del Dotto's and DDE's alleged failure to disclose adequately a restocking fee, amount ing to 10 percent of the purchase price, charged on refunds. Finally, the FTC alleged that DDE and NFN Inc. violated the TILA and its implementing regulation (Regulation Z) by failing to credit consumers' credit card accounts within seven days of accepting returned merchandise or services.

The proposed settlement would permanently prohibit Del Dotto Enterprises, NFN, Inc., and David Del Dotto from making the types of misrepresentations alleged in the FTC’s complaint. In addition, the defendants are specifically prohibited from making any representation about the performance, benefits, efficacy or success rate of any product or service, the profitability of using any product or service, or the profitability of any business opportunity or direct marketing activity, unless the representation is true and the defendants can substantiate the representation. In addition, the defendants would be prohibited from representing that any endorsement of a product or service represents the typical or ordinary experience of those who use the product or service unless it is true. Further, the defendants would be prohibited from using such terms as “Satisfaction Guarantee,” “Money Back Guarantee,” “Free Trial Offer,” or similar representations in advertising unless they refund the full purchase price of the advertised product or service at the purchaser’s request. The defendants also would be prohibited from failing prominently to disclose material limitations on guarantees, warranties and refund policies, and from failing to refund money in accordance with guarantees warranties, and refund policies within a reasonable period as prescribed by the settlement.

Further, the defendants would be prohibited from failing to deliver goods, services or title to land to purchasers within a reasonable time. If delivery cannot be made in such time, the defendants would be required to give the purchaser the option to consent to a delay or to receive a refund within seven days. In addition, the settlement would prohibit the defendants from failing to provide services for the length of time and in the manner represented. If this cannot be done, the defendants would be required to give the purchaser the option to receive an alternate service or to receive a refund within seven days.

Finally, the defendants would be required to comply with the TILA and its implementing regulation (Regulation Z) by crediting consumers' credit card accounts within seven days of accepting returned merchandise or services.

The FTC filed the stipulated final judgment and order for permanent injunction in the U.S. District Court for the Northern District of California, in San Francisco, on September 25, 1996. The FTC's regional office in Atlanta is handling this case. The Commission vote to authorize the filing of the settlement was 5-0.

NOTE: The stipulated final judgment 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 final judgment, as well as other documents associated with this case, are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326- 2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202- 326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(Civil Action No. C-95-0425-FMS)
(FTC File No. 942 3229)