Defendants in New York City Vending Machine Business Opportunity Settle FTC Charges

Evan Blumstein, principal of Pathway Merchandising, Inc., and Four Vend, Inc., doing business as IV Vend, IV Vending, Inc., For Vend and For Vend Incorporate, has been banned from engaging or participating in the sale, marketing, or distribution of any vending machine business venture as part of a Federal Trade Commission settlement. The settlement also requires Blumstein to obtain a $500,000 performance bond before engaging in the marketing, sale, or offering for sale of any franchise, business opportunity, or business venture other than vending machines.

In October 2001, the FTC filed a complaint against Evan Blumstein and his New York City-based businesses, charging them with making false and unsubstantiated earnings claims in the sale of their vending machine business opportunities. According to the FTC, the defendants sold their vending machine packages, which included candy-dispensing vending machines and marketing displays, from $7,995 to $20,000. The defendants told prospective purchasers that they could earn four profitable incomes per machine and advertised that prospective purchasers would net "$50,000 per year, $48,000 per year, or $150 to $250 per machine per month." The complaint alleged that the defendants misrepresented that prospective purchasers were likely to earn substantial income from the business, when, in fact, purchasers reportedly earned little or no income from the business opportunity. In addition, the complaint alleged that the defendants failed to provide prospective purchasers with basic disclosure and earnings claim documents.

The stipulated final judgment and order announced today prohibits the defendants and their agents from making, or assisting others in making, any false or misleading oral or written statement in connection with the marketing, offering for sale, or sale of any franchise, business opportunity or business venture. The settlement also prohibit the defendants from violating, or assisting others in violating, the FTC's Franchise Rule.

The settlement includes a $2 million suspended judgment, which would be reinstated should the court determine that the defendants failed to disclose or materially misrepresented their financial situation. The settlement requires defendant Blumstein to turn over $14,000 for disgorgement to the U. S. Treasury.

Finally, the settlement contains various reporting and record keeping provisions designed to assist the FTC in monitoring the defendants' compliance.

The Commission vote to authorize staff to file the stipulated final judgment and order was 5-0. It was filed in the U.S. District Court for the Southern District of New York, in New York City, on February 14, 2002 and requires approval by the court.

NOTE: This stipulated judgment and order 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 legal documents associated with these cases 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 thousands of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC Matter Number X020004)
(Civil Action No. 01-CIV-8987)