Court Halts Envelope-Stuffing Marketers

For the second time in a month, the Federal Trade Commission has put an end to a fraudulent and misleading pitch for work-at-home envelope stuffing business opportunities. Both actions stemmed from complaints brought as part of “Operation Pushing the Envelope,” a law enforcement sweep designed to protect consumers from opportunities that sound too good to be true – and actually are. In the action announced today, the FTC has settled its litigation against several Florida-based defendants through a court order barring them from pitching any home-based business opportunities or helping others to market such opportunities, as well as requiring them to pay $110,000.

The action announced today settles all FTC charges against the following defendants: Vinyard Enterprises, Inc., d/b/a Comfort Castle Enterprises, a Florida corporation; Sunshine Advertising & Marketing, Inc., d/b/a Dynamic Data Services, a Florida Corporation; Ray A. Thompson, as an individual and officer of one or more of the above-mentioned companies, also d/b/a Dynamic Data Services, Dectura Direct Service, and D.D. Service; Judith Livingston, as an individual and d/b/a Direct Business Services and Dynamic Data; and Jason Lunan, as an individual and d/b/a Dynamic Data Express and Comfort Castle Associates.

The Commission’s Complaint

According to the FTC’s complaint, since at least August 1997, the defendants, or people acting on their behalf, set up numerous post office boxes and commercial mailboxes in the greater Miami area, that they used to sell work-at-home mailing opportunities to consumers through flyers and mail delivered to consumers’ houses. The business opportunity consisted of two or more “tiers,” with instructions for consumers either to recruit a second or third generation of buyers using flyers or to market the defendants’ book reports on how to make money from home.

The defendants’ flyers claimed that consumers could earn “$5,000 Weekly!” simply folding and sending the flyers, which they called “catalogs.” Consumers could supposedly make “$1,000 to $5,000 Every Week,” including $10 for each catalog they mailed, ...[with] Paychecks mailed to you every Wednesday.” The defendants allegedly also claimed that the paycheck was “One hundred percent GUARANTEED!,” and that consumers would “be paid in advance before you are required to mail any of the reports.” For defendants’ business “opportunities,” consumers paid between $20 and $139, plus shipping and handling. The FTC contended that many of the consumers never received materials to mail, and none made the $5,000 per week earnings that the defendants promised.

The Stipulated Final Order

The stipulated final order contains strong injunctive relief, barring the defendants from marketing any work-at-home business opportunity in the future. It also prohibits them from assisting anyone else in violating Section 5 of the FTC Act and engaging in the illegal conduct alleged in the complaint. The order further requires the defendants to pay $110,000 to the Commission, with a monetary judgment of $4.1 million that would immediately become due if they are found to have misrepresented their financial condition. Finally, the order contains standard monitoring and reporting provisions to ensure the defendants’ compliance with its terms.

The Commission vote authorizing the filing of the stipulated order was 5-0. The order was filed in the U.S. District Court for the Southern District of Florida and signed by Judge Altonaga on December 14, 2004.

NOTE: This stipulated order for permanent injunction and final judgment is for settlement purposes only and does not constitute an admission of guilt.

Copies of the complaint and stipulated order for permanent injunction are available from the FTC’s website at www.ftc.gov. Information about the Federal Trade Commission is available from the FTC’s Web site at 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 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.

(FTC File No. X040016, Civ. No. 03-23291-CV)