FTC Settlement with "$cholar$cam" Defendant Includes $13,000 for Consumer Redress, Bond Requirement and Broad Injunctions

Atlanta resident Becky Burch Settles has agreed to turn over a little more than $13,000 for a consumer redress fund as part of a settlement with the Federal Trade Commission over her role in a scholarship search service that the FTC has alleged was fraudulent. The settlement also requires Settles, for 10 years, to post a $75,000 bond for the protection of customers before getting involved in any telemarketing activity, and prohibits her from making numerous false representations about any future scholarship search service she markets. The FTC litigation against the other Atlanta-based defendants in the case -- Career Assistance Planning, which does business as College Assistance Planning, College Assistance Program and C.A.P.; David Chaim Levy; and Donna M. Levy -- is still pending.

The FTC filed charges in this case in September 1996 as part of "Project $cholar$cam," a major law-enforcement and consumer education campaign targeting scam artists who promise "free money for college," charging from $10 to $400 for their services. According to the FTC complaint in the College Assistance Planning case, the defendants sent millions of postcards stating that recipients may be eligible for grants and scholarships. They offered a full refund of their $299 fee for students who did not receive at least $1,000 in scholarship money. The FTC alleged, however, that the defendants either supplied no list of scholarships at all or gave consumers a list of scholarships that were no longer available or for which students were not eligible. Few consumers received refunds, the FTC said, adding that the defendants debited many consumers’ checking accounts or charged their credit accounts without authorization.

The injunctions in the Settles consent order bar her from falsely representing the likelihood that consumers will receive financial assistance or the success of past customers, her refund policy or any other fact material to a consumer’s decision to purchase any product, service or investment she offers. She also is barred from misstating how consumers’ bank account or credit information will be used and from withdrawing money from consumers’ checking accounts or billing charges to their credit cards without first obtaining express written authori zation from the consumer. There also are provisions designed to ensure that any scholarship search service she offers provides a useful service to consumers.

If Settles is found to have misrepresented her financial condition, or if she fails to cooperate with the Commission in its litigation with the other defendants in the case, the settlement states that the court will enter a $55,000 judgment against her. Failure to cooperate also could lead to an increase to $100,000 in the bond requirement, under the settlement.

The consent order was filed in U.S. District Court for the Northern District of Georgia, Atlanta Division, on Feb. 11, and was approved by the court on Feb. 12. The Commission vote to approve the settlement for filing was 5-0.

NOTE: This consent order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent orders have the force of law when signed by the judge.

Copies of the consent order, a free package of consumer information from the FTC on how to identify a fraudulent scholarship search service, and a news release regarding Project $cholar$cam are available from the FTC’s web site at http://www.ftc.gov and also 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.

(Civil Action No.1:96-CV-2187-MHS)