Consumers need to be protected from false advertising. But when the Federal Trade Commission sets out to punish deceptive marketers — and then only succeeds in wasting time, resources, and money, are the consumers’ best interests being served?
The agency spent nearly three years investigating individuals and companies suspected of misrepresenting a line of government grant products; but in the end, the only “punishment” proffered was a reminder to follow the law.
Grant Institute Targeted By FTC
Back in 2009, the FTC and attorney generals of Kansas, Minnesota, and North Carolina filed a claim against Grant Writers Institute LLC and related entities. Authorities suspected the group of misrepresenting benefits by dangling the “guarantee” of “free government grant money” to unsuspecting consumers.
Did Group Dupe Consumers Into Believing They Could Qualify For Grants?
The FTC complaint alleged that the duped consumers into believing they were entitled to free government money.
How did it work? The company mailed postcards to residents claiming they were entitled to government grants. People who called the postcard phone number were pitched a $59 book called Professional Grant Writing: The Definitive Guide to Grant Writing Success. Those who bought the book were then allegedly tele-harassed about purchasing additional grant research, writing, and coaching services. According to official documents, pitch operators cited a 70% success rate for people who purchased additional materials.
The word “Guaranteed” Caused The Most Harm In The Eyes of the FTC
Since the postcard and telemarketing script included passages that led people to believe the program was “guaranteed,” the FTC determined that the business violated FTC’s telemarketing rules. After the commission had announced the verdict, several of the named defendants agreed to court settlements (which does not represent an admission of guilt).
The FTC’s Settlement Arrangements
Several sanctioned parties were banned from soliciting business via unsubstantiated marketing claims. The FTC also prohibited the defendants from violating the Telemarketing Rule. Two of the parties were also permanently banned from telemarketing, while others can never again market grant-related materials or use grant lead-generation lists.
Collectively, the involved parties were fined millions of dollars.
Marketers Didn’t Have The Money To Pay FTC Fines
Since most of the defendants couldn’t afford the fines, the majority of financial penalties were suspended. Other than that, what the FTC essentially did was administer an official — and expensive — letter-scolding.
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