Look, there’s no denying that 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 they really looking out for consumers best interests? The commissions’ latest “victory” is a prime example of FTC bureaucratic squander.
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” doled out was an official admonishment to follow the law.
Grant Writers Institute And Related Parties Are Targeted
Back in 2009, a case was filed by the FTC and the Attorney Generals of Kansas, Minnesota and North Carolina against Grant Writers Institute LLC and related entities. Authorities suspected the group of misrepresenting the benefits of their grant products and services by dangling the “guarantee” of “free government grant money” to unsuspecting consumers.
Duped Consumers Into Believing They Could Qualify For Grant Money
The FTC complaint alleged that the defendants engaged in a scheme wherein consumers were duped into believing that they were entitled to free government money.
How did it work? A postcard claiming the recipient was entitled to a government grant was mailed out. Interested parties who called the phone number on the postcard 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, during the phone pitches, operators claimed that people who bought the materials experienced a 70% success rate.
The word “Guaranteed” Caused The Most Harm In The Eyes of the FTC
Since the postcard and telemarketing script included verbiage that led people to believe the program was “guaranteed,” the FTC determined that consumer protection laws and the FTC’s telemarketing rules were broken. After the commission announced the verdict, several of the named defendants agreed to court settlements (which, by the way, does not represent an admission of guilt). So what were the strictures the investigation subjects agreed to accept?
The FTC’s Settlement Arrangements: An Exercise In Useless Governing
James Rulison, Jordan Sevy, Brett Blackman, Alicia Nossau, Justin Ely, Wealth Power Systems and Aria Financial Service were all banned from soliciting business via unsubstantiated marketing claims and prohibited from violating the FTC’s telemarketing rule. Blackman and Ely were also permanently banned from telemarketing, while Wealth Power System and Aria Financial Service can never again market grant-related materials or use grant lead-generation lists.
Blackman was fined $27 million, Ely $3.4 million, Nossau $5.5 million and Wealth Power Systems and Aria Financial Service a combined $3.4 million. Blackman and Ely got their penalties suspended since neither has much money; Nossau’s $5.5 million dollar judgment will be excused with a payment of $126,894 and Wealth/Aria’s suspended for $265,000.
Since Marketers Didn’t Have The Money To Pay FTC Fines, They Didn’t Have To
In other words, all of the settlement offers amounted to nothing more than a slap on the wrist. Since most of the defendants couldn’t afford the fines, the majority of financial penalties passed down were suspended. Other than that, what the FTC essentially did was administer an expensive official Scarlet letter- scolding. But since all citizens are bound to the law, this elaborate song-and-dance was simply an exercise in wasting tax dollars.
Official oversight is important, but do-nothing commissions are a waste. If the FTC really wants to affect positive change, they had better start making rulings with actual consequences; otherwise, it’s just an exercise in legislative vanity.
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Have an Internet advertising or FTC issue? Want to consult an attorney about the matter? If yes, then get in touch with Kelly / Warner law today. We’ve successfully handled hundreds of FTC cases and know the ropes. Reach out today to get your online marketing legal problem fixed.