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1996
ANNUAL REPORT

U.S. FEDERAL TRADE COMMISSION
WASHINGTON, D.C.

Annual
Report
of the

Federal
Trade
Commission

For Fiscal Year Ended
September 30, 1996

For sale by the Superintendent of Documents, U.S. Government Printing Office,
Washington, D.C. 20402

Prepared by
Bureau of Competition
Judith Bailey, Patricia Foster, James Mongoven
Bureau of Consumer Protection
Darlene Cossette, Clovia Hutchins, Ruth Sacks
Bureau of Economics
Janice Johnson, Paul Pautler, William Rosano, Michael Wise
Office of the Executive Director
Richard Arnold, Elliott Davis, James Giffin, Keith Golden, Julius Justice
Office of Information and Technology Management
Marie Barrett, Erika Beard, Kristine Titzer

FEDERAL TRADE COMMISSION - 1996

ROBERT PITOFSKY, Chairman
MARY L. AZCUENAGA, Commissioner
JANET D. STEIGER, Commissioner
ROSCOE B. STAREK, III, Commissioner
CHRISTINE A. VARNEY, Commissioner
DONALD S. CLARK, Secretary

EXECUTIVE OFFICES OF THE FEDERAL TRADE COMMISSION
Pennsylvania Avenue at Sixth Street, N.W.
Washington, D.C. 20580
Regional Offices

Atlanta, Georgia
Suite 5M35, Midrise Building
60 Forsyth Street, S.W.
Zip Code: 30303
Phone: (404) 656-1390

Denver, Colorado
Suite 1523
1961 Stout Street
Zip Code: 80294-0101
Phone: (303) 844-2272

Boston, Massachusetts
Suite 810
101 Merrimac Street
Zip Code: 02114-4719
Phone: (617) 424-5960

Los Angeles, California
Room 13209
11000 Wilshire Boulevard
Zip Code: 90024
Phone: (310) 235-4040

Chicago, Illinois
Suite 1860
55 East Monroe Street
Zip Code: 60603-5701
Phone: (312) 353-8156

New York, New York
13th Floor
150 William Street
Zip Code: 10038
Phone: (212) 264-8290

Cleveland, Ohio
Suite 520-A
668 Euclid Avenue
Zip Code: 44114
Phone: (216) 522-4210

San Francisco, California
Suite 570
901 Market Street
Zip Code: 94103
Phone: (415) 356-5270

Dallas, Texas
Suite 2150
1999 Bryan Street
Zip Code: 75201
Phone: (214) 979-9350

Seattle, Washington
Suite 2896
915 Second Avenue
Zip Code: 98174
Phone: (206) 220-6350

FEDERAL TRADE COMMISSION
1996 ANNUAL REPORT
Contents
Page
COMMISSIONERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Robert Pitofsky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mary L. Azcuenaga . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Janet D. Steiger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Roscoe B. Starek, III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Christine A. Varney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1
1
2
2
3

OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Management and Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Part II Consent Orders Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Part III Administrative Complaints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Part III Consent Orders Issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Initial Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Final Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Complaints Filed in District Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Preliminary Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Permanent Injunctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Civil Penalty Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer Redress Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rulemaking Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commission-Wide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Order Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer and Business Education Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consumer Protection Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appellate Court Review of Commission Actions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Competition Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economic Reports and Working Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economic Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economic Working Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advocacy Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

107
122
122
139
139
139
139
142
142
152
153
153
157
157
158
158
159
160
160
164

INDEX OF CASES LISTED IN THE APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Commissioners
COMMISSIONERS
ROBERT PITOFSKY
(4/95 - )

Robert Pitofsky was sworn in as 54th Chairman of the Federal
Trade Commission on April 12, 1995. At the time he was nominated
by President Clinton to chair the Commission, Chairman Pitofsky
was a Professor of Law at the Georgetown University Law Center and
Of Counsel to the Washington, D.C., law firm of Arnold & Porter.
He also has held positions at the Federal Trade Commission as a
Commissioner (1978-1981) and as Director of the Bureau of
Consumer Protection (1970-1973).
Chairman Pitofsky chaired the Defense Science Board Task Force
on Antitrust Aspects of Defense Industry Downsizing in 1994. He
has been a member of the Council of the Administrative Conference,
the Board of Governors of the D.C. Bar Association, and the Council
of the Antitrust Section of the American Bar Association. In
addition, he has been Dean of the Georgetown University Law
Center, a professor at New York University School of Law, and
Visiting Professor of Law at Harvard Law School.
Chairman Pitofsky’s publications include legal casebooks on both
trade regulation and antitrust law. He received a B.A. degree from
New York University and an L.L.B. from the Columbia School of
Law.

MARY L. AZCUENAGA
(11/84 - )

Mary L. Azcuenaga was sworn in as a member of the Federal
Trade Commission on November 27, 1984. She was appointed by
President Reagan for a term expiring September 26, 1991, and she
was reappointed by President Bush for a second term, expiring
September 26, 1998.
Before her appointment, Commissioner Azcuenaga spent more
than 11 years on the legal staff of the Commission, during which she
held several positions and gained experience in all aspects of the
Commission’s work. She has a varied litigation background,
including both federal court and administrative litigation. She has
substantial expertise in the field of antitrust, including extensive
experience in merger litigation. In addition, she has a background in
the field of consumer protection and administrative law and has
experience in administration and management.
Immediately before assuming her present position, Commissioner
Azcuenaga served as Assistant General Counsel for Legal Counsel of
the Federal Trade Commission. Earlier, she served as Assistant to the
General Counsel, as Assistant Director of the San Francisco Regional
Office, as Assistant to the Executive Director, and as a litigation
attorney in the Office of the General Counsel.

Federal Trade Commission
Commissioner Azcuenaga is a graduate of Stanford University
and the University of Chicago School of Law. She has been a
member of the Administrative Conference of the United States and
is a member of the Board of Trustees of the Food and Drug Law
Institute and a member of the Board of Directors of the Girl Scout
Council of the Nation’s Capital. She is the author of numerous
articles, speeches, and Commission opinions.
Commissioner Azcuenaga is a member of the bars of the District
of Columbia and the State of California. She lives in Washington,
D.C.
JANET D. STEIGER
(8/89 -)

Janet D. Steiger was sworn in as a member of the Federal Trade
Commission on August 11, 1989. She was nominated by President
Bush. Commissioner Steiger served as Chairman of the Commission
from August 1989 until April 1995.
Commissioner Steiger was Chairman of the Postal Rate Commission, by appointment of President Reagan, from March 1982 to
August 1989. She also chaired the Congressionally mandated threeyear Commission to Assess Veterans’ Education Policy (1987-1989),
which reported to the 100th Congress. A Republican, she was
nominated by President Carter, and confirmed by the Senate, as a
Postal Rate Commissioner in 1980. In 1985, the Federally Employed
Women of Washington awarded her the Outstanding Woman in
Government Award for 1984.
A member of Phi Beta Kappa, Commissioner Steiger received her
B.A. from Lawrence University in 1961 and did postgraduate study
at the University of Reading in England and at the University of
Wisconsin-Madison. She was a Fulbright Scholar, a Woodrow
Wilson Scholar, and a member of the Lawrence Board of Trustees
(1986-1989). Lawrence awarded her an honorary doctor of laws
degree in 1992.
Before government service, Commissioner Steiger was cofounder
of the WorkPlace, Inc., a Washington office-and-research facility.
Born in Oshkosh, Wisconsin, Commissioner Steiger is the widow of
Congressman William A. Steiger and the mother of their son, Bill.

ROSCOE B. STAREK, III
(11/90 - )

Roscoe B. Starek, III was sworn in as a member of the Federal
Trade Commission on November 19, 1990. Prior to that time,
Commissioner Starek held a number of positions in both the Legislative and Executive branches of the Federal Government. From
January 1989 until he was sworn in by President Bush, Commissioner
2

Commissioners
Starek was Deputy Assistant to the President and Deputy Director of
Presidential Personnel at the White House. Immediately prior to
joining the White House staff, Commissioner Starek worked on the
Bush transition team as Deputy Director of Presidential Personnel.
He served for seven years in several positions at the Department of
State, most recently as Deputy Assistant Secretary for Policy and
Counterterrorism.
From 1972 to 1982, Commissioner Starek worked on Capitol Hill
and on the Ford White House staff. From 1976 to 1982, he worked
for three Committees of the U.S. House of Representatives as Chief
Minority Counsel to the House Select Committee on Narcotics Abuse
and Control, Associate Counsel to the House Judiciary Committee,
and a Counsel to the Minority of the House Select Committee on
Intelligence. In 1975, Commissioner Starek was appointed to the
White House staff as Assistant General Counsel to the Presidential
Clemency Board. In 1974, Commissioner Starek was chosen by the
Minority Members of the House Judiciary Committee to be a Counsel
to the Impeachment Inquiry. During 1972 and 1973, he served on the
staff of U.S. Senator Charles Percy of Illinois, first as a legislative
assistant and thereafter as a Professional Staff Member to the
Permanent Subcommittee on Investigations of the Senate Government Operations Committee.
Commissioner Starek graduated with an A.B. in political science
from Syracuse University. He received a Juris Doctor degree from
the Washington College of Law at American University. He is a
member of the bar in Illinois and in the District of Columbia.
Commissioner Starek is married to the former Mildred Jeannette
Harllee. They have one daughter and reside in Alexandria, Virginia.
CHRISTINE A. VARNEY
(10/94 - )

Christine Varney was sworn in as a Commissioner of the Federal
Trade Commission on October 14, 1994. She was nominated by
President Clinton for a term that expired in September 1996.
Commissioner Varney formerly served as President Clinton’s
Cabinet Secretary and, as such, was the primary point of contact
between the President and the 20 members of his Cabinet. Prior to
joining the Clinton Administration, Commissioner Varney practiced
law with the Washington, D.C., firm of Hogan & Hartson. Her
representations included serving as Chief Counsel for the Clinton
Campaign, General Counsel to the 1992 Presidential Inaugural
Committee, and General Counsel to the Democratic National
Committee.
3

Federal Trade Commission
Commissioner Varney is a 1977 graduate of the State University
of New York in Albany and earned a Master’s in Public Administration in 1978 from the Maxwell School at Syracuse University. In
1985, she earned a Juris Doctorate from the Georgetown University
Law Center, where she was a Law Fellow. She also attended Trinity
College in Dublin, Ireland.
Commissioner Varney is a member of the District of Columbia
Bar, the New York State Bar, the American Bar Association, and the
National Lawyers’ Council. She is also a committeewoman on the
ABA Standing Committee on Election Law.
Commissioner Varney was born in Washington, D.C., and was
raised in Syracuse, New York. She is married to Thomas J. Graham
and has two children.

4

Overview
OVERVIEW
The Federal Trade Commission enforces a variety of federal
antitrust and consumer protection laws. By eliminating acts or
practices that are unfair or deceptive, the Commission seeks to ensure
that the nation’s markets function competitively and are vigorous,
efficient, and free of undue restrictions. Its efforts are generally
directed toward stopping actions that restrict competition or threaten
consumers’ ability to exercise informed choice. The Commission
also undertakes economic analysis to support its law enforcement
efforts and to contribute to the policy deliberations of various federal,
state, and local government bodies.
In addition to its statutory enforcement activities, the Commission
supports Congressional mandates through cost-effective nonenforcement activities, such as consumer education. This report
reviews the Commission’s accomplishments in fiscal year 1996.
COMPETITION MISSION

The Competition Mission is based upon the fundamental premise
of the antitrust laws that competition brings the best products and
services at the lowest prices, spurs efficiency and innovation, and
strengthens the U.S. economy. Unreasonable restraints on competition harm everyone, from consumers to businesses to workers. It
is the Commission’s job under its Competition Mission to ensure that
markets function competitively by eliminating unreasonable
competitive restraints, preventing anticompetitive mergers and
acquisitions, and encouraging governmental reliance on market
solutions.
Mission Focus
Given the Commission’s flat resources in the midst of a growing
economy, the challenges to accomplishing this Mission are
formidable. During fiscal year 1996, the Competition Mission
focused its limited resources on bringing enforcement actions that
make a positive difference in consumers’ lives, minimizing the
burden Commission actions place on business, and continuing to
refine the agency’s enforcement policies to account for dynamic
changes in both the economy and antitrust analysis.
Making a Difference in Consumers’ Lives.—The Competition
Mission has focused its enforcement actions in markets and industries
5

Federal Trade Commission
that matter most to consumers. In fiscal year 1996, more than
80 percent of the Mission’s resources, measured by staff hours
devoted to large cases, were at work in six key areas of the economy:
health care, pharmaceuticals, information and technology, energy,
consumer goods and services, and defense (where the consumer as
taxpayer is the beneficiary). The agency’s enforcement actions
against proposed mergers in these key industries have made a
difference. The Commission’s actions:

C

C

C

C

C

Prevented increases in health care costs paid by U.S. businesses
for their employees. The Commission forced abandonment of the
proposed merger of Rite Aid Corporation and Revco D.S., Inc.,
the nation’s first and second largest retail drug store chains, when
an investigation revealed that the merger would have a significant
adverse impact on health care costs.
Saved consumers nationwide as much as $30 million annually for
purchases of diltiazem, a drug used in the treatment of angina and
hypertension. A Commission consent order required divestitures
in the merger of Hoechst AG and Marion Merrell Dow, Inc., to
ensure continued competition in the market for diltiazem as well
as for other drugs used in treatments for tuberculosis and
ulcerative colitis.
Ensured for consumers and businesses the benefits of competitive
prices for natural gas in the Salt Lake City area. Questar
Corporation dropped its effort to acquire a 50-percent interest in
Kern River Gas Transmission Company after the Commission
authorized a preliminary injunction over concerns that Questar
was trying to thwart the benefits of deregulation by buying its
only competitor.
Protected prices and program choice for viewers of cable
television. Time Warner, Inc., and Turner Broadcasting System,
Inc., both major players in the cable television industry, agreed to
a major restructuring of their proposed merger in response to the
Commission’s concerns that, as originally structured, the merger
could impede competition by other cable programmers, thus
raising prices, and also could raise entry barriers for other forms
of video delivery (for example, direct broadcast satellite).
Helped to ensure that Americans get the most for their tax dollars
by protecting competition in defense industries. After a
Commission challenge, Lockheed Martin Corporation agreed to
restructure its acquisition of Loral Corporation to prevent a loss
6

Overview
in competition in the markets for air traffic control systems,
satellite systems, fighter aircrafts, and unmanned aerial vehicles.
Commission actions in nonmerger cases, although often less
visible than faster paced merger reviews, also addressed
anticompetitive conduct that threatened consumer welfare. The
Commission’s actions:

C

C

C

Protected innovation and pricing in the computer industry. In
Dell Computer, the Commission complaint alleged that Dell
abused a computer industry standard-setting process in a way that
threatened to prevent rival manufacturers from making use of an
advance in technology and to raise their costs. A Commission
consent order addressed these concerns by preventing Dell from
abusing the standard-setting process. As the first federal law
enforcement action against a firm for abuse of the standardsetting process, Dell Computer stands as an important precedent
for maintaining the integrity and procompetitive possibilities of
standard setting.
Challenged practices that could drive up the price of toys. The
Commission issued an administrative complaint against Toys R
Us, alleging that the nation’s number one toy retailer entered into
agreements with manufacturers to prevent them from selling
popular toys to warehouse clubs that would sell the toys more
cheaply than Toys R Us.
Opened up competition in the pricing of prescription drugs
purchased through pharmacy benefit plans. In Rx Care of
Tennessee, Inc., the Commission’s consent order strikes down the
use of “most favored nation” clauses that discourage discounting
and thus restrict price competition.

Minimizing the Burden on Business.—While the Commission
looks out for consumers’ interests, it attempts to do so with the least
possible burden on business. Obviously, the Commission cannot
avoid all burdens on business if it is to investigate and enforce the
law. The agency constantly reassesses its policies and procedures,
however, to see where it can streamline them or eliminate any
unnecessary requirements. During fiscal year 1996, for example, the
Commission:

C

Exempted five classes of transactions from the Hart-Scott-Rodino
(HSR) premerger notification reporting requirements that,
7

Federal Trade Commission

C

C

experience had indicated, were unlikely to pose a threat to
competition. These exemptions reduced by approximately 10
percent the number of reportable transactions.
Decreased the rate of “second requests” for documents through
use of a more thorough preliminary merger investigation, made
possible by expediting the clearance process between the
Commission and the Department of Justice to determine which of
the two antitrust agencies would review a proposed merger, which
gives staff more time to conduct a preliminary merger investigation. From fiscal year 1995 to fiscal year 1996, the percentage of
Commission preliminary merger investigations in which second
requests were issued dropped by a third, from 23 to 15 percent.
Expedited administrative trial proceedings through adoption of a
set of procedural rule changes. These changes, which will apply
to all Commission actions, including those that involve competition issues, establish new and shorter deadlines, streamline
discovery, and speed up trials.

Forward-Looking Antitrust Enforcement.—On the brink of the
21st century, the Commission is well aware of changes brought on by
rapid technological development and increased globalization of the
marketplace. The agency continues to refine its analysis to adapt to
these changes and to structure the least intrusive enforcement that
effectively protects free and competitive markets. During fiscal year
1996, the Commission:

C

C

C

Exercised its special competence as a deliberative body to deal
with complex competition issues and held 23 days of hearings
(with testimony from 140 witnesses, including economic and
legal scholars, business executives, consumer groups, state
enforcement authorities, and foreign enforcement authorities) on
changes in the global economy and the appropriate role of antitrust enforcement and analysis. The staff report that followed
includes an analysis of the debate and recommendations on how
to implement the Competition Mission in light of these changes.
Provided public guidance on competition in the fast-changing
health care industry by issuing jointly with the Department of
Justice the 1996 Statements of Antitrust Enforcement Policy in
Health Care.
Considered the critical importance in merger analysis of
“innovation markets,” or the competition between companies in
8

Overview

C

the research and development of new products that may not be
available to consumers for more than a decade. For example, the
consent agreement in the proposed merger of The Upjohn
Company and Pharmacia Aktiebolag, made final in fiscal year
1996, required the divestiture of a chemotherapy drug still under
development for colorectal cancer, the second most common form
of cancer.
Continued its commitment to work with state antitrust agencies
to leverage antitrust resources. The Commission has engaged in
several joint investigations with the states, enabling it to conduct
thorough investigations with fewer Commission resources, and
reducing the burden on business by allowing joint interviews and
joint requests for documents and information.

Programs Under the Competition Mission
The Commission implements its Competition Mission through
three major program areas: the Hart-Scott-Rodino (HSR) Premerger
Notification Program, the Mergers and Joint Ventures Program, and
the Nonmerger Program.
Premerger Notification Program
Through its implementation and enforcement of the HSR Act, the
Premerger Notification Program protects consumers from those
mergers that are anticompetitive. Prior to enactment of the Act,
mergers often were consummated and operations combined before the
antitrust agencies learned of the transactions. It was then difficult, if
not impossible, to “unscramble the eggs” and restore the benefits of
a competitive market. The HSR Act requires entities that meet
certain size requirements and that plan significant acquisitions to file
notice with the Commission and the Antitrust Division of the
Department of Justice. Consummation of the merger must be delayed
for statutorily prescribed periods of time. The HSR Act thus allows
the antitrust agencies to analyze and take action against anticompetitive mergers before the mergers actually take place.
The Program strives to minimize the burden on businesses that
are required to comply with the HSR Act. To improve voluntary
compliance, the Commission’s Premerger Office provides assistance
to filers in understanding the Act’s requirements, primarily through
responses to tens of thousands of telephone inquiries annually. As
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Federal Trade Commission
stated, the Commission, in cooperation with the Department of
Justice, also adopted new rules during fiscal year 1996 to exempt
certain kinds of transactions that are unlikely to have anticompetitive
effects.
Fiscal year 1996 marked the 20th anniversary of the passage of
the HSR Act. The Act has become an essential component of
antitrust enforcement. In particular, the Commission’s effective
enforcement of the Act has made parties to mergers and acquisitions
more certain of the timing of stages along the investigation path,
enabling them to schedule business activities with greater confidence.
Similarly, the Commission can make more reliable enforcement
decisions because it has access to all relevant data concerning the
competitive effect of a merger. This increased certainty has led to
better decisions on both sides and has also led to a process that
facilitates negotiated outcomes. In sum, the Premerger Program is an
important example of efficient antitrust enforcement that protects the
consumer’s interest in a competitive market while minimizing costs
to business.
Premerger Enforcement Activities
During fiscal year 1996, the number of premerger filings
increased for the fifth year in a row and totaled 3,087, marking the
first time in the history of the Program that filings exceeded 3,000.
This represents a 10-percent increase over the number reported during
fiscal year 1995 and a 102-percent increase over the 1,529 filings
recorded in fiscal year 1991.
The number of filings was at a record level even though the
Commission, in an effort to eliminate filings on transactions that are
unlikely to have a significant anticompetitive impact, adopted five
new rules exempting certain types of transactions from the reporting
and waiting period requirements. The new rules, which reduce the
number of reportable transactions by an estimated 10 percent, cover
transfers of goods or realty in the “ordinary course of business,” the
acquisition of oil and natural gas reserves valued at $500 million or
less, the acquisition of coal reserves valued at $200 million or less,
the acquisition of securities whose underlying value is represented
solely by those kinds of exempt assets, and acquisitions by certain
investors of rental real property.
Other premerger enforcement activities included responding to an
estimated 40,000 phone calls seeking information concerning
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Overview
reportability of transactions under the HSR Act and the details
involved in completing and filing premerger forms.

The HSR Act can ensure swift and efficient review of proposed
mergers only if the parties comply with the Act’s requirements and
provide complete information. When parties fail to comply with
these requirements, the Act provides for the imposition of civil
penalties. During fiscal year 1996, the Commission collected a
record $7.65 million in civil penalties after obtaining consent decrees
for violations of the HSR Act. In these settlements:
•
•
•
•

Sara Lee Corporation paid $3.10 million, the single largest civil
penalty ever for an HSR violation;
Automatic Data Processing, Inc., paid $2.97 million;
Foodmaker, Inc., paid $1.45 million; and
Titan Wheel International, Inc., paid $0.13 million.

Mergers and Joint Ventures Program
The Mergers and Joint Ventures Program seeks to prevent
mergers and acquisitions that are likely to harm competition and
consumers. The Program also investigates interlocking directorates
among competing firms that may have similar anticompetitive effects.
The Program has three essential components:

C
C
C

Detecting potentially harmful mergers before they occur by
monitoring merger activity and screening all significant mergers,
in conjunction with the Premerger Notification Program;
Investigating those mergers that the screening process has
targeted for further inquiry; and
Taking appropriate action to prevent (or undo) those mergers or
portions of mergers that, after investigation and analysis, appear
likely to substantially lessen competition.

In the case of some mergers, the Commission can act to prevent
harm to consumers and competition only by preventing the merger or,
in rare cases, by undoing it. In many other cases, however,
competition can be preserved by more narrowly tailored relief that
still allows the overall merger or transaction to proceed. Determining
the kind of relief necessary entails investigations that are designed to
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Federal Trade Commission
answer fundamental questions about the merger and the affected
relevant product and geographic markets:

•

•

Is the merger likely to result in a lessening of actual or potential
competition, increase the market power of the merging firms, and
lead to market dominance or a significant increase in the
likelihood of collusion?
Is the merger likely to increase barriers to entry or expansion or
to foster interdependent conduct among firms?

To protect consumers from mergers that may substantially lessen
competition, the most efficient and cost-effective strategy is to
prevent mergers before they occur. The Commission has authority
under Section 13(b) of the Federal Trade Commission Act to seek a
preliminary injunction in federal district court to stop a merger, but
more often, it resolves the competitive problem through consent
agreements with the merging parties. In addition to injunctive relief,
the Commission may rely on administrative remedial powers to
restore competition lost as a result of a merger. In either case, the
principal (though not exclusive) remedy is the prompt divestiture of
assets that are sufficient to restore competition.
Merger and Joint Ventures Enforcement Activities
During fiscal year 1996, Commission staff opened investigations
on 55 transactions, including 18 initial-phase investigations (four of
these were later converted to full phase) and 37 full-phase
investigations. The Commission issued requests for additional
information or documentary materials under the HSR Act (“second
requests”) for 36 of these proposed transactions. Preliminary
injunction cases were authorized in three transactions. Two of these
transactions, Questar/Kern River and Rite Aid/Revco (both
highlighted above), were subsequently abandoned. In the third
transaction, the proposed merger of Butterworth Hospital and
Blodgett Memorial Medical Center, a U.S. District Court denied the
Commission’s motion for a preliminary injunction, but the case was
subsequently appealed to the U.S. Court of Appeals for the Sixth
Circuit and will be litigated in an administrative proceeding. Finally,
parties abandoned four proposed mergers after the Commission
issued second requests for information.
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Overview
The Commission’s merger investigations included a number of
complex and significant transactions in the defense, health care, and
telecommunications industries where Commission efforts helped
protect competition in the midst of intense restructuring as a result of
rapidly changing economic forces and technology. Notable examples
include the merger between Time Warner, Inc., and Turner Broadcasting System, Inc., and the proposed, but later abandoned, merger
between Rite Aid Corporation and Revco D.S.
During the year, the Commission also accepted for public
comment 21 new consent agreements (of which 15 were also
finalized during the year) in the following industries:
Health care . . . . . . . . . .
Industrial applications . .
Defense industry . . . . . .
Funeral homes . . . . . . . .
Supermarkets and food .
Communications . . . . . .
Oil and gas . . . . . . . . . .
Manufacturing . . . . . . . .

4
4
4
3
3
1
1
1

The Commission continued to improve the analysis of, and the
remedies for, the anticompetitive effects of proposed mergers and
made significant gains in achieving divestitures more quickly.
During fiscal year 1996, the average time between the issuance of a
final consent order and divestiture approval by the Commission was
approximately 10 months, a decrease of 5 months from fiscal year
1995. Also, Competition Mission attorneys began participating in a
joint task force in cooperation with Commission economists and
Department of Justice staff to examine how the competitive analyses
of mergers should take into account any probable cost savings from
the merger.
Finally, the Commission continued its commitment to work with
state antitrust agencies to coordinate antitrust enforcement. The
Commission’s regional offices have particularly close working
relationships with state antitrust enforcers. Staff from both the
regional offices and the Bureau of Competition conduct joint and
parallel antitrust investigations with the states. Last year, the regional
offices hosted four “Common Ground” conferences, bringing together
representatives of state Attorneys General offices, several
Commission regional offices, and the Department of Justice. The
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Federal Trade Commission
conferences were designed to discuss substantive antitrust issues and
to explore areas where the state and federal agencies could work
together to promote consumer welfare. Plans are underway for future
conferences.
Nonmerger Program
The Commission’s Nonmerger Program includes three areas of
potential anticompetitive conduct: horizontal restraints, distributional
arrangements, and single firm violations. The Horizontal Restraints
Program is directed at investigating collusive or other collaborative
activities involving direct competitors that may harm consumers, such
as price fixing. Such activities can harm consumers by raising prices
and reducing the quality of available goods and services. Although
some agreements among competitors, such as standard setting and the
promulgation of legitimate ethical codes, can be procompetitive and
even essential, such agreements also can be abused in a way that
harms consumers.
The Distributional Restraints Program seeks to protect consumers
from anticompetitive consequences that arise from certain vertical
agreements among firms in the chain of distribution – from producers
to distributors to retailers. An agreement on resale price between
firms in a vertical relationship is an example of a distributional
practice that has a harmful effect on consumers and is considered per
se illegal. The Commission investigates distributional restraints
carefully to avoid challenging vertical agreements that may benefit
consumers.
The Single Firm Program seeks to prevent firms from creating or
maintaining market power through conduct that is injurious to
consumer welfare. A single firm with market power can use various
anticompetitive practices to reduce output below the competitive
level and to maintain supracompetitive prices, thereby injuring
consumers and misallocating resources. While neither the existence
of market power nor the attempt to gain market share is unlawful in
itself, achieving market power by practices that exclude competition
is unlawful. The principal challenge of the Single Firm Program is
to distinguish anticompetitive conduct from conduct that merely
constitutes vigorous competition. Conduct investigated under this
Program that may be unlawful includes exclusive dealing arrangements, tying arrangements, and price and non-price predation – all of

14

Overview
which can have the effect of driving competitors from a market
through means other than vigorous competition on merits.
Nonmerger Enforcement Activities
Under the three nonmerger programs, the Commission opened 49
initial-phase investigations during fiscal year 1996. Five of these
investigations were converted to full phase, along with two others that
had been opened in earlier years.
The Commission accepted six consent agreements for public
comment (with four of them made final during the year), finalized
eight other consent agreements, and modified four others. The
consent agreements accepted for public comment included:

C
C
C
C
C

New Balance Athletic Shoe, Inc. (resale price maintenance on
athletic shoes);
Dell Computer Corporation (abuse of the standard-setting process
in the computer industry to raise rivals’ costs);
RxCare of Tennessee, Inc. (agreements to impose “most favored
nation” clauses resulting in restriction of price competition in
sales of pharmacy services to pharmacy benefit plans);
Precision Moulding Company, Inc. (unlawful invitation to fix
prices on wood components for art frames); and
Waterous Company and Hale Products, Inc. (exclusive dealing
arrangements restricting competition in sale of fire engine
pumps).

During fiscal year 1996, adjudicated decisions were issued in
three significant nonmerger matters:

C

C

In International Association of Conference Interpreters et al., an
administrative law judge issued an initial decision in favor of the
Commission’s allegations that the association had engaged in a
decades-long collusive scheme to fix prices and to restrict other
work practices.
In California Dental Association, the Commission issued a final
decision finding antitrust violations for restrictions against
truthful, nondeceptive advertising involving the price, quality, and
availability of dental services. The matter is on appeal to the U.S.
Court of Appeals for the Ninth Circuit.

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Federal Trade Commission
C

In Harper & Row Publishers, Inc., the Commission dismissed
complaints against six book publishers alleging violations of the
Robinson-Patman Act involving various price and promotional
practices.

In a fourth significant nonmerger matter, Toys R Us, the
Commission issued an administrative complaint that will be litigated
during fiscal year 1997.
On the policy front, the Commission took important steps in
providing public guidance on competition in the fast-changing health
care industry. In August, the Commission, jointly with the
Department of Justice, issued the 1996 Statements of Antitrust
Enforcement Policy in Health Care. These revised statements
emphasize that the same antitrust principles that govern other
industries apply to health care providers and describe, based on the
Commission’s extensive experience in the area, how these basic
principles are applied to the health care sector. The staff also issued
five advisory opinions on proposed arrangements among health care
providers.
CONSUMER PROTECTION
MISSION

The goal of the Consumer Protection Mission is to maintain a
well-functioning marketplace that allows consumers to make
informed purchase choices. In today’s increasingly complex
marketplace, the Mission is developing new and creative strategies to
ensure the free flow of current and understandable information to
consumers.
Evolving technologies are radically changing the way consumers
learn about, buy, and pay for goods and services. An array of new
media has supplemented television and print advertising, once the
standard for reaching consumers. The Internet, pay-per-call telephone
services, and program-length television commercials (“infomercials”)
are among the new methods sellers are using to reach consumers. In
addition, consumers are more sophisticated. Not too long ago, they
were interested in only price and quality. Today they are concerned
with the health implications of the food they buy, the environmental
implications of packaging and other product attributes, the potential
loss of personal privacy resulting from the use of online communication, and the astounding growth in telemarketing and other types of
consumer fraud.
Mission Strategies
16

Overview
The Consumer Protection Mission uses three primary strategies
to achieve its goal:

C
C

C

Protecting consumers from fraud, deception, and unfair practices
in three priority areas – health, safety, and financial well-being;
Identifying impacts on consumers of globalization and new
technologies to build institutional expertise in these areas and to
adapt consumer protection principles to correct practices that
harm consumers and undermine these new markets; and
Using creative approaches that are effective in protecting
consumers and are not unduly burdensome for businesses.

The Mission implements these strategies through actions that involve
both law enforcement and consumer education. Acting on the belief
that the most effective consumer protection is education, the Mission
is committed to alerting as many consumers as possible to fraud in the
marketplace and educating consumers and businesses about their
rights and responsibilities under Commission rules and regulations.
Overview of Activities
Fighting fraud is one of the Commission’s highest priorities;
consumers are bilked out of billions of dollars a year. In fraud cases,
the Commission files actions in federal district court to bring an
immediate halt to ongoing business activities and freeze defendants’
assets. The Commission then pursues court orders that permanently
ban the fraudulent activities and provide refunds to consumers. In
addition to targeting fraud, the Commission’s law enforcement efforts
focus on stopping deceptive or unfair practices that cause significant
risk to consumer health, safety, and economic well-being. The
Commission often uses internal administrative litigation to pursue
nonfraud cases involving novel or complex legal issues, many
challenging advertising claims.
The Commission also puts a high priority on consumer
education – the first line of defense against fraud and deception.
With each major enforcement initiative, the Commission launches an
education campaign, using both traditional and new media to reach
as many consumers as possible. In fiscal year 1996, the Commission
distributed a record 4.1 million brochures. Almost all print materials
are posted to the ConsumerLine section of the Commission’s Web
page (www.ftc.gov); over 140,000 publications were accessed online
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Federal Trade Commission
during the year. A unique initiative of the Commission is the
Partnership for Consumer Education, a national coalition of 84
businesses, trade associations, consumer groups, and government
agencies that have committed to educate the public about telemarketing fraud. From January 1996, when the partnership was
launched, through September 1996, this group disseminated 90
million fraud prevention messages.
The Mission’s activities are supplemented by close federal-state
coordination. Joint resources are targeted to issues that have a direct
impact on consumers. Staff attorneys working on individual cases
and sweeps – groups of related cases – coordinate with their
colleagues in federal, state, and local consumer protection offices.
During the fiscal year, the Commission led its state and federal
partners in a series of law enforcement sweeps. The Commission
brought over 200 cases against fraudulent operators, stopping fraud
that cost consumers $200 million – four times the Commission’s
annual budget for Consumer Protection matters. And for every case
the Commission brought, its state and federal partners brought two
more.
The Consumer Protection Mission is advanced by five law
enforcement programs – Advertising Practices, Credit Practices,
Enforcement, Marketing Practices, and Service Industry Practices;
the Office of Consumer and Business Education; and the Commission’s ten regional offices. Regional staff are responsible for a
wide variety of significant consumer protection cases and are
important contact points for state Attorneys General and other state
and local consumer protection officials.
Advertising Practices Program
The Advertising Practices Program promotes truthful, informational advertising, fair competition, and industry self-regulation. It
issues guidelines to business on how to comply with Commission
laws and policies in specific areas such as food and environmental
marketing and advertising and how to advance national advertising
policy. It brings law enforcement actions that focus on advertising
claims with the potential for causing injury to consumers’ health,
safety, and economic well-being and the new advertising media and
techniques spawned by the increasingly diverse, high-tech
marketplace. It organizes public workshops and publishes reports
that examine important and controversial consumer protection issues.
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Overview
It also administers federal laws requiring health warnings on tobacco
products.
Health and safety claims – claims that consumers often cannot
judge for themselves – are a primary focus of this Program.
Consumer interest in health and nutrition is very high, and the market
has responded by introducing “healthier” food product lines and
nutritional supplements. The Program scrutinizes food advertisements for false and misleading low-calorie and low-fat claims.
Marketers of dietary supplements advertise and promote their
products heavily as scientific evidence becomes available regarding
the potential health benefits of various nutrients. The Program
monitors advertising for this product category, focusing on
unsubstantiated health and efficacy claims for supplements claiming,
for example, to speed weight loss and build muscle or to lower serum
cholesterol.
The marketing of over-the-counter (OTC) drugs also has
significant impact on consumers’ health and safety. The Program
challenges unsubstantiated claims of efficacy, superiority, and
comparative safety in OTC drug advertising, including claims for
analgesics, acne medications, and suntanning products. The increasing number of “switch” drugs, products previously available only by
prescription but now allowed by the Food and Drug Administration
(FDA) to be sold over-the-counter, also are of particular interest to
the Commission since there can be significant economic benefit to
consumers from these products.
In 1992, the Commission issued guidelines on environmental or
“green” labeling and advertising claims. During fiscal year 1996, the
Program conducted a formal review of the Guides, including holding
a public workshop in which representatives from state and federal
government, environmental groups, industry, and academia presented
their views. Based on this review, the Commission determined that
the Guides are effective in preventing deception and encouraging
truthful claims. Also in this area, the Commission provides
assistance to the U.S. Trade Representative on issues involving
international environmental labeling regulations and programs
conferring “eco-seals” to environmentally beneficial products.
New information technologies have had a significant impact on
advertising. Infomercials, home shopping channels, catalogs, online
shopping services, and other forms of nonretail, direct sales are a
growing segment of the advertising market. The Program responded
to this dramatic increase in advertising outlets through a media
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Federal Trade Commission
screening initiative, which works with advertising and media trade
associations, such as the Cable Television Advertising Bureau, to
educate the media on the importance of preventing fraudulent
advertising by careful screening. As part of this initiative, and in
conjunction with law enforcement actions, the Program is alerting
media members that have carried advertising alleged to be deceptive
by the Commission.
Expanded commercial use of the Internet is having a dramatic
impact on consumers. The benefits of the free flow of information,
both to consumers and industry, are great. The proliferation of
readily available personal information, however, could jeopardize
personal privacy and facilitate fraud and deception. In seeking to
understand these and other issues, the Program, working with staff of
the Credit Practices Program, convened a workshop in fiscal year
1996 to allow interested parties to express their views on privacy
issues and online protections for consumer privacy. A subsequent
report summarized the participants’ diverse views and described
private-sector efforts to address concerns about information privacy
online.
Recognizing that children are a special audience, the Commission
plays a leadership role in children’s advertising and marketing issues.
The Program focuses on deceptive and unfair advertising aimed at
children in traditional media and on the Internet. For example, as part
of the workshop and report examining consumer privacy in the online
marketplace, the Program conducted a review of the information
collected online from children. The Program also monitors tobacco
and alcohol advertising to identify ads targeted to an underage
audience, conducting law enforcement investigations where appropriate, and working with industry and health groups to encourage greater
self-regulation in this area.
Credit Practices Program
The Credit Practices Program enforces several federal credit
statutes that affect more than 113 million consumers who hold over
900 million credit cards and many millions more who obtain credit
through loans. In this age of borrowing, credit bureaus play a critical
role in the ease and speed with which individuals are able to get
credit. With files on over 190 million Americans, the major credit
bureaus have a responsibility to ensure the accuracy and privacy of
this personal and sensitive information.
20

Overview
In 1996, Congress passed comprehensive amendments to the Fair
Credit Reporting Act (FCRA) that take effect in 1997. The amendments significantly expand coverage of the Act to those who furnish
information to or obtain reports from consumer reporting agencies.
The Program is responsible for educating consumers and businesses
about the new rights and obligations established under this law.
During the past year, the Program continued its enforcement of the
current law, including litigation against one of the three major credit
bureaus for its alleged violations of the FCRA by selling target
marketing lists.
Credit identity fraud, where a criminal takes over a consumer’s
existing credit accounts or opens new credit accounts in the
consumer’s name, is a growing problem. The Program took the lead
in this area by working with consumer and industry groups, including
holding two workshops designed to promote consumer education and
voluntary industry efforts at prevention and cure of this rapidly
growing fraud.
Denial of credit access for reasons unrelated to creditworthiness
continues to be a serious problem. The Equal Credit Opportunity
Act, enforced by the Commission, requires lenders to judge
individuals’ creditworthiness by their financial condition and history,
not by factors such as race, age, or national origin. The Program
engages in enforcement activities designed to alert lenders subject to
the Commission’s jurisdiction that illegal lending discrimination is
not tolerated.
The credit market breaks down when creditors fail to provide
essential information or, worse, provide incorrect information. In its
jurisdiction over millions of creditors, the Commission’s role is to
ensure that they provide accurate information, thereby allowing the
marketplace to operate properly. The Truth-in-Lending and
Consumer Leasing Acts require certain information about the total
cost of the credit or lease to be placed in advertisements and given to
consumers before transactions are consummated to allow for
comparison shopping and fair competition among creditors. During
fiscal year 1996, the Program, working with 23 state Attorneys
General, concluded a major enforcement sweep of five major
automobile manufacturers for their deceptive lease and credit
advertisements. The proposed settlements, which became final in
1997, require the companies to provide clear, readable, and understandable cost information in their leases and, in two cases, credit
advertisements. In addition, the Commission participated with the
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Federal Trade Commission
Federal Reserve Board, industry members, and consumer groups to
develop consumer education on important leasing issues.
Default by a certain percentage of consumers is an inevitable
consequence of granting credit. Creditors may take collection action
in these cases or assign them to debt collectors. Under the Fair Debt
Collection Practices Act, the Commission plays a critical role in
clarifying proper collection tactics and prosecuting those who violate
the law. The Program also makes it clear that creditors bear some
responsibility for collectors’ actions, when they are aware of the
actions.
Finally, credit and other markets fail when merchants engage in
unfair or deceptive trade practices. Given the importance of credit in
individuals’ lives, many of these illegal practices focus on credit
issues. They include advance-fee loan fraud, phony gold cards,
misuse of bank drafts, false advertising about secured credit cards,
vacation scams, and credit repair.
The proliferation of readily available personal information on the
Internet raises issues concerning personal privacy and possible fraud
and deception. Working with the Advertising Practices Program, the
Program convened a workshop to explore the full range of views
about privacy in the online marketplace and the role of government
in this rapidly evolving marketplace, and will continue to monitor
developments in this fast-growing area. In addition, consumer
deception on the Internet resulted in several law enforcement actions,
many involving credit repair schemes.
Enforcement Program
The Enforcement Program enforces Commission orders that cover
a wide variety of products, services, and consumer protection issues.
It also administers and enforces more than a dozen statutes and rules,
covering such diverse areas as care labels on clothes, energy labels on
appliances, efficiency ratings for home insulation, buyers’ guides on
used cars, octane ratings, mail and telephone order sales, door-to-door
sales, and the receipt of unordered merchandise. The Program works
to improve compliance with orders and rules, seeking significant
penalties when appropriate, and working cooperatively to ensure
future compliance by companies that have acted in good faith and
committed only technical or inadvertent violations.
In fiscal year 1996, the Program obtained nearly $4.7 million in
civil penalties or disgorgement of ill-gotten gain to remedy violations
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Overview
of orders and rules. This amount includes the largest civil penalty to
date in a consumer protection matter – a major hearing aid
manufacturer paid $2.7 million to settle allegations of false and
unsubstantiated claims for hearing aids. Other cases resulting in
substantial penalties or disgorgement involved false low-fat claims
for frozen yogurt, unsubstantiated low-cholesterol claims for eggs,
misrepresentation of the performance of a toy, and unsubstantiated
engine treatment claims.
The Program coordinated a Telemarketing Sales Rule sweep of
office and cleaning supply fraud operations that targeted small
businesses and not-for-profit organizations, such as churches,
monasteries, and schools. The sweep encompassed 17 cases, 5 filed
by the Commission and 12 brought by the U.S. Postal Inspection
Service or state and local officials. Most of the targeted operations
closed, and some paid substantial sums in consumer redress.
The Program has responsibility for the Commission’s ongoing
review of its standard for claims that products are “Made in USA.”
A key event in this review was a 1996 workshop that brought together
industry representatives, labor union officials, consumer groups, state
officials, and others to discuss consumer perception of “Made in
USA” claims and how the movement toward a global economy
should affect the Commission’s standard.
A major project during fiscal year 1996 focused national attention
on the issue of checkout scanner accuracy. The Program worked
closely with the National Institute of Standards and Technology and
the National Conference on Weights and Measures to train state and
local officials and industry members in the use of inspection
procedures designed to increase scanner accuracy. Price checks
conducted in 300 stores in seven states did not suggest that federal
enforcement actions were required, but did suggest the need for
consumer and business education to focus attention on the issue.
Following extensive discussions with government and industry
officials, the Program worked with the Consumer and Business
Education Office to create and distribute educational materials.
The Program plays a leading role in carrying out the
Commission’s commitment to reviewing all of its rules and guides,
repealing those that are outdated or no longer necessary, and
streamlining those that are retained. In fiscal year 1996, the
Commission rescinded eight rules and two industry guides and
revised an additional six rules and two guides. Since the initiation of
the Commission’s regulatory reform program in 1992, the
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Federal Trade Commission
Commission has rescinded 27 rules and guides and revised another
19. This total represents more than 50 percent of the rules and guides
in effect in 1993.
In response to the North American Free Trade Agreement, the
Commission also is seeking to revise its rules to harmonize with
those of U.S. trading partners. The Program is working closely with
government and industry groups striving to achieve harmonization.
In fiscal year 1996, the Commission sought public comment on
proposals to allow use of icons in lieu of words on care labels and to
revise other textile labeling requirements in ways that will facilitate
trade within North America. The Commission also amended the
Appliance Labeling Rule to reduce manufacturer burdens in
complying with all North American energy labeling requirements.
Marketing Practices Program
The Marketing Practices Program works to stop fraud that
consumers cannot readily detect and avoid on their own. The
Program also targets economic harm caused by sellers who fail to
provide consumers with the information necessary to prevent them
from being deceived. Reflecting the variety, prevalence, and severity
of consumer problems in the national economy, the Program focuses
on deception and fraud in telemarketing and in the promotion and sale
of business opportunities and franchises. To ensure that consumers
have the information they need before paying for goods or services,
the Program enforces the Franchise Rule (requiring franchisors to
provide presale disclosure documents to prospective investors), the
Pay-Per-Call Rule (requiring disclosure of cost and other material
information to consumers who purchase information or entertainment
through 900 numbers), the Funeral Rule (requiring disclosure of
itemized cost and other information), and the Telemarketing Sales
Rule (requiring material disclosures and prohibiting
misrepresentations in telemarketing).
Economic fraud directed at consumers and small businesses is one
of the most common consumer protection problems. The Program
targets fraud that cannot be readily detected by most consumers or is
aimed at vulnerable populations, like older consumers. Many
perpetrators of this type of fraud use new technologies not yet
understood by consumers or apply familiar technologies in new ways
to confuse consumers, such as the Internet, new payment systems
(such as 900 numbers and other innovative telecommunications
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Overview
services), credit cards, electronic fund transfers, and demand drafts
(bank transactions that deduct money from a consumer’s checking
account without a written instrument bearing the consumer’s
signature).
Fraudulent sale of franchises and of business and employment
opportunities, often with the aid of telecommunications technology
and electronic fund transfers, has become an area of special concern.
These schemes often victimize consumers who invest severance pay,
retirement savings, or all their assets in business opportunities that
seem likely to pay off and provide economic security. Recent
estimates suggest that tens of thousands of investors lose as much as
$500 million a year to franchise and business opportunity fraud.
In its continuing effort against this type of fraud, the Program
launched “Project Buylines,” a sweep against seven marketers of
fraudulent business opportunities for 900-number lines. Investors are
told all they have to do is advertise the pay-per-call programs
recorded on the 900-number lines and take a portion of the revenues
for themselves. This effort was a follow-up to the innovative and
highly successful “Project Telesweep,” which in fiscal year 1995
resulted in dozens of cases filed concurrently by the Commission, the
Department of Justice, and state officials. Litigating the Telesweep
cases to conclusion was also an important effort of franchise fraud
and Franchise Rule enforcement in fiscal year 1996.
During the past year, a major effort of the Program was the design
and coordination of federal-state enforcement of the Telemarketing
Sales Rule (TSR), an important new tool in the battle against telemarketing fraud. The TSR became effective December 31, 1995,
making illegal almost everything that fraudulent telemarketers do to
separate consumers from their money. It also gives the 50 state
Attorneys General the ability to go into federal district court and get
injunctive orders that apply nationwide against fraudulent telemarketers. The enforcement effort included educating businesses and
consumers about the new Rule; providing training on the Rule and
federal court practice to the Commission’s co-enforcers, the states;
and designing, coordinating, and implementing a series of comprehensive enforcement sweeps, each of which focused on a particular
type of telemarketing fraud or a particular practice outlawed by the
TSR, such as credit repair scams, advance-fee loan scams, and
deceptive prize-promotion scams. Close coordination with the states
and other federal agencies with jurisdiction over telemarketing fraud
was a key strategy in implementing the sweeps. This effort resulted
25

Federal Trade Commission
in more than 100 TSR enforcement actions on the state and federal
level, including 23 federal district court cases filed by the
Commission and 7 filed by the U.S. Postal Inspection Service.
The Program also seeks to remedy consumer injury that occurs
when sellers fail to provide important information to consumers. By
enforcing the Funeral Rule, the Commission imposed sanctions on
funeral providers who failed to give consumers information about
choices and prices for all goods and services sold. A noteworthy
development in Funeral Rule enforcement was the Commission’s
implementation, in conjunction with the National Funeral Directors’
Association (NFDA), of an innovative industry training and certification program, the Funeral Rule Offenders Program (FROP),
designed to bring identified noncomplying funeral homes into
compliance without formal law enforcement action, thereby reducing
the level of Commission resources needed to enforce the Rule.
FROP participants make a voluntary payment to the U.S. Treasury
or the state in amounts lower than civil penalties might be assessed
for the potential law violations identified and agree to enroll their
personnel in NFDA’s training program and submit to NFDA
certification and business form review procedures. In fiscal year
1996, 26 funeral homes were offered FROP as an alternative to
possible litigation. Twenty-three of the funeral homes accepted the
offer and voluntarily entered FROP, making over $114,000 in
voluntary payments and receiving training in complying with the
Funeral Rule. The 26 homes that were offered FROP were identified
through efforts of the Commission and five state Attorneys General
in regional sweeps that involved test-shopping funeral homes in
Colorado, Illinois, Massachusetts, Ohio, and Oklahoma.
Service Industry Practices Program
The Service Industry Practices Program addresses a variety of
consumer frauds and market failures that impose substantial costs on
consumers, including the fraudulent or misleading sale of nontraditional investments and health care and other services. The
fraudulent telemarketing of investments and services causes billions
of dollars of consumer injury every year. In the wake of recent law
enforcement crackdowns on traditional prize-promotion and recovery
room frauds, investment frauds have burgeoned. The Internet has
become fertile ground for investment scams, and deregulation in the
telecommunications industry continues to spawn numerous invest26

Overview
ment ventures designed to capitalize on purported new markets.
False claims are made concerning the value and capabilities of the
particular technologies being promoted, the profit to be derived, and
the risk of investing.
During the past year, the Program attacked these and other frauds
with a strong enforcement effort that included several law enforcement sweeps, conducted with federal and state criminal authorities,
and intensified consumer education campaigns.
In “Operation Roadblock,” the Program partnered with 20 state
securities regulators to bring 85 actions against sellers of
“information superhighway” investments. This major crackdown was
aimed at telemarketers who peddle fraudulent high-tech investments
that cost consumers over $250 million. This effort garnered
enormous attention from the media, which in turn alerted consumers
to the perils of high-tech scams. Indeed, consumer warnings were on
the front page of USA Today.
“Operation Career Sweep” targeted scam artists who falsely
promised to obtain jobs for consumers in exchange for upfront fees
of up to several hundred dollars each. Working with federal and state
partners, the Program brought seven cases and obtained more than
$1 million in refunds for thousands of consumers. A consumer
education campaign to help job hunters avoid these schemes included
brochures, consumer tip cards, and public service messages posted on
the Internet.
The Program led “Project $cholar$cam,” which focused on scams
aimed at high school and college students seeking financial aid. The
sweep, which stopped scams that cost some 100,000 consumers over
$15 million, was combined with a massive education campaign in
which the Commission and the education community distributed over
800,000 bookmarks, posters, and flyers, and posted warnings at
popular Internet Web sites.
The Program joined forces with states and the FBI, bringing civil
cases in support of “Operation Senior Sentinel,” an enormous law
enforcement effort that closed down sweepstakes, recovery rooms,
and similar frauds that target older consumers. The Program and the
FBI also conducted simultaneous actions against an allegedly
fraudulent seller of “invention promotion” services, in which the
Program obtained $1 million in redress for consumers.
“Project Jackpot,” a federal-state effort targeting firms that
fraudulently offer purportedly valuable prizes to consumers to induce
them to purchase products, resulted in 56 enforcement actions against
27

Federal Trade Commission
79 defendants in 17 states. Consumer education materials were
developed and released in combination with this major law enforcement effort.
As part of its effort to combat telemarketing fraud, the
Commission maintains a Telemarketing Database developed with the
National Association of Attorneys General (NAAG). This database
captures information from the National Fraud Information Center (a
project of the National Consumers’ League), which receives about
8,000 inquiries a month from consumers who believe they may have
been subjected to a deceptive telemarketing sales pitch. The NAAGFTC Telemarketing Complaint System contains information from
over 60,000 complaints and grows at the rate of over 11,000 new
complaints each year. In fiscal year 1996, this system was used by
over 100 law enforcement agencies, including the FBI, the U.S.
Postal Inspection Service, the Department of Justice, and 44 state
Attorneys General. The complaint system helps agencies determine
enforcement priorities, allowing them to target particular types of
fraud and/or specific geographic areas. It is instrumental in providing
witnesses in cases that are part of the coordinated enforcement
sweeps by federal, state, and local agencies.
The marketing of health care services is estimated at $1 trillion
annually; as much as $100 billion may be attributable to fraud.
Victims of health care fraud frequently lack information to evaluate
deceptive advertisements and are often reluctant to challenge health
care professionals because of this information gap. Deception in the
marketing of these goods and services not only adversely affects
consumers’ pocketbooks, but also may endanger their health. Some
consumers may be led to purchase goods and services that do not
perform as advertised and delay treatments or procedures that may be
far more effective. The Program targets false and unsubstantiated
therapeutic and efficacy claims for health care goods and services,
and works jointly with other federal, state, and local agencies to
address deceptive claims. Education efforts are combined with law
enforcement to assist consumers and provide guidance to marketers.
During the past year, the Program pursued numerous innovative
remedies in the accomplishment of its mission. These included
sending a joint Commission/FDA staff advisory to over 37,000
ophthalmologists regarding impermissible claims for laser eye
surgery, working with the Department of Justice to repatriate
$330,000 in funds from a defendant’s Bahamian bank for redress to
U.S. telemarketing victims, holding a health care conference in Dallas
28

Overview
to promote joint federal-state enforcement against health frauds, and
negotiating a settlement that provided 1,000 energy-efficient windows
to state agencies in Oregon and Washington as consumer redress.
ECONOMIC ANALYSIS

The Bureau of Economics provides economic support to the
Commission’s antitrust and consumer protection activities, advises
the Commission and other government entities about the impact of
government regulation on competition, and analyzes economic
phenomena in the nation’s industrial economy as they relate to
antitrust and consumer protection.
The primary mission of the Commission is to enforce the antitrust
and consumer protection laws. In fiscal year 1996, the Bureau
continued to provide guidance and support to those activities.
In the antitrust area, economists offered advice on the economic
merits of potential antitrust actions. Situations in which the marketplace performed reasonably well were distinguished from situations
in which the market might be improved by Commission action.
When enforcement actions were initiated, economists worked to
integrate economic analysis into the proceeding, to provide expert
testimony, and to devise remedies that would improve market
competition.
In the consumer protection area, economists assessed the benefits
and costs of alternative policy approaches. Potential consumer
protection actions were evaluated not only for their immediate
impact, but also for their longer-run effects on price, product variety,
and overall consumer welfare.
Although the Commission is primarily an enforcement agency, it
is also charged with analyzing data and publishing information about
the nation’s industries, markets, and business firms. Much of this
work is undertaken by the Bureau of Economics. In fiscal year 1996,
economists conducted studies on a broad array of topics in antitrust
and consumer protection.
The Bureau of Economics also coordinates the Commission’s
Consumer and Competition Advocacy Program, which the agency
uses to provide advice to federal, state, and other regulatory entities
concerning the actual or potential economic impacts of existing and
proposed trade regulations.

29

Federal Trade Commission
Antitrust
In the antitrust area, economists participated in all investigations
of alleged antitrust violations and in the presentation of cases in
support of complaints. Economists also advised the Commission on
all proposed antitrust actions and provided economic expertise for
matters in litigation. These activities consumed the bulk of the
Bureau’s resources assigned to directly support the Commission’s
antitrust responsibilities.
The Bureau also maintains a small research program in support of
the Commission’s antitrust activities. During the year, the Bureau
released two studies: (1) The Salt Producers’ Discount Practices
Before and After the Robinson-Patman Act and the FTC’s Challenge
to Them: The Morton and International Salt Cases and (2) The
Effectiveness of Collusion Under Antitrust Immunity: The Case of
Liner Shipping Conferences.
Ongoing antitrust-related studies included (1) an examination of
the effects of Commission divestiture orders, (2) a study of the price
and output effects of franchise transfers and mergers in the carbonated soft drink bottling industry, (3) a descriptive study of the
pharmaceutical industry, (4) a study of the effects of mergers and
corporate downsizings on aggregate employment, (5) a study of the
effects of the entry of generic drugs on the pricing and output of
branded drugs, and (6) an empirical analysis of signal carriage for
cable TV systems.
Consumer Protection
In the consumer protection area, economists evaluated proposals
for full-phase investigations, consent negotiations, consent settlements, and complaints. In addition, economists routinely provided
day-to-day guidance on individual matters, provided litigation support
services, and made policy recommendations directly to the Commission.
In addition to the Bureau’s direct support for individual consumer
protection case matters, staff economists worked on consumer
protection topics of interest to the Commission. During fiscal year
1996, the Bureau released one study: Disentangling Regulatory
Policy: The Effects of State Regulations on Trucking Rates. The
Bureau also continued work on two other projects: (1) the effects of

30

Overview
advertising on the consumption of fats and cholesterol by U.S.
consumers and (2) the content of advertising for oils and margarines.
Consumer and Competition Advocacy
The interests of consumers are not always well represented in
some legislative and regulatory forums. Consequently, laws or
regulations are sometimes promulgated that harm consumers by
restricting entry, limiting competition, chilling innovation, raising
prices, or reducing the quality of goods and services. The goal of the
Commission’s advocacy activities is to limit such harm to consumers
by informing appropriate governmental and self-regulatory bodies
about the potential effects on consumers, both positive and negative,
of proposed legislation, rules, or industry guides or codes. The
advocacy program in the Bureau of Economics is the central source
of planning, coordination, review, and information for the staff’s
work in this area. During fiscal year 1996, the Commission staff
submitted 12 comments to federal agencies, such as the Federal
Energy Regulatory Commission and the Federal Communications
Commission, and various state agencies. Comment submissions
covered subject areas such as electric utility mergers, economic
claims about prescription drugs, allocation of video system capacity,
and various occupational regulation issues, among others.
MANAGEMENT AND
ADMINISTRATION

Budget and Finance
During fiscal year 1996, the Division of Budget and Finance
negotiated a cross-servicing agreement with the Department of the
Interior for Commission personnel and payroll processing systems to
be provided by the Department of the Interior’s Administrative
Service Center in Denver, Colorado, and worked with the Commission’s Division of Personnel to implement those systems. The
Commission’s contribution to the agreement included the design and
implementation of the Department of the Interior’s first fully
automated time and attendance payroll reporting system.
The Division of Budget and Finance managed the Commission’s
financial services, such as maintaining a general ledger accounting
system; ensuring that effective financial policies and procedures are
developed and maintained to support mission operations and to take
full advantage of available technologies; issuing accurate and timely
financial reports to program offices, the Department of the Treasury,
31

Federal Trade Commission
and the Office of Management and Budget; and providing oversight
of services received from the Administrative Service Center. The
Division also carried out Commission-wide management programs
for audit follow-up and reviewed and reported on internal controls.
The Division planned and carried out the fiscal year 1996 budget,
supported the fiscal year 1997 budget request through Congress, and
developed the fiscal year 1998 budget request.
Personnel
In fiscal year 1996, the Division of Personnel managed the
Commission’s human resources activities, which included such
services as recruitment, position classification, employee relations,
performance management, and labor relations. During the year, the
Division of Personnel continued working with Bureau/Office
Directors in filling several key senior positions. The Division also
provided valuable support to the agency’s Partnership Council in
implementing recommendations for improving the role of secretaries
and making changes to the Commission’s performance management
system. Specifically, the Division of Personnel coordinated an array
of seminars and training sessions geared toward maximizing the
effectiveness of the agency’s secretarial resource. Staff from the
Division also played a key role in facilitating the Commission’s
transition to changes in the performance management system. These
efforts included sponsoring training to foster increased managerial
feedback to employees.
Also during fiscal year 1996, the Division of Personnel began
utilizing the Department of the Interior’s Payroll Personnel System
for all payroll personnel activities. Agency managers now have the
capability to generate requests for personnel actions and time and
attendance records electronically through an integrated payroll
personnel system.
Procurement and General Services
In addition to providing the day-to-day administrative support to
the Commission, the Division of Procurement and General Services
completed several significant initiatives during fiscal year 1996.
These accomplishments included major contract awards for the
following:

32

Overview
C
C
C
C
C
C
C

Personal computers,
Services of experts,
Legal training,
Court reporting services,
Records management,
Administrative support services for Eastern Europe, and
Facility management services.

The Division submitted reports to the Federal Procurement Data
Center and the Small Business Administration describing goals and
accomplishments in the procurement area for the year. The Division
also administered the Commission’s credit card program for
purchases, which accounted for over $1 million.
Procurement and General Services completed several facility
projects. These included renovating the Mail Management Center to
accommodate X-ray equipment, remodeling offices on the sixth floor
to obtain better utilization of office space, installing safety glass and
fragment-retention film on the windows in the Child Care Center, and
coordinating the relocation of regional offices with the General
Services Administration.
Information and Technology Management
At the beginning of fiscal year 1996, the Planning and
Information program implemented a restructuring of its functions and
staff. That restructuring was the result of an extensive analysis of the
organizational structure and the methods of providing the products
and services needed by the customers of the Commission’s
information and technology resources. The program was renamed the
Office of Information and Technology Management (ITM) to more
clearly reflect the scope of responsibilities of the organization.
The restructuring was designed to enhance ITM efforts to meet
the overall goal of the program: increasing Commission productivity
and effectiveness by helping agency programs and staff make use of
information and technology to improve the quality and quantity of
their work. The strategy for meeting that goal has four elements:

C

Installing and maintaining the infrastructure of modern systems
and other information resources that are necessary for the
Commission’s lawyers and economists to do their work,

33

Federal Trade Commission
C
C
C

Training and supporting Commission staff in the use of the
infrastructure as effectively as possible,
Working with program managers and staff to focus resources on
the Commission’s priority law enforcement and consumer/
business education goals, and
Coordinating and supporting a majority of the Commission’s
information retrieval and dissemination efforts.

New Organizational Structure
In order to more effectively meet program goals, ITM was
structured into eight teams. The Chief Information Officer Team
provides overall management and direction to the program, as well as
administrative support in all areas. The Commission’s Chief
Information Officer is the leader of this team and of the ITM
program. The other teams, which provide products and services
directly to ITM customers, include the following: Litigation and
Customer Support, Library, Information Dissemination, Information
Management, Software Development, Technology Operations, and
Technology Development.
Customer-Directed Approach
In general, the organization was refined to provide a closer link
between the program and its customers and a more streamlined
structure to improve communication and cooperation within the
program. One of the most significant accomplishments of the year
was the creation of the ITM Board of Directors. That group, made up
of Bureau Directors, a Regional Director, and the Executive Director,
met several times throughout the year to review ITM’s proposals,
issues, problems, and accomplishments. The Board provided
invaluable assistance in ensuring that ITM concentrated on the
products and services that were most important to the missions of the
agency.
Management
Overall, the budgets and resources of the entire program were
combined into one to provide more effective and efficient
formulation, execution, management, and oversight. At the major
initiative level, ITM created a structure for each project that includes
34

Overview
a Commission sponsor, who is a senior manager from outside ITM
and who has considerable knowledge about the initiative’s subject
matter; a project steering committee, composed of representatives
from each organization that has a significant stake in the project,
which helps to ensure that the project’s scope and course are designed
to achieve the needed results; an ITM sponsor, who coordinates the
cooperation and communication between the ITM teams and the
Commission organizations involved in the project; a technical project
manager, who is responsible for planning and executing the project;
and the project team, which is composed of staff from any ITM team
that has some role in completion of the project. Each proposed major
initiative is presented to the ITM Board of Directors for approval of
the scope of the project and approval of the sponsors and manager.
That approach ensures that each project that will consume significant
resources falls within the priorities of ITM customers.
Products and Services
In addition to the ongoing maintenance of basic information and
technology services, ITM completed or made significant progress on
the following major initiatives.
Windows Desktop/Open Network Computing Project.—ITM
completed the project, which was begun in fiscal year 1995, to
acquire and install the hardware and software required to meet
Commission-wide staff needs for improved local area network (LAN)
services, Windows-based software, direct access to Commission data
resources in various media forms, and Internet access to the outside
world. The upgrade was designed to provide the requisite amount of
power and capacity at the desktop, at the server, and at the central
computer to support future open-network, client/server computing for
mission-critical systems, along with a graphical user interface and
LAN-based Windows applications.
Videoteleconferencing Services.—ITM purchased, installed in
both Headquarters’ buildings and each of the 10 regional offices, and
trained staff in the use of videoteleconferencing equipment, which
permits staff to conduct face-to-face meetings when needed, without
incurring travel expenses. The new service was used very successfully to provide training to regional staff and to receive regional
involvement in important discussions held at Headquarters. This
35

Federal Trade Commission
technology also provides the same type of service between individual
regional offices.
LANDOC Document Collection.—The collection of documents
that are available to Commission staff through the automated
document storage system, LANDOC, grew to over 27,000 documents
by the end of fiscal year 1996. In addition to increasing the number
of documents from various collections of historical documents,
including important documents issued by the Commission, ITM
implemented procedures to ensure that newly issued documents are
added to LANDOC as they are created.
Internet Services.—The success of the Commission’s Internet site
(www.ftc.gov) continued in fiscal year 1996. As the number of
customers who gained access to the site continued to increase, ITM
and the Internet Steering Committee selected a contractor to redesign
the Commission’s Internet site to gather the benefits other, more
mature sites have found. The result of the redesign will be a more
intuitive structure that may attract more customers. During the year,
procedures were implemented to ensure that both Commission news
releases and underlying documents were available through the
Internet soon after they were released to the public.
Telemarketing Complaint System.—In fiscal year 1996, ITM
worked very closely with the Bureau of Consumer Protection to
redesign the Telemarketing Complaint System. That system has been
extremely important to the Commission on two major fronts. First,
it captures information about problems and concerns that consumers
have about the telemarketing practices of businesses throughout the
country. That information is invaluable to the Bureau in identifying
businesses that may be in violation of various statutes and rules.
Second, because the system is available to law enforcement
organizations at all levels of government, it is a powerful tool in the
effort to coordinate enforcement of the law. The previous system was
several years old and was based upon technological infrastructures
that had become unwieldy or obsolete. In fiscal year 1996, a version
of the new system, which uses current technology and is much easier
to use, was made available to Commission staff. A very similar
version will be made available to other users in 1997. Not only was
the ultimate product successful, but the process used to produce the
product, which followed the cooperative and structured approach ITM
36

Overview
is using on all major initiatives, proved successful. Both ITM and the
Bureau agreed that the close working relationship that developed
during the effort will help to make future developments easier and
more effective.
Matter Management System (MMS).—The effort to replace the
Commission’s Management Information System (MIS) with a new
application made significant progress in fiscal year 1996. ITM built
upon the requirements analysis, completed in 1995, which determined
the types of information and functional needs that the agency has for
overall management of its activities, for historical purposes, for
conducting law enforcement and administrative activities, and for
integration with other agency automated information systems.
Software was purchased to serve as the basis for the new application,
which will be called the Matter Management System (MMS), and
customization of that software was begun. By the end of the year,
much of the customization was completed and the new system was
made available for limited testing by staff from each major
organization within the Commission. Implementation of the first
phase of the new system, which includes virtually all of the
functionality found in MIS, is scheduled for 1997.

37

Federal Trade Commission
APPENDIX
PART II CONSENT ORDERS ISSUED
COMPETITION MISSION

40
30
20
10
0
1992

1993

1994

1995

1996

COMPETITION MISSION (SUMMARY)
Number

Action
Date

Columbia/HCA Healthcare
Corporation

C3619

10/03/95

Horizontal Merger

Inpatient Hospital Services

Columbia/HCA Healthcare
Corporation

C3627

11/24/95

Horizontal Merger

Psychiatric Hospital
Services

Compagnie de Saint-Gobain

C3673

06/12/96

Horizontal Merger

Refractories and Hot
Surface Igniters

Council of Fashion Designers
of America, The

C3621

10/17/95

Horizontal Restraint

Fashion Modeling Services

Dell Computer Corporation

C3658

05/20/96

Attempt To
Monopolize

Personal Computers

Devro International plc

C3650

04/03/96

Horizontal Merger

Collagen Sausage Casings

Federal News Service Group,
Inc.
Reuters America, Inc.

C3632

12/18/95

Horizontal Restraint

News Transcripts

C3633

12/18/95

First Data Corporation

C3635

01/16/96

Horizontal Merger

Money Wire Transfers

Hoechst AG

C3629

12/05/95

Horizontal Merger

Pharmaceuticals

Title

38

Type of Matter

Product/Service

Part II Consent Orders Issued

Appendix

Number

Action
Date

Hughes Danbury Optical
Systems, Inc.

C3652

04/30/96

Horizontal Merger

Deformable Mirrors

Illinois Tool Works Inc.

C3651

04/23/96

Horizontal Merger

Industrial Power Equipment

Johnson & Johnson

C3645

03/19/96

Horizontal Merger

Surgical and Medical
Instruments

Koninklijke Ahold NV

C3687

09/30/96

Horizontal Merger

Grocery Stores

Litton Industries, Inc.

C3656

05/07/96

Vertical Merger

Systems Engineering

Local Health System, Inc.

C3618

10/03/95

Horizontal Merger

Inpatient Hospital Services

Lockheed Martin Corporation

C3685

09/18/96

Horizontal Merger

Guided Missiles and Space
Vehicles

Loewen Group Inc., The
Loewen Group International
Inc., The

C3678
C3677

07/30/96
07/30/96

Horizontal Merger

Funeral Homes

Mustad International Group
NV

C3624

10/30/95

Horizontal Merger

Rolled Horseshoe Nails

New Balance Athletic Shoe,
Inc.

921 0050

09/10/96

Vertical Price Fixing

Athletic Footwear

Phillips Petroleum Company

C3634

12/28/95

Horizontal Merger

Natural Gas Transmission

Port Washington Real Estate
Board, Inc.

C3625

11/17/95

Horizontal Restraint

Multiple Listing Services

Praxair Inc.

C3648

04/01/96

Horizontal Merger

Industrial Gases

Precision Moulding Company,
Inc.

C3682

09/03/96

Horizontal Restraint

Art Frames

Raytheon Company

C3681

09/03/96

Horizontal Merger

Communications Equipment

RxCare of Tennessee, Inc.

C3664

06/10/96

Horizontal Price
Fixing

Pharmacy Network

Santa Clara County Motor Car
Dealers Association

C3630

12/13/95

Boycott

New and Used Car
Dealerships

Service Corporation
International

C3646

03/21/96

Horizontal Merger

Funeral Homes and
Cemeteries

Silicon Graphics, Inc.

C3626

11/14/95

Vertical Merger

Entertainment Graphics
Software

Title

39

Type of Matter

Product/Service

Federal Trade Commission
Number

Action
Date

Stop & Shop Companies, Inc.,
The

C3649

04/02/96

Horizontal Merger

Grocery Stores

Summit Communications
Group, Inc.

C3623

10/20/95

Horizontal Restraint

Cable Television Services

Upjohn Company, The

C3638

02/08/96

Horizontal Merger

Pharmaceuticals

Title

COMPETITION MISSION
(DETAIL)

Type of Matter

Product/Service

Columbia/HCA Healthcare Corporation
A consent order settled charges that Columbia/HCA’s $3 million
merger with Healthtrust, Inc.–The Hospital Company would reduce
hospital competition in six geographic markets in four states. The
merger involves more than 280 hospitals nationwide and is the largest
hospital merger in U.S. history. The order, designed to restore
competition allegedly eliminated by the merger, requires the
divestiture of seven hospitals: two in Florida, one each in Texas and
Louisiana, and three in Utah, and termination of a hospital joint
venture agreement in Florida.
Columbia/HCA Healthcare Corporation
Columbia/HCA agreed to settle charges that its acquisition of
John Randolph Medical Center in Hopewell, Virginia, would increase
the already high level of concentration in the provision of psychiatric
hospital services in the Tri-Cities area of south-central Virginia
(consisting of Petersburg, Colonial Heights, Hopewell, and
surrounding counties) from 50 percent to more than 70 percent. The
consent order requires Columbia/HCA to divest its Poplar Springs
Hospital in Petersburg to a Commission-approved acquirer that will
operate the facility in competition with Columbia/HCA.
Compagnie de Saint-Gobain; Carborundum Company, The;
Saint-Gobain/Norton Industrial Ceramics Corporation
Compagnie de Saint-Gobain and its U.S. subsidiary, SaintGobain/Norton, agreed to settle antitrust concerns that the acquisition
of The Carborundum Company from the British Petroleum Company
would create a monopoly and raise prices for fused cast refractories
40

Part II Consent Orders Issued

Appendix

and silicon carbide refractory bricks, two products used in industrial
furnaces, and hot surface igniters, used in home appliances. The
consent order requires Saint-Gobain to divest businesses and
associated assets in each of the markets to firms that will operate
them in competition with Saint-Gobain.
Council of Fashion Designers of America, The; 7th on Sixth, Inc.
The Council of Fashion Designers and 7th on Sixth, two trade
organizations that represent fashion designers and sponsor major
fashion shows, agreed to settle allegations that they had negotiated the
fees their fashion designer members would pay for modeling services.
The consent order prohibits the two organizations from entering into
any agreements that fix the prices, terms, or conditions of
compensation for the provision of modeling services or modeling
agency services.
Dell Computer Corporation
Dell, a leading U.S. manufacturer of personal computers, agreed
to settle charges that it restricted competition and undermined the
standard-setting process in the personal computer industry by
threatening to exercise previously undisclosed patent rights against
computer manufacturers adopting the computer local bus design
standard set by the Video Electronics Standards Association (VESA).
This VL-bus mechanism transfers information or instructions
between the computer’s central processing unit and the computer’s
peripheral devices, such as a hard disk drive, a video display terminal,
or a modem. According to the complaint, Dell, sitting as a member
on VESA’s Local Bus Committee (established to adopt and approve
the VL-bus standard setting process), repeatedly certified to VESA
that it possessed no other exclusive rights, patents, trademarks, or
copyrights that conflicted with the proposed VL-bus standard. The
complaint further alleged that after VESA adopted the standard, Dell
sought to enforce its patent against companies planning to follow the
standard. Under the consent order, Dell cannot enforce its VL-bus
standard patent rights against computer manufacturers using the VLbus.

41

Federal Trade Commission
Devro International plc; Devro, Inc.
Devro agreed to settle charges that its acquisition of Teepak
International, Inc., would reduce competition by combining the
nation’s two top producers of collagen sausage casings. Under terms
of the consent order designed to replace competition, Devro is
required to divest the assets it uses to produce collagen sausage
casings for sale in the United States and Canada within three months.
The Commission approved the sale of the assets to Nitta Gelatin, Inc.,
of Japan.
Federal News Service Group, Inc.; Reuters America, Inc.;
Cortes W. Randell
Federal News Service Group, its president, Cortes W. Randell,
and Reuters agreed to settle charges that they entered into market
allocation agreements that ended competition between the two largest
U.S. sellers of fast-turnaround verbatim news transcripts of
Congressional hearings, news conferences, speeches, and other news
events. Under terms of the two consent orders, the parties are
prohibited from engaging in activities that restrict competition,
including the formulation of market allocation agreements with
competitors to divide customers and fix the resale prices of
transcripts.
First Data Corporation
First Data agreed to settle antitrust charges stemming from its
merger with First Financial Management Corporation. The complaint
issued with the consent order alleged that the $6.7 billion merger
could create a monopoly and lead to higher prices for consumer
money wire transfer services through the consolidation of the only
two companies offering these services in the United States. In an
attempt to restore competition to the market, the consent order
requires First Data to divest either its own MoneyGram business or
First Financial’s Western Union business to an entity that will operate
the business in competition with the merged company.
Hoechst AG
Hoechst agreed to settle charges that its $7.1 billion merger with
Marion Merrell Dow, Inc., would create the world’s third largest
42

Part II Consent Orders Issued

Appendix

pharmaceutical company and substantially reduce competition for
four drugs: (1) diltiazem, a hypertension and cardiac drug, (2) drugs
used to treat intermittent claudication, severe leg cramps caused by
arteriosclerosis, (3) oral dosage forms of mesalamine, used to treat
inflammatory bowel disease, and (4) rifadin, used to treat tuberculosis. The Commission permitted the merger (the new firm is known
as Hoechst Marion Roussel, Inc.), and the consent order required
Hoechst to restore competition in the research and development of the
drugs named in the complaint through the divestiture of specific
assets and through the accomplishment of prescribed steps designed
to restore competition to the market.
Hughes Danbury Optical Systems, Inc.;
General Motors Corporation; Hughes Electronics Corporation
Hughes Danbury, Hughes Electronics, and their parent company,
General Motors, agreed to settle allegations that the acquisition of the
Itek Optical Systems Division of Litton Industries, Inc., could either
raise prices or reduce the technology and quality for deformable
mirrors, an optic system component that allows the Air Force’s antimissile system’s Airborne Laser program to correct for distortions in
the atmosphere. According to the complaint issued with the consent
order, the Air Force awarded two team contracts to develop the
concept design: The Boeing Company/Lockheed Martin Corporation
team and the Rockwell International Corporation/Hughes team. The
complaint further alleged that Itek and Xinetics Inc. are the only two
firms that design and manufacture deformable mirrors. Itek is under
an exclusive contract with the Boeing team; Xinetics is under contract
with the Rockwell/Hughes team. As a result of the acquisition, Itek
would be in a position to supply mirrors to both teams. The consent
order requires the dissolution of an exclusivity provision in the
Xinetics contract, thereby ensuring that the Boeing team has a source
for the deformable mirrors other than Itek, once Itek is owned by
Hughes Danbury.
Illinois Tool Works Inc.
Illinois Tool Works agreed to settle antitrust concerns that its
proposed acquisition of Hobart Brothers Company would eliminate
an aggressive competitor in the market for both industrial power
sources and industrial engine drives used to generate power for arc
welding systems, used to join metal for industrial applications. The
43

Federal Trade Commission
consent order permitted the acquisition but required the divestiture of
Hobart’s industrial power sources and engine drive assets to Prestolite
Electric Incorporated or to another Commission-approved acquirer.
Johnson & Johnson
Johnson & Johnson agreed to settle charges that its acquisition of
Cordis Corporation would reduce competition and raise prices in the
market for cranial shunts used in the treatment of hydrocephalus.
According to the complaint issued with the consent order, the merger
would result in the two firms’ controlling over 85 percent of the
market for neuroscience products and interventional cardiology
products in the United States. The consent order requires Johnson &
Johnson to divest the Cordis Neuroscience Business.
Koninklijke Ahold NV; Ahold U.S.A., Inc.
Ahold U.S.A. and its parent company, Koninklijke Ahold, agreed
to settle charges that the acquisition of The Stop & Shop Companies,
Inc., would substantially reduce supermarket competition in 14
communities in New England. Terms of the consent order require
Ahold to divest 30 supermarkets within one month to pre-identified
buyers who would operate the stores in competition with Ahold’s
“Edwards” supermarket chain. In addition, the order requires Ahold
to provide the Commission with prior notice for ten years of plans to
acquire any supermarket in the areas named in the complaint.
Litton Industries, Inc.
Litton agreed to settle charges that its acquisition of PRC Inc.
would be anticompetitive. According to the complaint, Litton is one
of two defense contractors that manufacture Aegis destroyers for the
Navy. The complaint further alleged that PRC is the only systems
engineering and technical assistance (SETA) contractor for the Aegis
program. According to the Commission, entry by a new company
into this market is unlikely and sensitive information gained through
the acquisition could give Litton a competitive advantage and could
result in increased prices for the Aegis program. The consent order
requires Litton to divest a systems engineering and technical
assistance contract for the Navy’s Aegis destroyer program.
Local Health System, Inc.; Blue Water Health Services Corp.;
44

Part II Consent Orders Issued

Appendix

Mercy Health Services
A consent order with Local Health System, Blue Water Health,
and Mercy Health settled charges over the proposed merger of Port
Huron Hospital and Mercy Hospital–Port Huron, the two largest
hospitals in St. Clair County, Michigan. The order prohibits the
merger and requires the parties to obtain Commission approval for
three years before acquiring certain assets in any acute care hospital
facility in Greater Port Huron, Michigan (consisting of Port Huron,
Marysville, Kimball Township, Port Huron Township, and Fort
Gratiot).
Lockheed Martin Corporation
Lockheed Martin agreed to settle allegations that its proposed
acquisition of Loral Corporation would reduce competition in the
markets for air traffic control systems, commercial low earth orbit
satellites, military tactical fighter aircraft, and unmanned aerial
vehicles. The consent order requires Lockheed Martin to divest its
systems engineering and technical services contract with the Federal
Aviation Administration and prohibits the sharing of sensitive
information concerning competitors’ products between the two firms.
Loewen Group Inc., The; Loewen Group International Inc., The
Two separate consent orders settled charges relating to the
acquisitions of certain funeral homes and cemeteries by The Loewen
Group and its wholly owned subsidiary, The Loewen Group International. The complaint issued against Loewen Group challenged the
proposed acquisition of the Heritage Family Funeral Services, Inc., a
chain of funeral homes in the tri-state area of Virginia, Tennessee,
and North Carolina, on grounds that, if consummated, the acquisition
would eliminate competition between the firms and create a
monopoly in the three areas. A second complaint challenged two
Loewen Group International acquisitions in Texas – Garza Memorial
Funeral Home in Brownsville and Thomae-Garza Funeral Directors,
Inc., in the Harlingen/San Benito area of Cameron County – alleging
that the likelihood of collusion would be increased in both markets
due to the elimination of competition between the firms. Both orders
require the two firms to divest funeral homes to acquirers preapproved by the Commission.

45

Federal Trade Commission
Mustad International Group NV; Mustad Connecticut, Inc.
Mustad agreed to settle charges that through the acquisitions of
Capewell Manufacturing Company, Cooper Horseshoe Nail Co., Ltd.,
Emcoclavos S.A., and Sterward Engineering Company, Ltd., it gained
an illegal monopoly in the sale of rolled horseshoe nails in the United
States. According to the complaint issued with the consent order,
after the acquisitions, Mustad raised prices as much as 50 to 75
percent as a result of its market position. The order, designed to reestablish a viable competitor in the United States, requires Mustad to
divest specified assets relating to the horseshoe nail-making business
to a Commission-approved acquirer.
New Balance Athletic Shoe, Inc.
New Balance agreed to settle charges that it fixed and controlled
the resale prices of its shoes in an effort to raise retail prices for its
athletic footwear. According to the complaint issued with the consent
order, New Balance entered into pricing agreements with some of its
retailers to raise prices, to maintain certain price levels, and to
discontinue sales of New Balance products at discounted prices. The
complaint further alleged that New Balance threatened to terminate
shipments of its products, among other things, whenever a retailer
refused to enter into a pricing agreement. The provisions of the
consent order prohibit the company from engaging in any of the
alleged pricing practices set out in the complaint.
Phillips Petroleum Company; Enron Corporation
Phillips and Enron agreed to settle charges that Phillips’ proposed
acquisition of certain natural gas pipeline systems owned by Enron
would eliminate competition for natural gas transportation in the
Texas and Oklahoma Panhandle region. The final consent order
requires Phillips to modify the purchase agreement to exclude 830
specified miles of pipe and related gas-gathering assets of Enron
within the Panhandle. The order also requires Phillips and Enron, for
ten years, to notify the Commission before acquiring or selling certain
pipeline assets in the region.

46

Part II Consent Orders Issued

Appendix

Port Washington Real Estate Board, Inc.
A consent order settled charges that the Port Washington Real
Estate Board of Port Washington, New York, injured consumers by
unreasonably restraining competition among real estate brokers and
homeowners through its rules governing membership, advertising,
and listings of residential real estate. The order prohibits the Board
from a variety of practices that impose restrictions on brokers and
property owners in listing and selling real estate in the area.
Praxair Inc.
Praxair, the largest U.S. supplier of industrial gases, agreed to
divest four gas production plants to settle charges that its acquisition
of CBI Industries, Inc., would increase the likelihood of collusion and
raise prices for industrial atmospheric gases (nitrogen, oxygen, and
argon) in northern and southern California, eastern Connecticut,
western Wisconsin, and southern Minnesota. The consent order
requires Praxair to divest CBI’s atmospheric gas production facilities
in Vacaville and Irwindale, California; Bozrah, Connecticut; and
Madison, Wisconsin.
Precision Moulding Company, Inc.
Precision Moulding agreed to settle charges that it attempted to
fix prices in the market for stretcher bars used to construct frames for
artists’ canvases. The complaint issued with the consent order
alleged that representatives of Precision Moulding invited a new
competitor in the industry to raise its prices – suggesting that the
competitor’s prices were too low. The complaint also alleged that the
invitation, if accepted, would constitute an agreement to restrain trade
in violation of the federal antitrust laws. The consent order prohibits
Precision Moulding from engaging in pricing practices that induce
competitors to conspire to fix, raise, or maintain prices.
Raytheon Company
A consent order settled charges that Raytheon’s acquisition of
Chrysler Technologies Holding, Inc., reduced competition for the
U.S. Navy’s future procurement of the Submarine High Data Rate
(HDR) satellite communications system for use in Navy submarines.
According to the complaint, Raytheon, through its Electronic Systems
47

Federal Trade Commission
Division, and GTE Corporation submitted competing proposals to
develop the Submarine HDR program. Chrysler Technologies, as a
second-tier subcontractor to GTE, supplies antenna/terminal controls,
a component of the submarine HDR system. The merger of the two
firms would give Raytheon access to competitively sensitive
information concerning GTE’s overall proposal. The consent order
requires Raytheon to erect an information “firewall” to prohibit the
exchange of sensitive information concerning the Submarine HDR
system prior to the completion of the competitive procurement.
RxCare of Tennessee, Inc.; Tennessee Pharmacists Association
A consent order settled charges that RxCare and Tennessee
Pharmacists restricted pharmacy price competition through the use of
a “most favored nation” clause in RxCare’s contracts with independent pharmacies in Tennessee. The clause required that if a
prescription network pharmacy accepts a prescription reimbursement
rate lower than the RxCare rate, the pharmacy must accept the lower
rate for all RxCare business in which it participates. According to the
complaint, the clause discouraged the pharmacies from discounting
prices and thereby limited price competition among them in their
dealing with pharmacy benefits managers and third-party payers, such
as health benefits plans. The consent order requires RxCare to
remove the clause from existing contracts.
Santa Clara County Motor Car Dealers Association
A consent order settled charges that the Santa Clara County Motor
Car Dealers Association orchestrated an advertising boycott by its
auto dealer members against the San Jose Mercury News after the
newspaper ran an article telling consumers how to analyze new car
factory invoices. The order prohibits the Association from entering
into a boycott or any concerted refusal to deal with any newspaper,
periodical, television station, or radio station.
Service Corporation International
Service Corporation International agreed to settle charges that its
acquisition of Gibraltar Mausoleum Corporation would substantially
reduce competition for funerals and cemetery services in certain areas
of Texas and Florida. The consent order permitted the parties to
complete the acquisition but required Service Corporation Inter48

Part II Consent Orders Issued

Appendix

national to divest seven properties in Amarillo, Texas, and Brevard
and Lee Counties, Florida.
Silicon Graphics, Inc.
Silicon Graphics agreed to settle charges that its acquisition of
Alias Research, Inc., and Wavefront Technologies, Inc., two of the
world’s three leading entertainment graphics software firms, would
substantially reduce competition, raise prices, and reduce innovation
in the production of sophisticated computer-based graphics used in
the movie industry and other entertainment industries. The consent
order requires Silicon Graphics to take specific steps to ensure that
other companies could develop and sell entertainment graphics
software in a competitive market place.
Stop & Shop Companies, Inc., The; SSC Associates, L.P.
The Stop & Shop Companies agreed to settle charges that its
merger with Purity Supreme, Inc., would substantially reduce
supermarket competition, lead to higher prices, and lower the quality
of service in several Massachusetts areas (the Boston metropolitan
area, Cape Cod, the South Shore area, Bedford, and Brockton). The
consent order requires the divestiture of 17 stores in the five areas to
entities that would operate them in competition with the merged
firm’s remaining area stores.
Summit Communications Group, Inc.;
Wometco Cable TV (seven companies)
Summit, a wholly owned subsidiary of Time Warner, and seven
Wometco companies agreed to settle charges that they illegally agreed
to allocate among themselves the customers they would serve in Cobb
County, Georgia, an area where their local cable systems overlap.
According to the complaint accompanying the consent order, the
allocation of customers deprives consumers of choices on quality and
price made available through competition. The consent order
prohibits Summit and Wometco from engaging in the allocation of
customers and markets in 14 Georgia counties where they offer cable
service.

49

Federal Trade Commission
Upjohn Company, The; Pharmacia Aktiebolag
A consent order settled antitrust concerns stemming from the
$13.9 billion merger of Upjohn Company and Pharmacia Aktiebolag.
The order, designed to preserve competition in the research and
development of drugs used in the treatment of colorectal cancer,
requires the divestiture of Pharmacia’s topoisomerase I inhibitors to
a Commission-approved buyer.

50

Part II Consent Orders Issued

Appendix

PART II CONSENT ORDERS ISSUED
CONSUMER PROTECTION MISSION
50
40
30
20
10
0
1992

1993

1994

1995

1996

CONSUMER PROTECTION MISSION (SUMMARY)
Number

Action
Date

Amoco Oil Company

C3655

05/07/96

Unsubstantiated Gasoline
Claims

Gasoline

Azrak-Hamway
International, Inc.
Starwood Advertising, Inc.

C3653

05/02/96

Deceptive Advertising of
Product Performance

Remco Toys; Advertising
for Remco Toys

C3654

05/02/96

BBDO Worldwide, Inc.

C3637

01/24/96

Deceptive Caloric/
Nutritional Claims

Advertising for HäagenDazs Frozen Yogurt

Benckiser Consumer
Products, Inc.

C3659

05/22/96

Misrepresented Proceeds
Claims

Household Cleaning
Products

Blenheim Expositions, Inc.

C3633

12/22/95

Misrepresented Success and
Earnings Rates

Franchise Trade Shows

Budget Rent A Car Systems,
Inc.

C3674

06/17/96

Failed to Disclose Rental
Contract Obligations

Car Rentals

Cancer Treatment Centers of
America, Inc.

C3662

05/31/96

Unsubstantiated
Survivorship Rate

Medical Treatments for
Cancer

Dannon Company, Inc., The

C3643

03/18/96

Deceptive Caloric/
Nutritional Claims

Frozen Yogurt

Diet Workshop, Inc., The

C3663

06/03/96

Unsubstantiated WeightLoss/Maintenance Claims

Weight-Loss Programs

Title

Type of Matter

51

Product/Service

Federal Trade Commission
Number

Action
Date

DMC Publishing Group
(Timothy R. Bean, d/b/a)

C3665

06/10/96

Unsubstantiated Earnings
Claims

Internet Work-at-Home
Business Opportunity

Duram Rubber Products

C3640

02/12/96

Unsubstantiated Usage
Claims

Emergency Escape Mask

Enterprising Solutions
(Brian Coryat, d/b/a)

C3666

06/10/96

Deceptive Advertising of
Credit Rights and Remedies

Internet Credit Repair
Programs

Excel Communications
(Robert Serviss, d/b/a)

C3669

06/12/96

Unsubstantiated Earnings
Claims

Internet Work-at-Home
Business Opportunity

Ford Motor Company
Young & Rubicam, Inc.

C3679
C3680

08/22/96
08/22/96

Unsubstantiated
Performance Claims

Automobile Air Filter
Systems; Advertising for
Ford Automobiles

Genetus Alexandria, Inc.

C3639

02/09/96

Misrepresented Success
Rate

Impotence Treatment

Good News Products, Inc.

C3642

02/22/96

Deceptive Health/
Nutritional Claims

Eggs, Egg Products

J. Walter Thompson USA,
Inc.

C3622

10/20/95

Unsubstantiated Survey
about Weight-Loss Claims

Advertising for Jenny
Craig Weight-Loss
Program

Johnson & Collins Research,
Inc.

C3661

05/31/96

Unsubstantiated WeightLoss Claims

Diet and Exercise Products
for Teen Girls

Johnson & Johnson
Consumer Products, Inc.

C3636

01/18/96

Unsubstantiated HealthRelated Benefit Claims

Spermicidal Lubricant

Jordan, McGrath, Case &
Taylor, Inc.

C3684

09/18/96

Unsubstantiated
Performance Claims

Advertising for Doan’s
Pills (Over-the-Counter
Analgesics)

Live-Lee Productions, Inc.

C3620

10/10/95

Unsubstantiated Health/
Performance Claims

Vitamin and StopSmoking Sprays

Mama Tish’s Italian
Specialities, Inc.

C3644

03/19/96

Misrepresented Caloric/
Nutritional Claims

Flavored Ice Cup Dessert

May Department Stores
Company, The

C3676

07/09/96

Unfair Credit Practices and
Truth-in-Lending Act
Violations

Charge Accounts at Retail
Stores

Momentum
(Lyle R. Larson, d/b/a)

C3672

06/12/96

Deceptive Advertising of
Credit Rights and Remedies

Internet Credit Repair
Services

Title

Type of Matter

52

Product/Service

Part II Consent Orders Issued

Appendix

Number

Action
Date

Mrs. Fields Cookies, Inc.

C3657

05/13/96

Misrepresented Health/
Nutritional Claims

Low-Fat Cookies and
Baked Goods

N.W. Ayer & Son, Inc.

C3660

05/31/96

Deceptive Health/
Nutritional Claims

Advertising for Eggland’s
Best Eggs

NBDC Credit Resource
Publishing
(Rick A. Rahim, d/b/a)

C3671

06/12/96

Deceptive Advertising of
Credit Rights and Remedies

Internet Credit Repair
Services

NordicTrack, Inc.

C3675

06/17/96

Unsubstantiated WeightLoss/Maintenance Claims

Exercise Equipment

Safe Brands Corporation

C3647

03/26/96

Unsubstantiated Safety/
Environmental Claims

Automobile Antifreeze

Simplex Services
(Martha Clark, d/b/a)

C3667

06/10/96

Deceptive Advertising of
Credit Rights/Remedies

Internet Credit Repair
Services

Starr Communications
(Sherman G. Smith, d/b/a)

C3668

06/12/96

Unsubstantiated Earnings
Claims

Internet Tracer/Locator
Business Opportunity

Third Option Laboratories,
Inc.

C3628

11/29/95

Unsubstantiated HealthRelated Benefit Claims

Health Juice Drink

WLAR Co.

C3641

02/21/96

Unsubstantiated WeightLoss Claims

Diet and Exercise Products
for Teen Girls

Wolverine Capital
(Randolf D. Albertson,
d/b/a)

C3670

06/12/96

Deceptive Advertising
Claims

Internet Grant Assistance
Programs

Zygon International, Inc.

C3686

09/24/96

Unsubstantiated
Performance Claims and
Failure to Refund

Mail-Order Merchandise

Title

CONSUMER PROTECTION
MISSION (DETAIL)

Type of Matter

Product/Service

Amoco Oil Company
Amoco Oil settled allegations that its advertising campaign for
“crystal clear” Amoco Ultimate gasoline included unsubstantiated
claims. The Commission alleged that the company failed to have
adequate substantiation for its claims that Amoco Ultimate gasoline
delivers superior engine performance and environmental benefits
because it is refined more than competitors’ brands and that the
gasoline’s clear color demonstrates its superiority. Under the terms
53

Federal Trade Commission
of the consent order, Amoco Oil will not make any claim about
performance or environmental benefits for any of its gasolines
without first having scientific evidence to back the claim up.
Azrak-Hamway International, Inc.; Starwood Advertising, Inc.;
Marvin Azrak; Ezra Hamway; Les Towne
Two separate consent orders settled allegations that AzrakHamway, a toy manufacturer, Starwood Advertising, Inc., its
advertising agency, and their principals engaged in deceptive
advertising of a line of toy vehicles marketed by Azrak-Hamway’s
Remco Toys Division. The Commission alleged that television
advertising for the toys showed performance capabilities that the toys
do not actually have and that the packaging was also deceptive. Both
orders prohibit the use of deceptive demonstrations and other
misrepresentations. In addition, the Azrak-Hamway order requires
the company to offer full refunds to consumers who bought the toy
vehicles and to notify television stations that ran the ads, advising
them of the Commission’s action and of the availability of guidelines
used by many industry members to screen children’s advertising.
BBDO Worldwide, Inc.
BBDO Worldwide advertising agency agreed to settle Commission allegations of engaging in deceptive practices in connection
with its role in developing certain advertisements for Häagen-Dazs
frozen yogurt products. The advertisements claimed that all HäagenDazs frozen yogurt and frozen yogurt bars are low in fat; however,
the Commission alleged that those claims are false for many items in
each product line. The consent order prohibits BBDO Worldwide
from misrepresenting the amount of fat, saturated fat, cholesterol, or
calories in frozen yogurt, frozen sorbet, and ice cream products.
Benckiser Consumer Products, Inc.
Benckiser agreed to settle allegations that it made false and
misleading claims about the donation of proceeds from the sale of its
EarthRite line of household cleaning products. Benckiser claimed
that a portion of its proceeds would be donated to nonprofit
environmental groups, but, according to the Commission’s complaint,
the company has not donated any money to such groups since it began
54

Part II Consent Orders Issued

Appendix

selling the products in 1992. The consent order prohibits the
company from making similar misleading claims for any of its
cleaning products. The order also requires Benckiser, if it says it
donates some portion of its revenue to an organization, to clearly and
prominently disclose the method of determining the amount of the
donation.
Blenheim Expositions, Inc.
Blenheim Expositions, a company that produces franchise trade
shows and expositions, agreed to settle Commission allegations that
it misrepresented the results of a Gallup Poll featuring franchise
success and earning rates, in advertisements promoting the
International Franchise Association Expo. The consent order
prohibits Blenheim from misrepresenting survey results or making
unsubstantiated earnings and success rate claims in promoting
franchise shows. It also requires Blenheim to distribute consumer
education information about purchasing a franchise at the shows it
promotes for the next five years.
Budget Rent A Car Systems, Inc.
Budget agreed to settle allegations that it engaged in deceptive
practices when it failed to disclose potential charges to its rental car
customers. Customers who returned their rental cars with significant
damage and who had not purchased a “loss damage waiver” were
charged several thousand dollars more than the cost of repairs. The
Commission alleged that Budget sought to collect “loss of turnback”
fees, the amount of money Budget lost because it could not sell the
damaged vehicles back to the manufacturer at a price higher than
retail. The consent order requires Budget to pay $75,000 in consumer
redress. In addition, if Budget intends to charge customers for these
fees in the future, it must clearly disclose in rental contracts and
reservation systems that consumers are liable for costs in excess of
the actual cost of repairs to damaged vehicles.

55

Federal Trade Commission
Cancer Treatment Centers of America, Inc.;
Memorial Medical Center and Cancer Institute, Inc.;
Midwestern Regional Medical Center, Inc.
Cancer Treatment Centers and two affiliated hospitals agreed to
settle Commission allegations that they made false and unsubstantiated claims in advertising and promoting their cancer treatments. The
respondents also allegedly failed to substantiate a claim that their
five-year survivorship rate ranked among the highest recorded for
cancer patients. The consent order requires the respondents to have
competent and reliable evidence to substantiate future claims regarding the success or efficacy of their cancer treatments and to ensure
that testimonials they use do not misrepresent the typical experience
of their patients.
Dannon Company, Inc., The
Dannon agreed to settle allegations that it made false or
misleading nutritional claims for its Pure Indulgence line of frozen
yogurt, by representing that some flavors of the yogurt were low in fat
and calories when they were not. The consent order prohibits Dannon
from misrepresenting the existence or amount of fat, saturated fat,
cholesterol, or calories in any frozen food product in the future. In
addition, the company is required to pay $150,000 in disgorgement
to the U.S. Treasury.
Diet Workshop, Inc., The; Diet Workshop of Boston, Inc., The
The Diet Workshop, a franchisor of weight-loss plans and
products, and the Diet Workshop of Boston, the owner of its
company-operated territories, settled allegations that they made
unsubstantiated weight-loss and weight-maintenance claims and used
consumer testimonials deceptively. The consent order prohibits the
respondents from misrepresenting the performance of any weight-loss
program and requires them to have reliable scientific evidence to
substantiate claims about achieving or maintaining weight loss, or the
rate at which the loss can be expected to occur. The order also
requires disclosure statements in certain advertising and bars the
misleading use of testimonials.
DMC Publishing Group (Timothy R. Bean, d/b/a)
56

Part II Consent Orders Issued

Appendix

Timothy Bean, doing business as DMC Publishing Group, settled
allegations of deceptive marketing on the Internet. The Commission
alleged that Bean made false earnings claims in advertising for his
program to operate a home-based publishing and printing business.
The consent order requires him to have evidence to back up earnings
and sales claims for any business opportunity he markets.
Duram Rubber Products;
Frank A. Latronica, Jr (d/b/a Life Safety Products)
Duram Rubber Products and Frank Latronica settled allegations
that they falsely represented that the Duram Emergency Escape Mask
would protect wearers from lethal gases associated with fires for up
to 20 minutes. The consent order requires the respondents to notify
prior purchasers that the mask does not filter out carbon monoxide
and to disclose that fact on package labels and in certain advertisements.
Enterprising Solutions (Brian Coryat, d/b/a)
Brian Coryat, doing business as Enterprising Solutions, settled
allegations that he made unsubstantiated advertising claims on the
Internet regarding his credit repair program. The Commission
charged that Coryat falsely advertised that consumers could use his
credit repair kit to remove negative but accurate and up-to-date
information from their credit reports and that he made false and
unsubstantiated claims about the earnings potential of those who
purchased his Credit Repair Agency business. The consent order
prohibits Coryat from misrepresenting any right or remedy consumers
have under the Fair Credit Reporting Act and requires him to have
evidence to back up earnings or sales claims for any business
opportunity he markets.
Excel Communications (Robert Serviss, d/b/a)
Robert Serviss, doing business as Excel Communications, settled
allegations that he promoted a work-at-home opportunity on the
Internet using false and unsubstantiated earnings claims. The consent
order prohibits Serviss from misrepresenting the income, earnings, or
sales from any business opportunity and prohibits any claims about

57

Federal Trade Commission
past, present, or future earnings or income unless there is reliable
evidence to substantiate such claims.
Ford Motor Company; Young & Rubicam, Inc.
Two separate consent orders settled allegations that Ford and its
advertising agency made false claims about the extent to which
Ford’s MicronAir Filtration System can remove air pollutants from
its automobile passenger cabins. The Commission alleged that,
although the system filters out particles above a certain size, it has no
effect on very fine particles or gaseous pollutants such as hydrocarbons, carbon monoxide, and nitrogen oxides. The orders prohibit
the respondents from making broad claims of pollution removal for
this or any similar system and require them to have substantiation for
other claims about air filter efficacy.
Genetus Alexandria, Inc.;
Galen Medical Centers, Ltd. (successor to Genetus);
George Oprean; Linda Huffman Oprean
A clinic and its operators agreed to settle allegations that they
made misleading claims in connection with their impotence treatment. The Commission alleged that Genetus falsely represented that
a physician would examine, diagnose, and treat every patient, that the
treatment was unqualifiedly safe, and that the treatment would arrest
each patient’s impotence. The respondents also allegedly billed
insurance companies for medical tests that were not performed. The
consent order prohibits the respondents from misrepresenting the
nature or extent of a physician’s participation in any treatment, the
safety or efficacy of any procedure, and the extent to which a treatment is covered by a patient’s medical insurance.
Good News Products, Inc.
The Commission gave final approval to a consent order with
Good News Products regarding allegedly false representations that its
eggs were significantly lower in fat than ordinary eggs, that they
would increase blood cholesterol levels less than ordinary eggs, and
that they would have a positive effect on risk factors for heart disease.
The order prohibits misrepresentations regarding the nutrient content

58

Part II Consent Orders Issued

Appendix

of eggs or products containing egg yolks and requires scientific
substantiation for health claims about such products.
J. Walter Thompson USA, Inc.
The Commission approved a consent order with J. Walter Thompson, settling allegations that the company engaged in deceptive
practices in connection with advertising it created for the Jenny Craig
Weight Loss Program. The Commission alleged that the company
lacked substantiation for advertising claims that nine out of ten Jenny
Craig clients would recommend the program to a friend. Under the
order, J. Walter Thompson must have evidence to substantiate claims
that any weight-loss program is endorsed by any person, group, or
other entity, and the company is prohibited from misrepresenting the
existence or results of any study or survey in connection with any
diet-related food, weight-loss or fitness programs or equipment.
Johnson & Collins Research, Inc.; Gregor A. von Ehrenfels
The Commission gave final approval to a consent order settling
allegations that Johnson & Collins Research and its owner used
deceptive advertising of purported weight-loss and body-shaping
products in magazines directed toward teenage girls. The products
consisted primarily of booklets containing advice on dieting and
exercise. The order requires the respondents to clearly disclose that
what they are selling are booklets or pamphlets, prohibits them from
making unsubstantiated representations regarding the effects of any
weight-loss program, and requires them to disclose that weight loss
requires dieting, increased exercise, or both.
Johnson & Johnson Consumer Products, Inc.
The Commission approved a consent order with Johnson &
Johnson Consumer Products settling allegations that its advertising
campaign for a spermicidal lubricant contained misleading and
unsubstantiated claims about condom failure, touting the lubricant as
“condom insurance” to protect against unwanted pregnancy and
sexually transmitted diseases. Under the order, Johnson & Johnson
Consumer Products, its parent corporation, and all other Johnson &
Johnson subsidiaries are prohibited from misrepresenting the results
of any study concerning over-the-counter products relating to human
59

Federal Trade Commission
reproduction, contraception, or sexually transmitted diseases. In
addition, they are required to have competent and reliable scientific
evidence for claims about the efficacy and health-related benefits of
any personal lubricant or spermicide they advertise.
Jordan, McGrath, Case & Taylor, Inc.
Jordan, McGrath, Case & Taylor, an advertising firm, settled
allegations in connection with its role in advertising for Doan’s Pills.
According to the Commission, the advertisements made unsubstantiated claims that Doan’s Pills are better than competing over-thecounter analgesics in relieving back pain. The consent order requires
the company to have competent and reliable scientific evidence to
support any claims regarding the efficacy, safety, benefits, or
performance of any over-the-counter internal analgesic. The
Commission also issued an administrative complaint against the
marketers of Doan’s Pills (see – Ciba-Geigy Corporation, page 64).
Live-Lee Productions, Inc.; Ruta Lee
The Commission gave final approval to a consent order with Ruta
Lee and her production company, Live-Lee Productions, settling
allegations that advertising claims she made for three vitamin sprays
and a stop-smoking spray were unsubstantiated. Lee made the claims
on television’s Home Shopping Club, commercial programming
carried on the Home Shopping Network. Under the order, Lee and
Live-Lee Productions are required to have competent and reliable
scientific evidence for claims about a food or drug’s effect on the
user’s health or about the performance of smoking-cessation products
or programs. A separate order was approved for the Home Shopping
Network (see – page 66).
Mama Tish’s Italian Specialities, Inc.
The Commission approved a consent order with Mama Tish’s
settling allegations that the company misrepresented the calorie
content of its flavored ice cup desserts. The consent order prohibits
Mama Tish’s from misrepresenting the existence or amount of
calories or any other nutrient or ingredient in any frozen dessert
product.

60

Part II Consent Orders Issued

Appendix

May Department Stores Company, The
The May Department Stores Company (May Company) agreed to
settle allegations that, in converting its Thalhimer’s customers’
charge accounts to Hecht’s accounts, it transferred obsolete
derogatory information to the new accounts. The Commission also
alleged that the conversion process led to inaccurate reporting of
payments, resulting in some cases of unwarranted collection efforts,
and that May Company issued unsolicited credit cards. The consent
order requires May Company to follow reasonable procedures to
ensure the accuracy of information it provides to credit bureaus, to
remove incorrectly reported information, and to cease collection
activity of disputed charges. In addition, the order prohibits May
Company from issuing unrequested credit cards.
Momentum (Lyle R. Larson, d/b/a)
Lyle Larson, doing business as Momentum, agreed to settle
allegations that he falsely advertised on the Internet that consumers
could use his “legal” program to remove negative but accurate and
up-to-date information from their credit reports. The consent order
prohibits Larson from misrepresenting any right or remedy consumers
have under the Fair Credit Reporting Act and requires him to disclose
in advertising for credit repair products that misrepresenting one’s
Social Security number or certain other information may be a federal
crime.
Mrs. Fields Cookies, Inc.
The Commission approved a consent order with Mrs. Fields,
settling allegations that advertising and promotional materials touting
a cookie line as “low fat” were false and misleading for two cookies
in the line. Under the order, Mrs. Fields agreed not to misrepresent
the amount of fat, saturated fat, cholesterol, or calories in any bakery
food products.
N.W. Ayer & Son, Inc. (d/b/a NW Ayer, Inc.)
N.W. Ayer & Son, doing business as NW Ayer, agreed to settle
allegations concerning its role in creating advertising for Eggland’s
Best eggs that allegedly conveyed deceptive claims regarding the
61

Federal Trade Commission
effect of the eggs on blood cholesterol. The consent order prohibits
the company from misrepresenting the amount of cholesterol, fat,
saturated fat, or any other fatty acid with regard to eggs and dairy,
meat, or poultry products. It also requires NW Ayer to have
competent and reliable scientific evidence to back up any claims that
such products have any health benefit.
NBDC Credit Resource Publishing (Rick A. Rahim, d/b/a)
Rick Rahim, doing business as NBDC Credit Resource Publishing, settled allegations that he falsely advertised on the Internet that
his credit repair program is legal, although it advises consumers to
misrepresent their Social Security numbers in order to obtain a new
credit identity. The consent order prohibits Rahim from misrepresenting the legality of any credit repair product he advertises and
requires him to disclose in advertisements for these products that
misrepresenting one’s Social Security number or certain other
information may be a federal crime.
NordicTrack, Inc.
NordicTrack agreed to settle allegations that it made false and
unsubstantiated claims for weight loss and weight maintenance in
advertising its cross-country ski exercise machine. The Commission
alleged that NordicTrack overstated success rates, based on studies
that excluded all but a highly selected group of purchasers. The
consent order requires NordicTrack to have competent and reliable
evidence to support weight-loss, weight-maintenance, and related
claims for any exercise equipment it sells.
Safe Brands Corporation; ARCO Chemical Company;
Warren Distribution, Inc.
The Commission approved a consent order with Safe Brands, its
parent company, Warren Distribution, and ARCO, settling allegations
that they made unsubstantiated advertising claims about the safety of
Sierra antifreeze, its environmental benefits, and its ability to protect
vehicle engines. Safe Brands is the manufacturer of Sierra antifreeze,
and ARCO supplies the principal ingredient, propylene glycol. Under
the order, the companies are prohibited from making unsubstantiated

62

Part II Consent Orders Issued

Appendix

claims and are required to put a statement on Sierra antifreeze
containers cautioning consumers that it may be harmful if swallowed.
Simplex Services (Martha Clark, d/b/a)
Martha Clark, doing business as Simplex Services, settled
allegations that she used deceptive advertising on the Internet in
connection with her credit repair program. The Commission alleged
that Clark made false claims in advertising the Guaranteed Credit
Doctor program by stating that consumers could remove negative
items from their credit reports, even if the information was accurate
and up-to-date. The consent order prohibits the respondent from
misrepresenting any right or remedy consumers have under the Fair
Credit Reporting Act, including their ability to remove adverse
information from a credit report.
Starr Communications (Sherman G. Smith, d/b/a)
Sherman Smith, doing business as Starr Communications, agreed
to settle allegations that he made false and unsubstantiated earnings
claims in his Internet advertising for the “U.S. Government Tracer
Business Program,” which purportedly would show consumers how
to make money tracking down people due refunds after they had paid
off their mortgages. The consent order requires Smith to have
substantiation for profits, earnings, or sales claims for any business
opportunity he markets.
Third Option Laboratories, Inc.; Susan McWilliams Bolton;
Danny Bishop McWilliams; William J. McWilliams
The Commission approved a consent order with Third Option and
its principals, marketers of a fruit beverage, “Jogging in a Jug,”
settling allegations that they made numerous false health claims for
the drink. The order prohibits the respondents from making unsubstantiated claims about this beverage or any similar product and
requires them to have competent and reliable scientific evidence to
support any representation they make about the performance, safety,
efficacy, or benefits of any food, dietary supplement, or drug they
market in the future. In addition, the respondents are required to
notify certain previous purchasers, advising them of the Com-

63

Federal Trade Commission
mission’s allegations, and to pay $480,000, which will be used for
refunds to consumers or disgorged to the U.S. Treasury.
WLAR Co.; Michael K. Craig
The Commission accepted a final consent order with WLAR Co.
and its owner regarding the alleged deceptive advertising of weightloss and body-shaping booklets in magazine advertising directed at
teenage girls. The order prohibits false or unsubstantiated weightloss-related claims for any weight-loss product and requires the
respondents to disclose in future ads that the “product” being
advertised consists solely of booklets or pamphlets.
Wolverine Capital (Randolf D. Albertson, d/b/a)
Randolf Albertson, doing business as Wolverine Capital, settled
Commission allegations that he made false or unsubstantiated
advertising claims on the Internet. Albertson’s advertising touted
“Free Cash Grants by Mail” and offered, for a fee, to match
consumers with private foundations likely to give them money for
business, education, and other purposes. The respondent represented
that the majority of his clients were approved for cash grants, a claim
that the Commission alleged is false and unsubstantiated. The
consent order prohibits Albertson from making similar claims and
from misrepresenting the services or assistance he provides in
obtaining any financial products or services.
Zygon International, Inc.; Dane Spotts
The Commission accepted a final consent order with Zygon, a
national mail-order catalog marketer, and its owner, settling
allegations that they used deceptive practices in the advertising and
sale of several products. The respondents agreed to pay up to
$195,000 in refunds under terms of the order, to resolve allegations
that the company made a number of unsubstantiated claims and failed
to honor its money-back guarantee policy for its products. The order
also requires that Zygon and Dane Spotts have competent and reliable
substantiation for any claims about the performance, benefits,
efficacy, or safety of any product or service they market, and requires
them to honor any refund policy they advertise.

64

Part III Administrative Complaints

Appendix

PART III ADMINISTRATIVE COMPLAINTS
COMPETITION MISSION
COMPETITION MISSION (SUMMARY)
Title
Toys R Us, Inc.

Number

Action Date

Type of Matter

D9278

05/22/96

Horizontal Price Fixing

COMPETITION MISSION
(DETAIL)

Product/Service
Children’s Games and Toys

Toys R Us, Inc.
The Commission issued an administrative complaint charging that
Toys R Us, the nation’s largest toy retailer, used its market power to
keep toy prices higher and reduce toy outlet choices for consumers.
The complaint alleged that Toys R Us extracted agreements from toy
manufacturers to (1) stop selling certain toys to warehouse clubs,
(2) put toys into more expensive combination packages, and (3) tell
Toys R Us in advance what items they planned to sell to the clubs.
The complaint further alleged that as a result of these practices,
consumers could not obtain lower priced toys from clubs and could
not compare prices easily.

65

Federal Trade Commission
PART III ADMINISTRATIVE COMPLAINTS
CONSUMER PROTECTION MISSION
CONSUMER PROTECTION MISSION (SUMMARY)
Title

Number

Action Date

Type of Matter

Ciba-Geigy Corporation

D9279

06/21/96

Unsubstantiated Health
Claims

Doan’s Pills (Over-theCounter Analgesics)

Exxon Corporation

D9281

09/11/96

Unsubstantiated
Performance Claims

Gasoline

Quaker State-Slick 50, Inc.

D9280

07/12/96

Unsubstantiated
Performance Claims

Automotive Engine
Treatment

CONSUMER PROTECTION
MISSION (DETAIL)

Product/Service

Ciba-Geigy Corporation; Ciba Self-Medication, Inc.
The Commission issued an administrative complaint alleging that
Ciba-Geigy and Ciba Self-Medication, marketers of Doan’s Pills, did
not have evidence to back up advertising claims that this pain reliever
was more effective in relieving back pain than other over-the-counter
analgesics. The Commission is seeking an order that will prohibit the
respondents from making such claims without reliable scientific
evidence and that may require corrective advertising. The advertising
agency for Doan’s Pills reached a separate settlement with the
Commission in connection with its role in some of the challenged
advertising (see – Jordan, McGrath, Case & Taylor, Inc., page 57).
Exxon Corporation
The Commission issued an administrative complaint alleging that
Exxon misled consumers by making unsubstantiated advertising
claims for its gasoline. The advertisements allegedly claimed that
switching to Exxon gasolines generally – or to Exxon 93 Supreme
specifically – would make engines cleaner and would significantly
reduce automobile maintenance costs. According to the Commission,
Exxon failed to substantiate these claims. The Commission is
seeking an order to require the company to have scientific support for
future claims about the benefits of its gasolines.

66

Part III Administrative Complaints

Appendix

Quaker State-Slick 50, Inc.; Slick 50 Corp.;
Slick 50 Management, Inc.; Slick 50 Products Corp.
The Commission issued an administrative complaint alleging that
Quaker State and three subsidiaries made false and unsubstantiated
claims in advertising for Slick 50, the best selling automobile engine
treatment in the United States. The advertisements claimed that
Slick 50 improved engine performance, reduced engine wear,
lengthened engine life, and provided a host of other benefits
compared with motor oil alone. The Commission is seeking an order
to prohibit future misrepresentations and to require that claims be
backed by competent and reliable evidence.

67

Federal Trade Commission
PART III CONSENT ORDERS ISSUED
CONSUMER PROTECTION MISSION
CONSUMER PROTECTION MISSION (SUMMARY)
Title

Number

Action Date

Type of Matter

Home Shopping Network, Inc.

D9272

09/26/96

Unsubstantiated Health
Claims

Vitamin and StopSmoking Sprays

National Dietary Research,
Inc.

D9263

11/07/95

Unsubstantiated Health
Claims

Weight-Loss Products
and Programs

CONSUMER PROTECTION
MISSION (DETAIL)

Product/Service

Home Shopping Network, Inc.; Home Shopping Club, Inc.;
HSN Lifeway Health Products, Inc.
Home Shopping Network and two of its subsidiaries settled
allegations of deceptive advertising for four mouth sprays – three
vitamin sprays and a stop-smoking spray. The sprays were promoted
and sold via interactive television shopping programs. According to
the Commission, the respondents made a number of health-related
claims for the sprays without evidence to support them. Under the
consent order, the respondents must secure scientific evidence to back
up claims that any food, supplement, or drug can treat a disease or
affect a function of the body. A separate settlement was made with
the actress who made the claims on television and her production
company (see – Live-Lee Productions, Inc., page 58).
National Dietary Research, Inc.; William H. Morris Company, The;
William H. Morris
The Commission approved a consent order with two companies
and their owner, settling allegations that they made false and
unsubstantiated claims for two products purported to promote weight
loss and reduce cholesterol. Under the order, the respondents are
required to pay $100,000, to be used for consumer refunds if practical
or to be deposited in the U.S. Treasury. The order also prohibits the
respondents from making false or unsubstantiated claims about their
products and programs in the future, including claims about weight

68

Initial Decisions

Appendix
loss or health benefits, dietary constituents, test results, and
testimonials.

INITIAL DECISIONS
CONSUMER PROTECTION MISSION
CONSUMER PROTECTION MISSION (SUMMARY)
Title
RustEvader Corporation

Number Action Date
D9274

CONSUMER PROTECTION
MISSION (DETAIL)

05/24/96

Type of Matter
Unsubstantiated Conditional
Warranty Claims

Product/Service
Automobile Electronic
Corrosion-Control Product

RustEvader Corporation (a/k/a Rust Evader Corporation,
d/b/a REC Technologies);
David F. McCready
An Administrative Law Judge issued an initial decision
prohibiting RustEvader and its president from using the names “Rust
Evader” or “Rust Buster” for a purported electronic corrosion-control
device for automobiles that the judge said is not effective in
substantially reducing corrosion, despite the company’s advertising
campaign to the contrary. The Commission alleged that RustEvader
made false claims about this product and about a demonstration and
studies regarding its efficacy. The judge’s decision prohibits
RustEvader from using the two brand names, from misrepresenting
the performance, efficacy, or attributes of any automotive product,
and from conditioning warranty coverage on the purchase of certain
brand-named or trade-named products or services.

69

Federal Trade Commission
FINAL ORDERS
COMPETITION MISSION
COMPETITION MISSION (SUMMARY)
Title

Number

Action Date

California Dental Association

D9259

03/26/96

Horizontal Restraints

Dental Services

Harper & Row Publishers, Inc.
Hearst Corporation, The
Macmillan, Inc.
Putnam Berkley Group, Inc.,
The
Random House, Inc.
Simon & Schuster, Inc.

D9217
D9219
D9218
D9220

09/10/96
09/10/96
09/10/96
09/10/96

Distributional
Arrangements

Book Publishing

D9222
D9221

09/10/96
09/10/96

COMPETITION MISSION
(DETAIL)

Type of Matter

Product/Service

California Dental Association
A Commission decision upheld an administrative complaint that
alleged that the California Dental Association interfered with its
members’ use of truthful and nondeceptive advertising to promote the
price, quality, and availability of dental services. The order, which
upholds the 1995 initial decision of an Administrative Law Judge,
prohibits such practices in the future and requires the Association to
update its Code of Ethics to remove any language that does not agree
with the provisions of the order. The order, however, does not
prohibit the Association from enacting ethical guidelines to regulate
false and misleading advertising of dental services or members’
solicitation of patients vulnerable to undue influence.
Harper & Row Publishers, Inc.; Hearst Corporation, The;
Macmillan, Inc.; Putnam Berkley Group, Inc., The;
Random House, Inc.; Simon & Schuster, Inc.
The Commission dismissed separate administrative complaints
against six book publishers, ruling that changes in the book
distribution industry have corrected the alleged price discrimination
practices specified in the 1988 complaints. The complaints had
charged that the publishers used unfair methods of competition by

70

Final Orders

Appendix
engaging in discriminatory pricing practices and services in the sale
of trade books and mass-market paperbacks.

FINAL ORDERS
CONSUMER PROTECTION MISSION
CONSUMER PROTECTION MISSION (SUMMARY)
Title
Dillard Department Stores, Inc.

CONSUMER PROTECTION
MISSION (DETAIL)

Number

Action Date

D9269

03/07/96

Type of Matter
Truth-in-Lending
Regulation Z

Product/Service
Credit Card Use in
Retail Stores

Dillard Department Stores, Inc.
The Commission dismissed its complaint against Dillard, ending
a case in which it had alleged that Dillard made it unreasonably
difficult for consumers to remove unauthorized charges from their
charge card bills. The Commission dismissed the complaint in light
of a standard recently issued by the Federal Reserve Board, which
deals with investigating claims of unauthorized credit card use. The
Commission stated that because the new standard appears to differ
from the standard reflected in the complaint, it would not be in the
public interest to continue the case.

71

Federal Trade Commission
COMPLAINTS FILED IN DISTRICT COURT
CONSUMER PROTECTION MISSION

60
50
40
30
20
10
0
1992

1993

1994

1995

1996

CONSUMER PROTECTION MISSION (SUMMARY)
Number

Action
Date

Ad-Com International, Inc.

X960041

03/01/96

Franchise Rule

900-Number Business
Venture

American Business Supplies,
Inc.

X960074

06/26/96

Telemarketing Sales
Rule

Office Supplies

American Exchange Group, Inc.

X960080

07/22/96

Telemarketing Sales
Rule

Magazine Subscription
Prize Promotion

American Inventors Corporation

X960028

10/24/95

Investment Fraud

Invention Promotions

Amstar Finance Corporation

X960055

06/05/96

Advance-Fee Loan
Fraud

Consumer Finance

Bell Connections, Inc.

X960030

01/23/96

Investment Fraud

Paging License Services

Best Marketing, Inc.

X960077

07/12/96

Prize-Promotion
Fraud

Specialty Merchandise

Bureau 2000 International, Inc.

X960042

03/07/96

Franchise Rule

900-Number Business
Venture

Career Assistance Planning, Inc.

X960089

08/27/96

Scholarship Fraud

Scholarship Search
Services/Finance

Career Information Services,
Inc.

X960058

06/14/96

Job Placement Fraud

Employment Services

Title

72

Type of Matter

Product/Service

Complaints Filed in District Court

Appendix

Number

Action
Date

Careers, Inc.

X960072

06/12/96

Job Placement Fraud

Employment Services

Christopher Ebere Nwaigwe

X960091

08/28/96

Scholarship Fraud

Scholarship Search
Services/Finance

College Assistance Services,
Inc.

X960093

08/27/96

Scholarship Fraud

Scholarship Search
Services/Finance

Commercial Electrical Supply,
Inc.

X960097

06/26/96

Telemarketing Sales
Rule

Office Supplies

Direct Link, Inc.

X960065

06/20/96

Job Placement Fraud

Employment Services

Diversified Marketing Service
Corporation

X960025

03/12/96

Telemarketing Sales
Rule

Magazine Subscription
Sales

EDJ Telecommunications, Inc.,
d/b/a International Marketing

X960006

11/28/95

Telemarketing Sales
Rule

Prize Promotion

Empress Corporation, d/b/a
American Publishers Exchange,
Inc.

X960008

12/05/95

Telemarketing Fraud

Magazine Subscription
Prize Promotion

Falcon Crest Communications,
Inc.

X960016

11/29/95

Investment Fraud

Mobile Radio and Paging
License Services

Family Publishers Clearing
Center

X960090

07/15/96

Telemarketing Sales
Rule

Magazine Subscription
Prize Promotion

Financial Freedom Report, Inc.

X960056

06/04/96

Investment Fraud

Home-Based Business
Opportunity

Fortuna Alliance, LLC

X960059

05/23/96

Investment Fraud

Internet Pyramid Scheme

Genesis One Corporation

X960038

03/04/96

Franchise Rule

900-Number Business
Venture

Glendale Associates
(Patricia Esme Popp, d/b/a)

X960084

06/07/96

Telemarketing Sales
Consumer Finance
Rule and Advance-Fee
Loan Fraud

Global E

X960075

06/05/96

Advance-Fee Loan
Fraud

Consumer Finance

Gold Leaf Publishing &
Distributing Company, Inc.
(William Szabo, d/b/a)

X960044

03/01/96

Franchise Rule

900-Number Business
Venture

Ideal Concepts, Inc.

X960002

12/05/96

Telemarketing Fraud

Prize Promotion

Title

73

Type of Matter

Product/Service

Federal Trade Commission
Number

Action
Date

Ideal Credit Referral Services,
Ltd.

X960063

06/05/96

Telemarketing Sales
Consumer Finance
Rule and Advance-Fee
Loan Fraud

Incentive International

X960099

07/18/96

Cross-Border
Telemarketing Fraud

Prize Promotion

Infinity Multimedia, Inc.

X960073

06/24/96

Franchise Rule

Display Rack Business
Opportunity

Innovative Telemedia, Inc.

X960027

03/04/96

Investment Fraud

900-Number Business
Opportunity

Intelinet Data Services

X960067

06/12/96

Job Placement Fraud

Employment Services

J.C. Penney

X960110

09/24/96

Equal Credit
Opportunity Act

Retail Consumer Credit

J.P. Meyers Company, Inc.

X960045

03/07/96

Franchise Rule

900-Number Business
Venture

Law Center, The

X960069

04/10/96

Telemarketing Sales
Rule

Credit Repair

Linc II, Inc.

X960083

06/14/96

Job Placement Fraud

Employment Services

Marketing Response Group, Inc.

X960036

01/18/96

Direct-Mail Fraud

Direct-Mail Vacation,
Prize, and Land Sale
Promotion

Metro Data, Inc.

X960112

06/14/96

Job Placement Fraud

Employment Services

Michael P. McGowan

X960076

07/01/96

Telemarketing Sales
Rule

Office Supplies

Micom Corporation

X960024

01/23/96

Investment Fraud

Mobile Radio and Paging
License Services

Multinet Marketing, LLC

X960081

07/17/96

Telemarketing Sales
Rule

Magazine Subscription
Prize Promotion

National Business Distributors
Company, Inc.

X960087

06/26/96

Telemarketing Sales
Rule

Office Supplies

National Talent Associates Inc.

X950060

06/04/96

Order Violation

Talent Brokerage Services

Network Communications
Group, Ltd.

X960119

01/26/96

Investment Fraud

Mobile Radio and Paging
License Services

Title

74

Type of Matter

Product/Service

Complaints Filed in District Court

Appendix

Number

Action
Date

Oasis Southwest, Inc.

X960079

07/15/96

Telemarketing Sales
Rule

Prize Promotion – “Say No
to Drugs” Materials

Omega Promotions, Inc.

X960118

06/14/96

Job Placement Fraud

Employment Services

O’Neill, Incorporated

X960100

09/27/96

Order Violation

Wetsuits

Pioneer Communications of
Nevada, Inc.

X960043

03/01/96

Franchise Rule

900-Number Business
Venture

Publishers Award Bureau

X960098

07/15/96

Telemarketing Sales
Rule

Magazine Subscription
Prize Promotion

Silver State Western Publishing,
Inc., d/b/a Prime Time
Marketing

X960053

05/15/96

Telemarketing Sales
Rule

Prize Promotion – “Say No
to Drugs” Materials

Sparta Chem, Inc.

X960071

07/01/96

Telemarketing Sales
Rule

Office Supplies

Student Aid Incorporated

X960115

08/27/96

Scholarship Fraud

Scholarship Search
Services/Finance

Student Assistance Services,
Inc.

X960120

08/27/96

Scholarship Fraud

Scholarship Search
Services/Finance

Telecommunications Protection
Agency, Inc.

X960085

07/17/96

Telemarketing Sales
Rule

Prize Promotion “Recovery
Room”

Tower Cleaning Systems, Inc.

X960122

08/23/96

Franchise Rule

Commercial Janitorial
Cleaning Franchises

Universal Credit Corporation
(Gabrielle Ellis and Mark
Thomas Ellis, d/b/a)

X960048

02/07/96

Misrepresentations
and Deceptive
Advertising

Credit Repair

USA Channel Systems, Inc.

X960017

01/23/96

Investment Fraud

Paging License Services

USA Credit Services, Inc.

X960068

04/10/96

Telemarketing Sales
Rule

Credit Repair

Worldwide Wallcoverings &
Blinds, Inc.

X960096

09/23/96

Mail/Telephone Order
Merchandise Rule

Wallpaper and Window
Coverings

Title

75

Type of Matter

Product/Service

Federal Trade Commission
CONSUMER PROTECTION
MISSION (DETAIL)

Ad-Com International, Inc.; Anthony Catalano; Lorraine Corrales
The Commission filed a complaint alleging that Ad-Com and
corporate officers Anthony Catalano and Lorraine Corrales violated
the Franchise Rule by failing to give investors required pre-purchase
information. The defendants sold business ventures consisting of
investments in pay-per-call information or entertainment programs
that consumers access by calling 900-numbers. The Commission is
seeking a court order that would include consumer redress or
disgorgement of illegal profits to the U.S. Treasury and that would
bar the defendants from similar deceptive practices in the future.
American Business Supplies, Inc.; Interstate Office Systems, Inc.;
Nationwide Office Products, Inc.; Michael Chierico
The Commission filed a complaint alleging that the defendants,
office supply telemarketers, violated the Telemarketing Sales Rule by
telephoning small businesses and nonprofit organizations, using
deceptive means to get the name and address of a person to list on
invoices, and sending unordered office supplies and invoices charging
inflated prices. When victims of the scheme complained or tried to
return the goods, they were allegedly harassed or charged substantial
“restocking” or shipping fees. The Commission is seeking permanent
injunctive relief and consumer redress.
American Exchange Group, Inc.; Todd Bishop; William S. Kelly
The Commission filed a complaint alleging that American
Exchange, a telemarketer, falsely promised consumers that they
would receive valuable awards or gifts if they purchased magazine
subscriptions or other items and falsely told them that the awards
would be worth more than the cost of the purchases. The complaint
also alleged that the defendants violated the Telemarketing Sales Rule
by failing to disclose that no purchase was required to enter the
promotion or to win a prize. The Commission is asking the court for
a permanent injunction and consumer redress.

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Appendix

American Inventors Corporation (AIC);
American Institute for Research and Development, Inc. (AIRD);
Ronald Boulerice; John Hoime; John L. Samson
The Commission filed a complaint alleging that the defendants
ran a deceptive invention promotion scheme that bilked consumers
nationwide out of thousands of dollars each over a 20-year span. The
complaint alleged that the firms and their principal officers made a
variety of false claims and failed to disclose key information in the
course of inducing consumers to purchase patenting and marketing
services. A federal district court issued a preliminary injunction,
which requires the defendants to make certain disclosures to their
customers as to success rates and earnings, continues a freeze on the
defendants’ assets, prohibits them from making misrepresentations,
and orders them not to destroy documents, pending the outcome of a
trial.
Amstar Finance Corporation; Amstar Investment Corporation;
Bibekanand Satpathy
The Commission filed a complaint alleging that the defendants
used deceptive credit practices in offering advance-fee loans. The
defendants offer market brokerage services for business loans and
venture capital to consumers for advance fees averaging $3,000. The
Commission is seeking a permanent injunction and consumer redress.
Bell Connections, Inc.;
Michael Berman (d/b/a Discount Filing Services);
Donald Lee Dayer; Jimmie Justus; Erwin Allen Strauss
The Commission is seeking a permanent injunction for four
individuals and two related companies that offered application
preparation services for paging licenses available through the Federal
Communications Commission (FCC), which regulates the radio
frequencies used by pagers. According to the Commission complaint,
the defendants charged consumers ten or more times the FCC charges
for the application process and made a number of false statements,
including that paging licenses were profitable investments, that
buyers could lease or sell their licenses to existing paging systems,
and that the fees Bell charged were to cover work required by the

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Federal Trade Commission
FCC such as engineering studies. FCC regulations prohibit applicants from obtaining licenses for profitable resale.
Best Marketing, Inc.; Edward H. Hexter (a/k/a David D. Best)
The Commission filed a complaint alleging that Best Marketing
and its president/director deceptively telemarketed to small
businesses, telling them that they would win a premium if they
ordered certain speciality items and representing that the premiums
were worth more than the cost of the orders. In fact, the complaint
alleged, the prizes the businesses received were worth less than what
they paid for the purchases; in addition, the defendants failed to
disclose that no purchase was required to win a prize. The
Commission is seeking a court order for permanent injunctive relief
and consumer redress.
Bureau 2000 International, Inc.; Malibu Media, Inc.;
Krystee Carr; Dave Ryder
The Commission filed a complaint alleging that Bureau 2000,
Malibu Media, and their corporate officers violated the Franchise
Rule by failing to give investors required pre-purchase information.
The defendants sold business ventures consisting of investments in
pay-per-call information or entertainment programs that consumers
access by calling 900-numbers. The Commission is seeking a court
order that would include consumer redress or disgorgement of illegal
profits to the U.S. Treasury and that would bar the defendants from
similar deceptive practices in the future.
Career Assistance Planning, Inc. (d/b/a College Assistance Planning,
College Assistance Program, and C.A.P.);
David Chaim Levy; Donna M. Levy (a/k/a Donna Holleger);
Becky Burch Settles
The Commission filed a complaint alleging that the defendants
offered fraudulent scholarship search services. According to the
complaint, the defendants supplied lists of unsuitable or expired
scholarships or no lists at all, misrepresented or did not honor their
refund policy, and debited consumers’ bank or credit accounts
without authorization. The Commission obtained a temporary
restraining order and is seeking a court order permanently barring the
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Complaints Filed in District Court

Appendix

defendants from similar schemes and requiring them to give refunds
to their customers.
Career Information Services, Inc.; CIS Associates, Inc.;
William Phillips; David Lee Smith
The Commission obtained a court order freezing more than
$2 million in corporate and individual assets pursuant to a preliminary injunction against Career Information Services, its successor
CIS Associates, and two corporate officers. The Commission
complaint alleged that the defendants ran a deceptive job services
scheme, which included misleading classified ads and nondisclosure
of charges for 900-number telephone calls. The injunction prohibits
the defendants from making false or misleading statements in
connection with providing employment advisory services and requires
them to disclose the cost of any pay-per-call service they offer, as
required by the 900-Number Rule. The Commission is seeking a
permanent injunction and consumer redress.
Careers, Inc. (d/b/a Career Marketing Services, Inc., Jobtech,
Professional Model and Talent, Inc., and United Careers, Inc.);
Daniel T. Faulkner; Nicholas S. Mancino
The Commission filed a complaint alleging that Careers and two
of its officers deceptively marketed employment services for airline
jobs nationwide. The Commission said that the company led
consumers to believe that it was affiliated with one or more airlines
and had special access to job openings, and that for an upfront fee of
$135, they would soon be employed in their chosen geographic areas.
However, the Commission alleged that few, if any, consumers
obtained jobs in their chosen areas. A proposed settlement of these
allegations would prohibit the defendants from making false or
misleading statements in connection with offering employment
services and would require payment of $350,000 in redress.
Christopher Ebere Nwaigwe (a/k/a Christopher Maige,
Michael Morge, and Michael Norge)
The Commission filed a complaint alleging that Christopher
Nwaigwe, operating under a variety of personal and business names
such as “National Scholarship Program,” offered fraudulent
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Federal Trade Commission
scholarship search services. According to the complaint, the defendant supplied lists of unsuitable or expired scholarships or no lists at
all. The Commission obtained a temporary restraining order and is
seeking a court order permanently barring the defendant from similar
schemes and requiring him to give refunds to his customers.
College Assistance Services, Inc.; Conni Canella; Linda Love
The Commission filed a complaint alleging that the defendants
falsely represented themselves as a scholarship clearinghouse and
charged an upfront fee, guaranteeing that students would receive
scholarships worth at least $1,000. According to the complaint, the
defendants supplied a list of college aid sources that included
contests, loans, and programs with expired deadlines. In addition, the
defendants did not give refunds unless students complied with certain
conditions. The Commission obtained a temporary restraining order
and is seeking a permanent injunction and consumer redress.
Commercial Electrical Supply, Inc.; Michael C. Spence
(d/b/a American Industrial Supplies, Commercial Distributors,
Crown Electrical Supply, and Kemtech Industries)
The Commission filed a complaint alleging that Commercial
Electrical and Michael Spence (doing business under a number of
names) violated the Telemarketing Sales Rule. According to the
complaint, the defendants telephoned small businesses and nonprofit
organizations and then sent unordered supplies, followed by invoices
charging inflated prices. When victims of the scheme complained,
they were allegedly harassed, and when they tried to return the goods,
they were charged substantial “restocking” or shipping fees. The
Commission obtained a temporary restraining order and an asset
freeze. The Commission is seeking permanent injunctive relief and
consumer redress.
Direct Link, Inc.; Suzanne Bannister
The Commission filed a complaint alleging that Direct Link and
its president engaged in the fraudulent marketing of employment
services. According to the complaint, the defendants falsely
advertised available jobs and charged consumers upfront fees, but few
if any consumers received the job placement assistance promised.
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Appendix

The Commission is seeking a court order permanently barring the
challenged practices and ordering the defendants to pay redress for
injured consumers.
Diversified Marketing Service Corporation;
Magazine Club Billing Service, Inc.;
National Marketing Service, Inc.;
Neighborhood Periodical Corporation (NPC) of the Midwest, Inc.;
C.H. Kuykendall; H.G. Kuykendall, Jr.; H.G. Kuykendall, Sr.
The Commission filed a complaint alleging that Diversified, three
related companies, and their officers violated the Telemarketing Sales
Rule by debiting consumers’ checking accounts for packages of
magazine subscriptions without the consumers’ authorization or even
knowledge in some instances. The defendants placed unsolicited
calls to consumers and obtained bank account numbers, allegedly
using a variety of misrepresentations, including false claims about the
costs of the subscriptions. The Commission is seeking permanent
injunctive relief and consumer redress or disgorgement.
EDJ Telecommunications, Inc. (d/b/a International Marketing);
Judy L. Burr (a/k/a Judith L. Burr); David L. Ramos
The Commission filed a complaint alleging that EDJ Telecommunications and its officers orchestrated a telemarketing scheme
involving the fraudulent promotion of prizes. According to the
Commission, the defendants promised consumers valuable prizes if
they purchased certain merchandise, but the prizes were never
delivered or were worth a fraction of their claimed value. A proposed
settlement also filed in court includes a permanent injunction and
requires payment of $377,000 in consumer redress.
Empress Corporation (d/b/a American Publishers Exchange, Inc.);
Scott Cooke
The Commission filed a complaint alleging that Empress and
Scott Cooke used deceptive sales practices and misrepresentations in
telemarketing magazine subscriptions. According to the Commission, the company promised consumers valuable prizes or awards
that were never delivered or were worth a fraction of their claimed

81

Federal Trade Commission
value. The Commission is seeking permanent injunctive relief and
consumer redress or disgorgement.
Falcon Crest Communications, Inc.;
Republic Communications Corp.; Joseph Caridi; Joel H. Cohen;
Nicholas DeRico (a/k/a Nicholas Vasti); Jordan Drew;
Gary Paperman (a/k/a Gary Perry)
A federal district court temporarily halted the deceptive sales
practices and froze the assets of Falcon Crest, its principals and
salesmen, for selling bogus brokerage services to consumers holding
federal paging and mobile radio licenses. According to the Commission complaint, the defendants represented themselves to clients
as experienced and highly successful license brokers and charged
upfront, nonrefundable fees, but delivered few, if any, offers to buy
or lease the licenses consumers held. The defendants also include
Falcon Crest’s parent company, Republic Communications. The
Commission is seeking a permanent injunction and consumer redress.
Family Publishers Clearing Center (d/b/a American Publisher
Clearing Center and American Publishers Clearing Center);
American Enterprise List, Inc. (d/b/a Warner List and Warner Lists,
Inc.);
Kenneth Caparoni; Philip Katz; Sheldon Katz; Michael Weiss
The Commission filed a complaint alleging that Family Publishers and related companies solicit consumers, telling them that they are
“guaranteed to win” seemingly valuable prizes; however, when
consumers call to claim the prizes, they are told they must pay several
hundred dollars for magazine subscriptions to be eligible. In addition,
the complaint alleged that the company misrepresented the nature and
value of its prizes and failed to disclose that no purchase was required
to enter the promotion or to win a prize. The Commission is seeking
a permanent injunction against the companies and their principals and
redress for consumers.

82

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Appendix

Financial Freedom Report, Inc.;
American Home Business Association, Inc.; Elevã, Inc.;
FFR Marketing, Inc.; FreeCom Communications, Inc.;
Silent SalesForce, Inc.; Annette S. Brazell; Robert V. Brazell;
Dana P. Gull; Don S. Gull; Kelly Haroldsen; Mark O. Haroldsen
The Commission filed a complaint alleging that these six
companies and six individuals, who were officers, directors, and/or
shareholders in some or all of the companies, misrepresented the
earnings potential to consumers who purchased their “starter kits” for
home businesses such as selling distressed merchandise, T-shirts, or
vitamins. According to the complaint, the defendants used programlength television commercials, mailings, and seminars to induce
consumers to purchase the starter kits by making claims that each of
the business ventures was a proven money-maker. The Commission
has asked the court to order a permanent halt to the alleged
misrepresentations and an asset freeze to preserve funds for consumer
redress.
Fortuna Alliance, LLC; Augustine Delgado; Monique Delgado;
Donald R. Grant; Gail Oliver; Libby Gustine Welch
In its largest law enforcement action against fraud on the Internet,
the Commission filed a complaint alleging that Fortuna promoted a
hard-core investment fraud scheme, which was actually a pyramid
scheme. Advertising over the Internet through their World Wide
Web page, the defendants promised participants in the scheme a
$5,000-per-month return on a $250 investment and encouraged
multiple investments. The Commission obtained a court order
temporarily halting the scheme, freezing the defendants’ assets, and
appointing a receiver. The Commission is seeking an order permanently halting these activities and providing redress for consumers.
Genesis One Corporation (d/b/a Bureau One);
Alex Bass; Rose Kistorian
The Commission filed a complaint alleging that Genesis One,
doing business as Bureau One, and its corporate officers violated the
Franchise Rule by failing to give investors required pre-purchase
information and by making false earnings claims. The defendants
sold business ventures consisting of investments in pay-per-call
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Federal Trade Commission
information or entertainment programs that consumers access by
calling 900-numbers. The Commission won a temporary restraining
order and is seeking a court order that would include consumer
redress or disgorgement of illegal profits to the U.S. Treasury and that
would bar the defendants from similar deceptive practices in the
future.
Glendale Associates; Crown Credit Services; Star Financial Services
(Patricia Esme Popp, d/b/a all three businesses)
The Commission filed a complaint alleging that Patricia Popp,
operating under three business names, violated the Telemarketing
Sales Rule by offering advance-fee loans. The defendant markets
debt-consolidation, business, automobile, and residential loans. The
Commission is seeking a permanent injunction and consumer redress.
Global E; Alexander & Associates; CMS; Interstate, Inc.;
MAG Group; Net Sales; Adelino Calvo, Jr.; Robert R. Silvers;
Tod A. Silvers (a/k/a Tod Alexander)
The Commission filed a complaint alleging that three individuals,
operating as Global E and under five other business names, marketed
credit cards for advance fees in violation of the Telemarketing Sales
Rule. The Commission is seeking a permanent injunction and
consumer redress.
Gold Leaf Publishing & Distributing Company, Inc.
(William Szabo, d/b/a)
The Commission filed a complaint alleging that William Szabo,
doing business as Gold Leaf, violated the Franchise Rule by failing
to give investors required pre-purchase information and by making
false earnings claims. The defendant sold business ventures
consisting of investments in pay-per-call information or entertainment
programs that consumers access by calling 900-numbers. The
Commission is seeking a court order that would include consumer
redress or disgorgement of illegal profits to the U.S. Treasury and that
would bar Szabo from similar deceptive practices in the future.
Ideal Concepts, Inc.; Michael Garganese

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Appendix

The Commission filed a complaint alleging that Ideal Concepts
and its president used a deceptive prize-promotion scheme in telemarketing to consumers nationwide, many of them senior citizens.
In the scheme, consumers received unsolicited telephone calls telling
them that they had been selected to receive valuable prizes or awards
if they purchased certain merchandise. According to the complaint,
the prizes or awards were never delivered or were worth a fraction of
their claimed value. The Commission is seeking permanent injunctive relief and consumer redress or disgorgement.
Ideal Credit Referral Services, Ltd.; CAF Phone Systems;
Direct Telemarketing, Inc.; Elite Credit Referral Services, Ltd.;
New Consolidated Consultants, Inc.; Universal Client Services, Inc.;
Cindy W. Forde (a/k/a Cindy Williams); Stephen Mark Fraser;
Donald Patrick Hugh; Dion William Lockhart; Karl Morris;
David Wayne Panella; Englhieberth (Bert) Smith;
Maria Tilotta Smith
The Commission filed a complaint alleging that six companies
and eight individuals, operating out of Canada, violated the Telemarketing Sales Rule by marketing advance-fee loans. This case
marks the first time the Commission has sued a foreign telemarketing
“boiler room.” The Commission is seeking a permanent injunction
and consumer redress, and the Province of British Columbia has
initiated law enforcement proceedings against the same defendants.
Incentive International (9013-0980 Quebec Inc., d/b/a Incentive
International, Incentives International, and Pegasus Industries);
Joshua Baazov; Ofer Baazov
The Commission filed a complaint against this Canadian firm and
two principals, alleging that Incentive International engages in crossborder telemarketing fraud, calling senior citizens in the United States
and telling them they have won valuable prizes. In fact, according to
the Commission complaint, consumers receive premiums worth a
fraction of the hundreds or thousands of dollars they spend on
purchases from the company. The company allegedly also fails to
disclose the odds of winning each potential prize and the fact that no
purchase is required to win a prize. The Commission is seeking a
permanent injunction and consumer redress.

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Federal Trade Commission
Infinity Multimedia, Inc.; Quality Marketing Associates, Inc.;
William B. Chappie (a/k/a William Bruno Chapple,
Chappie Czaplewski, William Brono Czaplewski, Ken Olson,
and Bill Stack);
Joseph A. Wentz
The Commission filed a complaint against two companies and
two individuals, alleging that they made false earnings claims and
used other deceptive practices in selling their prepackaged
distributorships, in violation of the Franchise Rule. The Commission
subsequently negotiated an agreement that includes consumer redress
with three of the four defendants, who marketed CD-ROM display
rack businesses. The allegations against the individual defendant
Chappie are still pending. The Commission took over the defendants’
World Wide Web page to provide information about the case to
consumers who access the page.
Innovative Telemedia, Inc.;
Frederick O. Buckley (a/k/a Westy Monroe)
The Commission filed a complaint alleging that Innovative
Telemedia and its officer made false earnings claims about the
businesses they sold and failed to pay investors the agreed-on portion
of revenues. The business ventures consisted of investments in payper-call information or entertainment programs that consumers access
by calling 900-numbers. The Commission won a temporary restraining order and is seeking a court order that would include consumer
redress or disgorgement of illegal profits to the U.S. Treasury and that
would bar the defendants from similar deceptive practices in the
future.
Intelinet Data Services; Stratified Advertising and Marketing, Inc.;
Patrick Donaghy; Thomas F. Frontera; Robin L. Murphy
The Commission filed a complaint alleging that Intelinet, also
doing business as Stratified, and three company officers engaged in
the fraudulent marketing of employment services. According to the
complaint, the defendants falsely advertised available government
jobs and charged consumers upfront fees, but few if any consumers
received the job placement assistance promised. The Commission is

86

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Appendix

seeking a court order permanently barring the challenged practices
and ordering the defendants to pay redress to injured consumers.
J.C. Penney
The Commission filed a settlement with J.C. Penney, one of the
largest retail store chains in the country, that requires payment of a
$225,000 civil penalty to settle allegations that it violated consumers’
rights to receive written notice of the reasons for a denial of credit.
The Commission alleged that when Penney denied consumers’ credit
applications, it either failed to explain the reasons at all or gave the
wrong reasons. Under the proposed settlement, Penney would also
be required to give consumers who were denied credit in the past a
written statement of the correct reasons for denial and to comply with
federal laws requiring such explanation in the future. The consent
decree requires the court’s approval to become binding.
J.P. Meyers Company, Inc.; Joseph Shapiro
The Commission filed a complaint alleging that J.P. Meyers and
its officer violated the Franchise Rule, which requires franchisors to
give potential buyers certain pre-purchase information. The defendants sold business ventures consisting of investments in pay-per-call
information or entertainment programs that consumers access by
calling 900-numbers. The Commission is seeking a court order that
would include consumer redress or disgorgement of illegal profits to
the U.S. Treasury and that would bar the defendants from similar
deceptive practices in the future.
Law Center, The; Consumer Law Center, The;
Walter D. Channels; James Martin Coose
The Law Center and The Consumer Law Center are two names
under which Walter Channels and James Coose have done credit
repair business. The Commission filed a complaint alleging that the
defendants violated the credit repair provision of the Telemarketing
Sales Rule by saying that their services as a law firm would force
credit bureaus to remove negative or bad credit. In fact, federal law
allows credit bureaus to report all truthful information, including
negative information, for seven years. The Commission is seeking
permanent injunctive relief and redress for consumers.
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Federal Trade Commission
Linc II, Inc.; Joel Ancelowitz (a/k/a Jim Manti); Betty Busler
The Commission filed a complaint alleging that Linc II and two
individuals ran a fraudulent job placement service. According to the
allegations, the defendants solicited consumers through advertisements in newspapers and falsely claimed that they had access to a
nationwide “hidden” job market and could obtain job interviews for
clients, but few if any clients received job listings, interviews, or jobs
themselves. In fact, the complaint said that the clients did not even
receive rejection slips from potential employers, leaving them
uncertain as to whether the defendants did anything to market their
job skills. The Commission is seeking a permanent injunction.
Marketing Response Group, Inc.;
Marketing Response Group and Laser Company, Inc.;
Palm Harbor Holdings, Inc.; Pete-Nik Holdings, Inc.;
Service Bureau International, Inc.;
William S. Kilichowski; Peter J. Porcelli, Jr.
The Commission filed a complaint against Marketing Response
and its officers and affiliates for allegedly acting with numerous telemarketers nationwide to defraud consumers with direct-mail
promotions that falsely promised quick land sales, guaranteed awards,
and free vacations. According to the complaint, Marketing Response
devised the promotions, created the standard mail pieces, selected the
mailing lists, and printed, addressed, and mailed the deceptive
solicitations on behalf of its client telemarketers. The Commission
is seeking injunctive relief and funds for consumer redress.
Metro Data, Inc. (a/k/a Metro Dade);
Dennis R. Bell; Marilyn Naylor Koblasz; Cassandra Stone
The Commission filed a complaint against Metro, its president,
and two other principals, alleging that they engaged in the fraudulent
marketing of employment services. According to the Commission,
the defendants charged consumers upfront fees but provided lists of
companies that were not hiring or were out of business. The
Commission is seeking a court order permanently barring the
challenged practices and ordering the defendants to pay redress to
injured consumers.

88

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Appendix

Michael P. McGowan (a/k/a Michael McGovern, d/b/a
Industrial Chemical, Inc., Med-Amna First Aide,
Med-Amna First Aide Care, National Safety,
National Safety Supply, and National Safety & Supply);
Amna Medical Products Corp. (d/b/a Amna Medical,
Med-Amna, Med-Amna First Aide, and
Med-Amna First Aide Care);
Industrial Chemical Corporation (d/b/a Industrial Chemical, Inc.)
The Commission filed a complaint alleging that the defendants,
office supply telemarketers, violated the Telemarketing Sales Rule by
sending unordered supplies to small businesses and nonprofit
organizations, followed by invoices charging inflated prices. When
victims complained or tried to return the goods, they were allegedly
harassed and charged substantial “restocking” or shipping fees. The
Commission is seeking a permanent injunction and consumer redress.
Micom Corporation; Joseph M. Viggiano; Lawrence Williams
The Commission filed a complaint alleging that Micom and two
principals offered deceptive application services for specialized
mobile radio and paging licenses issued by the Federal Communications Commission (FCC). The complaint alleged that the company
misrepresented the value of the licenses and that some consumers did
not receive either their licenses or refunds of the fees paid. The
Commission is seeking an injunction.
Multinet Marketing, LLC; American Family Sweepstakes, LLC;
American Readers Service, Inc.; World Class Vacations, Inc.;
Clarence Jack Servaes; Jack Michael Servaes
The Commission filed a complaint against four companies and
two of their principals, alleging that Multinet Marketing solicits
consumers, telling them that they have won prizes; however, when
consumers call to claim the prizes, the telemarketers request credit
card numbers to charge between $300 and $600 for “major” prizes,
other promotional items, and magazine subscriptions. In addition,
Multinet Marketing allegedly misrepresents the value of the prizes it
awards. Further, according to the complaint, American Readers
Service sponsors the Multinet Marketing prize promotion and
provides customer and credit card services, in violation of the
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Federal Trade Commission
Telemarketing Sales Rule. The Commission is seeking a permanent
injunction and consumer redress.
National Business Distributors Company, Inc.;
Deborah L. Azari; Raphael Ralph Azari
The Commission filed a complaint alleging that the defendants
violated the Telemarketing Sales Rule by engaging in misrepresentations and fraudulent practices in connection with telephone
sales of office supplies. According to the complaint, the defendants
sent unordered merchandise to small businesses and nonprofit organizations and billed at inflated prices. Victims who complained or tried
to return the supplies were harassed and charged substantial
“restocking” and shipping fees. The Commission seeks permanent
injunctive relief and consumer redress.
National Talent Associates, Inc.; Jerome P. Ashfield
The Commission filed a complaint alleging that National Talent
Associates and its president misrepresented their ability to place
children in high-paying modeling and acting jobs and violated a 1975
order that barred them from doing so. The Commission has asked for
civil penalties of up to $10,000 for each violation of the previous
order and a requirement that the defendants post a performance bond
before resuming work in the talent brokerage business.
Network Communications Group, Ltd.;
Alliance Communications, Inc.; Joseph Messina; Oliver Porter
The Commission filed a complaint alleging that the defendants
misrepresented their offering of application services for specialized
mobile radio and paging licenses issued by the Federal Communications Commission (FCC). The defendants allegedly misrepresented
that consumers would receive FCC licenses through their services and
misrepresented the investment value of the licenses. The Commission is seeking permanent injunctive relief.
Oasis Southwest, Inc.; Ray Jojola; Michael A. Portalatin
The Commission filed a complaint alleging that Oasis Southwest,
a telemarketer, and two principals conducted a fraudulent prize
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Appendix

promotion. The complaint alleged that Oasis Southwest promised
consumers that they would receive an award if they purchased “Say
No to Drugs” paraphernalia and that the award would be worth more
than the purchase cost. However, the awards consumers received, if
any, were allegedly not worth more than what the consumers paid. In
addition, the complaint alleged that the defendants violated the
Telemarketing Sales Rule by failing to disclose that no purchase was
required to enter the promotion or to win a prize. The Commission
is seeking a permanent injunction and consumer redress.
Omega Promotions, Inc.; Regency Services, Inc.;
Richard Devon Grant; Lisa Phillips (a/k/a Lisa Warnock Grant,
Lisa Marie Warnock, and Lisa Phillips Warnock);
Michael Warnock
The Commission filed a complaint alleging that Omega, Regency,
and their corporate officers engaged in the fraudulent telemarketing
of employment services. According to the complaint, the defendants
conducted multiple operations promoting job openings, charging
advance fees, and debiting consumers’ bank accounts without
authorization. The Commission is seeking a court order permanently
barring the challenged practices and ordering the defendants to pay
redress to injured consumers.
O’Neill, Incorporated
The Commission filed a complaint and a consent decree against
O’Neill, the largest seller of wetsuits in the United States. The
company agreed to settle allegations that it failed to accurately list the
fiber content of its garments, in violation of federal law and a
previous consent order. According to the complaint, in 1992 the
Commission issued a consent order settling allegations that O’Neill
violated the Textile Fiber Products Identification Act by mislabeling
certain wetsuits. Since that time, the company has sold thousands of
wetsuits labeled as 100 percent nylon bonded to neoprene, even
though they also contained polyester bonded to neoprene. The
proposed settlement requires payment of a $10,000 civil penalty and
permanently bars O’Neill from future violations of the order.

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Pioneer Communications of Nevada, Inc.;
Glen E. Burke; Mike Luther
The Commission filed a complaint alleging that Pioneer and its
officers violated the Franchise Rule by failing to give investors
required pre-purchase information. The defendants sold business
ventures consisting of investments in pay-per-call information or
entertainment programs that consumers access by calling 900numbers. The Commission is seeking a court order that would
include consumer redress or disgorgement of illegal profits to the
U.S. Treasury and that would bar the defendants from similar
deceptive practices in the future.
Publishers Award Bureau;
Marc Duboise; Gerald E. LaFrance; Kenneth E. Nelson
The Commission filed a complaint alleging that Publishers Award
Bureau sends solicitations to consumers telling them that they are
“guaranteed to win” seemingly valuable prizes; however, when
consumers call to claim their prizes, they are told they must pay
several hundred dollars for magazine subscriptions to be eligible. In
addition, according to the complaint, the prizes actually won are of
little value. The complaint also alleged that the company violated the
Telemarketing Sales Rule by failing to disclose that no purchase was
required to enter the promotion or to win a prize. The Commission
is seeking a permanent injunction and consumer redress.
Silver State Western Publishing, Inc. (d/b/a Prime Time Marketing
and Prime Time Publishing);
John A. Pieri
The Commission filed a complaint alleging that Silver State,
doing business as Prime Time, and principal John Pieri violated the
Telemarketing Sales Rule in connection with a “Say No to Drugs”
program. The complaint alleged that the defendants enticed consumers into purchasing materials or magazine subscriptions by telling
them they would receive “extremely valuable” prizes or awards in
exchange for their purchases, which was a misrepresentation. The
court ordered a temporary halt to the allegedly deceptive prizepromotion solicitation scheme. The Commission is seeking permanent injunctive relief and redress for injured consumers.
92

Complaints Filed in District Court

Appendix

Sparta Chem, Inc.; Dennis J. Saccurato (d/b/a Compu-Kleen, Inc.)
The Commission filed a complaint alleging that the defendants,
office supply telemarketers, violated the Telemarketing Sales Rule by
sending unordered supplies to small businesses and nonprofit
organizations, followed by invoices charging inflated prices. When
victims complained or tried to return the goods, they were allegedly
harassed and charged substantial “restocking” or shipping fees. The
Commission is seeking a permanent injunction and consumer redress.
Student Aid Incorporated;
Adel Kovaleva; Adel Tager; Raimma Tagiev
The Commission filed a complaint alleging that the defendants
falsely represented their ability to help students obtain scholarships
or grants. According to the complaint, the defendants told consumers
that they could obtain at least $1,000 in scholarships or grants, but
provided lists of unsuitable or expired scholarships and grants. They
also required students to provide rejection letters from each source to
get promised refunds and debited consumers’ checking accounts
without authorization. The Commission obtained a temporary
restraining order and is seeking a permanent injunction and consumer
redress.
Student Assistance Services, Inc.; Student Financial Services, Inc.;
Fred Markowitz; Donald McGovern
The Commission filed a complaint alleging that the defendants
offered fraudulent scholarship search services for an upfront fee and
guaranteed to refund the fee if students did not get a scholarship or
grant. According to the complaint, the defendants provided lists of
unsuitable and expired scholarships or no lists at all and did not honor
their refund policy. The Commission obtained a temporary restraining order and is seeking a court order permanently barring the
defendants from similar schemes and requiring them to give refunds
to their customers.
Telecommunications Protection Agency, Inc.;
Charles Fulton; Jennifer Fulton

93

Federal Trade Commission
The Commission filed a complaint alleging that Telecommunications Protection and its principals violated the Telemarketing Sales
Rule. According to the complaint, Telecommunications Protection
claimed that, for an upfront fee of $5,000 or more, it would assist
consumers in recovering money that they had lost in previous
telemarketing schemes. In fact, the complaint alleged that, in most if
not all instances, the money was not recovered. The Commission is
seeking a permanent injunction and consumer redress.
Tower Cleaning Systems, Inc.; David A. Gansky
The Commission filed a complaint against Tower, which has
commercial janitorial cleaning franchises in 11 states, alleging that
the company and its president violated the Franchise Rule. The
complaint alleged that the defendants made inflated earnings claims,
did not give required pre-purchase information to potential franchisees, and refused to make refunds as promised in its contracts. In
a consent decree filed with the complaint, Tower agreed to pay
$50,000, which will be used for consumer redress or disgorged to the
U.S. Treasury. The proposed decree would prohibit the defendants
from such violations of the Rule in the future.
Universal Credit Corporation
(Gabrielle Ellis and Mark Thomas Ellis, d/b/a)
A federal district court ordered a temporary halt to an allegedly
deceptive “credit repair” scheme run by two individuals doing
business as Universal Credit. The order followed a Commission
complaint alleging that the defendants falsely represented that they
could remove negative information from consumers’ credit files, even
when the information was accurate. The complaint also alleged that
the defendants made unauthorized withdrawals from consumers’
checking accounts and falsely implied that they had posted a bond to
cover money-back guarantees. The Commission is seeking a court
order permanently prohibiting the deceptive practices and requiring
a monetary payment to be used for refunds for consumers.
USA Channel Systems, Inc.; Two-Way Systems, Inc.;
Charles Bernard Bayne (d/b/a Page 8, as co-partner);
Rick Havil (d/b/a Page 8, as co-partner)

94

Complaints Filed in District Court

Appendix

The Commission filed a complaint alleging that two companies,
both jointly run by two individuals, ran a fraudulent application mill
for federal paging licenses. According to the complaint, the defendants misrepresented the lease or resale value of the licenses, the
number of licenses available in a given geographical area, and the
income or profit that consumers could realize from purchasing the
licenses. The Commission is seeking a permanent injunction and
monetary relief.
USA Credit Services, Inc.; Steven Spence
The Commission obtained a temporary restraining order and an
asset freeze against USA Credit and its president, Steven Spence.
The Commission filed a complaint alleging that Spence violated the
Telemarketing Sales Rule by making false claims about his credit
repair service. According to the complaint, Spence claimed that he
could remove negative information from consumers’ credit reports
even if the information was accurate and timely. In addition, Spence
allegedly violated the Rule by seeking an upfront fee for his services.
The Commission is seeking permanent injunctive relief and consumer
redress.
Worldwide Wallcoverings & Blinds, Inc.;
Martha Kazak; Bruce Sears
The Commission obtained a federal court order temporarily
halting the operations of Worldwide, a company that advertised
discount wallpaper and window blinds and promised delivery within
two or three days. The Commission filed a complaint alleging that
Worldwide defrauded thousands of customers by, in many instances,
simply taking their money and not shipping any merchandise at all.
According to the complaint, the company obtained millions of dollars
through this massive fraud, which prompted record numbers of
complaints to Better Business Bureaus and the Illinois Attorney
General’s office. The Commission asked the court to issue a
permanent injunction against Worldwide and its principal officers and
to provide for a consumer redress fund.

95

Federal Trade Commission
PRELIMINARY INJUNCTIONS
COMPETITION MISSION
COMPETITION MISSION (SUMMARY)
Title

Number

Action Date

Blodgett Memorial Medical
Center

951 0126

01/19/96

Horizontal Merger

Inpatient Hospital
Services

Questar Corporation

961 0001

12/27/95

Horizontal Merger

Natural Gas Transmission

Rite Aid Corporation

961 0020

04/17/96

Horizontal Merger

Drug Stores

COMPETITION MISSION
(DETAIL)

Type of Matter

Product/Service

Blodgett Memorial Medical Center; Butterworth Hospital
The Commission filed a motion for a preliminary injunction to
block the proposed merger of Blodgett Memorial Medical Center and
Butterworth Hospital, the two largest hospitals in Grand Rapids,
Michigan, alleging that the merger would substantially reduce
competition for general acute care inpatient hospital services in the
area. On September 26, 1996, the U.S. District Court for the Western
District of Michigan, Southern Division, denied the Commission’s
request for an injunction. The Commission has appealed the denial
of the request for an injunction to the U.S. Court of Appeals for the
Sixth Circuit.
Questar Corporation
Questar abandoned its plans to acquire a 50-percent ownership
interest in Kern River Gas Transmission Company after the
Commission filed a motion in federal district court for a preliminary
injunction to bar the transaction. According to the complaint, the
consummation of the acquisition would give Questar control over the
transmission of natural gas to industrial customers in the Salt Lake
City area, which would reduce competition between the two firms
and lead to higher prices. The court dismissed the case without
prejudice.

96

Preliminary Injunctions

Appendix

Rite Aid Corporation; Revco D.S., Inc.
Rite Aid abandoned its proposed $1.8 billion acquisition of Revco
after the Commission voted to seek a preliminary injunction in federal
court to block the transaction. The Commission was set to charge
that the merger of the two largest retail drug store chains in the
United States would substantially reduce competition for prescription
drugs sold in retail pharmacy outlets in numerous geographic areas.
Rite Aid withdrew its tender offer before the Commission could file
its motion in court.

97

Federal Trade Commission
PERMANENT INJUNCTIONS
CONSUMER PROTECTION MISSION
50
40
30
20
10
0
1992

1993

1994

1995

1996

CONSUMER PROTECTION MISSION (SUMMARY)
Number

Action
Date

Acme Vending Company

X950095

02/28/96

Franchise Rule

Vending Machine Business
Opportunity

(Allied Snax, Inc.)
James L. Roche

X960123

05/24/96

Franchise Rule

Snack Food Business
Opportunity

Allstate Business Consultants
Group, Inc.

X950061

08/30/96

Franchise Rule

Vending Machine Business
Opportunity

(American Vending Group, Inc.)
Kenneth Sterling

X950083

05/21/96

Franchise Rule

Display Rack Business
Opportunity

Building Inspector of America,
Inc., The

X940061

06/17/96

Franchise Rule

Home Inspection Service
Franchises

Cambridge Exchange, Ltd., The

X930047

02/08/96

Investment Fraud

Artwork

Diamond Rug and Carpet Mills,
Inc.

X960003

12/12/95

Textile Fiber
Product
Identification Act

Carpets

Georgetown Galleries, Inc.

X960010

11/29/95

Investment Fraud

Art Prints

Giving You Credit, Inc.

X960101

04/12/96

Telemarketing Sales
Rule and Fair Credit
Reporting Act

Credit Repair

Title1

98

Type of Matter

Product/Service

Permanent Injunctions

Appendix

Title1

Number

Action
Date

Infinity Corporation
(Makiko Kato, d/b/a)

X950097

03/14/96

Franchise Rule

Medical Billing Service
Business Opportunity

Ivory Jack’s Trading Company,
Inc.
Northwest Tribal Art, Inc.

X960052

05/08/96

Authenticity Fraud

Artwork – Native American
Style

X960052

05/08/96

(Meridian Capital Management,
Inc.)
Angelo DeLon

X950060

04/25/96

Telemarketing Fraud

Investment Scheme
“Recovery Room”

North East Telecommunications,
Ltd.

X960082

09/20/96

Investment Fraud

Paging License Services

Nu-Idea Technologies, Inc.
T. Randall Bridges
James R. Davis

X950079
X950079
X950079

04/12/96
04/12/96
04/12/96

Franchise Rule

Vending Machine Business
Opportunity

Ray Williams Funeral Home, Inc.

X960019

01/12/96

Funeral Rule

Funeral Services

(Second Income, Inc.)
Glenn Rosofsky

X950073

11/27/95

Franchise Rule

Vending Machine Business
Opportunity

Showcase Distributing, Inc.

X950054

07/08/96

Franchise Rule

Vending Machine Business
Opportunity

Surface Science Corporation

X950100

02/14/96

Franchise Rule

Engine Lubricant Business
Opportunity

(Telecommunications of America,
Inc.)
Robert Diehl

X950050

03/14/96

Franchise Rule

Pay Telephone Business
Opportunity

X950062
X950062
X950062

03/26/96
03/26/96
03/26/96

Telemarketing Fraud

“Better Business Bureau”
Scheme

X960035

05/10/96

Funeral Rule

Funeral Services

United States Business Bureau,
Inc.
Reuben Borja
Paul Kalomeris
William Robert O’Rourke
Yasik Funeral Home – Stanley S.
Yasik, Inc.
1

Type of Matter

Product/Service

A company name shown in parentheses is for identification of the case only; the company is not a defendant in the
item shown in the table.

99

Federal Trade Commission
CONSUMER PROTECTION
MISSION (DETAIL)

Acme Vending Company; Peter K. Smith
As part of a nationwide crackdown by federal and state regulators
on business opportunity fraud, the Commission announced a
settlement with Acme Vending and Peter Smith, marketers of snack
and soft drink vending machine franchises. The settlement requires
that the defendants comply with the Franchise Rule and prohibits
them from making false or misleading statements when offering any
franchise or business opportunity in the future.
(Allied Snax, Inc.)
James L. Roche
James Roche, individually and as an officer and director of Allied
Snax, a now-defunct company, settled allegations that he misrepresented earnings claims and other aspects of his snack food
distributorship programs. In addition, he agreed to settle allegations
that he violated the Franchise Rule by failing to provide prospective
franchisees with documentation required by the Rule. The settlement
permanently bans Roche from promoting or selling any franchise or
business venture.
Allstate Business Consultants Group, Inc.;
Enrico Pace; Edward Wong
Allstate Business Consultants, its president, and its CEO agreed
to permanently discontinue their marketing and sale of franchises for
candy vending machines. They also agreed to post a $1.5 million
bond for protection of their customers before engaging in future
telemarketing activities. The ban and bond were included in an
agreement settling allegations that the defendants made false claims
about the earnings potential and other aspects of their business
opportunities and also used false references to induce consumers to
purchase the franchises, in violation of the Franchise Rule.
(American Vending Group, Inc.)
Kenneth Sterling
The Commission settled with Kenneth Sterling, president of
American Vending, alleging that the company violated the Franchise
Rule in its sale of display rack vending opportunities for gourmet
100

Permanent Injunctions

Appendix
coffees, by failing to provide critical pre-purchase information to
potential buyers and making exaggerated earnings claims. The
consent decree prohibits Sterling from violating the Rule and from
making false statements or misrepresenting material aspects of any
business venture he offers.
Building Inspector of America, Inc., The
The Building Inspector, which offered franchises for home
inspection services, settled allegations that it failed to disclose to
potential purchasers the litigation and bankruptcy history of the
company and two of its officers. The Commission also alleged that
the company made unsubstantiated claims about the earnings
franchise buyers could expect, among other violations of the
Franchise Rule. The settlement bars The Building Inspector from
future violations of the Rule. In separate settlements, three of the
company officers agreed to pay civil penalties (see – page 111).
Cambridge Exchange, Ltd., The; Wellington Art, Ltd., Inc.;
Samuel Stier; Steven Stier
Two companies and two individuals settled allegations that they
participated in a deceptive scheme to telemarket animation cels and
other artworks to consumers nationwide. The Commission alleged
that the defendants solicited consumers to purchase artworks by
misrepresenting the investment value and profit potential of the art
and also ran a deceptive prize-promotion scheme in which the
artwork won was worth less than the “shipping and handling” fees
consumers had to pay. The settlement prohibits the defendants from
making false claims about the value or investment profit potential of
any artwork or other item in the future.
Diamond Rug and Carpet Mills, Inc.
An investigation by the Commission and the Department of
Justice revealed numerous instances in which Diamond apparently
falsely labeled the fiber content and weight of its carpets, both of
which are critical to carpet wear and cost. The investigation led to a
guilty plea by the company to criminal violations of the Textile Act
and a criminal fine of $100,000. In addition, the company signed a
consent decree settling allegations of civil violations of the same
101

Federal Trade Commission
statute. The consent decree requires the company to comply with the
Textile Act in the future and to set up a control system to ensure
proper fiber identification and prohibits it from misrepresenting the
fiber weight of carpets it manufactures and distributes.
Georgetown Galleries, Inc. (Unique Selling
Propositions, Inc., d/b/a);
Richard Spring
Unique Selling Propositions, doing business as Georgetown
Galleries, and its owner settled allegations that they misrepresented
the investment value of the antiquarian art prints they sold. Under the
settlement, Richard Spring and his company are barred from misrepresenting the investment value of the prints they sell and are
required to disclose that buying artwork as an investment is high risk.
Giving You Credit, Inc.; Clear Your Credit, Inc.;
Partners in Vision International, Inc.;
Keith Berggren; Lois Symington; Paul Symington
The Commission alleged that the three companies and their
principal officers developed a multi-level marketing plan to sell credit
repair services through representatives who earned commissions on
their sales and bonuses for recruiting new sales representatives.
According to the complaint, one tactic the defendants used was to
falsely claim that the Fair Credit Reporting Act requires deletion of
an entire negative entry if it is not 100 percent accurate. The
defendants settled the allegations under a consent decree that
prohibits them from engaging in similar practices and requires them
to cease collection efforts.
Infinity Corporation (Makiko Kato, d/b/a); Gregory Duvall
The Commission approved a settlement with Makiko Kato, doing
business as Infinity, and principal Gregory Duvall. The company
offers business opportunities to provide medical billing services using
Infinity software. The settlement requires that the defendants comply
with the Franchise Rule and prohibits them from making false or
misleading statements when offering any franchise or business
opportunity in the future.

102

Permanent Injunctions

Appendix
Ivory Jack’s Trading Company, Inc.; Northwest Tribal Art, Inc.;
Ngoc Q. Ly; Kurt L. Tripp
Two companies and their owners settled Commission allegations
that they falsely represented that Native-American-style carvings they
offered for sale were authentic Native-made artwork. As part of the
settlement, the defendants are prohibited from misrepresenting that
their artwork is made by Native Americans and are required to follow
procedures to prevent such misrepresentations at the retail level for
products they offer at wholesale. In addition, the two individual
defendants are each required to pay $20,000 as disgorgement.
(Meridian Capital Management, Inc.)
Angelo DeLon
Angelo DeLon settled allegations stemming from his participation
in an allegedly deceptive telemarketing scheme, run by Meridian
Capital, that purported to recover money consumers had lost to
telemarketing investment fraud. Under the terms of the settlement,
DeLon is permanently prohibited from engaging in misrepresentations regarding any material aspect of telemarketing or recovery room
services and is required to post a $50,000 bond before engaging in
telemarketing or assisting others engaged in telemarketing.
North East Telecommunications, Ltd.; Strategies Telecom, Inc.;
Tannen Advertising, Inc.; Daniel L. Coutinho; Mark R. Goldstein
(a/k/a Steve Collins, Steven Roberts, and Steve Rogers);
Dilraj Mathauda (a/k/a Roger Ford);
Anthony Vandeputte (a/k/a Ron Stewart)
The Commission negotiated a settlement with Strategies Telecom,
which was part of a common enterprise that offered investments in
paging licenses issued by the Federal Communications Commission
(FCC). According to the Commission, the defendants (including
three companies and four individuals who were executives or
managers of the companies) misrepresented a number of facts,
including that the licenses were valuable investments, that the fee
charged was for studies required by the FCC, and that North East
would assist clients in marketing their licenses. In addition, the
defendants falsely represented that North East was a member of trade
associations that deal with the FCC and its regulations. The
103

Federal Trade Commission
settlement with Strategies Telecom prohibits the company from
making the challenged false claims. Charges against the other
defendants are pending.
Nu-Idea Technologies, Inc.; Film Centers of America, Inc.;
Mr. Popcorn, Inc.; T. Randall Bridges;
James R. Davis (a/k/a Ron Davis); Joseph Gilmore
The Commission reached three settlements with Nu-Idea, two
related firms, and three principals, who sold vending machine
business ventures. The Commission alleged that the defendants
violated the Franchise Rule by failing to give potential buyers
required disclosures and documentation of evidence supporting
earnings claims. The settlements bar future violations of the Rule.
Ray Williams Funeral Home, Inc.;
David L. Northern, Jr.; Sarah C. Northern; Jeffrey L. Rhodes
Ray Williams Funeral Home and its corporate officers settled
allegations that they violated the Funeral Rule by failing to give test
shoppers a required general price list. The Rule is designed to ensure
that consumers know they can purchase only the goods and services
they want or need. The consent decree prohibits future violations of
the Rule.
(Second Income, Inc., d/b/a Creative Promotions
and Silver Shots, Inc.)
Glenn Rosofsky
The Commission negotiated a settlement with an individual
named in the business opportunity fraud case against Second Income.
The Commission alleged that Glenn Rosofsky enticed consumers
nationwide into purchasing coin-operated game vending machines as
business opportunities by making false claims about potential
earnings, profitable locations, and compliance with state licensing
laws. The Commission also alleged that the defendant violated the
Franchise Rule by failing to provide required disclosure documents
to prospective franchisees. The settlement prohibits Rosofsky from
making deceptive claims about any business opportunity and from
violating the Franchise Rule in the future. It also requires him to post
a $1 million performance bond for the protection of future customers.
104

Permanent Injunctions

Appendix
Showcase Distributing, Inc.; Dale Merritt (d/b/a VC Network)
Showcase Distributing and Dale Merritt, also doing business as
VC Network, settled allegations that they violated the Franchise Rule
by misrepresenting the earnings potential of business opportunities
featuring vending machines for gourmet popcorn and other products.
The settlement bars them from misrepresenting future business
opportunities and requires them to comply with the Franchise Rule.
Merritt is also required to post a performance bond of $200,000 if he
wishes to engage in the sale or promotion of any franchise or business
venture in the next ten years.
Surface Science Corporation; David J. Kriel
The Commission approved an agreement with Surface Science
and its president, settling allegations of business opportunity fraud.
The company was attempting to market business opportunities for the
right to sell Megalon engine lubricant, which purportedly guaranteed
against engine wear. The settlement requires that the defendants
comply with the Franchise Rule and prohibits them from making false
or misleading statements when offering any franchise or business
opportunity. This was the first franchise case in which the
Commission was able to act before any actual sales were made and,
thus, before any consumers lost their investments.
(Telecommunications of America, Inc.)
Robert Diehl
The Commission obtained a settlement with one of the corporate
officers of Telecommunications of America, a company charged with
business opportunity fraud involving pay telephone business ventures.
Under the settlement, Robert Diehl must comply with the Franchise
Rule in the future, which requires that certain documentation be given
to prospective buyers, and he is prohibited from making false or
misleading statements when offering any franchise or business
opportunity. Additional settlements require two other officers to pay
consumer redress (see – page 135).

105

Federal Trade Commission
United States Business Bureau, Inc.
(d/b/a National Business Bureau)
Reuben Sierra Borja (a/k/a R.B. Borja and Reuben Sierra);
Paul Kalomeris (a/k/a Andrew North);
William Robert O’Rourke (a/k/a Billy Ray, R.C. Reinhold,
Billy Ray Roark, Bill Roberts, Andrew Joseph Rourke,
Terrence Michael Rourke, and William Rourke)
The Commission reached agreements with United States Business
Bureau and three of its officers, settling allegations that they ran a
fraudulent “better business bureau” that consumers could call for
information on business opportunity marketers. Some of the
businesses covered by the sham better business bureau were targeted
in other cases brought by the Commission as part of the same
nationwide crackdown. The settlements prohibit the officers from
falsely implying that they are affiliated with a Better Business Bureau
or with the government.
Yasik Funeral Home – Stanley S. Yasik, Inc.;
Joseph S. Yasik; Stanley J. Yasik, Jr.
Yasik Funeral Home and two corporate officers settled allegations
that they violated the Funeral Rule in failing to give test shoppers the
required general price list of goods and services. The consent decree
prohibits the defendants from violating the Rule in the future.

106

Civil Penalty Actions

Appendix
CIVIL PENALTY ACTIONS
COMPETITION MISSION
COMPETITION MISSION (SUMMARY)

Title

Number

Action Date

Automatic Data Processing,
Inc.

951 0113

03/27/96

Premerger Notification

Salvage Yard
Information Systems

Federated Department Stores,
Inc.

931 0140

12/09/95

Distributional
Arrangements

Retail Department
Stores

Foodmaker, Inc.

941 0056

08/26/96

Premerger Notification

Restaurants

Sara Lee Corporation

921 0023

02/09/96

Premerger Notification

Shoe Care Products

Titan Wheel International, Inc.

941 0110

05/10/96

Premerger Notification

Tires and Inner Tubes

COMPETITION MISSION
(DETAIL)

Type of Matter

Product/Service

Automatic Data Processing, Inc.; AutoInfo Inc.;
Orion Management Corp.
Automatic Data Processing agreed to pay $2.97 million in civil
penalties to settle charges that it failed to include key competitive
documents in a premerger filing for its acquisition of AutoInfo. The
civil penalty settlement is the third largest ever obtained for a
violation of the Hart-Scott-Rodino (HSR) Antitrust Improvements
Act of 1976 and is also the largest ever obtained under charges for
failure to submit documents required by item 4(c) of the Notification
and Report Form. The complaint and consent judgment were filed in
the U.S. District Court for the District of Columbia by Commission
attorneys acting as special attorneys to the U.S. Attorney General.
Federated Department Stores, Inc.
One of the country’s largest operators of department stores agreed
to settle charges that it violated a 1979 consent order prohibiting it
from interfering with the entry of a competitor into a shopping mall
in which it operates a store. The complaint charged that Federated
threatened to block another tenant from buying a department store in
a Florence, Kentucky, mall where Federated operates a Lazarus

107

Federal Trade Commission
department store. Under terms of the consent judgment, Federated
agreed to pay $250,000 in civil penalties.
Foodmaker, Inc.; Chi-Chi’s, Inc.
Foodmaker paid $1.45 million in civil penalties to settle charges
that its Chi-Chi’s subsidiary failed to comply with the notification and
filing requirements under the HSR Act before it acquired Consul,
Inc., operator of 26 Chi-Chi’s franchises. The complaint was filed in
the U.S. District Court for the District of Columbia by Commission
attorneys acting as special attorneys to the U.S. Attorney General.
Sara Lee Corporation
Sara Lee agreed to pay $3.1 million, the largest civil penalty ever
imposed under the HSR Act, for allegedly failing to notify federal
antitrust agencies before acquiring the shoe care products assets of
Reckitt & Colman plc. The complaint was filed in the U.S. District
Court for the District of Columbia by Commission attorneys serving
as special attorneys to the U.S. Attorney General. A consent order,
finalized in 1994, required divestiture of the Griffin and Esquire
brands of shoe polish in settlement of charges that the acquisition
could create a monopoly in the U.S. market for shoe care products.
Titan Wheel International, Inc.; Pirelli Armstrong Tire Corporation
Titan Wheel International agreed to pay a $130,000 civil penalty
to settle charges that it acquired a Pirelli Armstrong plant in Des
Moines before notifying the two federal antitrust agencies and
observing the statutory waiting period. According to the complaint,
the parties transferred control of the Pirelli Armstrong assets three
days before filing notification under the HSR Act with the Commission and the Department of Justice. The complaint and proposed
consent judgment were filed in the U.S. District Court for the District
of Columbia by Commission attorneys acting as special attorneys to
the U.S. Attorney General.

108

Civil Penalty Actions

Appendix
CIVIL PENALTY ACTIONS
CONSUMER PROTECTION MISSION
60
50
40
30
20
10
0
1992

1993

1994

1995

1996

CONSUMER PROTECTION MISSION (SUMMARY)
Number

Action
Date

A.H. Peters Funeral Home of Grosse
Pointe, Inc.

X960013

12/21/95

Funeral Rule

Funeral Services

All Snax, Inc.

X960121

09/27/96

Franchise Rule

Display Rack
Business Opportunity

Allied Bond & Collection Agency, Inc.

X960117

02/16/96

Fair Debt Collection
Practices Act

Debt Collection

American Direct Marketing, Inc.

X960040

03/28/96

Mail/Telephone Order
Merchandise Rule

Mail-Order
Merchandise

America’s Radio Transmitter, Ltd.

X950084

05/24/96

Franchise Rule

Radio Transmitter
Business Opportunity

Beeson Funeral Home, Inc.

X960054

06/06/96

Funeral Rule

Funeral Services

(Building Inspector of America, Inc.,
The)
Lawrence Finkelstone
Beverly Tisei
Ralph Tisei

X940061
X940061
X940061

10/25/95
04/03/96
06/19/96

Franchise Rule

Home Inspection
Service Franchises

Chynoweth Corporation, d/b/a IS
International

X960092

07/25/96

Fair Debt Collection
Practices Act and Fair
Credit Reporting Act

Debt Collection,
Tenant Screening

Dahlberg, Inc.

X940021

11/22/95

Order Violation

Hearing Aids

Title

109

Type of Matter

Product/Service

Federal Trade Commission
Number

Action
Date

Daniels & Hutchison Funeral Homes
(Robert C. Hutchinson, Jr., d/b/a)
House of Wright Mortuary, Inc.
J. Llewellyn Bell Memorial Chapel,
Inc.
John F. Yasik, Inc.

X960031

05/10/96

X960032
X960033

05/10/96
05/10/96

X960034

05/10/96

Doctors Eyecare Center, Inc.

X960061

Double Z Manufacturing, Inc.

Title

Type of Matter

Product/Service

Funeral Rule

Funeral Services

06/25/96

Prescription Release
Rule

Eyeglasses and Eye
Examinations

X960046

04/04/96

Care Labeling Rule

Women’s Apparel

Eggland’s Best, Inc.

X960029

03/14/96

Order Violation

Eggs

Eton Derma Laboratories

X960001

08/06/96

Order Violation

Acne Treatment

Family Memorial Funeral Home of
Yazoo City, Inc.
Glenwood Funeral Homes, Inc.
Gregory Funeral Home, Inc.
Robbins Funeral Home
(Yolande T. Robbins, d/b/a)
Stricklin-King Funeral Home, Inc.
W.H. Jefferson Funeral Home
Williams Funeral Service
(Matthew Williams, Jr., d/b/a)

X960105

09/11/96

Funeral Rule

Funeral Services

X960102
X960104
X960106

09/11/96
09/11/96
09/11/96

X960103
X960107
X960108

09/11/96
09/11/96
09/11/96

Firstlight Entertainment, Inc.

X950096

03/14/96

Franchise Rule

Display Rack
Business Opportunity

G & L Financial Services, Inc., d/b/a
Goldman & Levine

X960066

06/04/96

Fair Debt Collection
Practices Act

Debt Collection

Glass Funeral Home, Inc.
M.H.I. Group, Inc.
Mark Curry’s Funeral Home, Inc.
Thomas Aikens, Inc.

X960020
X960018
X960014
X960021

01/16/96
02/12/96
01/22/96
01/18/96

Funeral Rule

Funeral Services

Global Gumballs, Inc.

X950085

06/04/96

Franchise Rule

Vending Machine
Business Opportunity

Hasbro, Inc.

X960088

08/20/96

Order Violation

Toys

Island Automated Medical Services,
Inc.

X950098

08/21/96

Franchise Rule

Medical Billing
Service Business
Opportunity

J.C. Pro Wear, Inc.

X940045

11/08/95

Franchise Rule

Sports Apparel
Franchise

110

Civil Penalty Actions

Appendix
Number

Action
Date

Type of Matter

Laura Ashley, Inc.

X960086

08/13/96

Care Labeling Rule

Women’s and
Children’s Apparel

Lewis & Ribbs Mortuary, Inc.

X960116

06/12/96

Funeral Rule

Funeral Services

Li’l Snacks, Inc.

X950101

05/08/96

Franchise Rule

Vending Machine
Business Opportunity

Modern Management Systems, Inc.

X950088

04/29/96

Franchise Rule

Vending Machine
Business Opportunity

National Tech Systems, Inc.

X950090

06/25/96

Franchise Rule

Display Rack
Business Opportunity

Nibblers, Inc.

X950091

11/01/95

Franchise Rule

Vending Machine
Business Opportunity

Quartercall Communications, Inc.

X950094

12/28/95

Franchise Rule

Pay Telephone
Business Opportunity

Restland Funeral Homes, Inc.

X920009

09/19/96

Funeral Rule

Funeral Services

STP Corporation

X960004

12/20/95

Order Violation

Motor Oil Additives

Summit Communications, Inc.

X950099

05/28/96

Franchise Rule

Pay Telephone
Business Opportunity

Tanzara International, Inc.

X960109

09/04/96

Care Labeling Rule

Women’s Sports
Apparel

Telebrands Corporation

X960111

09/23/96

Mail/Telephone Order
Merchandise Rule

Mail-Order
Merchandise

Tutor Time Child Care Systems, Inc.

X960094

08/05/96

Franchise Rule

Day Care Center
Franchises

United Creditors Alliance Corporation

X960113

09/19/96

Fair Debt Collection
Practices Act

Debt Collection

W.W. Chambers, Co., Inc.

X950070

07/17/96

Funeral Rule

Funeral Services

Title

CONSUMER PROTECTION
MISSION (DETAIL)

Product/Service

A.H. Peters Funeral Home of Grosse Pointe, Inc.;
David L. Peters; Roy A. Peters
A.H. Peters and its officers agreed to pay a $60,000 civil penalty
to settle allegations that they violated the Funeral Rule. The
Commission alleged that they conditioned the furnishing of certain
111

Federal Trade Commission
funeral goods and services on the purchase of other goods and
services, failed to provide general price lists, and failed to give
properly itemized statements. Under the settlement, the defendants
are required to follow written procedures and to participate in a
training program to ensure that their employees comply with the
Funeral Rule in the future.
All Snax, Inc.; Harvey Waters
All Snax and its president agreed to a consent order under which
they are required to pay a $20,000 civil penalty to settle allegations
that they violated the Franchise Rule in their sale of display rack
distributorships for snack foods and related products. According to
the Commission, the defendants failed to give potential investors a
complete pre-purchase disclosure document about the business
opportunity they sold and documentation to support claimed earnings.
Under the provisions of the settlement, the defendants are permanently enjoined from future violations of the Rule.
Allied Bond & Collection Agency, Inc.
Allied Bond & Collection Agency settled allegations that it was
in violation of the Fair Debt Collection Practices Act (FDCPA),
which prohibits the use of threatening, harassing, and deceptive
tactics to collect debts. The Commission alleged that company
employees threatened to sue consumers when there was no reasonable
likelihood that the consumers would be sued and telephoned
consumers at work when they knew such calls were prohibited by the
consumer’s employer. The agreement requires the company to pay
a $140,000 civil penalty and prohibits it from future violations of the
FDCPA.
American Direct Marketing, Inc.; Herman S. Howard
The Commission obtained an agreement from American Direct
Marketing and its president to pay a $100,000 civil penalty as part of
a settlement of allegations that they violated the Mail/Telephone
Order Merchandise Rule, which requires merchandisers to ship items
ordered within a certain time period. The Commission alleged that
the mail-order company shipped products late, failed to properly
notify consumers of their option to cancel late orders, and sent refund
112

Civil Penalty Actions

Appendix
checks that bounced. The defendants are prohibited from violating
the Rule in the future.
America’s Radio Transmitter, Ltd.;
America’s Radio Transmitter, Inc.; Leon D. Swichkow
The two companies and their president agreed to pay a $10,000
civil penalty to settle allegations that they failed to give potential
investors presale disclosures about the business opportunities they
sold and documentation to support claimed earnings, as required by
the Franchise Rule. America’s Radio Transmitter issued franchises
to sell short-range AM radio transmitters for promotional use,
claiming investors could earn $120,000 a year. The settlement
prohibits the defendants from violating the Rule and from making
false statements or misrepresenting material aspects of any business
venture they offer.
Beeson Funeral Home, Inc.; James E. Beeson, Jr.
Beeson Funeral Home and owner James Beeson settled allegations that they violated the Funeral Rule by failing to provide
consumers with price lists and by bundling funeral goods and
services. The defendants agreed to pay a civil penalty of $20,000 and
to comply with the Rule in the future.
(Building Inspector of America, Inc., The)
Lawrence Finkelstone; Beverly Tisei; Ralph Tisei
Three officers of The Building Inspector, which offered franchises
for home inspection services, settled allegations that they failed to
disclose to potential purchasers the litigation and bankruptcy history
of the company and two of its officers. The Commission also alleged
that the defendants made unsubstantiated claims about the earnings
franchise buyers could expect, among other violations of the
Franchise Rule. The settlements bar the officers from future violations of the Rule and require civil penalty payments, as follows:
Lawrence Finkelstone, $5,000; Beverly Tisei, $10,000; Ralph Tisei,
$20,000.

113

Federal Trade Commission
Chynoweth Corporation (d/b/a IS International)
Chynoweth, doing business as IS International, a company that
performs screening of tenant applicants for apartments, executes
evictions, and acts as a collection agency for rent and damage
charges, agreed to settle allegations that it violated provisions of the
Fair Debt Collection Practices Act and the Fair Credit Reporting Act.
The Commission alleged that the company engaged in a wide range
of violations, including revealing consumers’ debts to third parties,
making harassing and abusive telephone calls, and misrepresenting
who it was or what legal action it might take. The company also
allegedly failed to correct inaccurate data about tenants in consumer
files it made available to potential landlords. Under the terms of the
settlement, IS International must pay a $10,000 civil penalty and is
enjoined from violating the laws in the future. In addition, the firm
and its employees are required to inform consumers of their
protections under the law.
Dahlberg, Inc.
Dahlberg agreed to pay a $2.75 million civil penalty to settle
allegations that it made numerous false and unsubstantiated claims for
its Miracle-Ear Clarifier, a “noise-suppression” hearing aid, in
violation of a 1976 Commission order. The settlement prohibits
future violations of the earlier order, which bars Dahlberg from
making false or unsubstantiated claims about the features, performance, uniqueness, superiority, or efficacy of its hearing aids. This is
the largest civil penalty ever obtained in a consumer protection case.
Daniels & Hutchison Funeral Homes
(Robert C. Hutchison, Jr., d/b/a);
House of Wright Mortuary, Inc.; Jacquita L. Wright;
Robert O. Wright;
J. Llewellyn Bell Memorial Chapel, Inc.; J. Llewellyn Bell;
John F. Yasik, Inc.; John P. Yasik, Jr.; John P. Yasik, III;
Stephanie A. Yasik
In a nationwide crackdown on funeral homes, four Delaware-area
funeral homes and their operators agreed to pay civil penalties as part
of agreements settling allegations that they violated the Funeral Rule.
The Commission alleged that the funeral homes failed to give test
114

Civil Penalty Actions

Appendix
shoppers the required general price list for goods and services and, in
some instances, failed to provide separate price lists for items not on
the general list. The agreements require the funeral homes to comply
with the Rule in the future and impose civil penalties as follows:
Robert Hutchison, doing business as Daniels & Hutchison, $3,500;
House of Wright and corporate officers Robert and Jacquita Wright,
$7,700; J. Llewellyn Bell Memorial Chapel and J. Llewellyn Bell,
$3,200; John F. Yasik, Inc., and three corporate officers, $3,700.
Doctors Eyecare Center, Inc.; Daniel B. Shropshire
Doctors Eyecare, which offers eye examinations and eyeglasses,
and its president agreed to pay a $10,000 civil penalty to settle
allegations that they failed to provide many patients with a copy of
their eyeglass prescription after completing an eye examination and
that they unlawfully included on their prescription forms a waiver of
liability as to accuracy. These practices violate the Prescription
Release Rule, which requires an ophthalmologist or optometrist to
give a copy of the patient’s eyeglass prescription to the patient
immediately after the eye examination is over. In addition to
requiring the civil penalty, the settlement prohibits the defendants
from further violating the Rule. This is the first case alleging
violation of this Rule, which is intended to provide consumers with
a choice of eyeglass providers and the opportunity to shop around for
competitive prices.
Double Z Manufacturing, Inc.
Double Z Manufacturing, a women’s clothing manufacturer,
agreed to pay a $50,000 civil penalty to settle allegations that it put
faulty care labeling in several styles of formal and party dresses. As
a result, the decorative trim or other parts of the garments were
damaged when they were dry-cleaned according to the labels, the
Commission alleged. Double Z Manufacturing also agreed to use
proper care instruction labels on its garments in the future, in
compliance with the Care Labeling Rule.
Eggland’s Best, Inc.
The Commission’s follow-up of its 1994 case against Eggland’s
led to another settlement with the company over the cholesterol115

Federal Trade Commission
related claims it has made in marketing its eggs, and this time the
settlement includes a civil penalty of $100,000. The Commission
alleged that Eggland’s advertising conveyed the same false and
unsubstantiated claims about the effect of its eggs on serum
cholesterol that were challenged in 1994. The consent decree
prohibits Eggland’s from violating the 1994 Commission consent
order in the future.
Eton Derma Laboratories; Atida Karr Enterprises, Inc.;
Atida H. Karr
The marketer of an over-the-counter acne treatment agreed to pay
a $200,000 civil penalty to settle allegations that infomercials representing the product as an effective treatment for severe or cystic acne
were deceptive. The Commission alleged that, at the time Atida Karr
and her companies made the claims, they did not have competent and
reliable scientific or medical evidence to support them. According to
the Commission, the recent claims also violate a 1979 order
prohibiting Karr from making unsubstantiated claims about the
effectiveness or superiority of any acne preparation she markets.
Family Memorial Funeral Home of Yazoo City, Inc.;
Michele Goodloe;
Glenwood Funeral Homes, Inc.; John Kamman, Jr.;
William D. Mobley, Sr.;
Gregory Funeral Home, Inc.; Vay Gregory McGraw;
Robbins Funeral Home (Yolande T. Robbins, d/b/a);
Stricklin-King Funeral Home, Inc.; Aaron S. King, Jr.;
David A. King;
W.H. Jefferson Funeral Home; James E. Jefferson, Jr.;
Williams Funeral Service (Matthew Williams, Jr., d/b/a)
In a sweep of funeral homes in Mississippi, the Commission
alleged that seven homes violated the Funeral Rule by failing to give
test shoppers the required general price list of funeral goods and
services. In some instances, the homes failed to provide supplemental
price lists for items not on the general lists. The settlements prohibit
the funeral homes from future violations of the Rule and require them
to pay civil penalties, as follows: Family Memorial, $1,500;
Glenwood, $16,500; Gregory, $1,000; Robbins, $1,000; StricklinKing, $10,500; W.H. Jefferson, $1,000; Williams, $1,000.
116

Civil Penalty Actions

Appendix
Firstlight Entertainment, Inc.; Michael Peters
The Commission announced a settlement with Firstlight Entertainment and corporate officer Michael Peters in connection with
allegations that they violated the Franchise Rule. The company
markets display rack distributorships for “collectable” comic books.
The Commission alleged that the company failed to give prospective
purchasers basic disclosure and earnings documentation, as required
by the Rule. The settlement requires the defendants to pay a $10,000
civil penalty and to comply with the Rule in the future and prohibits
them from making false or misleading statements when offering any
franchise or business opportunity.
G & L Financial Services, Inc. (d/b/a Goldman & Levine)
The Commission approved a consent agreement settling allegations that G & L Financial, doing business as Goldman & Levine,
violated the Fair Debt Collection Practices Act (FDCPA). According
to the Commission, Goldman & Levine violated the Act by disclosing
consumers’ debts to third parties, falsely stating or implying that
courts or law enforcement authorities had been contacted about the
debts, and using abusive language when talking to consumers, among
other things. Under the terms of the agreement, the defendant must
pay a $10,000 civil penalty and is permanently enjoined from future
violations of the FDCPA.
Glass Funeral Home, Inc.; James L. Glass, Sr.;
M.H.I. Group, Inc.; Funeral Services Acquisition Group, Inc.;
Douglas I. Kinzer
Mark Curry’s Funeral Home, Inc.; Mark III Funeral Home, Inc.;
Mark W. Curry, III;
Thomas Aikens, Inc.; Thomas Aikens; Yvonne J. Aikens
Four funeral home operators in Florida agreed to pay civil
penalties to settle allegations that they violated the Funeral Rule by
failing to give customers the required price list of funeral goods and
services. Some of the defendants also failed to provide supplemental
price lists and failed to disclose information that would help
consumers decide whether they needed to purchase certain items.
The companies and corporate officers agreed to comply with the Rule
in the future and to pay the following penalties: Glass Funeral Home
117

Federal Trade Commission
and its president, $4,000; M.H.I. Group, Funeral Services Acquisition, and Kinzer, an officer of both companies, $35,000; Mark
Curry’s, Mark III, and officer Curry, $11,000; Thomas Aikens, Inc.,
and its corporate officers, $9,000.
Global Gumballs, Inc.; Michelle Smith; Tim McCarty
The Commission settled with Global Gumballs and its officers in
connection with allegations that they violated the Franchise Rule in
the sale of gumball vending machine routes. The Commission
alleged that the defendants failed to provide critical pre-purchase
information to potential buyers and made exaggerated earnings
claims. The consent order prohibits the defendants from violating the
Rule and from making false statements or misrepresenting material
aspects of any business venture they offer. In addition, they are
required to pay a $50,000 civil penalty.
Hasbro, Inc.
Hasbro, a toy company, agreed to pay a $280,000 civil penalty to
settle allegations that it engaged in deceptive advertising in violation
of a 1993 consent order. The Commission alleged that a recent
Hasbro commercial for its Colorblaster paint sprayer toy appeared to
show that children could operate the toy with very little effort when,
in fact, a motorized air compressor was used during filming of the
commercial to provide the necessary pressure. The consent decree
prohibits the firm from using deceptive demonstrations or otherwise
misrepresenting the performance of any toy.
Island Automated Medical Services, Inc. (d/b/a Diversified Data
Services, Med Star USA, and Star Funding Group);
John Travlos
Island Automated Medical Services and its officer have agreed to
pay a $40,000 civil penalty to settle allegations that they failed to give
potential investors presale disclosures about the business opportunity
they sold and documentation to support claimed earnings, as required
by the Franchise Rule. The defendants sold medical claimsprocessing franchises. The settlement requires the defendants to
comply with all aspects of the Franchise Rule and prohibits them

118

Civil Penalty Actions

Appendix
from making false statements or misrepresenting material aspects of
any franchise or business they offer.
J.C. Pro Wear, Inc.; James L. O’Laughlin
J.C. Pro Wear and its principal officer agreed to settle allegations
of falsely claiming to be in compliance with the Franchise Rule and
with violating the Rule, in part, by failing to provide prospective
franchisees with required disclosure documents. The company offers
franchises for retail outlets that sell sports apparel in leased space in
Montgomery Ward stores. The settlement prohibits the defendants
from making similar misrepresentations and from violating the Rule
in the future and requires them to pay a civil penalty of $65,000.
Laura Ashley, Inc.
Laura Ashley, an importer and retailer of children’s and women’s
ready-to-wear clothes, agreed to pay a $60,000 civil penalty to settle
allegations that it violated the Care Labeling Rule, which requires that
clothing be labeled with written instructions for proper cleaning and
care. According to the Commission, Laura Ashley used symbols
rather than written instructions, in violation of the current Rule.
Under the agreement, the company will pay the civil penalty and will
be barred from future violations of the Rule.
Lewis & Ribbs Mortuary, Inc.; Lorenzo J. Lewis
Lewis & Ribbs Mortuary and its owner agreed to pay a $20,000
civil penalty to settle allegations that they failed to give consumers
general price lists and statements itemizing their purchases in the
form required by the Funeral Rule. Under the terms of the settlement,
in addition to paying the civil penalty, the defendants must comply
with the Rule in the future.
Li’l Snacks, Inc.; Cornelius (Eugene) Hartley; Nava Jo Hartley
The Commission reached a settlement with L’il Snacks and two
individuals in connection with allegations that they violated the
Franchise Rule. The Commission alleged that the defendants, who
offered business opportunities involving snack-food vending machine
routes, failed to give potential buyers detailed upfront disclosures and
119

Federal Trade Commission
documentation, as required by the Rule. The settlement requires the
defendants to pay a $20,000 civil penalty and prohibits them from
violating the Rule in the future.
Modern Management Systems, Inc. (d/b/a Nationwide Vending);
Margaret Reed Small
The Commission settled with Modern Management Systems and
its president in connection with alleged violations of the Franchise
Rule in their sale of countertop snack-vending machines. The
Commission alleged that the defendants failed to provide critical prepurchase information to potential buyers and made exaggerated
earnings claims. The consent decree prohibits the defendants from
violating the Rule and from making false statements or misrepresenting material aspects of any business venture they offer. In
addition, Modern Management Systems agreed to pay a $7,000 civil
penalty.
National Tech Systems, Inc.; Mel Parsell
National Tech Systems and its president agreed to pay a $10,000
civil penalty to settle allegations that they failed to give potential
investors presale disclosures about the business opportunities they
sold and documentation to support claimed earnings, as required by
the Franchise Rule. The company sold display rack business
opportunities for “Crime Alert” personal protection products,
claiming that investors could earn up to $80,000 a year. Under the
provisions of the settlement, the defendants are prohibited from
violating the Rule and from making false statements or misrepresenting material aspects of any business venture they offer.
Nibblers, Inc.; Thomas Kiernan
Nibblers and its president agreed to pay a $10,000 civil penalty,
as well as to properly and accurately disclose key information to
future investors in any franchise or business opportunity they offer.
These provisions were included in a settlement of allegations that the
defendants, who offer business opportunities involving candy vending
machines, failed to provide potential investors with information
required by the Franchise Rule.

120

Civil Penalty Actions

Appendix
Quartercall Communications, Inc.; Fitzgerald Lewis
The president of Quartercall agreed to pay a $10,000 civil penalty
to settle allegations that he and his company failed to provide key
information to potential investors in their pay telephone business
opportunity, as required by the Franchise Rule. The consent decree
requires the defendants to comply fully with the provisions of the
Rule and prohibits them from making unsubstantiated earnings claims
or misrepresenting any other material aspects of a franchise or
business opportunity.
Restland Funeral Home, Inc.; Bluebonnet Hills Funeral Home, Inc.;
Laurel Land Funeral Home, Inc.;
Laurel Land Funeral Home of Fort Worth, Inc.;
Singing Hills Funeral Home, Inc.
Restland and four of its subsidiary funeral homes agreed to pay a
$121,600 civil penalty to settle allegations that they failed to provide
customers with itemized general price lists and other information
required by the Funeral Rule. In addition to paying the civil penalty,
the largest ever imposed under the Funeral Rule, the defendants
agreed to send itemized statements to customers who purchased preneed plans between 1987 and 1989, to participate in a training
program administered by the National Funeral Directors Association
(NFDA), and to submit their price lists and other forms to NFDA for
review.
STP Corporation; First Brands Corporation
STP and its parent corporation, First Brands, agreed to settle
allegations that they violated a 1976 Commission order under which
they are prohibited from making false and unsubstantiated claims for
motor oil additives. According to the Commission, the defendants
made numerous false claims in advertisements regarding the engineprotection qualities of their oil additive, STP Engine Treatment with
XEP2. The settlement requires the defendants to pay a civil penalty
of $888,000 for the order violation.
Summit Communications, Inc.; Mitchell R. Newman

121

Federal Trade Commission
The Commission settled with Summit Communications and its
president in connection with allegations that they had violated the
Franchise Rule in their sale of pay telephone vending franchises. The
Commission alleged that the defendants failed to provide critical prepurchase information to potential buyers and made exaggerated
earnings claims. The consent decree prohibits the defendants from
violating the Rule and from making false statements or misrepresenting material aspects of any business venture they offer. In
addition, Summit Communications agreed to pay a $10,000 civil
penalty.
Tanzara International, Inc.
Tanzara, an importer of women’s sportswear, agreed to pay a
$10,000 civil penalty to settle allegations that it put improper care
labels on some of its rayon garments. The Commission alleged that
the care procedure that was recommended on the labels resulted in
significant shrinkage. As part of the settlement, Tanzara agreed to
provide proper care instructions on its labels in the future, in
compliance with the Care Labeling Rule.
Telebrands Corporation; Ajit Khubani
Telebrands and its owner reached a settlement with the Commission resolving allegations that they violated the Mail/Telephone
Order Merchandise Rule in selling various products through print and
broadcast advertising. The Commission alleged that the defendants
failed to provide consumers with appropriate and timely notification
of delays in shipping orders, to obtain customers’ consent to delays,
and to cancel delayed orders and provide refunds. The settlement
requires the defendants to pay a $95,000 civil penalty and prohibits
future Rule violations.
Tutor Time Child Care Systems, Inc.;
Florida Academic Enterprises, Inc.; Lifecare Investments, Inc.;
Michael Weissman; Richard Weissman
Tutor Time, a nationwide franchisor of day care centers, agreed
to pay a $220,000 civil penalty to settle allegations that it had
overstated the earnings potential of franchise owners, the length of
time it takes to open a center, and other important factors about
122

Civil Penalty Actions

Appendix
owning a Tutor Time franchise. The Commission also charged Tutor
Time with failing to give potential franchisees certain key prepurchase information about the franchise required by the Franchise
Rule. In addition to requiring the civil penalty, the order prohibits
the defendants from making similar misrepresentations, requires them
to comply with the Rule, and bars them from imposing gag orders
that prohibit their former franchisees from talking about their
experiences with the company.
United Creditors Alliance Corporation
United Creditors, a nationwide debt collection agency, agreed to
pay a $146,000 civil penalty in settlement of allegations that it
repeatedly violated the Fair Debt Collections Practices Act (FDCPA).
The Commission alleged that United Creditors, in attempting to
collect debts, made telephone calls after hours, used abusive
language, falsely threatened consumers with legal action, and engaged
in a variety of other FDCPA violations. The settlement prohibits the
company from future violations of the FDCPA as well as requiring
payment of the civil penalty.
W.W. Chambers Co., Inc.; Thomas S. Chambers;
William W. Chambers; William W. Chambers, III
W.W. Chambers, a funeral home, and its principals paid a
$10,000 civil penalty to settle allegations that they failed to provide
consumers with written itemized price lists and other information, in
violation of the Funeral Rule. Under the terms of the settlement, the
defendants must comply with the Rule in the future.

123

Federal Trade Commission
CONSUMER REDRESS ACTIONS1
CONSUMER PROTECTION MISSION
50
40
30
20
10
0
1992

1993

1994

1995

1996

CONSUMER PROTECTION MISSION (SUMMARY)
Title2,3

Number

Action Date

(American Fortune 900, Inc.)
Rory Cypers

X960011

08/07/96

Investment Fraud

900-Number Telephone
Lines

Caribbean Clear, Inc.

X920041

08/22/96

Order Violation

Swimming Pool
Disinfectant System

Chase McNulty Group, Inc.

X950035

01/31/96

Investment Fraud

Wireless Communications
Technology – Interactive
Video and Data Service

Consumer Credit Advocates,
P.C.

X960039

03/20/96

Credit Report Fraud

Internet Credit Repair

Credit Doctor

X960037

04/10/96

Telemarketing Sales
Rule

Credit Repair

Desert Financial Group, Inc.
Keith Parker

X960007

04/29/96

Telemarketing Fraud

Prize Promotion
“Recovery Room”

Fraud Action Network System
(FANS), Inc.

X960023

07/30/96

Telemarketing Sales
Rule

Prize Promotion
“Recovery Room”

Freedom Medical, Inc.

X950041

01/05/96

Telemarketing Fraud

Medical Equipment and
Health Insurance

Fresh-O-Matic Corporation

X960015

02/23/96

Franchise Rule

Vending Machine
Business Opportunity

Global Development Services,
Inc.

X960114

07/27/96

Investment Fraud

Invention Promotion

124

Type of Matter

Product/Service

Consumer Redress Actions

Appendix

Title2,3

Number

Action Date

Hang-Ups Art Enterprises, Inc.

X950014

01/29/96

Investment Fraud

Art Prints

Independence Medical, Inc.

X950043

09/19/96

Telemarketing Fraud

Medical Equipment and
Health Insurance

(International Charity
Consultants, Inc.)
AWARE

X940028

04/03/96

Telemarketing Fraud

Telephone PrizePromotion Charitable
Solicitation

International Computer
Concepts, Inc.

X940071

10/24/95

Franchise Rule

Display Rack Business
Opportunity

Mackie Services, Inc.

X950046

02/12/96

Franchise Rule

Display Rack Business
Opportunity

Motion Medical, Inc.

X950042

05/20/96

Telemarketing Fraud

Medical Equipment and
Health Insurance

MTK Marketing, Inc.
Intel Marketing
Dennis Connelly
Erick Graziano

X960049
X960049
X960049
X960049

09/18/96
08/08/96
08/08/96
08/08/96

Telemarketing Fraud

Office Supplies

National Bureau of Credit, Inc.
(Johnny Ray Dunn, d/b/a)

X960070

08/08/96

Telemarketing Sales
Consumer Finance
Rule and Advance-Fee
Loan Fraud

Nishika, Ltd.

X950016

04/16/96

Telemarketing Fraud

Camera Prize Promotion

North American Supply, Inc.
Larry Ellis

X950055
X950055

11/22/95
11/22/95

Telemarketing Fraud

Office Supplies

On Line Communications, Inc.
Richard Basile

X960022

07/19/96

Telemarketing Fraud
and Investment Fraud

Paging License Services

Orion Products Corporation

X960095

07/19/96

Franchise Rule

Vending Machine
Business Opportunity

Public Telco Corporation

X950064

10/04/95

Franchise Rule

Pay Telephone Business
Opportunity

Research Awards Center, Inc.
Fernando “Tom” Alvarez

X950033

02/29/96

Telemarketing Fraud

Sweepstakes/Prize
Promotions

Satellite Broadcasting
Corporation
PAL Financial Services, Inc.
Allan Wells

X950034

01/19/96

Investment Fraud

Satellite Television
Broadcasting Services

X950034
X950034

01/19/96
01/19/96

125

Type of Matter

Product/Service

Federal Trade Commission
Title2,3

Number

Action Date

X950073
X950073

11/27/95
11/27/95

Franchise Rule

Vending Machine
Business Opportunities

X940075

10/06/95

Franchise Rule

Display Rack Business
Opportunity

(Telecommunications of
America, Inc.)
Stephen Jonathan Burns
Barry Taylor

X950050
X950050

03/14/96
03/14/96

Franchise Rule

Pay Telephone Business
Opportunity

Total Care, Inc.

X960012

09/23/96

Telemarketing Fraud

Prize Promotion

U.S. Telemedia, Inc.

X960051

09/24/96

Mail/Telephone Order
Merchandise Rule

Internet Computer
Memory Chips

United Consumer Services, Inc.

X940080

05/21/96

Telemarketing Fraud

Telemarketing Fraud
“Recovery Room”

United Wholesalers, Inc.

X950004

01/16/96

Telemarketing Fraud

Business Supplies

USM Corporation, d/b/a Senior
Citizens Against Telemarketing
(SCAT)

X950067

01/23/96

Telemarketing Fraud

Telemarketing Fraud
“Recovery Room”

Telemarketing Fraud
X960026
X960026

06/26/96
06/26/96

Magazine Subscription
Prize Promotion

X940029

01/31/96

Franchise Rule

Vending Machine
Business Opportunity

(Second Income, Inc.)
Alan Rosofsky
M. David Silverman
Southeast Necessities
Company, Inc.

Windward Marketing, Ltd.
Crestwood Enterprises, Inc.
Matthew Corbitt Mizell, Jr.
(Wolf Group)
Marvin Wolf
1

Type of Matter

Product/Service

The consumer redress amounts included in the following case descriptions have been ordered by the court and may
be higher than the amounts collected and returned to consumers.
2
A company name shown in parentheses is for identification of the case only; the company is not a defendant in the
item shown in the table.
3
Redress or disgorgement funds were also obtained in the following administrative orders:
Azrak-Hamway International, Inc. (see page 52)
Budget Rent A Car Systems, Inc. (see page 53)
Dannon Company, Inc., The (see page 54)
Ivory Jack’s Trading Company, Inc. (see page 101)
National Dietary Research, Inc. (see page 66)
Third Option Laboratories, Inc. (see page 61)
Zygon International, Inc. (see page 62)

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Consumer Redress Actions
CONSUMER PROTECTION
MISSION (DETAIL)

Appendix

(American Fortune 900, Inc.)
Rory Cypers
The Commission negotiated a settlement with Rory Cypers, a
principal of American Fortune 900, concerning his role in the company’s allegedly deceptive marketing of investments in 900-number
telephone lines. The Commission alleged that the company depleted
a substantial portion of investors’ capital in paying sales commissions
and other expenses and misrepresented the number of operational
900-number lines in which it had a financial interest. The settlement
with Cypers includes $100,000 for consumer redress; in addition, he
must post a $300,000 performance bond before engaging in any type
of telemarketing and must disclose the existence of the bond to
customers.
Caribbean Clear, Inc.; Patricia Benton; Jerry Minchey
The Commission obtained a settlement of civil contempt
allegations with Caribbean Clear and two former corporate officers,
which includes a $70,000 redress fund for consumers who purchased
the Caribbean Clear disinfectant system for swimming pools since
1992. The Commission alleged that the company could not substantiate advertising claims that the system can be used without
chlorine or similar chemicals and that it makes pool water safe
enough to drink, and that the company therefore violated a 1992 order
prohibiting such unsubstantiated claims. The settlement also requires
Caribbean Clear to notify purchasers about the need to use
appropriate chemicals with the system.
Chase McNulty Group, Inc.;
E. Lee Elliott; Anthony L. Rick; Jeffrey D. Trotter
Chase McNulty and its officers settled allegations that they
engaged in a variety of deceptive practices in connection with the
marketing of investments in a new wireless communications technology called interactive video and data service (IVDS). The
Commission alleged that the defendants misled investors as to the
profitability of the investment, the use of investor proceeds, the
capital needed to develop IVDS systems, and the technological
capabilities of such systems. Under the settlement, the defendants are
prohibited from making such misrepresentations in connection with
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Federal Trade Commission
the sale of any investment or telemarketed product or service. In
addition, the individual defendants are required to turn over virtually
all of their significant assets (totaling $160,000) for consumer redress,
and a $1 million judgment was entered against the corporate
defendant, Chase McNulty. The individual defendants are each
required to post a $350,000 performance bond before engaging in the
telemarketing of any product or service, unless they are employed by
a regulated broker or agency.
Consumer Credit Advocates, P.C.;
Consumer Credit and Legal Services, P.C.;
David B. Markowitz; John E. Petiton
The Commission reached a settlement with two closely related
law firms that were behind a deceptive advertisement for credit repair
services posted on thousands of Internet news groups. Consumer
Credit and Legal Services and two of its officers created Consumer
Credit Advocates, which advertised that it could remove derogatory
information from clients’ credit reports even when that information
was accurate and not obsolete. The settlement bans the defendants
from engaging in fraudulent credit repair practices and requires them
to warn customers that consumers have no legal right to have accurate
information removed from their credit reports. The order also
requires the defendants to pay $17,500 in consumer redress and
prohibits them from instituting collection procedures against their
current and former credit repair clients.
Credit Doctor (Jayco Associates, d/b/a); Jerry J. Jewell
Jayco Associates, doing business as Credit Doctor, and corporate
officer Jerry Jewell agreed to settle allegations that they misrepresented the credit repair services they provided and required advance
payment, in violation of the Telemarketing Sales Rule. The
settlement requires the defendants to pay $15,000 for refunds to
consumers, prohibits them from trying to collect payments on past
contracts, and requires them to withdraw negative credit reports they
sent to credit reporting agencies about consumers who did not pay
them. The order also prohibits the defendants from making similar
deceptive claims about credit repair services and from violating the
Rule in the future.

128

Consumer Redress Actions

Appendix

Desert Financial Group, Inc.; Keith Parker
Desert Financial and its president agreed to settle allegations that
they falsely told consumers, many of whom were senior citizens, that
for an upfront fee, sometimes exceeding $1,000, they could recover
money the consumers had lost to other telemarketers. In fact, according to the Commission, little, if any, money was recovered from the
defendants’ efforts. The settlement with Keith Parker requires him
to post a $300,000 bond before engaging in telemarketing activities
in the future and to pay $11,000 for consumer redress. The settlement
prohibits Parker from misrepresenting any fact material to a
consumer’s decision to make a charitable contribution, to enter a
contest, or to purchase recovery room services or any other product
or service. The Commission is seeking a default judgment against
Desert Financial once the settlement with Parker is approved by the
court.
Fraud Action Network System (FANS), Inc.;
Michael Starrion; Rena Warden
A federal district court permanently banned a telemarketer and
two individuals from engaging in any prize-promotion telemarketing
activity or recovery service. The judge issued the order after FANS
and two of its officers failed to answer Commission allegations that
they misrepresented that their “recovery room” services would obtain
money that consumers had lost in previous telemarketing schemes
and that they violated the Telemarketing Sales Rule by requesting
payment in advance. The judgment provides for over $378,900 for
consumer redress.
Freedom Medical, Inc.; Freedom Medical of Wisconsin;
Sierra Medical, Inc.; Robert D. Atkins; Robert L. Grden;
Brian A. Patten; Daniel Smeltzer
Three related companies and four individuals agreed to settle
allegations that they deceptively telemarketed medical equipment to
consumers nationwide and engaged in fraud against health insurance
companies. According to the Commission, the defendants marketed
medical equipment to disabled persons, then obtained physicians’
approval and submitted claims to health insurers; the claims in many
instances were for more expensive equipment and for items and
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Federal Trade Commission
accessories that had not been ordered by consumers. The agreement
requires the defendants to pay a total of $269,650 for consumer
redress. In addition, Brian Patten and Robert Grden are banned for
ten years from selling or marketing any medical equipment, product,
or service, and Robert Atkins is required to post a $50,000 performance bond before selling or marketing medical equipment. All
defendants are prohibited from making misrepresentations like those
alleged in the complaint.
Fresh-O-Matic Corporation
Fresh-O-Matic, a company that markets business opportunities
involving soft drink vending machines, agreed to pay $100,000 for
consumer redress to settle allegations that it failed to provide key
information to potential purchasers of its distributorships, as required
by the Franchise Rule. The Commission alleged that the company
also misrepresented potential earnings and the location assistance it
would provide to investors. The consent order requires the company
to comply fully with the Rule and prohibits it from misrepresenting
any material aspect of a franchise or business opportunity.
Global Development Services, Inc.; Kenneth A. Rogers
Global Development and its president agreed to pay $1 million for
consumer refunds as part of a settlement of allegations brought by the
Commission. According to the allegations, the defendants, who
marketed invention promotion services, misrepresented the financial
gains their clients were likely to achieve and did not address the
specific market potential, patentability, feasibility, or merit of clients’
inventions. The settlement also requires Global and Kenneth Rogers
to give customers a written notice stating that not one of their clients
has received profits of any kind from an invention as a result of
Global’s services.
Hang-Ups Art Enterprises, Inc.; Max Klein
Hang-Ups Art and its president agreed to pay $150,000 into a
fund for consumer redress as part of a settlement of allegations that
they sold counterfeit art prints. The Commission alleged that the
defendants bought and sold purported limited-edition prints attributed
to well-known artists such as Marc Chagall, Joan Miro, and Pablo
130

Consumer Redress Actions

Appendix

Picasso, and represented to consumers that the prints were the work
of the named artists, while knowing that they were counterfeit. The
settlement also contains strong prohibitions against false claims about
the nature of any artwork the defendants sell in the future.
Independence Medical, Inc.; Ability Medical, Inc.;
American Medical Independence (A.M.I.);
Independence Medical of America, Inc.; Jeffrey S. Marmer;
Jerry Rodney Rogers; Jerry Wilburn Rogers; Violet Cassie Rogers
Independence Medical, three related companies, and company
officers and agents agreed to pay redress totaling $38,500 to settle
allegations stemming from their role in an allegedly deceptive scheme
to telemarket medical equipment to consumers nationwide. The
Commission alleged that these defendants, along with a number of
other corporate and individual defendants, marketed one type of
equipment to consumers but then obtained physician approval and
made insurance claims for other, more expensive equipment. In some
cases, the Commission alleged, insurance claims were filed for items
never ordered by consumers. The settlement bars Jerry Rodney
Rogers from any aspect of marketing medical products or services for
ten years, and it requires Jeffrey Marmer to obtain a $100,000
performance bond before engaging in the sale of durable medical
equipment and to pay a judgment of $31,000. Jerry Wilburn Rogers
and Violet Cassie Rogers are required to obtain a performance bond
of $50,000 before engaging in the sale or rental of medical equipment
and to pay a judgment of $7,500.
(International Charity Consultants, Inc.)
Future Images, Inc.; Regeneration & Renewing, Inc.
(d/b/a AWARE or Aware-Regeneration and Renewing);
Topp Kat, Inc.; Toppkat, II. Inc.; Sherri L. Harvey; William Jervis;
Joseph Rubbico; Michael Kody Sawyer
Eight defendants in a charitable solicitation fraud case agreed to
pay more than $4.1 million in consumer redress as part of a
settlement. The Commission alleged that the defendants used a
fraudulent prize-promotion pitch to induce consumers, many of them
elderly, to donate money to two purportedly charitable organizations,
one of which – AWARE – was not a true nonprofit organization. The
court order bans William Jervis, Joseph Rubbico, and Michael
131

Federal Trade Commission
Sawyer from participating in telephone prize promotions and requires
all of the defendants to post a $5 million performance bond before
engaging in telemarketing activities in the future. These eight defendants are among 24 originally charged in this case.
International Computer Concepts, Inc.;
Helen Schumaker; Larry Schumaker
A federal district court judge ordered International Computer and
its officers to pay nearly $1.6 million in consumer redress in
settlement of allegations that they misrepresented the potential
earnings of their business opportunities and used fraudulent
references, among other violations of the Franchise Rule. The
company sells franchises consisting of computer software display
racks to be placed in retail stores. The order also permanently bans
the defendants from involvement with business opportunities and
franchises in the future.
Mackie Services, Inc.; Panoramic Multimedia, Inc.;
Stanley L. Katz; Randy Prefer
Two companies and their principal officers settled allegations that
they exaggerated the earnings potential of their business opportunities
involving CD-ROM display racks and otherwise violated the
Franchise Rule. The Commission alleged that the defendants overstated potential profits and the value of the CD-ROM titles they
supplied. In addition, they allegedly used fraudulent references and
failed to provide investors with important documentation. The
defendants are barred from marketing any franchise or business
venture in the future and are required to pay $20,000 into a consumer
redress fund.
Motion Medical, Inc.; Anton Albert Wood
Motion Medical and its president agreed to settle allegations
stemming from their participation in an allegedly deceptive scheme
to telemarket medical equipment to consumers nationwide and file
false claims with health insurance companies. According to the
Commission, the defendants marketed medical equipment to disabled
persons, then obtained physicians’ approval and submitted claims to
health insurers, which in many instances were for more expensive
132

Consumer Redress Actions

Appendix

equipment and for items that had not been ordered by consumers.
The settlement prohibits the defendants from misrepresenting any
product or service they telemarket in the future and requires Anton
Wood to obtain a $150,000 performance bond before he engages in
the sale of durable medical equipment. In addition, the defendants
are required to pay a total of $346,700 for consumer redress.
MTK Marketing, Inc. (d/b/a District Supply Center
and Central Supply Center);
Acacia Properties, Inc. (d/b/a National Supply Center);
Copy Resource Center, Inc. (d/b/a District Supply Center
and Central Supply Center);
Intel Marketing of California, Inc. (d/b/a District Supply Center);
Nationwide Transport, Inc. (d/b/a District Supply Center);
Paragon Shipping, Inc. (d/b/a National Supply Center);
Telco Marketing, Inc. (d/b/a Central Supply Center);
Dennis Connelly; Jeanine Dora; Erick Graziano (a/k/a Eric Knight);
Donna Green; Sam June; Colleen McCullough;
James Rem (d/b/a Central Supply Center and JR Associates);
Donald Ryan
The Commission negotiated four settlements with 15 defendants
in its case against perpetrators of an allegedly deceptive “toner
phoner” scheme. The defendants were alleged to have victimized
small businesses by misrepresenting themselves as the businesses’
regular suppliers, shipping unordered photocopier toner and other
office supplies, and charging exorbitant prices. The settlements
include a combined payment of more than $17 million for consumer
redress. The settlements also prohibit the defendants from engaging
in deceptive acts and practices, permanently ban defendants Dennis
Connelly and Sam June from engaging in the telemarketing of office
supplies, and require the other individual defendants to post bonds
ranging from $25,000 to $200,000 before engaging in the telemarketing of office supplies.
National Bureau of Credit, Inc. (Johnny Ray Dunn, d/b/a
this company and Carolina Federal Financial Services,
Carolina Firstate Bankcard & Loan Program Services,
Carolina Firstate Financial, Fidelity National Financial
Services, National Bureau of Consumer Affairs Department,
and NBC Services)
133

Federal Trade Commission
The Commission negotiated an agreement with Johnny Ray Dunn
settling allegations that he engaged in misrepresentations and
fraudulent practices in connection with the offering of advance-fee
credit cards and loans. Dunn represented that he had an “excellent
record” with an independent consumer protection agency, the
National Bureau of Consumer Affairs, which was actually one of the
names under which he did business, the Commission alleged. The
settlement requires Dunn to pay $3,500 in consumer redress, bars him
from marketing advance-fee credit services and from violating the
Telemarketing Sales Rule’s provisions against deceptive or abusive
marketing, and prohibits him from making misrepresentations in
connection with any product or service he sells in the future.
Nishika, Ltd.; American 3-D Corporation; American 3-D, Ltd.;
Bentley Industries, Inc.; Nishika 3-D Camera Sales, Inc.;
Nishika Corporation; James D. Bainbridge; Daniel Alan Fingarette
The Commission negotiated two settlements with defendants in
a nationwide prize-promotion telemarketing scheme. The Commission filed a complaint against the Nishika and American 3-D
companies and James Bainbridge, who is president, owner, or principal of these five companies, and against Bentley Industries and its
owner and president, Daniel Fingarette. The defendants allegedly
induced consumers to pay inflated prices for cameras and other items
by misrepresenting that they had won valuable awards. The first
agreement includes $9.6 million for a consumer redress fund and
$1.7 million for consumers listed as creditors in the companies’
bankruptcy proceedings. The second bars the defendants from
engaging in similar deceptive schemes in the future.
North American Supply, Inc.; American Computer Industries, Inc.;
Otis Brown; Larry Ellis; Harold Moskowitz; Ron Moskowitz
The Commission reached settlement agreements that will recover
money for redress to small businesses allegedly defrauded by North
American Supply or its predecessor, American Computer Industries.
The Commission alleged that the defendant corporations ran
deceptive schemes to sell small companies overpriced photocopier
toner and other office supplies by telephone. The two consent
judgments make the defendants liable for redress in the following
134

Consumer Redress Actions

Appendix

amounts: North American Supply and American Computer Industries,
$1.3 million; Larry Ellis, $202,316; Harold Moskowitz and Ron
Moskowitz, $325,000.
On Line Communications, Inc.;
Richard Basile; Robert Corey (a/k/a Michael Allen)
The Commission reached a settlement with one defendant and
obtained a default judgment against the others in its case against On
Line Communications, a company that allegedly ran a fraudulent
application service for paging system licenses issued by the Federal
Communications Commission (FCC). The Commission alleged that
the firm, its president, and a hidden principal misrepresented their
paging license services, alleging that consumers are unlikely to derive
any income or profit from such licenses, contrary to the defendants’
claims. The settlement with Richard Basile requires him to turn over
$39,150 in frozen assets for consumer redress and prohibits him from
making false representations about any investment he offers in the
future. The court entered a default judgment of $817,130 for redress
against On Line Communications and Robert Corey after they failed
to answer the Commission’s allegations. The judgment also prohibits
false claims and requires Corey to post a $300,000 performance bond
before engaging in any telemarketing in the future.
Orion Products Corporation (d/b/a Natural Choice-USA);
Antares Corporation; Dana M. Bashor
Orion, Antares, and their president agreed to pay $1 million in
consumer redress to settle allegations of violating the Franchise Rule.
The Commission alleged that the defendants misrepresented the
potential earnings and profits of their vending machine distributorships and other facts about the businesses, and that they used false
references. Under the proposed settlement, the defendants are
permanently prohibited from making misrepresentations about the
income, profits, or sales volume that distributors could expect and
about the extent of location assistance.
Public Telco Corporation; Ronald Oman
A federal district court entered a judgment against Public Telco
and its owner for nearly $2.4 million for consumer redress. The
135

Federal Trade Commission
Commission alleged that the defendants overstated the earnings
potential of their pay telephone business opportunities, provided false
references, misrepresented the assistance they would provide
investors, and lied about their refund policies. The defendants are
permanently banned from offering any franchise or business
opportunity, from engaging in any form of telemarketing, and from
selling or transferring any customer lists.
Research Awards Center, Inc.; Financial Research Group, Inc.;
Quality Marketing, Inc.; Fernando “Tom” Alvarez;
Nicholas Creighton Parr (a/k/a Nicholas Creighton and Creig Parr)
The Commission settled with three corporations and two
individuals in connection with allegations that they mailed millions
of deceptive solicitations in a massive sweepstakes scheme in which
they falsely promised consumers that they were “guaranteed winners”
of valuable prizes. The settlement requires Fernando Alvarez to pay
$900,000 for consumer redress; it bars all five defendants from
offering sweepstakes or similar promotions, prohibits them from
making false statements in offering any product or service by direct
mail, and requires each of them to obtain a $1 million performance
bond before offering products or services by direct mail in the future.
Satellite Broadcasting Corporation; Media Management, Inc.;
PAL Financial Services, Inc.; Satellite Broadcasting Royalty Trust;
Satellite Systems, Inc.; T. Michael Haws; Lonny Remmers;
Allan Wells (a/k/a Joseph Champion)
Five companies and three individuals who are company officers
agreed to pay a total of more than $700,000 for consumer redress in
three settlements relating to allegations that they misrepresented
investment opportunities in satellite television broadcasting services.
The Commission alleged that the defendants induced consumers to
invest in a plan to market and distribute direct broadcast satellite
(DBS) television programming by falsely representing the investment
as a “low-risk” and “instant income” venture and falsely telling
investors that they had already acquired the rights to market DBS
programming transmitted by DIRECTV, Inc., the largest provider of
DBS programming in the United States. The settlements permanently
prohibit the defendants from misrepresenting any investment

136

Consumer Redress Actions

Appendix

opportunity and require the individual defendants to post performance
bonds before engaging in any future telemarketing activities.

137

Federal Trade Commission
(Second Income, Inc., d/b/a Creative Promotions
and Silver Shots, Inc.)
Alan L. Rosofsky; M. David Silverman
The Commission negotiated settlements with two individuals
named in the business opportunity fraud case against Second Income.
The Commission alleged that the defendants enticed consumers
nationwide into purchasing coin-operated game vending machines as
business opportunities by making false claims about potential
earnings, profitable locations, and compliance with state licensing
laws. The Commission also alleged that the defendants violated the
Franchise Rule by failing to provide required disclosure documents
to prospective franchisees. The two settlements provide for
combined consumer redress of $80,000 and prohibit the defendants
from making deceptive claims about any business opportunity and
from violating the Franchise Rule in the future.
Southeast Necessities Company, Inc. (d/b/a Dr.’s Choice);
Allstate Locating, Inc.; Germaine Easley; David Kallen;
Marc Frank Kallen; Janice Lynn Zoyes; Michael George Zoyes
Two companies and five individuals paid $360,000 to settle
allegations involving their allegedly deceptive marketing of business
opportunities. The money will be used as redress for consumers who
invested in the defendants’ display racks of “Dr.’s Choice” diet and
vitamin products. The Commission alleged that the defendants
misrepresented the earnings and success of the businesses and the
availability of profitable retail locations for the display racks,
furnished fraudulent references, and failed to make key pre-purchase
disclosures required by the Franchise Rule. The settlement
permanently prohibits the defendants from engaging in telemarketing
and from selling any franchise or business opportunity.
(Telecommunications of America, Inc.)
Stephen Jonathan Burns; Barry Taylor
The Commission obtained settlements with two officers of
Telecommunications of America in connection with allegations that
they violated the Franchise Rule in selling pay telephone business
opportunities. The settlements require that the defendants comply
with the Rule in the future and prohibit them from making false or
138

Consumer Redress Actions

Appendix

misleading statements when offering any franchise or business
opportunity. In addition, Barry Taylor is required to pay $10,000 and
Jonathan Burns is required to pay $7,500 for consumer redress.
Total Care, Inc.; Irwin Gonor
Total Care and its president agreed to settle allegations that they
were involved in a fraudulent telemarketing scheme that preyed on
older consumers. According to the Commission, the defendants made
unsolicited telephone calls to consumers nationwide, many of them
senior citizens, and promised them valuable prizes or awards if they
purchased certain merchandise. In many instances, the Commission
alleged, the prizes were worth little or nothing. The settlement
requires the defendants to pay more than $2.5 million in consumer
redress.
U.S. Telemedia, Inc.; Robert A. Brandzel
U.S. Telemedia, a firm that marketed computer memory chips
over the Internet, settled allegations that its marketing was deceptive
and that it violated the Mail/Telephone Order Merchandise Rule. The
Commission alleged that U.S. Telemedia and its principal officer
failed to deliver merchandise in the time promised and failed to
provide refunds to consumers who either did not get the chips they
ordered or did not get them in a timely manner. To settle the
allegations, the defendants agreed to pay $5,500 in consumer redress
and are barred from misrepresenting merchandise or shipping
schedules in the future and from any other violations of the Rule.
United Consumer Services, Inc. (formerly United Recovery
Services, Inc.);
Wayne Axelrod; Wendy Heitkamp
A federal district court judge upheld Commission allegations
against a company and two principals who operated a deceptive
“recovery room” telemarketing scam. The Commission alleged that
the defendants targeted victims of a previous telemarketing scheme
who had lost money by investing in specialized mobile radio licenses
and that they made a variety of deceptive representations in promising
to recover the victims’ losses for upfront fees. The judgment requires

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Federal Trade Commission
that the defendants pay more than $161,000 in consumer redress and
permanently bars them from offering recovery services.
United Wholesalers, Inc.; Innovators of Success, Inc.;
International Research Corporation; Long Life Industries, Inc.;
Steven Green; Philip G. Lynch; James W. MacDonald;
Margaret A. MacDonald
Four corporations and four individuals agreed to transfer assets
totaling approximately $1.3 million to the Commission and to pay an
additional $202,000 for consumer redress as part of the settlement of
allegations that they used deceptive and illegal tactics in a massive
telemarketing scheme that preyed on businesses and health care
facilities across the country. The defendants allegedly misrepresented
that they were the regular suppliers of business supplies and their
prices were the regular prices. Further, they allegedly shipped
unordered merchandise and intimidated customers into paying
invoices for the unordered goods. The settlement prohibits the
defendants from making misrepresentations in connection with any
telemarketing activity, from using aliases, from shipping or billing for
unordered merchandise, and from transferring their customer lists. In
addition, for a period of five years, the individual defendants are
required to post a $500,000 performance bond before reentering the
telemarketing business.
USM Corporation (d/b/a Senior Citizens Against Telemarketing
(SCAT) and SCAT Services);
Anita Sowards
SCAT and its president agreed to pay approximately $25,000 for
possible consumer redress, to settle allegations that they engaged in
a deceptive telemarketing “recovery room” scheme that preyed on
elderly consumers. The Commission alleged that the defendants
falsely represented that they were affiliated with a government
consumer protection agency and that, for an upfront fee, they would
recover money the consumers had lost to previous fraudulent
telemarketers. The settlement permanently prohibits the defendants,
in connection with any type of telemarketing, from misrepresenting
any fact that may influence a consumer’s decision to make a
charitable contribution, enter a contest, or purchase any good or
service.
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Appendix

Windward Marketing, Ltd.; Crestwood Enterprises, Inc.
(both corporations d/b/a Magazine Distributors of America,
Magazine Express, Magazines of America, Magazines Limited,
Magazines Unlimited, Premium Magazine,
and Wholesale Magazine);
Kent L. Holbrook; Matthew Corbitt Mizell, Jr.
The Commission negotiated settlements with a group of
telemarketers who allegedly perpetrated a magazine subscription
telemarketing scheme using a variety of company names. The
Commission alleged that the defendants used false promises of
valuable prizes and a variety of other misrepresentations to obtain the
numbers of consumers’ checking accounts, which the defendants then
debited without authorization. A federal district court issued a
preliminary injunction halting the allegedly deceptive practices. In
one settlement, Matthew Mizell, former president of corporate
defendant Crestwood Enterprises, agreed to pay $493,000 in
consumer redress. In another, Kent Holbrook, current president of
Crestwood Enterprises, agreed to relinquish any claim on the assets
of the company, including $150,000 in funds frozen at the
Commission’s request for use as redress. That settlement also
includes a $13.4 million judgment against Crestwood Enterprises.
(Wolf Group)
30 corporations; James E. Holler; Clyde G. King;
Vincent Leonardo; Marvin Wolf
A federal district court judgment against four individuals and 30
corporate defendants requires over $31 million for consumer redress
to settle allegations that they were involved in deceptive selling of
vending machine business opportunities. The Commission alleged
that the defendants used a variety of deceptive claims and practices,
including using fraudulent references and misrepresenting investors’
potential earnings and the assistance they would get in locating the
vending machines. According to the complaint, many investors never
even received their machines. The Commission alleged that the
defendants also violated the Franchise Rule by failing to give
potential investors critical pre-purchase information about the
franchisors that may have tipped off consumers to the deceptive
scheme.

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RULEMAKING ACTIVITIES
COMMISSION-WIDE

Sunset Rule
The Commission issued a final rule regarding the duration of
administrative cease and desist orders in both antitrust and consumer
protection matters. Under the new Sunset Rule, administrative orders
issued prior to August 16, 1995, will expire automatically 20 years
after they were issued, unless there has been a complaint or consent
decree alleging that the order has been violated. The Rule incorporating this “sunset” policy for existing administrative orders follows
Commission policy issued in August 1995 that provides for
termination of future administrative orders after 20 years. Before the
Rule was adopted, the Commission could set aside orders or
provisions of orders only upon filing of a petition by the respondent
or initiation of show-cause proceedings by the Commission. The new
Rule became effective on January 2, 1996.

COMPETITION MISSION

Premerger Review Regulations
The Commission issued amendments to premerger notification
rules by adopting five new rules that exempt certain mergers and
acquisitions from prior review by federal regulators. Under the new
rules, certain classes of transactions that are not likely to raise
antitrust concerns are exempted from the reporting requirements of
the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976.
That Act generally requires entities contemplating mergers to file
premerger reports with the Commission and the Department of
Justice and to wait a specified period of time before consummating
the transactions, so that the government can review the mergers and
challenge those that may violate antitrust laws. The new rules clarify
types of transactions that are exempt from the advance notice
requirement, including certain acquisitions of real estate and fuel
resources. Adoption of the new rules, which target transactions
unlikely to have a significant anticompetitive impact, will remove an
unnecessary burden from both businesses and government.

CONSUMER PROTECTION
MISSION

Appliance Labeling Rule
The Appliance Labeling Rule, in effect since 1980, is designed
to help consumers comparison-shop for energy-efficient home
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Appendix
appliances such as refrigerators and freezers. Under this Rule,
manufacturers must attach to most major appliances EnergyGuide
labels that provide an estimate of the product’s annual energy
consumption or energy efficiency. The Commission amended the
Rule this year to allow appliance manufacturers to place energy use
labels required by the Canadian and Mexican governments “directly
adjoining” the EnergyGuide labels. The amended Rule, which
became effective June 28, 1996, supports the goal of the North
American Free Trade Agreement to harmonize standards-related
measures to facilitate trade among the United States, Canada, and
Mexico.
Funeral Rule
In conjunction with the National Funeral Directors Association
(NFDA), the Commission implemented two programs to improve and
ensure the funeral industry’s compliance with the Funeral Rule. This
Rule requires that funeral homes give shoppers a general price list of
funeral goods and services. One program, the Funeral Rule Offenders
Program (FROP), is an option to resolve violations of the Rule.
Violators choosing to enroll in this program make voluntary payments
to the U.S. Treasury or state government, undergo compliance review
by NFDA counsel, and hold NFDA-led training for all employees.
The second program, the Funeral Industry Rule Compliance
Assurance Program, provides continuous training to funeral industry
personnel on Rule compliance.
Recycled Oil Rule
The Commission approved a final rule on test procedures and
labeling standards for recycled or “rerefined” oil intended for use as
engine oil. The Recycled Oil Rule implements statutory requirements
designed to encourage the use of recycled oil. It permits
manufacturers to represent on a container of recycled oil that the oil
is substantially equivalent to new engine oil, as long as the
determination of equivalency is based on the test procedures
prescribed by the new Rule.
Regulatory Reform

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Federal Trade Commission
The Commission continued its activities under the ten-year
schedule to review all rules and guides, repealing those that are
outdated or no longer needed, and streamlining those that are
retained. In fiscal year 1996, the Commission rescinded eight rules
(the Fiberglass Curtain and Draperies Rule, the Quick Freeze Spray
Rule, the Binocular (Prismatic) Rule, the Sleeping Bag Rule, the
Tablecloth Rule, the Extension Ladder Rule, the Leather Belt Rule,
and the Light Bulb Rule) and two industry guides (the Hosiery Guides
and the Watch Band Guides). In addition, the Commission revised
six rules (the Cooling-Off Rule, the Used Car Rule, the R-Value Rule,
the Textile Rules, the Appliance Labeling Rule (mentioned above),
and the Smokeless Tobacco Rule), and two industry guides (the
Jewelry Guides and the Automotive Fuel Economy Guides).
Telemarketing Sales Rule
The Telemarketing Sales Rule, designed to give consumers
important information regarding telemarketing offers, went into effect
on December 31, 1995. The Rule prohibits telephone solicitors from
a variety of practices, including calling before 8 a.m. or after 9 p.m.,
calling people who have said they do not want to be called,
misrepresenting any aspect of the goods or services offered, and
seeking advance payment before rendering service.

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Appendix
ORDER MODIFICATIONS
COMPETITION MISSION
40
30
20
10
0
1992

1993

1994

1995

1996

COMPETITION MISSION (SUMMARY)
Title

Number

Action Date

Adobe Systems Incorporated

C3536

03/13/96

Horizontal Merger

Computer Programming
and Software

Alleghany Corporation

C3218
C3335

06/27/96
06/27/96

Horizontal Merger

Title Offices,
Title Insurance

American Home Products
Corporation

C3557

01/16/96

Horizontal Merger

Pharmaceuticals

American Stores Company

C3238

12/01/95

Horizontal Merger

Grocery Stores

Arkla Inc.

C3265

06/13/96

Horizontal Merger

Gas Transmission and
Distribution

Atlantic Richfield Company
(ARCO)

C3314

02/07/96

Horizontal Merger

Chemicals

Boston Scientific Corporation

C3573

01/05/96

Horizontal Merger

Surgical and Medical
Instruments

California Medical Association

C2967

10/27/95

Horizontal Price Fixing

Physicians Offices

Charter Medical Corporation

C3558

01/29/96

Horizontal Merger

Psychiatric Hospitals

Columbia/HCA Healthcare
Corporation

C3619

05/15/96

Horizontal Merger

General Medical and
Surgical Hospitals

Hoechst Celanese Corporation

D9216

04/26/96

Horizontal Merger

Organic Fibers

Institut Merieux S.A.

C3301

01/18/96

Horizontal Merger

Pharmaceuticals

145

Type of Matter

Product/Service

Federal Trade Commission
Title

Number

Action Date

IVAX Corporation

C3565

06/17/96

Horizontal Merger

Pharmaceuticals

KKR Associates, L.P.

C3253

10/31/95

Horizontal Merger

Packaged Foods

L’Air Liquide S.A.

C3216

02/15/96

Horizontal Merger

Industrial Gases

Mannesmann AG

C3378

10/11/95

Horizontal Merger

Conveyors and
Conveying Equipment

McCormick & Company

C3468

02/26/96

Horizontal Restraints

Dehydrated Onions

MTH Holdings, Inc.

C3266

02/16/96

Horizontal Merger

Grocery Stores

National Dairy Products
Corporation

D8548

11/08/95

Price Discrimination

Packaged Foods

Occidental Petroleum
Corporation

D9205

11/16/95

Horizontal Merger

Plastic Materials and
Resins

Papermakers Felt Association

C0828

11/22/95

Monopolization

Papermaking Felt

Pendleton Woolen Mills, Inc.

C2985

09/30/96

Distributional
Restraints

Clothing

Red Apple Companies, Inc.

D9266

09/13/96

Horizontal Restraints

Grocery Stores

Roche Holding Ltd.

C3315
C3542

01/16/96
01/16/96

Horizontal Merger

Pharmaceuticals

Rohm & Haas Company

C3387

01/16/96

Horizontal Merger

Acrylic Polymers

S.C. Johnson & Son, Inc.

C3418

12/22/95

Horizontal Merger

Polishes and Sanitation
Goods

Service Corporation
International

C3372
C3440
C3579
C3348

04/18/96
04/18/96
04/18/96
04/18/96

Horizontal Merger

Funeral Services and
Cemeteries

Sun Company, Inc.

C3246

04/18/96

Horizontal Merger

Petroleum Products

T&N plc

C3312

04/23/96

Horizontal Merger

Motor Vehicle Parts and
Accessories

Tele-Communications, Inc.

C3575

05/15/96

Horizontal Merger

Cable TV

Vons Companies, Inc., The

C3233

05/28/96

Horizontal Merger

Grocery Stores

West Point Pepperell Inc.

C3244

10/04/95

Horizontal Merger

Bed and Bath Linens

Sentinel Group, Inc.

146

Type of Matter

Product/Service

Order Modifications
COMPETITION MISSION
(DETAIL)

Appendix
Adobe Systems Incorporated; Aldus Corporation
The Commission modified a 1994 consent order, eliminating
Adobe’s obligation to obtain Commission approval before acquiring
an interest in any firm that develops or sells professional-illustration
software for Macintosh or Power Macintosh computers, and requiring
instead, advance Commission notice of such acquisitions. Under the
Commission’s 1996 prior approval policy, consent agreements will
no longer routinely require parties to a challenged merger to obtain
prior approval for future transactions.
Alleghany Corporation
The Commission modified, in part, two consent orders, one issued
in 1987 and another issued in 1991. The Commission ended the
obligation of Alleghany, in both orders, to obtain prior Commission
approval before acquiring certain assets related to title insurance,
instead substituting a provision requiring the firm to provide prior
notification for acquisitions of original title records. The modification also exempts acquisitions of certain copies of title records.
American Home Products Corporation
The Commission ended the obligation of American Home
Products to obtain prior approval before acquiring certain assets of
any U.S. manufacturer of tetanus, diphtheria, or rotavirus vaccine.
The prior approval provision was included in a 1995 consent order
that settled charges stemming from the acquisition of American
Cyanamid Company, a competitor in the market for pharmaceutical
products. The Commission replaced the prior approval provision
with a prior notice requirement, obligating the firm, for ten years, to
notify the Commission before proceeding with certain acquisitions.
American Stores Company
The Commission granted in part American Stores’ request to
reopen and modify a 1988 consent order, requiring Commission
approval before acquiring certain retail grocery stores in specified
areas of California and Nevada. The Commission replaced the prior
approval provision with a prior notice requirement for the acquisitions specified in the original order.
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Federal Trade Commission
Arkla, Inc. (NorAm Energy Corporation, successor)
The Commission granted the petition of NorAm Energy, formerly
Arkla, and set aside a 1989 consent order requiring prior Commission
approval for certain transactions related to pipeline acquisitions. The
consent order settled charges that Arkla’s acquisition of natural gas
pipeline assets from TransArk Transmission Co. would reduce
competition for the transportation of natural gas out of the Arkoma
Basin in Arkansas.
Atlantic Richfield Company (ARCO); ARCO Chemical Company;
Union Carbide Chemicals and Plastic Company Inc.;
Union Carbide Corporation
The Commission ended ARCO’s obligation to obtain
Commission approval before acquiring the assets of any company that
produces urethane polyether polyol, propylene glycol, or propylene
oxide. The original order, issued in 1990, settled charges relating to
ARCO’s acquisition of certain chemical assets from Union Carbide
Chemicals and Plastic Company, a subsidiary of Union Carbide
Corporation.
Boston Scientific Corporation
The Commission ended the obligation of Boston Scientific to
obtain prior Commission approval before acquiring certain assets of
any company engaged in researching, developing, or manufacturing
intravascular ultrasound (IVUS) catheters for sale in the United
States. The modified order now requires prior notification of
acquisitions of exclusive rights to U.S. patents related to the
production of IVUS catheters. The 1995 order settled antitrust
concerns stemming from the acquisitions of Cardiovascular Imaging
Systems, Inc., and SCIMED Life Systems, Inc., two competitors in
the market for IVUS catheters.
California Medical Association
The Commission granted the petition of the California Medical
Association to set aside a 1979 consent order to allow the Association
to establish and operate a managed care plan whereby physicians
would provide services under a fee schedule. The original order
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Appendix
prohibited the Association from participating in and publishing a
relative values study that influenced the fees charged by physicians.
According to the Commission, the original order was designed to
inhibit price-fixing, not to inhibit the Association’s lawful entry into
managed care markets.
Charter Medical Corporation
The Commission granted in part the petition of Charter and
modified two provisions in a 1995 order, replacing the general prior
approval requirement with a prior notice provision requiring
Commission notice of acquisitions of certain psychiatric facilities
and setting aside the prior notice provisions concerning certain
nonmerger joint ventures.
Columbia/HCA Healthcare Corporation
The Commission modified a hold-separate agreement requiring
the Utah assets of Healthtrust, Inc.–The Hospital Company to be
operated separately from Columbia/HCA. Under conditions of the
modification, Columbia/HCA’s hold-separate requirements ended
when Davis Hospital, the Medical Center of Layton, and Pioneer
Valley Hospital were sold to Paracelsus Healthcare Corporation.
Hoechst Celanese Corporation
The Commission ended Hoechst Celanese’s obligation to obtain
prior Commission approval before acquiring certain assets related to
acetal. The order settled charges that the acquisition of the Celanese
Corporation by Hoechst substantially lessened competition in the
manufacture and sale of acetal, an engineering thermoplastic polymer
used in small mechanical parts such as gears, in the United States.
Institut Merieux S.A. (Pasteur Merieux Serums & Vaccins S.A.,
successor)
The Commission granted the petition of Pasteur Merieux
(successor to Institut Merieux, S.A.) to delete the provision of a 1990
consent order requiring prior approval of any acquisition of any
company that manufactures or sells in the United States human
vaccines also produced by Pasteur Merieux, such as vaccines for
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Federal Trade Commission
diphtheria, pertussis, and tetanus (DPT), polio, and rabies. The
Commission replaced the requirement with a prior notice provision
for acquisitions valued at $2 million or more. The consent order
settled charges that the acquisition of Connaught BioSciences, Inc.,
would create a dominate firm in the U.S. market for rabies and
injectable polio vaccines.
IVAX Corporation
The Commission modified a 1995 consent order settling
allegations that IVAX’s acquisition of Zenith Laboratories, Inc.,
could create a monopoly in the U.S. market for verapamil, a generic
drug used in the treatment of patients with chronic cardiac conditions.
The modified order ends IVAX’s requirement to obtain prior
Commission approval before acquiring the assets of any firm that
manufactures extended-release generic verapamil in the United
States.
KKR Associates, L.P.
The Commission ended the provision of a consent order that
required KKR Associates to obtain Commission approval before
making acquisitions in certain food product categories, including
packaged nuts, oriental foods, and catsup. The 1989 consent order
permitted the acquisition of RJR Nabisco and required the divestiture
of certain assets and businesses associated with RJR Nabisco and
Beatrice/Hunt-Wesson.
L’Air Liquide S.A.
The Commission granted a petition from L’Air Liquide and
eliminated the only remaining obligation under the 1988 order – to
obtain prior Commission approval before acquiring any U.S. producer
of liquid gases used in industrial applications. The original order
settled charges stemming from L’Air Liquide’s acquisition of Big
Three Industries, Inc.
Mannesmann AG
The Commission set aside a 1992 consent order against
Mannesmann. The last applicable provision required Mannesmann
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Appendix
to obtain Commission approval before acquiring any entity that
manufactures and sells certain conveyor systems in the United States.
The original order settled charges relating to the acquisition of
Rapistan Corporation and required the divestiture of The Buschman
Company.
McCormick & Company, Inc.
The Commission modified a 1993 consent order and ended
McCormick’s obligation to obtain Commission approval before
acquiring the assets of any company that sells a specified level of
dehydrated onion products.
MTH Holdings, Inc.; GU Acquisition Corporation
The Commission granted the amended petition of MTH Holdings
to modify a 1989 consent order and ended the company’s obligation
to obtain prior Commission approval before acquiring any grocery
store in certain specified areas of Vermont and New York. The
provision was replaced with a prior notice provision requiring MTH
Holdings to instead notify the Commission before making such
acquisitions in the future. The 1989 order settled charges that MTH’s
acquisition of GU Acquisition Corporation, a holding company that
owned The Grand Union Company, would reduce competition among
grocery stores in various areas of Vermont and Upstate New York.
National Dairy Products Corporation (Kraft Foods, Inc., successor)
The Commission set aside a 1967 consent order that prohibits
Kraft Foods (as successor to National Dairy Products) from
discriminating in price between different purchasers of its jam, jelly,
and preserves products. The order was modified under the
Commission’s “sunsetting” policy, which terminates most orders after
20 years.
Occidental Petroleum Corporation;
Occidental Chemical Corporation
The Commission ended the obligation of Occidental Petroleum
and its subsidiary, Occidental Chemical, to obtain Commission
approval before acquiring stock in any polyvinyl chloride (PVC)
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Federal Trade Commission
producer in the United States. The 1994 consent order settled charges
stemming from Occidental’s acquisition of the PVC businesses of
Tenneco Polymers, Inc.
Papermakers Felt Association (Albany International Corporation,
successor to Albany Felt Company)
The Commission terminated a 1964 consent order that settled
charges that the Papermakers Felt Association and its members
conspired to fix and maintain prices and terms of sale in the
papermakers felt industry. The order against Albany International
(successor to Albany Felt Company) was set aside under the
Commission’s “sunsetting” policy, which terminates orders that have
been in effect more than 20 years.
Pendleton Woolen Mills, Inc.
The Commission modified in part a 1979 order that settled
charges that Pendleton had engaged in agreements with retailers about
the prices at which they could advertise and sell Pendleton clothing
and other products. The order prohibited the firm from engaging in
certain resale price maintenance practices and also contained “fencing
in” provisions prohibiting Pendleton from exercising unilateral
control over how its products are marketed and sold. The modification permits Pendleton to engage in lawful, price-restrictive,
cooperative advertising and also allows Pendleton to terminate a
reseller of its products for failing to adhere to Pendleton’s announced
resale prices or sale periods.
Red Apple Companies, Inc.; Designcraft Industries, Inc.
(d/b/a Sloan’s Supermarkets, Inc.);
Supermarket Acquisition Corp.; John A. Catsimatidis
The Commission granted a petition from Red Apple and three
other respondents to reopen and modify a 1995 consent order ending
their obligation to divest a supermarket in the Chelsea area of
Manhattan, only after the respondents agreed to pay a civil penalty of
$600,000 for failure to divest certain supermarkets in Manhattan on
a timely basis.
Roche Holding Ltd.; Genentech, Inc.; Hoffman-La Roche Inc.;
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Appendix
Roche Holdings, Inc.
The Commission modified the prior approval provisions in two
orders that required Roche and subsidiary Hoffman-La Roche, among
other things, to obtain approval before acquiring certain assets in the
markets for drug abuse testing products. In the 1990 order that settled
antitrust concerns relating to the acquisition of Genentech, the
Commission replaced the prior approval provision with a prior notice
provision; the Commission set aside entirely the 1994 order that
challenged the acquisition of Syntex, a competitor in drug abuse
testing products.
Rohm & Haas Company
The Commission granted in part the petition of Rohm & Haas to
end the company’s obligation to obtain Commission approval before
acquiring an interest in any entity that produces architectural acrylic
emulsion polymers, an ingredient in exterior latex paints. In place of
the prior approval requirement, the Commission imposed a prior
notice requirement for certain future acquisitions.
S.C. Johnson & Son, Inc.
The Commission set aside in its entirety a 1993 consent order that
required S.C. Johnson to obtain Commission approval before
acquiring any interest in air freshener or furniture care products
manufactured or distributed in the United States.
Service Corporation International; Sentinel Group, Inc.
The Commission granted in part petitions to reopen and modify
four consent orders that settled antitrust concerns stemming from
Service Corporation International’s acquisitions of funeral homes
owned by Sentinel (two consent orders), Pierce, and Uniservice
Corporation. Each order was modified by removing the prior
approval requirements and substituting prior notice requirements
relating to the acquisitions of interests in funeral establishments.
Sun Company, Inc.

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Federal Trade Commission
The Commission granted Sun’s petition to modify a 1989 consent
order by substituting a prior notice provision for the prior approval
requirement. The order now requires Sun to notify the Commission
before acquiring any light petroleum products terminals or pipelines
in certain parts of New York and Pennsylvania.
T&N plc
The Commission granted T&N’s request and modified a 1990
consent order that settled antitrust concerns relating to the acquisition
of J.P. Industries, Inc. The consent order now requires T&N to
provide prior notice before acquiring any entity engaged in the
manufacture of engine bearings.
Tele-Communications, Inc.
The Commission granted in part Tele-Communications’ petition
to end its obligation to obtain prior approval before acquiring any
cable television system in the Columbus, Georgia, area as required by
a 1995 consent order. The consent order was modified to require the
firm to notify the Commission before acquiring any assets originally
covered by the prior approval provision.
Vons Companies, Inc., The; Safeway Stores Incorporated;
SSI Associates, L.P.
At the request of Vons Companies, the Commission replaced a
prior approval requirement with one requiring prior notice for
acquisitions of supermarkets in specified geographic areas. The 1988
consent order settled concerns stemming from Vons’ acquisition of
Safeway stores in southern California and Nevada. The Commission,
however, denied Vons’ petition to modify a 1992 order that settled
charges relating to the acquisition of supermarkets in San Luis Obispo
county, California, on grounds that ending the prior approval
requirements in that order would not be in the public interest.
West Point Pepperell, Inc. (WestPoint Stevens, Inc., successor)
The Commission ended the obligation of WestPoint Stevens
(successor to West Point Pepperell) to obtain prior approval before
acquiring certain bed and bath linen manufacturing assets required by
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Appendix
a 1988 order. The order allowed West Point Pepperell to acquire
J.P. Stevens & Co. but required the divestiture of certain sheet and
towel manufacturing facilities. The Commission modified the order
under its recently adopted prior approval policy whereby consent
orders stemming from merger cases will no longer include prior
approval provisions.

ORDER MODIFICATIONS
CONSUMER PROTECTION MISSION
CONSUMER PROTECTION MISSION (SUMMARY)
Title

Number

Action Date

Type of Matter

Product/Service

General Motors Corporation

C2966

12/21/95

Deceptive Disclosure/Labeling

Automobile Engines

CONSUMER PROTECTION
MISSION (DETAIL)

General Motors Corporation
The Commission reopened and modified the portion of a 1979
consent order that prohibited General Motors (GM) from placing the
name of a car division on an engine label unless the car division also
manufactured the engine. Since the order was issued, GM has
implemented a series of corporate restructurings that resulted in the
removal of engine production from the nameplate divisions that
existed in 1979. The 1979 order settled allegations that GM engaged
in unfair and deceptive practices by selling cars with engines and
other equipment manufactured by a different GM division without
informing purchasers. The order prohibited GM from misrepresenting the availability of any standard or optional equipment and
prohibited GM from displaying a division’s name on an engine unless
the engine was manufactured by that division. The Commission
modified the order to allow GM to display brand nameplates on
engines that are materially different from those displaying all other
brand nameplates.

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Federal Trade Commission
CONSUMER AND BUSINESS EDUCATION ACTIVITIES
CONSUMER PROTECTION
MISSION

Publications and Other Products
The Office of Consumer and Business Education produced 61
new and revised publications: 55 for consumers and 6 for business;
they included 22 updates and one publication in Spanish. Distribution exceeded 4.1 million copies.
The Office produced two radio public service announcements
(PSAs). The PSA on the Telemarketing Sales Rule (TSR), produced
in English and Spanish, was distributed to an estimated 2,200
stations. The other, which promoted The Real Deal booklet, was sent
to 500 radio stations and networks.
The Office produced several new “products,” including tip cards,
bookmarks, book covers, and flyers, and redesigned its Facts for
Consumers format to enhance readability. Among the year’s special
products were two award-winning publications: The Real Deal, an
activity booklet for pre-teens, and Viatical Settlements, widely
distributed through the Internet.
Internet Activities
The Office established ConsumerLine in 1995 to enhance
distribution. In fiscal year 1996, ConsumerLine received more than
140,000 “hits” (accesses to individual publications or categories).
The Office established World Wide Web pages for ConsumerLine
and the new TSR. It also established a FAQ (Frequently Asked
Questions) feature, which provides a forum for Commission staff to
answer consumers’ online questions. The Office arranged for
hyperlinks to and from many Web pages (government and nongovernment) to increase publication visibility and accessibility.
The Office initiated the Commission effort to develop a federal
interagency consumer information Web site. During the last quarter
of 1996, the Office registered the “consumer.gov” domain name,
elicited the partnership of five other federal consumer protection and
law enforcement agencies, and began design and development.
Cooperative Projects
The Office continued to work with the National Association of
Attorneys General; in addition, it cooperated with the Federal
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Consumer and Business Education Activities

Appendix

Communications Commission to produce brochures on telephone
leasing and high-tech telecommunications scams, with the American
Express Company to write and distribute brochures on cybershopping
and the use of credit for college students, and with the Direct
Marketing Association to produce a compliance guide to the TSR and
a business checklist for direct marketers.
The Office furnished the Securities and Exchange Commission
with more than 3,000 copies of Investing in Interactive TV Licenses
to be included with letters to complainants, worked with the Social
Security Administration to augment the Commission’s mailing list for
Viatical Settlements, and worked with the Small Business Administration (SBA) to distribute information about office supply scams, and
other business publications.
The Office helped support town meetings produced by regional
office staff and the Commission’s Office of Congressional Affairs.
The Office also participated in an “expo” with 60 other government
agencies for Public Service Recognition Week, distributing 10,000
copies of agency publications in three days. It continued its work
with the Consumer Literacy Consortium, a group of more than 20
private and public sector organizations headed by the Consumer
Federation of America, to market 66 Ways to Save Money, and its
work with the Alliance Against Fraud in Telemarketing.
In September, the Commission announced several actions against
companies that guarantee scholarships to high school or college
students. As part of this effort, the Office developed a campaign to
educate students and parents about scholarship scams. The Office
disseminated posters and other materials through the 3,600 member
stores of the National Association of College Stores and via the
ConsumerLine. In addition, the Office elicited the cooperation of six
major educational organizations and the Interactive Services Association to promote the materials through professional journals, newsletters, and the Web. The Office also disseminated materials
produced by Sallie Mae (a nationwide provider of student loans) to
high school counselors, teachers, and students. The education
campaign will continue through spring 1997.
Finally, the Office spearheaded the Partnership for Consumer
Education, an innovative cooperative effort among 84 federal
agencies, private industry, and consumer organizations to provide
effective consumer education campaigns against fraud. As its first
project, the Commission targeted various telemarketing scams,
including investment fraud. This new approach to marketing
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Federal Trade Commission
products and messages to various industry, trade, and professional
organizations helped to expand the audience for consumer and
industry education. Since its launch in January 1996, the partnership
has disseminated 90 million fraud-prevention messages.
Telemarketing Fraud Information
To mark the first anniversary of the TSR, the Commission and its
partners developed a national education campaign, “Spread the Word
About Telemarketing Fraud.” The centerpiece is an action kit
containing background information, a fact sheet, a list of suggested
activities that organizations can undertake in support of the initiative,
a consumer quiz, a sample press release, sample op-ed and newsletter
articles, public service announcements, and a form for ordering
additional education materials.
The kit is distributed widely to partners, consumer organizations,
the media, and government agencies, and is available on the Web
(www.ftc.gov/telemarketing). Partners have carried out a wide range
of activities to strengthen and expand the effectiveness of the
Partnership and the “Spread the Word” campaign. For example,
American Express placed an educational message in its Optima
billing statement; the Atlanta Metropolitan Transit Authority has
placed public service messages on buses and trains; the
Administration on Aging placed a newsletter article that generated
wide interest and support among Area Agencies on Aging; Spiegel
placed a PSA in several sales catalogs; The Industry Council for
Tangible Assets has asked relevant publishers to include articles in
newsletters; the International Credit Association is having
information about credit fraud incorporated into high-school teachers’
guides; and the Publisher’s Clearinghouse developed an envelope
stuffer about sweepstakes fraud.
Additional Consumer Education Partnerships
For “Operation Copycat,” a law enforcement effort focusing on
office supply scams, the Office produced a brochure and tip card,
directed toward small businesses and nonprofit organizations, the
most frequent victims of this scam. These products were distributed
to nearly 350 trade and business publications with a combined
circulation of 24 million. The Office arranged for the Association of
Chamber of Commerce Executives, whose more than 1,500 members
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Appendix

represent approximately 90 percent of the chambers in the United
States, to help publicize and distribute the brochure and tip card. In
addition, the SBA agreed to distribute the brochure through its 70
regional offices. Online dissemination of the brochure originated
with ConsumerLine and was hyperlinked to the U.S. Business
Advisor’s Web site.
In an educational campaign to fight advance-fee employment
scams, the Office developed a brochure and tip card and coordinated
the participation of five major human resource and placement
industry organizations. The groups promoted the brochure and tip
card in their member newsletters and magazines, and three of the
groups added the publications to their Web sites. In addition, the
Office sent the brochure to 23 industry magazines. The major
industry publication, the Fordyce Letter, ran a story on the
Commission’s educational campaign.

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APPELLATE COURT REVIEW OF COMMISSION ACTIONS
COMPETITION MISSION
COMPETITION MISSION (SUMMARY)
Title

Number

Action Date

Coca-Cola Bottling Company
of the Southwest

D9215

09/10/96

Horizontal Merger

Carbonated Soft Drinks

Freeman Hospital

D9273

11/30/95

Horizontal Merger

Inpatient Hospital Services

COMPETITION MISSION
(DETAIL)

Type of Matter

Product/Service

Coca-Cola Bottling Company of the Southwest;
Dr Pepper/Seven-Up Company
The Commission dismissed its complaint against Coca-Cola
Bottling Company of the Southwest after the U.S. Court of Appeals
for the Fifth Circuit ruled that the competitive effects of the 1984
acquisition of a San Antonio, Texas, area Dr Pepper franchise should
have been reviewed under the Soft Drink Interbrand Competition Act
of 1980 rather than the Clayton Act. The Commission said that,
while it disagreed with the court decision, the circumstances
underlying the court’s decision were not likely to apply in future cases
involving an acquisition of soft drink bottlers.
Freeman Hospital; Tri-State Osteopathic Hospital Association, Inc.
(d/b/a Oak Hill Hospital)
The Commission determined not to pursue the administrative
litigation and dismissed the complaint that challenged the merger of
the second and third largest acute care hospitals in the Joplin,
Missouri, metropolitan area. The complaint alleged that the merger
of Freeman and Oak Hill Hospitals would substantially reduce
competition and raise prices for inpatient acute care hospital services
in the area. The hospitals consummated the merger after the U.S.
Court of Appeals for the Eighth Circuit denied the Commission’s
motion for a preliminary injunction. The decision to end the
administrative proceedings was made in accordance with a 1995
policy statement pursuant to which the Commission evaluates on a
case-by-case basis whether to pursue administrative litigation after
the denial of a preliminary injunction.
160

Economic Reports and Working Papers

Appendix

ECONOMIC REPORTS AND WORKING PAPERS
ECONOMIC REPORTS

Economic Reports are major, published reports, usually containing original research and entailing a substantial commitment of
resources, concerning an issue of current policy interest or of longterm impact on Federal Trade Commission antitrust or consumer
protection missions.
The Salt Producers’ Discount Practices Before and After the RobinsonPatman Act and the FTC’s Challenge to Them: The Morton and International Salt Cases, John L. Peterman, October 1995.
This study describes the pricing and distribution of salt during the
National Industrial Recovery Act period and beyond (1930-1945).
Two Commission cases brought to enforce the Robinson-Patman
antidiscrimination law during this period are examined in some detail.
Also included is a statistical description of industries in which the
Commission brought Robinson-Patman Act cases between 1936 and
1980.
Disentangling Regulatory Policy: The Effects of State Regulations on
Trucking Rates, Timothy P. Daniel and Andrew N. Kleit, November
1995.
This study estimates the relationship between intrastate trucking
rates and three different types of state-level regulations: (1) the strictness with which rates are regulated, (2) the requirements placed on
motor carriers seeking to enter the market, and (3) whether the state
provides antitrust immunity for decisions made by motor carrier rate
bureaus.
The Effectiveness of Collusion Under Antitrust Immunity: The Case
of Liner Shipping Conferences, Paul S. Clyde and James D. Reitzes,
January 1996.
This study analyzes whether ocean shipping rates are affected by
the presence and practices of ocean liner conferences. The study
provides some support for the conclusion that some aspects of the
conference system may contribute to higher shipping rates, particularly when the conference has a sizable market share.

161

Federal Trade Commission
ECONOMIC WORKING
PAPERS

Economic Working Papers are preliminary, unpublished work
products of the Commission, resulting from original research by
Bureau of Economics staff, either in connection with ongoing agency
activities or as independent analyses, often entailing relatively minor
allocations of official time.
The Political Economy of Federal Trade Commission Administrative Decision Making in Merger Enforcement (WP #210),
Malcolm B. Coate and Andrew N. Kleit, November 1995.
A Game Theory Model of Celebrity Endorsements (WP #211),
Mark N. Hertzendorf, March 1996.
Entry Policy and Entry Subsidies (WP #212), James D. Reitzes and
Oliver R. Grawe, April 1996.

162

Advocacy Filings

Appendix
ADVOCACY FILINGS
ADVOCACY FILINGS (SUMMARY)

Agency/State

Matter
Number

Subject/Issue

Authorization
Date

FEDERAL AGENCIES
Copyright Office

V960014

Open Video Systems Licensing

09/13/96

Federal Communications
Commission

V960013

900-Numbers

08/26/96

V950014

Local Multipoint Distribution
Service

08/22/96

V960009

Open Video Systems

07/15/96

V960007

Paging License Allocation
Procedures

03/18/96

Federal Energy Regulatory
Commission

V960008

Merger Standards

05/06/96

Food and Drug Administration

V960001

Direct-to-Consumer Promotion

01/11/96

V960002

“Pharmaco-Economic” Claims

01/16/96

STATES
Massachusetts

V960012

Wholesale Liquor Price Advertising

06/25/96

Tennessee

V960005

Veterinary Form-of-Practice

02/02/96

Virginia

V960015

Real Estate Settlements

09/19/96

Washington

V960006

Certified Public Accountant
Qualifications

03/18/96

ADVOCACY FILINGS (DETAIL)
FEDERAL AGENCIES

Copyright Office: Open Video Systems Licensing
Staff of the San Francisco Regional Office and the Bureau of
Economics filed a comment with the Copyright Office recommending
that it extend the compulsory licensing arrangement for cable
television systems to open video systems (OVS). OVS, established
under the Telecommunications Act of 1996, will combine features of
common carriers and cable systems in providing video programming.
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Federal Trade Commission
Staff said that applying the cable compulsory license to OVS, rather
than having OVS negotiate separate copyright licenses for each
broadcast channel, could benefit consumers because it would lead to
an allocation of resources that better reflected the relative costs of
different video distribution methods and would reduce the OVS’s cost
of acquiring programming, making its acquisition costs comparable
to those of other distribution technologies. In addition, the staff
recommended that the copyright liability rest with the firm providing
the programming on the OVS, not with the OVS operators.
Federal Communications Commission: 900-Numbers
Federal Trade Commission staff filed comments with the Federal
Communications Commission (FCC) supporting its efforts to keep
unscrupulous pay-per-call service providers from evading federal
regulations governing the 900-number industry. In particular, staff
supported the FCC’s efforts to prevent pay-per-call transactions from
being disguised as long-distance calls by requiring that whenever a
provider of information or entertainment programs gets any
remuneration for calls to such a program, the calls must fall within
the 900-number dialing code. Staff said that consumers would likely
benefit from this proposal because it would allow them to recognize
telephone numbers for calls that entail charges above regular longdistance charges, would subject the calls to cost-disclosure and
billing-dispute requirements, and would enable consumers to prevent
charges for unauthorized calls by blocking 900 numbers. The
Commission also said it supports efforts to narrow an exemption from
regulatory requirements in situations where there is a “presubscription” agreement between the caller and the information
provider, by requiring that such agreements be in writing.
Federal Communications Commission: Local Multipoint
Distribution Service
Federal Trade Commission staff filed comments with the FCC
about policies for awarding licenses for local multipoint distribution
service (LMDS), which can be used for two-way voice, video, and
data transmission, potentially in competition with local telephone or
cable companies. Staff said that local telephone or cable companies
that acquired an LMDS license for the same geographic area in which
they offer their current service, given enough market power, could
164

Advocacy Filings

Appendix
either warehouse the LMDS license to forestall a third party from
coming in and competing, or could raise the price of both services
they offer. In general, staff supported the FCC’s proposals to adopt
a cross-ownership rule that, rather than strictly prohibiting the award
of licenses to cable or telephone companies whose service areas
overlap the area for the LMDS license, would permit the incumbent
cable or telephone service operator to acquire an LMDS license as
long as the overlap was no more than a certain percentage of the area.
Staff concluded that until such time as effective competition is
present in these markets, the acquisition of LMDS spectrum licenses
by competing local exchange carriers and cable operators presents
potentially significant risks.
Federal Communications Commission: Open Video Systems
Staff of the Federal Trade Commission and the Antitrust Division
of the Department of Justice filed comments with the FCC in
opposition to petitions for reconsideration of the FCC’s recently
adopted rules to permit the operators of open video systems (OVS) to
limit the ability of competing, in-region cable operators to demand
carriage of their programming on the OVS. Staff supported the
FCC’s decision to permit an OVS operator to discriminate against or
exclude a directly competing dominant cable company when such
discrimination or exclusion is reasonable and just under the
Telecommunications Act of 1996. This approach, staff concluded,
comports with the mandate of the Act that the FCC accelerate the
emergence of competition in this market.
Federal Communications Commission: Paging License Allocation
Procedures
The Federal Trade Commission filed comments with the FCC
supporting its proposed revisions to its paging licensing rules and
distribution through competitive bidding. The Commission observed
that several of the proposed bidding procedures, such as requiring a
bidder to disclose its business classifications and posting upfront
payments, will help deter fraud. The Commission suggested that the
proposed bidding procedures can be strengthened further, to prevent
fraudulent abuse of the auction process, by requiring applicants, prior
to auction, to disclose the identities of the real parties in interest and
financial information. In addition, applicants should certify, prior to
165

Federal Trade Commission
auction, that the license will comply with any FCC transfer
restrictions and performance requirements. The Commission further
suggested that the application and competitive bidding procedures
require that bidding agents and application preparers disclose material
information about paging license regulations to the licensee and to all
interested parties.
Federal Energy Regulatory Commission: Merger Standards
The staff of the Bureau of Economics filed comments with the
Federal Energy Regulatory Commission (FERC) recommending
measures to assist in FERC’s evaluation of whether electric utility
mergers will be anticompetitive and increase costs for consumers.
Staff suggested relying on the Horizontal Merger Guidelines,
examining actual market concentration and competitive conditions,
examining competitive conditions among generation suppliers, and
modeling transmission flows. Staff concluded that open access to
transmission services should enable increased competition among
power generators to benefit consumers through lower rates.
Food and Drug Administration: Direct-to-Consumer Promotions
Commission staff filed comments with the Food and Drug
Administration (FDA) in response to a notice of proposed rulemaking
concerning its regulation of direct-to-consumer advertising for
prescription drugs. Staff suggested that the FDA consider adopting
an approach similar to the Commission’s Deception Policy Statement
and Statement on Advertising Substantiation to assist in evaluating
prescription drug advertisements. Staff recommended that limiting
current disclosure requirements and adjusting disclosure requirements
according to advertising venues could increase the net benefits of
direct-to-consumer advertisements. Staff also recommended that the
FDA consider alternative means for ensuring consumer access to
important information, replacing the highly technical and lengthy
“brief summary” currently appearing in consumer-directed prescription drug advertising.
Food and Drug Administration: “Pharmaco-Economic” Claims
Commission staff filed comments with the FDA in response to a
notice of proposed rulemaking concerning how structural changes in
166

Advocacy Filings

Appendix
the health care industry affect its responsibilities to regulate drug
marketing and promotion. Staff suggested that the FDA consider a
more flexible substantiation standard requiring competent and reliable
evidence whose level could depend on the claim being made, rather
than a standard containing an a priori requirement. Staff also
suggested that the FDA may wish to consider a disclosure approach
for any deception concerning “switch” programs, programs in which
pharmacists in managed-care plans seek physician approval to switch
a patient from a prescribed drug to a drug from a manufacturer
affiliated with the pharmacist. Clear and conspicuous disclosures
could cure deception while preserving the economic benefits of these
programs.

STATES

Massachusetts: Wholesale Liquor Price Advertising
In a statement to the Massachusetts Alcoholic Beverages Control
Commission, Boston Regional Office staff supported repeal of a
Massachusetts rule that facilitates wholesale-level collusion in liquor.
Staff suggested that the rule, which requires liquor wholesalers to file
a price list prior to the month in which the list will be effective, may
harm competition by deterring price changes. The rule may also
prevent incentive discounts in the form of free goods and promotional
discounts. Staff concluded that repealing the rule would tend to
encourage competition in the sale of alcoholic beverages in
Massachusetts.
Tennessee: Veterinary Form-of-Practice
The Atlanta Regional Office submitted comments to the
Tennessee State legislature supporting a bill that will permit
veterinarians to practice as employees of non-veterinarians under
certain conditions. Staff suggested that prohibiting jointly owned or
operated facilities could prevent efficient combinations of business
practices or operations that might result in lower prices to consumers,
while admitting new business formats that Tennessee’s law now
prohibits could have a positive effect on competition and might afford
consumers a wider selection of services and costs.

167

Federal Trade Commission
Virginia: Real Estate Settlements
Staff of the Commission and the Department of Justice submitted
a joint comment to the Virginia State Bar urging against adoption of
the Bar’s proposal to prevent non-lawyers and title company attorneys
from handling closings of real estate transactions and refinancings.
Staff said that the proposal, which would particularly affect
consumers who are obtaining home equity loans or refinancing
existing real estate loans, would be anticompetitive and would
increase costs to consumers by forcing consumers who would not
otherwise hire an attorney for a real estate closing to do so and would
likely cause the price of lawyers’ settlement services to increase, by
eliminating competition from lay settlement services. Staff
concluded that uninformed consumers could be protected by
measures far less anticompetitive than an outright ban on non-lawyer
closings.
Washington: Certified Public Accountant Qualifications
Commission staff filed comments with the Washington State
legislature on a rule that will require candidates for Certified Public
Accountant (CPA) status to earn at least 150 semester hours of
undergraduate academic credit. Staff suggested that raising the
educational entry requirements for CPA licensure will increase costs
of entry and may raise prices to consumers for CPA services. The
price effect could cause some consumers to reduce their use of
accounting services, substitute similar services at a lower price, or
forego professional accounting services altogether.

168

Index of Cases Listed in the Appendix
Respondent/Defendant

Page

Respondent/Defendant

Page

American Publishers Clearing Center . . . . . . . . . 80
American Publishers Exchange, Inc. . . . . . . . . . . 79
American Readers Service, Inc. . . . . . . . . . . . . . . 87
American Stores Company . . . . . . . . . . . . . . . . . 144
American Vending Group, Inc . . . . . . . . . . . . . . . 98
America’s Radio Transmitter, Inc. . . . . . . . . . . . . 111
Amna Medical . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Amna Medical Products Corp. . . . . . . . . . . . . . . 87
Amoco Oil Company . . . . . . . . . . . . . . . . . . . . . . 51
Amstar Finance Corporation . . . . . . . . . . . . . . . . 75
Amstar Investment Corporation . . . . . . . . . . . . . . 75
Ancelowitz, Joel . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Antares Corporation . . . . . . . . . . . . . . . . . . . . . . 133
ARCO Chemical Company . . . . . . . . . . . . . 60, 145
Arkla, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Ashfield, Jerome P. . . . . . . . . . . . . . . . . . . . . . . . . 88
Atida Karr Enterprises, Inc. . . . . . . . . . . . . . . . . 114
Atkins, Robert D. . . . . . . . . . . . . . . . . . . . . . . . . 127
Atlantic Richfield Company (ARCO) . . . . . . . . 145
AutoInfo Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Automatic Data Processing, Inc. . . . . . . . . . . . . 105
AWARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Aware-Regeneration and Renewing . . . . . . . . . . 129
Axelrod, Wayne . . . . . . . . . . . . . . . . . . . . . . . . . 136
Azari, Deborah L. . . . . . . . . . . . . . . . . . . . . . . . . . 88
Azari, Raphael Ralph . . . . . . . . . . . . . . . . . . . . . . 88
Azrak, Marvin . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Azrak-Hamway International, Inc. . . . . . . . . . . . . 52

7th on Sixth, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 40
9013-0980 Quebec Inc. . . . . . . . . . . . . . . . . . . . . 83
-AA.H. Peters Funeral Home
of Grosse Pointe, Inc. . . . . . . . . . . . . . . . . . . . . 109
Ability Medical, Inc. . . . . . . . . . . . . . . . . . . . . . 129
Acacia Properties, Inc. . . . . . . . . . . . . . . . . . . . . 131
Acme Vending Company . . . . . . . . . . . . . . . . . . . 98
Ad-Com International, Inc. . . . . . . . . . . . . . . . . . . 74
Adobe Systems Incorporated . . . . . . . . . . . . . . . 144
Ahold U.S.A., Inc. . . . . . . . . . . . . . . . . . . . . . . . . 43
Aikens, Thomas . . . . . . . . . . . . . . . . . . . . . . . . . 115
Aikens, Yvonne J. . . . . . . . . . . . . . . . . . . . . . . . . 115
Albany Felt Company . . . . . . . . . . . . . . . . . . . . . 149
Albany International Corporation . . . . . . . . . . . . 149
Albertson, Randolf D. . . . . . . . . . . . . . . . . . . . . . 62
Aldus Corporation . . . . . . . . . . . . . . . . . . . . . . . 144
Alexander & Associates . . . . . . . . . . . . . . . . . . . . 82
Alexander, Tod . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
All Snax, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Alleghany Corporation . . . . . . . . . . . . . . . . . . . . 144
Allen, Michael . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Alliance Communications, Inc. . . . . . . . . . . . . . . 88
Allied Bond & Collection Agency, Inc. . . . . . . . 110
Allied Snax, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Allstate Business Consultants Group, Inc. . . . . . . 98
Allstate Locating, Inc. . . . . . . . . . . . . . . . . . . . . 135
Alvarez, Fernando “Tom” . . . . . . . . . . . . . . . . . 134
America's Radio Transmitter, Ltd. . . . . . . . . . . . . 111
American 3-D Corporation . . . . . . . . . . . . . . . . . 132
American 3-D, Ltd. . . . . . . . . . . . . . . . . . . . . . . 132
American Business Supplies, Inc. . . . . . . . . . . . . 74
American Computer Industries, Inc. . . . . . . . . . . 132
American Direct Marketing, Inc. . . . . . . . . . . . . 110
American Enterprise List, Inc. . . . . . . . . . . . . . . . 80
American Exchange Group, Inc. . . . . . . . . . . . . . 74
American Family Sweepstakes, LLC . . . . . . . . . . 87
American Fortune 900, Inc. . . . . . . . . . . . . . . . . 125
American Home Business Association, Inc. . . . . . 80
American Home Products Corporation . . . . . . . 144
American Industrial Supplies . . . . . . . . . . . . . . . . 78
American Institute for Research
and Development, Inc. (AIRD) . . . . . . . . . . . . . 75
American Inventors Corporation (AIC) . . . . . . . . 75
American Medical Independence (A.M.I.) . . . . . 129
American Publisher Clearing Center . . . . . . . . . . 80

-BBaazov, Joshua . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Baazov, Ofer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Bainbridge, James D. . . . . . . . . . . . . . . . . . . . . . 132
Bannister, Suzanne . . . . . . . . . . . . . . . . . . . . . . . . 78
Bashor, Dana M. . . . . . . . . . . . . . . . . . . . . . . . . . 133
Basile, Richard . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Bass, Alex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Bayne , Charles Bernard . . . . . . . . . . . . . . . . . . . . 92
BBDO Worldwide, Inc. . . . . . . . . . . . . . . . . . . . . 52
Bean, Timothy R. . . . . . . . . . . . . . . . . . . . . . . . . . 54
Beeson Funeral Home, Inc. . . . . . . . . . . . . . . . . . 111
Beeson, James E., Jr. . . . . . . . . . . . . . . . . . . . . . . 111
Bell Connections, Inc. . . . . . . . . . . . . . . . . . . . . . 75
Bell, Dennis R. . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Bell, J. Llewellyn . . . . . . . . . . . . . . . . . . . . . . . . 112
Benckiser Consumer Products, Inc. . . . . . . . . . . . 52
Bentley Industries, Inc. . . . . . . . . . . . . . . . . . . . . 132

169

Federal Trade Commission
INDEX OF CASES LISTED IN THE APPENDIX
Respondent/Defendant

Page

Respondent/Defendant

Page

Career Information Services, Inc. . . . . . . . . . . . . . 77
Career Marketing Services, Inc. . . . . . . . . . . . . . . 77
Careers, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Caribbean Clear, Inc. . . . . . . . . . . . . . . . . . . . . . 125
Caridi, Joseph . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Carolina Federal Financial Services . . . . . . . . . . 131
Carolina Firstate Bankcard
& Loan Program Services . . . . . . . . . . . . . . . . 131
Carolina Firstate Financial . . . . . . . . . . . . . . . . . 131
Carr, Krystee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Catalano, Anthony . . . . . . . . . . . . . . . . . . . . . . . . 74
Catsimatidis, John A. . . . . . . . . . . . . . . . . . . . . . 149
Central Supply Center . . . . . . . . . . . . . . . . . . . . 131
Chambers, Thomas S. . . . . . . . . . . . . . . . . . . . . . 121
Chambers, William W. . . . . . . . . . . . . . . . . . . . . 121
Chambers, William W., III . . . . . . . . . . . . . . . . . 121
Champion, Joseph . . . . . . . . . . . . . . . . . . . . . . . 134
Channels, Walter D. . . . . . . . . . . . . . . . . . . . . . . . 85
Chappie, William B. . . . . . . . . . . . . . . . . . . . . . . . 83
Chapple, William Bruno . . . . . . . . . . . . . . . . . . . . 83
Charter Medical Corporation . . . . . . . . . . . . . . . 146
Chase McNulty Group, Inc. . . . . . . . . . . . . . . . . 125
Chi-Chi’s, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Chierico, Michael . . . . . . . . . . . . . . . . . . . . . . . . . 74
Chynoweth Corporation . . . . . . . . . . . . . . . . . . . 112
Ciba Self-Medication, Inc. . . . . . . . . . . . . . . . . . . 64
Ciba-Geigy Corporation . . . . . . . . . . . . . . . . . . . . 64
CIS Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . 77
Clark, Martha . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Clear Your Credit, Inc. . . . . . . . . . . . . . . . . . . . . 100
CMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Coca-Cola Bottling Company of the Southwest . 157
Cohen, Joel H. . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
College Assistance Planning . . . . . . . . . . . . . . . . 76
College Assistance Program . . . . . . . . . . . . . . . . . 76
College Assistance Services, Inc. . . . . . . . . . . . . . 78
Collins, Steve . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Columbia/HCA Healthcare Corporation . . . 39, 146
Commercial Distributors . . . . . . . . . . . . . . . . . . . 78
Commercial Electrical Supply, Inc. . . . . . . . . . . . 78
Compagnie de Saint-Gobain . . . . . . . . . . . . . . . . . 39
Compu-Kleen, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 91
Connelly, Dennis . . . . . . . . . . . . . . . . . . . . . . . . 131
Consumer Credit Advocates, P.C. . . . . . . . . . . . 126
Consumer Credit and Legal Services, P.C. . . . . . 126

Benton, Patricia . . . . . . . . . . . . . . . . . . . . . . . . . 125
Berggren, Keith . . . . . . . . . . . . . . . . . . . . . . . . . 100
Berman, Michael . . . . . . . . . . . . . . . . . . . . . . . . . 75
Best Marketing, Inc. . . . . . . . . . . . . . . . . . . . . . . . 76
Best, David D. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Bishop, Todd . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Blenheim Expositions, Inc. . . . . . . . . . . . . . . . . . . 53
Blodgett Memorial Medical Center . . . . . . . . . . . 94
Blue Water Health Services Corp. . . . . . . . . . . . . 43
Bluebonnet Hills Funeral Home, Inc. . . . . . . . . . 119
Bolton, Susan McWilliams . . . . . . . . . . . . . . . . . . 61
Borja, R.B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Borja, Reuben Sierra . . . . . . . . . . . . . . . . . . . . . 104
Boston Scientific Corporation . . . . . . . . . . . . . . 145
Boulerice, Ronald . . . . . . . . . . . . . . . . . . . . . . . . . 75
Brandzel, Robert A. . . . . . . . . . . . . . . . . . . . . . . 136
Brazell, Annette S. . . . . . . . . . . . . . . . . . . . . . . . . 80
Brazell, Robert V. . . . . . . . . . . . . . . . . . . . . . . . . . 80
Bridges, T. Randall . . . . . . . . . . . . . . . . . . . . . . . 102
Brown, Otis . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Buckley, Frederick O. . . . . . . . . . . . . . . . . . . . . . . 84
Budget Rent A Car Systems, Inc. . . . . . . . . . . . . . 53
Building Inspector of America, Inc., The . . . . 99, 111
Bureau 2000 International, Inc. . . . . . . . . . . . . . . 76
Bureau One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Burke, Glen E. . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Burns, Stephen Jonathan . . . . . . . . . . . . . . . . . . 135
Burr, Judith L. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Burr, Judy L. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Busler, Betty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Butterworth Hospital . . . . . . . . . . . . . . . . . . . . . . 94
-CC.A.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
CAF Phone Systems . . . . . . . . . . . . . . . . . . . . . . . 83
California Dental Association . . . . . . . . . . . . . . . 68
California Medical Association . . . . . . . . . . . . . 145
Calvo, Adelino, Jr. . . . . . . . . . . . . . . . . . . . . . . . . 82
Cambridge Exchange, Ltd., The . . . . . . . . . . . . . . 99
Cancer Treatment Centers of America, Inc. . . . . . 53
Canella, Conni . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Caparoni, Kenneth . . . . . . . . . . . . . . . . . . . . . . . . 80
Carborundum Company, The . . . . . . . . . . . . . . . . 39
Career Assistance Planning, Inc. . . . . . . . . . . . . . 76

170

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Respondent/Defendant

Page

Respondent/Defendant

Page

Diversified Marketing Service Corporation . . . . . 79
DMC Publishing Group . . . . . . . . . . . . . . . . . . . . 54
Doctors Eyecare Center, Inc. . . . . . . . . . . . . . . . 113
Donaghy, Patrick . . . . . . . . . . . . . . . . . . . . . . . . . 84
Dora, Jeanine . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Double Z Manufacturing, Inc. . . . . . . . . . . . . . . 113
Dr Pepper/Seven-Up Company . . . . . . . . . . . . . 157
Dr.’s Choice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Drew, Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Duboise, Marc . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Dunn, Johnny Ray . . . . . . . . . . . . . . . . . . . . . . . 131
Duram Rubber Products . . . . . . . . . . . . . . . . . . . . 55
Duvall, Gregory . . . . . . . . . . . . . . . . . . . . . . . . . 100

Consumer Law Center, The . . . . . . . . . . . . . . . . . 85
Cooke, Scott . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Coose, James Martin . . . . . . . . . . . . . . . . . . . . . . 85
Copy Resource Center, Inc. . . . . . . . . . . . . . . . . 131
Corey, Robert . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Corrales, Lorraine . . . . . . . . . . . . . . . . . . . . . . . . 74
Coryat, Brian . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Council of Fashion Designers of America, The . . 40
Coutinho, Daniel L. . . . . . . . . . . . . . . . . . . . . . . 101
Craig, Michael K. . . . . . . . . . . . . . . . . . . . . . . . . . 61
Creative Promotions . . . . . . . . . . . . . . . . . . 102, 135
Credit Doctor . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Creighton, Nicholas . . . . . . . . . . . . . . . . . . . . . . 134
Crestwood Enterprises, Inc. . . . . . . . . . . . . . . . . 138
Crown Credit Services . . . . . . . . . . . . . . . . . . . . . 82
Crown Electrical Supply . . . . . . . . . . . . . . . . . . . . 78
Curry, Mark W., III . . . . . . . . . . . . . . . . . . . . . . . 115
Cypers, Rory . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Czaplewski, Chappie . . . . . . . . . . . . . . . . . . . . . . 83
Czaplewski, William Brono . . . . . . . . . . . . . . . . . 83

-EEasley, Germaine . . . . . . . . . . . . . . . . . . . . . . . . 135
EDJ Telecommunications, Inc. . . . . . . . . . . . . . . . 79
Eggland’s Best, Inc. . . . . . . . . . . . . . . . . . . . . . . 113
Elevã, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Elite Credit Referral Services, Ltd. . . . . . . . . . . . 83
Elliott, E. Lee . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Ellis, Gabrielle . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Ellis, Larry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Ellis, Mark Thomas . . . . . . . . . . . . . . . . . . . . . . . 92
Empress Corporation . . . . . . . . . . . . . . . . . . . . . . 79
Enron Corporation . . . . . . . . . . . . . . . . . . . . . . . . 45
Enterprising Solutions . . . . . . . . . . . . . . . . . . . . . 55
Eton Derma Laboratories . . . . . . . . . . . . . . . . . . 114
Excel Communications . . . . . . . . . . . . . . . . . . . . . 55
Exxon Corporation . . . . . . . . . . . . . . . . . . . . . . . . 64

-DDahlberg, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Daniels & Hutchison Funeral Homes . . . . . . . . . 112
Dannon Company, Inc., The . . . . . . . . . . . . . . . . . 54
Davis, James R. . . . . . . . . . . . . . . . . . . . . . . . . . 102
Davis, Ron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Dayer, Donald Lee . . . . . . . . . . . . . . . . . . . . . . . . 75
Delgado, Augustine . . . . . . . . . . . . . . . . . . . . . . . 81
Delgado, Monique . . . . . . . . . . . . . . . . . . . . . . . . 81
Dell Computer Corporation . . . . . . . . . . . . . . . . . 40
DeLon, Angelo . . . . . . . . . . . . . . . . . . . . . . . . . . 101
DeRico, Nicholas . . . . . . . . . . . . . . . . . . . . . . . . . 80
Desert Financial Group, Inc. . . . . . . . . . . . . . . . 127
Designcraft Industries, Inc. . . . . . . . . . . . . . . . . . 149
Devro International plc . . . . . . . . . . . . . . . . . . . . . 40
Devro, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Diamond Rug and Carpet Mills, Inc. . . . . . . . . . . 99
Diehl, Robert . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Diet Workshop of Boston, Inc., The . . . . . . . . . . . 54
Diet Workshop, Inc., The . . . . . . . . . . . . . . . . . . . 54
Dillard Department Stores, Inc. . . . . . . . . . . . . . . 69
Direct Link, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Direct Telemarketing, Inc. . . . . . . . . . . . . . . . . . . 83
Discount Filing Services . . . . . . . . . . . . . . . . . . . . 75
District Supply Center . . . . . . . . . . . . . . . . . . . . 131
Diversified Data Services . . . . . . . . . . . . . . . . . . 116

-FFalcon Crest Communications, Inc. . . . . . . . . . . . 80
Family Memorial Funeral Home
of Yazoo City, Inc. . . . . . . . . . . . . . . . . . . . . . . 114
Family Publishers Clearing Center . . . . . . . . . . . . 80
Faulkner, Daniel T. . . . . . . . . . . . . . . . . . . . . . . . . 77
Federal News Service Group, Inc. . . . . . . . . . . . . 41
Federated Department Stores, Inc. . . . . . . . . . . . 105
FFR Marketing, Inc . . . . . . . . . . . . . . . . . . . . . . . 80
Fidelity National Financial Services . . . . . . . . . . 131
Film Centers of America, Inc. . . . . . . . . . . . . . . 102
Financial Freedom Report, Inc. . . . . . . . . . . . . . . 80
Financial Research Group, Inc. . . . . . . . . . . . . . 134
Fingarette, Daniel Alan . . . . . . . . . . . . . . . . . . . 132
Finkelstone, Lawrence . . . . . . . . . . . . . . . . . . . . . 111

171

Federal Trade Commission
Respondent/Defendant

Page

Respondent/Defendant

Page

Goodloe, Michele . . . . . . . . . . . . . . . . . . . . . . . . 114
Grant, Donald R. . . . . . . . . . . . . . . . . . . . . . . . . . 81
Grant, Lisa Warnock . . . . . . . . . . . . . . . . . . . . . . . 89
Grant, Richard Devon . . . . . . . . . . . . . . . . . . . . . 89
Graziano, Erick . . . . . . . . . . . . . . . . . . . . . . . . . 131
Grden, Robert L. . . . . . . . . . . . . . . . . . . . . . . . . 127
Green, Donna . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Green, Steven . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Gregory Funeral Home, Inc. . . . . . . . . . . . . . . . . 114
GU Acquisition Corporation . . . . . . . . . . . . . . . 148
Gull, Dana P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Gull, Don S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

First Brands Corporation . . . . . . . . . . . . . . . . . . 119
First Data Corporation . . . . . . . . . . . . . . . . . . . . . 41
Firstlight Entertainment, Inc. . . . . . . . . . . . . . . . 115
Florida Academic Enterprises, Inc. . . . . . . . . . . 120
Foodmaker, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 106
Ford Motor Company . . . . . . . . . . . . . . . . . . . . . . 55
Ford, Roger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Forde, Cindy W. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Fortuna Alliance, LLC . . . . . . . . . . . . . . . . . . . . . 81
Fraser, Stephen Mark . . . . . . . . . . . . . . . . . . . . . . 83
Fraud Action Network System (FANS), Inc. . . . 127
FreeCom Communications, Inc. . . . . . . . . . . . . . . 80
Freedom Medical of Wisconsin . . . . . . . . . . . . . 127
Freedom Medical, Inc. . . . . . . . . . . . . . . . . . . . . 127
Freeman Hospital . . . . . . . . . . . . . . . . . . . . . . . . 157
Fresh-O-Matic Corporation . . . . . . . . . . . . . . . . 128
Frontera, Thomas F. . . . . . . . . . . . . . . . . . . . . . . . 84
Fulton, Charles . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Fulton, Jennifer . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Funeral Services Acquisition Group, Inc. . . . . . . 115
Future Images, Inc. . . . . . . . . . . . . . . . . . . . . . . . 129

-HHamway, Ezra . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Hang-Ups Art Enterprises, Inc. . . . . . . . . . . . . . 128
Haroldsen, Kelly . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Haroldsen, Mark O. . . . . . . . . . . . . . . . . . . . . . . . 80
Harper & Row Publishers, Inc. . . . . . . . . . . . . . . . 68
Hartley, Cornelius (Eugene) . . . . . . . . . . . . . . . . 117
Hartley, Nava Jo . . . . . . . . . . . . . . . . . . . . . . . . . 117
Harvey, Sherri L. . . . . . . . . . . . . . . . . . . . . . . . . 129
Hasbro, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Havil, Rick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Haws, T. Michael . . . . . . . . . . . . . . . . . . . . . . . . 134
Hearst Corporation, The . . . . . . . . . . . . . . . . . . . . 68
Heitkamp, Wendy . . . . . . . . . . . . . . . . . . . . . . . . 136
Hexter, Edward H. . . . . . . . . . . . . . . . . . . . . . . . . 76
Hoechst AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Hoechst Celanese Corporation . . . . . . . . . . . . . . 146
Hoffman-La Roche Inc. . . . . . . . . . . . . . . . . . . . 149
Hoime, John . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Holbrook, Kent L. . . . . . . . . . . . . . . . . . . . . . . . 138
Holleger, Donna . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Holler, James E. . . . . . . . . . . . . . . . . . . . . . . . . . 138
Home Shopping Club, Inc. . . . . . . . . . . . . . . . . . . 66
Home Shopping Network, Inc. . . . . . . . . . . . . . . . 66
House of Wright Mortuary, Inc. . . . . . . . . . . . . . 112
Howard, Herman S. . . . . . . . . . . . . . . . . . . . . . . 110
HSN Lifeway Health Products, Inc. . . . . . . . . . . . 66
Hugh, Donald Patrick . . . . . . . . . . . . . . . . . . . . . . 83
Hughes Danbury Optical Systems, Inc. . . . . . . . . 42
Hughes Electronics Corporation . . . . . . . . . . . . . . 42
Hutchison, Robert C., Jr. . . . . . . . . . . . . . . . . . . 112

-GG & L Financial Services, Inc. . . . . . . . . . . . . . . 115
Galen Medical Centers, Ltd. . . . . . . . . . . . . . . . . . 56
Gansky, David A. . . . . . . . . . . . . . . . . . . . . . . . . . 92
Garganese, Michael . . . . . . . . . . . . . . . . . . . . . . . 82
Genentech, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 149
General Motors Corporation . . . . . . . . . . . . 42, 152
Genesis One Corporation . . . . . . . . . . . . . . . . . . . 81
Genetus Alexandria, Inc. . . . . . . . . . . . . . . . . . . . 56
Georgetown Galleries, Inc. . . . . . . . . . . . . . . . . 100
Gilmore, Joseph . . . . . . . . . . . . . . . . . . . . . . . . . 102
Giving You Credit, Inc. . . . . . . . . . . . . . . . . . . . 100
Glass Funeral Home, Inc. . . . . . . . . . . . . . . . . . . 115
Glass, James L., Sr. . . . . . . . . . . . . . . . . . . . . . . 115
Glendale Associates . . . . . . . . . . . . . . . . . . . . . . . 82
Glenwood Funeral Homes, Inc. . . . . . . . . . . . . . 114
Global Development Services, Inc. . . . . . . . . . . 128
Global E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Global Gumballs, Inc. . . . . . . . . . . . . . . . . . . . . 116
Gold Leaf Publishing
& Distributing Company, Inc. . . . . . . . . . . . . . . 82
Goldman & Levine . . . . . . . . . . . . . . . . . . . . . . . 115
Goldstein, Mark R. . . . . . . . . . . . . . . . . . . . . . . . 101
Gonor, Irwin . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Good News Products, Inc. . . . . . . . . . . . . . . . . . . 56

-I-

172

Index of Cases Listed in the Appendix
Respondent/Defendant

Page

Respondent/Defendant

Ideal Concepts, Inc. . . . . . . . . . . . . . . . . . . . . . . . 82
Ideal Credit Referral Services, Ltd. . . . . . . . . . . . 83
Illinois Tool Works Inc. . . . . . . . . . . . . . . . . . . . . 42
Incentive International . . . . . . . . . . . . . . . . . . . . . 83
Incentives International . . . . . . . . . . . . . . . . . . . . 83
Independence Medical of America, Inc. . . . . . . . 129
Independence Medical, Inc. . . . . . . . . . . . . . . . . 129
Industrial Chemical Corporation . . . . . . . . . . . . . 87
Industrial Chemical, Inc. . . . . . . . . . . . . . . . . . . . 87
Infinity Corporation . . . . . . . . . . . . . . . . . . . . . . 100
Infinity Multimedia, Inc. . . . . . . . . . . . . . . . . . . . 83
Innovative Telemedia, Inc. . . . . . . . . . . . . . . . . . . 84
Innovators of Success, Inc. . . . . . . . . . . . . . . . . . 137
Institut Merieux S.A. . . . . . . . . . . . . . . . . . . . . . 146
Intel Marketing of California, Inc. . . . . . . . . . . . 131
Intelinet Data Services . . . . . . . . . . . . . . . . . . . . . 84
International Charity Consultants, Inc. . . . . . . . . 129
International Computer Concepts, Inc. . . . . . . . . 130
International Marketing . . . . . . . . . . . . . . . . . . . . 79
International Research Corporation . . . . . . . . . . 137
Interstate Office Systems, Inc. . . . . . . . . . . . . . . . 74
Interstate, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
IS International . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Island Automated Medical Services, Inc. . . . . . . 116
IVAX Corporation . . . . . . . . . . . . . . . . . . . . . . . 147
Ivory Jack’s Trading Company, Inc. . . . . . . . . . . 101

Page

-KKallen, David . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Kallen, Marc Frank . . . . . . . . . . . . . . . . . . . . . . 135
Kalomeris, Paul . . . . . . . . . . . . . . . . . . . . . . . . . 104
Kamman, John, Jr. . . . . . . . . . . . . . . . . . . . . . . . 114
Karr, Atida H. . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Kato, Makiko . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Katz, Philip . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Katz, Sheldon . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Katz, Stanley L. . . . . . . . . . . . . . . . . . . . . . . . . . 130
Kazak, Martha . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Kelly, William S. . . . . . . . . . . . . . . . . . . . . . . . . . 74
Kemtech Industries . . . . . . . . . . . . . . . . . . . . . . . . 78
Khubani, Ajit . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Kiernan, Thomas . . . . . . . . . . . . . . . . . . . . . . . . 118
Kilichowski, William S. . . . . . . . . . . . . . . . . . . . . 86
King, Aaron S., Jr. . . . . . . . . . . . . . . . . . . . . . . . 114
King, Clyde G. . . . . . . . . . . . . . . . . . . . . . . . . . . 138
King, David A. . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Kinzer, Douglas I. . . . . . . . . . . . . . . . . . . . . . . . 115
Kistorian, Rose . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
KKR Associates, L.P. . . . . . . . . . . . . . . . . . . . . . 147
Klein, Max . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Knight, Eric . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Koblasz, Marilyn Naylor . . . . . . . . . . . . . . . . . . . 86
Koninklijke Ahold NV . . . . . . . . . . . . . . . . . . . . . 43
Kovaleva, Adel . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Kraft Foods, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 148
Kriel, David J. . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Kuykendall, C.H. . . . . . . . . . . . . . . . . . . . . . . . . . 79
Kuykendall, H.G., Jr. . . . . . . . . . . . . . . . . . . . . . . 79
Kuykendall, H.G., Sr. . . . . . . . . . . . . . . . . . . . . . . 79

-JJ. Llewellyn Bell Memorial Chapel, Inc. . . . . . . 112
J. Walter Thompson USA, Inc. . . . . . . . . . . . . . . . 56
J.C. Penney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
J.C. Pro Wear, Inc. . . . . . . . . . . . . . . . . . . . . . . . 117
J.P. Meyers Company, Inc. . . . . . . . . . . . . . . . . . . 85
Jayco Associates . . . . . . . . . . . . . . . . . . . . . . . . . 126
Jefferson, James E., Jr. . . . . . . . . . . . . . . . . . . . . 114
Jervis, William . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Jewell, Jerry J. . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Jobtech . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
John F. Yasik, Inc. . . . . . . . . . . . . . . . . . . . . . . . 112
Johnson & Collins Research, Inc. . . . . . . . . . . . . . 57
Johnson & Johnson . . . . . . . . . . . . . . . . . . . . . . . . 42
Johnson & Johnson Consumer Products, Inc. . . . 57
Jojola, Ray . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Jordan, McGrath, Case & Taylor, Inc. . . . . . . . . . 57
JR Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
June, Sam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Justus, Jimmie . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

-LLaFrance, Gerald E. . . . . . . . . . . . . . . . . . . . . . . . 90
Larson, Lyle R. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Latronica, Frank A., Jr. . . . . . . . . . . . . . . . . . . . . . 55
Laura Ashley, Inc. . . . . . . . . . . . . . . . . . . . . . . . 117
Laurel Land Funeral Home of Fort Worth, Inc. . 119
Laurel Land Funeral Home, Inc. . . . . . . . . . . . . 119
Law Center, The . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Lee, Ruta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Leonardo, Vincent . . . . . . . . . . . . . . . . . . . . . . . 138
Levy, David Chaim . . . . . . . . . . . . . . . . . . . . . . . . 76
Levy, Donna M. . . . . . . . . . . . . . . . . . . . . . . . . . . 76

173

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Respondent/Defendant

Page

Respondent/Defendant

Page

Marmer, Jeffrey S. . . . . . . . . . . . . . . . . . . . . . . . 129
Mathauda, Dilraj . . . . . . . . . . . . . . . . . . . . . . . . 101
May Department Stores Company, The . . . . . . . . 58
McCarty, Tim . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
McCormick & Company, Inc. . . . . . . . . . . . . . . 148
McCready, David F. . . . . . . . . . . . . . . . . . . . . . . . 67
McCullough, Colleen . . . . . . . . . . . . . . . . . . . . . 131
McGovern, Donald . . . . . . . . . . . . . . . . . . . . . . . . 91
McGovern, Michael . . . . . . . . . . . . . . . . . . . . . . . 87
McGowan, Michael P. . . . . . . . . . . . . . . . . . . . . . 87
McGraw, Vay Gregory . . . . . . . . . . . . . . . . . . . . 114
McWilliams, Danny Bishop . . . . . . . . . . . . . . . . . 61
McWilliams, William J. . . . . . . . . . . . . . . . . . . . . 61
Med Star USA . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Med-Amna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Med-Amna First Aide . . . . . . . . . . . . . . . . . . . . . . 87
Med-Amna First Aide Care . . . . . . . . . . . . . . . . . 87
Media Management, Inc. . . . . . . . . . . . . . . . . . . 134
Memorial Medical Center
and Cancer Institute, Inc. . . . . . . . . . . . . . . . . . . 53
Mercy Health Services . . . . . . . . . . . . . . . . . . . . . 43
Meridian Capital Management, Inc. . . . . . . . . . . 101
Merritt, Dale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Messina, Joseph . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Metro Dade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Metro Data, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Micom Corporation . . . . . . . . . . . . . . . . . . . . . . . 87
Midwestern Regional Medical Center, Inc. . . . . . 53
Minchey, Jerry . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Mizell, Matthew Corbitt, Jr. . . . . . . . . . . . . . . . . 138
Mobley, William D., Sr. . . . . . . . . . . . . . . . . . . . 114
Modern Management Systems, Inc. . . . . . . . . . . 118
Momentum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Monroe, Westy . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Morge, Michael . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Morris, Karl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Morris, William H. . . . . . . . . . . . . . . . . . . . . . . . . 66
Moskowitz, Harold . . . . . . . . . . . . . . . . . . . . . . . 132
Moskowitz, Ron . . . . . . . . . . . . . . . . . . . . . . . . . 132
Motion Medical, Inc. . . . . . . . . . . . . . . . . . . . . . 130
Mr. Popcorn, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 102
Mrs. Fields Cookies, Inc. . . . . . . . . . . . . . . . . . . . 59
MTH Holdings, Inc. . . . . . . . . . . . . . . . . . . . . . . 148
MTK Marketing, Inc. . . . . . . . . . . . . . . . . . . . . . 131
Multinet Marketing, LLC . . . . . . . . . . . . . . . . . . . 87
Murphy, Robin L. . . . . . . . . . . . . . . . . . . . . . . . . . 84
Mustad Connecticut, Inc. . . . . . . . . . . . . . . . . . . . 44
Mustad International Group NV . . . . . . . . . . . . . . 44

Lewis & Ribbs Mortuary, Inc. . . . . . . . . . . . . . . 117
Lewis, Fitzgerald . . . . . . . . . . . . . . . . . . . . . . . . 118
Lewis, Lorenzo J. . . . . . . . . . . . . . . . . . . . . . . . . 117
Life Safety Products . . . . . . . . . . . . . . . . . . . . . . . 55
Lifecare Investments, Inc. . . . . . . . . . . . . . . . . . 120
Linc II, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Litton Industries, Inc. . . . . . . . . . . . . . . . . . . . . . . 43
Live-Lee Productions, Inc. . . . . . . . . . . . . . . . . . . 58
Li’l Snacks, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 117
Local Health System, Inc . . . . . . . . . . . . . . . . . . . 43
Lockhart, Dion William . . . . . . . . . . . . . . . . . . . . 83
Lockheed Martin Corporation . . . . . . . . . . . . . . . 44
Loewen Group Inc., The . . . . . . . . . . . . . . . . . . . . 44
Loewen Group International Inc., The . . . . . . . . . 44
Long Life Industries, Inc. . . . . . . . . . . . . . . . . . . 137
Love, Linda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Luther, Mike . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Ly, Ngoc Q. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Lynch, Philip G. . . . . . . . . . . . . . . . . . . . . . . . . . 137
L’Air Liquide S.A. . . . . . . . . . . . . . . . . . . . . . . . 147
-MM.H.I. Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . 115
MacDonald, James W. . . . . . . . . . . . . . . . . . . . . 137
MacDonald, Margaret A. . . . . . . . . . . . . . . . . . . 137
Mackie Services, Inc. . . . . . . . . . . . . . . . . . . . . . 130
Macmillan, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
MAG Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Magazine Club Billing Service, Inc. . . . . . . . . . . 79
Magazine Distributors of America . . . . . . . . . . . 138
Magazine Express . . . . . . . . . . . . . . . . . . . . . . . 138
Magazines Limited . . . . . . . . . . . . . . . . . . . . . . . 138
Magazines of America . . . . . . . . . . . . . . . . . . . . 138
Magazines Unlimited . . . . . . . . . . . . . . . . . . . . . 138
Maige, Christopher . . . . . . . . . . . . . . . . . . . . . . . . 77
Malibu Media, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 76
Mama Tish's Italian Specialities, Inc. . . . . . . . . . . 58
Mancino, Nicholas S. . . . . . . . . . . . . . . . . . . . . . . 77
Mannesmann AG . . . . . . . . . . . . . . . . . . . . . . . . 147
Manti, Jim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Mark Curry’s Funeral Home, Inc. . . . . . . . . . . . 115
Mark III Funeral Home, Inc. . . . . . . . . . . . . . . . 115
Marketing Response Group
and Laser Company, Inc. . . . . . . . . . . . . . . . . . . 86
Marketing Response Group, Inc. . . . . . . . . . . . . . 86
Markowitz, David B. . . . . . . . . . . . . . . . . . . . . . 126
Markowitz, Fred . . . . . . . . . . . . . . . . . . . . . . . . . . 91

174

Index of Cases Listed in the Appendix
Respondent/Defendant

Page

Respondent/Defendant

Page

-N-

-O-

N.W. Ayer & Son, Inc. . . . . . . . . . . . . . . . . . . . . . 59
National Bureau of Consumer Affairs
Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
National Bureau of Credit, Inc. . . . . . . . . . . . . . 131
National Business Bureau . . . . . . . . . . . . . . . . . 104
National Business Distributors Company, Inc. . . . 88
National Dairy Products Corporation . . . . . . . . . 148
National Dietary Research, Inc. . . . . . . . . . . . . . . 66
National Marketing Service, Inc. . . . . . . . . . . . . . 79
National Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
National Safety & Supply . . . . . . . . . . . . . . . . . . . 87
National Safety Supply . . . . . . . . . . . . . . . . . . . . . 87
National Supply Center . . . . . . . . . . . . . . . . . . . 131
National Talent Associates, Inc. . . . . . . . . . . . . . . 88
National Tech Systems, Inc. . . . . . . . . . . . . . . . . 118
Nationwide Office Products, Inc. . . . . . . . . . . . . . 74
Nationwide Transport, Inc. . . . . . . . . . . . . . . . . . 131
Nationwide Vending . . . . . . . . . . . . . . . . . . . . . . 118
Natural Choice-USA . . . . . . . . . . . . . . . . . . . . . 133
NBC Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
NBDC Credit Resource Publishing . . . . . . . . . . . 59
Neighborhood Periodical Corporation (NPC)
of the Midwest, Inc. . . . . . . . . . . . . . . . . . . . . . . 79
Nelson, Kenneth E. . . . . . . . . . . . . . . . . . . . . . . . . 90
Net Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Network Communications Group, Ltd. . . . . . . . . 88
New Balance Athletic Shoe, Inc. . . . . . . . . . . . . . 45
New Consolidated Consultants, Inc. . . . . . . . . . . . 83
Newman, Mitchell R. . . . . . . . . . . . . . . . . . . . . . 119
Nibblers, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Nishika 3-D Camera Sales, Inc. . . . . . . . . . . . . . 132
Nishika Corporation . . . . . . . . . . . . . . . . . . . . . . 132
Nishika, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
NorAm Energy Corporation . . . . . . . . . . . . . . . . 145
NordicTrack, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 60
Norge, Michael . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
North American Supply, Inc. . . . . . . . . . . . . . . . 132
North East Telecommunications, Ltd. . . . . . . . . 101
North, Andrew . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Northern, David L., Jr. . . . . . . . . . . . . . . . . . . . . 102
Northern, Sarah C. . . . . . . . . . . . . . . . . . . . . . . . 102
Northwest Tribal Art, Inc. . . . . . . . . . . . . . . . . . 101
Nu-Idea Technologies, Inc. . . . . . . . . . . . . . . . . 102
NW Ayer, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Nwaigwe, Christopher Ebere . . . . . . . . . . . . . . . . 77

Oak Hill Hospital . . . . . . . . . . . . . . . . . . . . . . . . 157
Oasis Southwest, Inc. . . . . . . . . . . . . . . . . . . . . . . 88
Occidental Chemical Corporation . . . . . . . . . . . 148
Occidental Petroleum Corporation . . . . . . . . . . . 148
Oliver, Gail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Olson, Ken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Oman, Ronald . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Omega Promotions, Inc. . . . . . . . . . . . . . . . . . . . . 89
On Line Communications, Inc. . . . . . . . . . . . . . . 133
Oprean, George . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Oprean, Linda Huffman . . . . . . . . . . . . . . . . . . . . 56
Orion Management Corp. . . . . . . . . . . . . . . . . . . 105
Orion Products Corporation . . . . . . . . . . . . . . . . 133
O’Laughlin, James L. . . . . . . . . . . . . . . . . . . . . . 117
O’Neill, Incorporated . . . . . . . . . . . . . . . . . . . . . . 89
O’Rourke, William Robert . . . . . . . . . . . . . . . . . 104
-PPace, Enrico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Page 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
PAL Financial Services, Inc. . . . . . . . . . . . . . . . 134
Palm Harbor Holdings, Inc. . . . . . . . . . . . . . . . . . 86
Panella, David Wayne . . . . . . . . . . . . . . . . . . . . . 83
Panoramic Multimedia, Inc. . . . . . . . . . . . . . . . . 130
Papermakers Felt Association . . . . . . . . . . . . . . 149
Paperman, Gary . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Paragon Shipping, Inc. . . . . . . . . . . . . . . . . . . . . 131
Parker, Keith . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Parr, Creig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Parr, Nicholas Creighton . . . . . . . . . . . . . . . . . . 134
Parsell, Mel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Partners in Vision International, Inc. . . . . . . . . . 100
Pasteur Merieux Serums & Vaccins S.A. . . . . . . 146
Patten, Brian A. . . . . . . . . . . . . . . . . . . . . . . . . . 127
Pegasus Industries . . . . . . . . . . . . . . . . . . . . . . . . 83
Pendleton Woolen Mills, Inc. . . . . . . . . . . . . . . . 149
Perry, Gary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Pete-Nik Holdings, Inc. . . . . . . . . . . . . . . . . . . . . 86
Peters, David L. . . . . . . . . . . . . . . . . . . . . . . . . . 109
Peters, Michael . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Peters, Roy A. . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Petiton, John E. . . . . . . . . . . . . . . . . . . . . . . . . . 126
Pharmacia Aktiebolag . . . . . . . . . . . . . . . . . . . . . 48
Phillips Petroleum Company . . . . . . . . . . . . . . . . 45

175

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Respondent/Defendant

Page

Respondent/Defendant

Page

Reuters America, Inc. . . . . . . . . . . . . . . . . . . . . . . 41
Revco D.S., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Rhodes, Jeffrey L. . . . . . . . . . . . . . . . . . . . . . . . 102
Rick, Anthony L. . . . . . . . . . . . . . . . . . . . . . . . . 125
Rite Aid Corporation . . . . . . . . . . . . . . . . . . . . . . 95
Roark, Billy Ray . . . . . . . . . . . . . . . . . . . . . . . . . 104
Robbins Funeral Home . . . . . . . . . . . . . . . . . . . . 114
Robbins, Yolande T. . . . . . . . . . . . . . . . . . . . . . . 114
Roberts, Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Roberts, Steven . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Roche Holding Ltd. . . . . . . . . . . . . . . . . . . . . . . 149
Roche Holdings, Inc. . . . . . . . . . . . . . . . . . . . . . 149
Roche, James L. . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Rogers, Jerry Rodney . . . . . . . . . . . . . . . . . . . . . 129
Rogers, Jerry Wilburn . . . . . . . . . . . . . . . . . . . . 129
Rogers, Kenneth A. . . . . . . . . . . . . . . . . . . . . . . 128
Rogers, Steve . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Rogers, Violet Cassie . . . . . . . . . . . . . . . . . . . . . 129
Rohm & Haas Company . . . . . . . . . . . . . . . . . . . 150
Rosofsky, Alan L. . . . . . . . . . . . . . . . . . . . . . . . . 135
Rosofsky, Glenn . . . . . . . . . . . . . . . . . . . . . . . . . 102
Rourke, Andrew Joseph . . . . . . . . . . . . . . . . . . . 104
Rourke, Terrence Michael . . . . . . . . . . . . . . . . . 104
Rourke, William . . . . . . . . . . . . . . . . . . . . . . . . . 104
Rubbico, Joseph . . . . . . . . . . . . . . . . . . . . . . . . . 129
Rust Evader Corporation . . . . . . . . . . . . . . . . . . . 67
RustEvader Corporation . . . . . . . . . . . . . . . . . . . . 67
RxCare of Tennessee, Inc. . . . . . . . . . . . . . . . . . . 46
Ryan, Donald . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Ryder, Dave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Phillips, Lisa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Phillips, William . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Pieri, John A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Pioneer Communications of Nevada, Inc. . . . . . . 90
Pirelli Armstrong Tire Corporation . . . . . . . . . . 106
Popp, Patricia Esme . . . . . . . . . . . . . . . . . . . . . . . 82
Porcelli, Peter J., Jr. . . . . . . . . . . . . . . . . . . . . . . . 86
Port Washington Real Estate Board, Inc. . . . . . . . 45
Portalatin, Michael A. . . . . . . . . . . . . . . . . . . . . . 88
Porter, Oliver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Praxair Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Precision Moulding Company, Inc. . . . . . . . . . . . 46
Prefer, Randy . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Premium Magazine . . . . . . . . . . . . . . . . . . . . . . . 138
Prime Time Marketing . . . . . . . . . . . . . . . . . . . . . 90
Prime Time Publishing . . . . . . . . . . . . . . . . . . . . . 90
Professional Model and Talent, Inc. . . . . . . . . . . . 77
Public Telco Corporation . . . . . . . . . . . . . . . . . . 133
Publishers Award Bureau . . . . . . . . . . . . . . . . . . . 90
Putnam Berkley Group, Inc., The . . . . . . . . . . . . . 68
-QQuaker State-Slick 50, Inc. . . . . . . . . . . . . . . . . . . 65
Quality Marketing Associates, Inc. . . . . . . . . . . . 83
Quality Marketing, Inc. . . . . . . . . . . . . . . . . . . . 134
Quartercall Communications, Inc. . . . . . . . . . . . 118
Questar Corporation . . . . . . . . . . . . . . . . . . . . . . . 94
-R-

-S-

Rahim, Rick A. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Ramos, David L. . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Randell, Cortes W. . . . . . . . . . . . . . . . . . . . . . . . . 41
Random House, Inc. . . . . . . . . . . . . . . . . . . . . . . . 68
Ray Williams Funeral Home, Inc. . . . . . . . . . . . 102
Ray, Billy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Raytheon Company . . . . . . . . . . . . . . . . . . . . . . . 46
REC Technologies . . . . . . . . . . . . . . . . . . . . . . . . 67
Red Apple Companies, Inc. . . . . . . . . . . . . . . . . 149
Regency Services, Inc. . . . . . . . . . . . . . . . . . . . . . 89
Regeneration & Renewing, Inc. . . . . . . . . . . . . . 129
Reinhold, R.C. . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Rem, James . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Remmers, Lonny . . . . . . . . . . . . . . . . . . . . . . . . 134
Republic Communications Corp. . . . . . . . . . . . . . 80
Research Awards Center, Inc. . . . . . . . . . . . . . . . 134
Restland Funeral Home, Inc. . . . . . . . . . . . . . . . 119

S.C. Johnson & Son, Inc. . . . . . . . . . . . . . . . . . . 150
Saccurato, Dennis J. . . . . . . . . . . . . . . . . . . . . . . . 91
Safe Brands Corporation . . . . . . . . . . . . . . . . . . . 60
Safeway Stores Incorporated . . . . . . . . . . . . . . . 151
Saint-Gobain/Norton Industrial Ceramics
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Samson, John L. . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Santa Clara County Motor Car Dealers
Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Sara Lee Corporation . . . . . . . . . . . . . . . . . . . . . 106
Satellite Broadcasting Corporation . . . . . . . . . . 134
Satellite Broadcasting Royalty Trust . . . . . . . . . 134
Satellite Systems, Inc. . . . . . . . . . . . . . . . . . . . . . 134
Satpathy, Bibekanand . . . . . . . . . . . . . . . . . . . . . . 75
Sawyer, Michael Kody . . . . . . . . . . . . . . . . . . . . 129

176

Index of Cases Listed in the Appendix
Respondent/Defendant

Page

Respondent/Defendant

Page

SSC Associates, L.P. . . . . . . . . . . . . . . . . . . . . . . 48
SSI Associates, L.P. . . . . . . . . . . . . . . . . . . . . . . 151
Stack, Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Star Financial Services . . . . . . . . . . . . . . . . . . . . . 82
Star Funding Group . . . . . . . . . . . . . . . . . . . . . . 116
Starr Communications . . . . . . . . . . . . . . . . . . . . . 61
Starrion, Michael . . . . . . . . . . . . . . . . . . . . . . . . 127
Starwood Advertising, Inc. . . . . . . . . . . . . . . . . . . 52
Sterling, Kenneth . . . . . . . . . . . . . . . . . . . . . . . . . 98
Stewart, Ron . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Stier, Samuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Stier, Steven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Stone, Cassandra . . . . . . . . . . . . . . . . . . . . . . . . . 86
Stop & Shop Companies, Inc., The . . . . . . . . . . . 48
STP Corporation . . . . . . . . . . . . . . . . . . . . . . . . 119
Strategies Telecom, Inc. . . . . . . . . . . . . . . . . . . . 101

SCAT Services . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Schumaker, Helen . . . . . . . . . . . . . . . . . . . . . . . . 130
Schumaker, Larry . . . . . . . . . . . . . . . . . . . . . . . . 130
Sears, Bruce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Second Income, Inc. . . . . . . . . . . . . . . . . . . 102, 135
Senior Citizens Against Telemarketing
(SCAT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Sentinel Group, Inc. . . . . . . . . . . . . . . . . . . . . . . 150
Servaes, Clarence Jack . . . . . . . . . . . . . . . . . . . . . 87
Servaes, Jack Michael . . . . . . . . . . . . . . . . . . . . . 87
Service Bureau International, Inc. . . . . . . . . . . . . 86
Service Corporation International . . . . . . . . 47, 150
Serviss, Robert . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Settles, Becky Burch . . . . . . . . . . . . . . . . . . . . . . 76
Shapiro, Joseph . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Showcase Distributing, Inc. . . . . . . . . . . . . . . . . 103
Shropshire, Daniel B. . . . . . . . . . . . . . . . . . . . . . 113
Sierra Medical, Inc. . . . . . . . . . . . . . . . . . . . . . . 127
Sierra, Reuben . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Silent SalesForce, Inc. . . . . . . . . . . . . . . . . . . . . . 80
Silicon Graphics, Inc. . . . . . . . . . . . . . . . . . . . . . . 47
Silver Shots, Inc. . . . . . . . . . . . . . . . . . . . . 102, 135
Silver State Western Publishing, Inc. . . . . . . . . . . 90
Silverman, M. David . . . . . . . . . . . . . . . . . . . . . 135
Silvers, Robert R. . . . . . . . . . . . . . . . . . . . . . . . . . 82
Silvers, Tod A. . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Simon & Schuster, Inc. . . . . . . . . . . . . . . . . . . . . . 68
Simplex Services . . . . . . . . . . . . . . . . . . . . . . . . . 60
Singing Hills Funeral Home, Inc. . . . . . . . . . . . . 119
Slick 50 Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Slick 50 Management, Inc. . . . . . . . . . . . . . . . . . . 65
Slick 50 Products Corp. . . . . . . . . . . . . . . . . . . . . 65
Sloan’s Supermarkets, Inc. . . . . . . . . . . . . . . . . . 149
Small, Margaret Reed . . . . . . . . . . . . . . . . . . . . . 118
Smeltzer, Daniel . . . . . . . . . . . . . . . . . . . . . . . . . 127
Smith, David Lee . . . . . . . . . . . . . . . . . . . . . . . . . 77
Smith, Englhieberth (Bert) . . . . . . . . . . . . . . . . . . 83
Smith, Maria Tilotta . . . . . . . . . . . . . . . . . . . . . . . 83
Smith, Michelle . . . . . . . . . . . . . . . . . . . . . . . . . 116
Smith, Peter K. . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Smith, Sherman G. . . . . . . . . . . . . . . . . . . . . . . . . 61
Southeast Necessities Company, Inc. . . . . . . . . . 135
Sowards, Anita . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Sparta Chem, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 91
Spence, Michael C. . . . . . . . . . . . . . . . . . . . . . . . . 78
Spence, Steven . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Spotts, Dane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Spring, Richard . . . . . . . . . . . . . . . . . . . . . . . . . 100

Stratified Advertising and Marketing, Inc. . . . . . . 84
Strauss, Erwin Allen . . . . . . . . . . . . . . . . . . . . . . . 75
Stricklin-King Funeral Home, Inc. . . . . . . . . . . . 114
Student Aid Incorporated . . . . . . . . . . . . . . . . . . . 91
Student Assistance Services, Inc. . . . . . . . . . . . . . 91
Student Financial Services, Inc. . . . . . . . . . . . . . . 91
Summit Communications Group, Inc. . . . . . . . . . 48
Summit Communications, Inc. . . . . . . . . . . . . . . 119
Sun Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . 150
Supermarket Acquisition Corp. . . . . . . . . . . . . . 149
Surface Science Corporation . . . . . . . . . . . . . . . 103
Swichkow, Leon D. . . . . . . . . . . . . . . . . . . . . . . . 111
Symington, Lois . . . . . . . . . . . . . . . . . . . . . . . . . 100
Symington, Paul . . . . . . . . . . . . . . . . . . . . . . . . . 100
Szabo, William . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
-TT&N plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Tager, Adel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Tagiev, Raimma . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Tannen Advertising, Inc. . . . . . . . . . . . . . . . . . . 101
Tanzara International, Inc. . . . . . . . . . . . . . . . . . 120
Taylor, Barry . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Telco Marketing, Inc. . . . . . . . . . . . . . . . . . . . . . 131
Tele-Communications, Inc. . . . . . . . . . . . . . . . . . 151
Telebrands Corporation . . . . . . . . . . . . . . . . . . . 120
Telecommunications of America, Inc. . . . . 103, 135
Telecommunications Protection Agency, Inc. . . . 91
Tennessee Pharmacists Association . . . . . . . . . . . 46
Third Option Laboratories, Inc. . . . . . . . . . . . . . . 61

177

Federal Trade Commission
Respondent/Defendant

Page

Respondent/Defendant

Page

W.H. Jefferson Funeral Home . . . . . . . . . . . . . . 114
W.W. Chambers Co., Inc. . . . . . . . . . . . . . . . . . . 121
Warden, Rena . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Warner List, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Warner Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Warnock, Lisa Marie . . . . . . . . . . . . . . . . . . . . . . 89
Warnock, Lisa Phillips . . . . . . . . . . . . . . . . . . . . . 89
Warnock, Michael . . . . . . . . . . . . . . . . . . . . . . . . 89
Warren Distribution, Inc. . . . . . . . . . . . . . . . . . . . 60
Waters, Harvey . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Weiss, Michael . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Thomas Aikens, Inc. . . . . . . . . . . . . . . . . . . . . . . 115
Tisei, Beverly . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Tisei, Ralph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Titan Wheel International, Inc. . . . . . . . . . . . . . . 106
Topp Kat, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Toppkat, II. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 129
Total Care, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Tower Cleaning Systems, Inc. . . . . . . . . . . . . . . . 92
Towne, Les . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Toys R Us, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Travlos, John . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Tri-State Osteopathic Hospital
Association, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 157
Tripp, Kurt L. . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Trotter, Jeffrey D. . . . . . . . . . . . . . . . . . . . . . . . . 125
Tutor Time Child Care Systems, Inc. . . . . . . . . . 120
Two-Way Systems, Inc. . . . . . . . . . . . . . . . . . . . . 92

Weissman, Michael . . . . . . . . . . . . . . . . . . . . . . . 120
Weissman, Richard . . . . . . . . . . . . . . . . . . . . . . . 120
Welch, Libby Gustine . . . . . . . . . . . . . . . . . . . . . . 81
Wellington Art, Ltd., Inc. . . . . . . . . . . . . . . . . . . . 99
Wells, Allan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Wentz, Joseph A. . . . . . . . . . . . . . . . . . . . . . . . . . 83
West Point Pepperell, Inc. . . . . . . . . . . . . . . . . . 151
WestPoint Stevens, Inc. . . . . . . . . . . . . . . . . . . . 151
Wholesale Magazine . . . . . . . . . . . . . . . . . . . . . 138
William H. Morris Company, The . . . . . . . . . . . . 66
Williams Funeral Service . . . . . . . . . . . . . . . . . . 114
Williams, Cindy . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Williams, Lawrence . . . . . . . . . . . . . . . . . . . . . . . 87
Williams, Matthew, Jr. . . . . . . . . . . . . . . . . . . . . 114
Windward Marketing, Ltd. . . . . . . . . . . . . . . . . . 138
WLAR Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Wolf Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Wolf, Marvin . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Wolverine Capital . . . . . . . . . . . . . . . . . . . . . . . . . 62
Wometco Cable TV . . . . . . . . . . . . . . . . . . . . . . . 48
Wong, Edward . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Wood, Anton Albert . . . . . . . . . . . . . . . . . . . . . . 130
World Class Vacations, Inc. . . . . . . . . . . . . . . . . . 87
Worldwide Wallcoverings & Blinds, Inc. . . . . . . . 93
Wright, Jacquita L. . . . . . . . . . . . . . . . . . . . . . . . 112
Wright, Robert O. . . . . . . . . . . . . . . . . . . . . . . . . 112

-UU.S. Telemedia, Inc. . . . . . . . . . . . . . . . . . . . . . . 136
Union Carbide Chemicals
and Plastic Company Inc. . . . . . . . . . . . . . . . . . 145
Union Carbide Corporation . . . . . . . . . . . . . . . . 145
Unique Selling Propositions, Inc. . . . . . . . . . . . . 100
United Careers, Inc. . . . . . . . . . . . . . . . . . . . . . . . 77
United Consumer Services, Inc. . . . . . . . . . . . . . 136
United Creditors Alliance Corporation . . . . . . . 121
United Recovery Services, Inc. . . . . . . . . . . . . . 136
United States Business Bureau, Inc. . . . . . . . . . 104
United Wholesalers, Inc. . . . . . . . . . . . . . . . . . . 137
Universal Client Services, Inc. . . . . . . . . . . . . . . . 83
Universal Credit Corporation . . . . . . . . . . . . . . . . 92
Upjohn Company, The . . . . . . . . . . . . . . . . . . . . . 48
USA Channel Systems, Inc. . . . . . . . . . . . . . . . . . 92
USA Credit Services, Inc. . . . . . . . . . . . . . . . . . . 93
USM Corporation . . . . . . . . . . . . . . . . . . . . . . . . 137
-V-

-YVandeputte, Anthony . . . . . . . . . . . . . . . . . . . . . 101
Vasti, Nicholas . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
VC Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Viggiano, Joseph M. . . . . . . . . . . . . . . . . . . . . . . . 87
Von Ehrenfels, Gregor A. . . . . . . . . . . . . . . . . . . . 57
Vons Companies, Inc., The . . . . . . . . . . . . . . . . . 151

Yasik Funeral Home – Stanley S. Yasik, Inc. . . . 104
Yasik, John P., III . . . . . . . . . . . . . . . . . . . . . . . . 112
Yasik, John P., Jr. . . . . . . . . . . . . . . . . . . . . . . . . 112
Yasik, Joseph S. . . . . . . . . . . . . . . . . . . . . . . . . . 104
Yasik, Stanley J., Jr. . . . . . . . . . . . . . . . . . . . . . . 104
Yasik, Stephanie A. . . . . . . . . . . . . . . . . . . . . . . 112
Young & Rubicam, Inc. . . . . . . . . . . . . . . . . . . . . 55

-W-

178

Index of Cases Listed in the Appendix
Respondent/Defendant

Page

Respondent/Defendant

Page

Zoyes, Michael George . . . . . . . . . . . . . . . . . . . 135
Zygon International, Inc. . . . . . . . . . . . . . . . . . . . 62

-ZZoyes, Janice Lynn . . . . . . . . . . . . . . . . . . . . . . . 135

179