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Direct Response Marketing

Telemarketers Hit with Seven FTC Violations

25 Jan, 2006 Response This Week


WASHINGTON- The Federal Trade Commission (FTC) waged seven counts of federal marketing violations against Conversion Marketing Inc. and Adam Tyler MacDonald, including Do-Not-Call (DNC) Registry violations and unsubstantiated claims. The defendants face a $474,000 settlement consisting of $463,000 in consumer redress and $11,000 in civil penalties.

Conversion Marketing advertised tooth-whitening kits and weight-loss patches. According to the FTC, the defendants offered  “free” samples of the tooth-whitening kits, but then later debited consumers’ accounts without permission and enrolled them in monthly continuity programs. The Commission also alleged that the defendants made unsubstantiated claims about their weight-loss patches and had telemarketers pitch them to people who were listed on the DNC Registry.

The weight-loss patches, known as Pounds Off Patch and Carbs Off Patch, were supposed to cause substantial weight loss when placed on the skin by blocking carbohydrate intake. The FTC claimed that the defendants “abandoned” calls, or left consumers on the phone without a teleservices representative, when marketing these patches to consumers on the DNC Registry. A separate complaint has been filed with the Department of Justice for that offense and for failing to pay the annual access fee to the updated DNC Registry.

In addition to the monetary penalties, the defendants are prohibited from making any unsubstantiated claims or misrepresentations, such as offering “free” products without informing consumers that they’ll be enrolled in a continuity program. Before accepting payment, the defendants must have the “express, informed consent of the consumers,” according to the Commission. The original settlement, containing a $979,204 judgment, was suspended based on inability to pay, except for $463,000. The settlement that was referred to the Department of Justice contains a $580,056 civil penalty, which was suspended, save for $11,000.

 “I’m glad that this traumatic ordeal is over,” said McDonald. “We have always maintained our innocence, and I think that we did a great job demonstrating to the FTC that we did nothing intentionally wrong or unethical. That was and has always been the most important element of this matter.  Our integrity is everything. A lesson learned that I would like to pass on to anyone or any company processing orders via direct response, either through telemarketing or on television: it is critical that you understand where and how the orders are being generated that you process because ultimately you will be held responsible for any of the vendors you do business with.”


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