Two Springville men and an Internet shopping mall company they founded have agreed to pay $4 million to settle Federal Trade Commission charges they made false earnings claims to promote their company.
Craig R. Pickering and Mark R. Comer, two past presidents of iMall, also would be barred for life from selling any Internet or pay-per-call business opportunity; barred for 10 years from selling franchises; and required to post a $500,000 bond before selling certain types of business opportunities.iMall was to pay $750,000 of the fine, with Pickering and Comer to pay the remaining $3.25 million.
Between July 1995 and August 1998, iMall marketed two Internet-related programs using direct mail, radio ads, television infomercials, a promotional cassette and telemarketing calls designed to induce investors to attend free seminars where they would hear about the business opportunities, the FTC said. Potential investors were told that for a $2,000 investment they could make $2,000 to $5,000 a month for five to 10 hours of work.
The FTC said most investors did not earn nearly what the seminar leaders claimed they could. The earnings claims were false and misleading and violated federal laws.
"This case sends two important messages: Marketers, back up your earnings claims. It's the law. Consumers, don't buy a pig in a poke. Check out business opportunities to make sure they're everything they claim to be," said Jodie Bernstein, director of the FTC's Bureau of Consumer Protection. "A deceptive claim is a deceptive claim, whether it is on the Internet or in your local newspaper."
According to the FTC complaint, Pickering and Comer co-founded iMall in July 1995. The company was incorporated in Nevada and had offices both in Provo and its principal location in Studio City, Calif. The FTC said Pickering and Comer generated approximately $30 million in gross revenue from the sale of iMall ventures.
A spokeswoman for the FTC said the agency typically appoints an administrator who distributes fines collected to affected investors.