Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Prize Promotion Scheme Halted in FTC Contempt Action, (Mar 13, 2013)

By William Zale, J.D.

At the FTC’s request, the federal district court in Las Vegas has issued an injunction appointing a receiver and freezing the assets of a bogus prize-promotion scheme that was run by a repeat offender whom the agency first stopped from making deceptive telemarketing pitches 15 years ago (FTC v. Dayton Family Productions, Inc., FTC File No. X970058, Civ. Act. No. CV-S-97-750-PMP (LRL)).

The March 5 court order addresses Glen E. Burke’s prize promotion pitch in which consumers were told they won a valuable prize, only to receive cheap costume jewelry or a lithograph print after paying money up-front.

Based on his role an earlier film investment scheme, in 1998 a federal district court entered an order permanently banning Burke from engaging in telemarketing and prohibiting him from making material misrepresentations about any product or service. In addition to the order, the FTC had obtained a prior order in 1996 against Burke in connection with a business opportunity scam, and he has also been the subject of enforcement actions by other federal agencies.

Despite the 1998 order, the FTC alleges that since early 2011, Burke and his company, American Health Associates, LLC (AHA), have engaged in a deceptive telemarketing scheme through which they call consumers and tell them that they have won valuable prizes, supposedly worth thousands of dollars.

Consumers are told that to claim the prizes they must first buy vitamins for between $300 and $500. In some cases, the defendants then seek additional payments for even “more valuable” or “second level” prizes. After consumers make these payments, however, either no prizes are delivered, or the prize they do “win,” such as costume jewelry or lithographs, is worth less than they initially paid for the vitamins. Consumers who try to return the vitamins for a refund find the process difficult, if not impossible, to complete, according to the FTC.

The court order freezes the assets of Burke and AHA and appoints a receiver over AHA. The order grants this relief pending the outcome of the FTC’s civil contempt actions against the defendants for violating the 1998 order. In its contempt actions, the FTC alleged that Burke violated the 1998 order both through his AHA telemarketing scheme and through an additional direct-mail sweepstakes scheme. The direct-mail scheme promised consumers thousands or millions of dollars in winnings if they made a small payment, but after making the payment, no consumer received the promised winnings. The FTC is seeking compensation for consumers harmed by the defendants’ alleged order violations.

Companies: Dayton Family Productions, Inc.

News: ConsumerProtection FederalTradeCommissionNews