Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Sweepstakes operator banned from prize promotion industry, (Oct 7, 2014)

By Linda O’Brien, J.D., LL.M.

A sweepstakes operator that allegedly took millions of dollars from consumers throughout the United States and dozens of other countries—including Canada, the United Kingdom, France, and Japan—has been banned from the prize promotion business under a settlement with the FTC, the agency announced today (FTC v. Applied Marketing Sciences LLC, File No. 132-3106).

In September 2013, the FTC filed a complaint in the federal district court for the Central District of California, charging the defendants with violating federal law in connection with their deceptive prize promotion letters. The court subsequently halted the operation, froze the defendants’ assets, and appointed a receiver over the corporate defendants pending resolution of the case.

The complaint alleged that consumers received personalized mail that falsely claimed they had won a cash prize, typically more than $2 million, and required the consumers to pay a fee, usually from $20 to $30, to collect. Those who paid got nothing of value in return. The vast majority of the victims appeared to be seniors over the age of 65.

The defendants are Liam O. Moran of Ventura, California, and his companies, Applied Marketing Sciences LLC; Standard Registration Corporation, also doing business as Consolidated Research Authority and CRA; and Worldwide Information Systems Incorporated, also d/b/a Specific Monitoring Service, SMS, Specific Reporting Service, SRS, Universal Information Services, UIS, Compendium Sampler Services, and CSS.

Under the settlement order, the defendants were banned from any conduct involving prize promotions; permanently prohibited from misrepresenting any good or service; barred from selling or otherwise benefitting from consumers’ personal information; and precluded from failing to properly dispose of customer information. The order imposes a judgment of more than $11 million, which represents the amount of money consumers lost. The judgment will be suspended when Moran turns over the proceeds of the sale of his home. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The Commission vote authorizing the staff to file the proposed stipulated order was 5-0.

Companies: Applied Marketing Sciences LLC; Standard Registration Corporation; Worldwide Information Systems Incorporated

News: ConsumerProtection FederalTradeCommissionNews