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Mystery shopper site settles with FTC
- — 05 December, 2008 06:22
A Web-based operation that promised customers they could make big money as mystery shoppers will pay US$850,000 to settle charges of deceptive advertising and contempt brought by the U.S. Federal Trade Commission.
The FTC in March 2007 filed complaints against three companies and five people, alleging they worked together on a campaign saying that MysteryShopLink.com was hiring mystery shoppers nationwide. Mystery shoppers get paid to shop at stores or dine out.
MysteryShopLink.com ran advertisements online, in newspapers, on the radio and on television. People who responded to the ads were told by the company's telemarkers that Mystery Shop Link had large numbers of unfilled mystery shopping jobs available. In exchange for a $99 fee, consumers were promised enough work to earn a steady full-time or part-time income as mystery shoppers, the FTC said.
Instead, consumers received a worthless certification and access to postings for mystery shopping jobs controlled by other companies, the FTC said. Consumers had to apply for these mostly low-paying jobs and had no advantage over anyone else who found the postings free elsewhere on the Internet. Most consumers got no jobs and earned no money, the agency said.
The companies charged by the FTC in March were Mystery Shop Link and Tangent Group, both based in Portland, Maine, and telemarketer Harp Marketing Services, based in Fort Lauderdale, Florida.
The FTC also charged five of the eight defendants -- Mystery Shop Link, Tangent Group, Robin Larry Murphy, Andrew Holman and Kenneth Johnson -- with contempt. The contempt charge alleged that Murphy violated the terms of a consent judgment in a prior telemarketing fraud case involving false promises of government jobs. The 1997 consent judgment barred Murphy from making material misrepresentations of fact while telemarketing, and required him to post a $100,000 bond.
In addition to seeking contempt sanctions against Murphy, the FTC also alleged that the codefendants were in contempt of the previous order because they all participated in running MysteryShopLink.com despite knowing about the prior consent judgment against Murphy. Murphy, Holman and Johnson are all shareholders and current or former officers at Mystery Shop Link, according to court documents filed by the FTC.
The settlements announced Thursday were with two groups of defendants. The settlement with the first group, Mystery Shop Link, Tangent Group, Murphy, Holman and Johnson, resolves both the 2007 case and the contempt charges.
Under the settlement, the FTC will collect the proceeds of Murphy's $100,000 bond, and the settlement also includes a $17.8 million judgment, which is suspended based on the defendants' inability to pay. The full judgment will be imposed if the defendants are found to have misrepresented their financial condition, the FTC said. As a repeat offender, Murphy is permanently banned from telemarketing, except for nondeceptive sales to businesses of telecommunications equipment.
The second settlement includes defendants Harp Marketing Services and its principals, Aiden Reddin and Marc Gurney. Harp Marketing was the primary outside telemarketing firm that handled consumer calls and sales for Mystery Shop Link, the FTC said.
This settlement requires Harp and its owners to pay $750,000 in redress and prohibits them from making misrepresentations in the future. The Harp settlement also includes a suspended judgment of $6.8 million, the total amount of Mystery Shop Link sales made by Harp's telemarketers. The full amount of this judgment will be imposed if the defendants are found to have misrepresented their financial condition.
Both settlements prohibit the defendants from collecting payments from Mystery Shop Link customers, and from transferring or benefiting from information about those customers.