[Federal Register Volume 62, Number 24 (Wednesday, February 5, 1997)]
[Notices]
[Pages 5412-5413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2808]


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FEDERAL TRADE COMMISSION

[File No. 952-3401]


1554 Corp.; Brainerd L. Mellinger, III; Analysis To Aid Public 
Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting 
unfair or deceptive acts or practices and unfair methods of 
competition, this consent agreement, accepted subject to final 
Commission approval, would prohibit, among other things, the Woodland 
Hills, California-based company and its president from making 
unsubstantiated earnings claims and from using deceptive testimonials. 
The Commission had alleged that 1554 and Mellinger advertised a work-
at-home course, called ``Mellinger World Trade Mail Order Plan,'' in an 
infomercial which contained deceptive and misleading claims.

DATES: Comments must be received on or before April 7, 1997.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 6th St. and Pa. Ave., NW., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT:
Justin Dingfelder, Federal Trade Commission, S-4302, 6th and 
Pennsylvania Ave, NW, Washington, DC 20580. (202) 326-3017.
Jonathan Cowen, Federal Trade Commission, S-4302, 6th and Pennsylvania 
Ave, NW, Washington, DC 20580. (202) 326-2533.
Lemuel Dowdy, Federal Trade Commission, S-4302, 6th and Pennsylvania 
Ave, NW, Washington, DC 20580. (202) 326-2981.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Sec. 2.34 of the 
Commission's rules of practice (16 CFR 2.34), notice is hereby given 
that the above-captioned consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of sixty (60) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the accompanying complaint. An electronic copy of the 
full text of the consent agreement package can be obtained from the 
Commission Actions section of the FTC Home Page (for January 27, 1997), 
on the World Wide Web, at ``http://www.ftc.gov/os/actions/htm.'' A 
paper copy can be obtained from the FTC Public Reference Room, Room H-
130, Sixth Street and Pennsylvania Avenue, NW, Washington, DC 20580, 
either in person or by calling (202) 326-3627. Public comment is 
invited. Such comments or views will be considered by the Commission 
and will be available for inspection and copying at its principal 
office in accordance with Sec. 4.9(b)(6)(ii) of the Commission's rules 
of practice (16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement to a proposed consent order from 1554 
Corporation and its president Brainerd L. Mellinger, III (collectively, 
``respondents''). The agreement would settle a proposed complaint by 
the Federal Trade Commission that respondents engaged in unfair or 
deceptive acts or practices in violation of section 5(a) of the Federal 
Trade Commission Act.
    The proposed consent order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.

The Proposed Complaint

    This matter concerns advertising practices related to the sale of 
1554 Corporation's Mellinger World Trade Mail Order Plan (``Mellinger 
Plan''). The administrative complaint, which the Commission has 
proposed to issue, would allege that respondents promoted the sale of 
the Mellinger Plan by creating and disseminating advertisements and 
promotional materials, including a program-length television 
advertisement entitled ``Mellinger's Secret Treasures.''
    The complaint charges that through the use of statements contained 
in their advertisements and promotional materials, respondents made 
unsubstantiated representations that consumers who use the Mellinger 
plan typically succeed in readily starting and operating profitable 
businesses and that consumers who use the Mellinger Plan typically earn 
substantial income. The complaint also charges that endorsements 
appearing in respondents' advertisements and promotional materials were 
represented, without substantiation, to be reflective of the typical or 
ordinary experience of members of the public who have used the 
Mellinger Plan.

The Proposed Order

    The proposed consent order contains provisions that are designed to 
remedy the alleged advertising violations and to prevent respondents 
from engaging in similar acts and practices in the future. The order 
prohibits respondents from making any unsubstantiated representations: 
(1) that consumers who use the Mellinger plan typically succeed in 
readily starting and operating profitable businesses, (2) that 
consumers who use the Mellinger Plan typically earn substantial income, 
or (3) about the performance, benefits, efficacy or success rate of any 
product or service concerning business opportunities.
    The proposed order also contains prohibitions about using or 
misusing testimonials or endorsements. In particular, the order 
prohibits respondents from using testimonials that do not reflect the 
actual opinions, beliefs, or experiences of the endorser, and from 
using testimonials to represent the typical experience of respondents' 
customers unless respondents can substantiate that such claims are in 
fact typical or respondents clearly disclose that the endorser's 
experience is not typical. The order also contains standard provisions 
regarding record-keeping, notification of changes in corporate or 
employment status, distribution of the order, termination of the order, 
and the filing of a compliance report.
    The purpose of this analysis is to facilitate public comment on the 
proposed order, and it is not intended to constitute an official 
interpretation of

[[Page 5413]]

the agreement and the proposed order or to modify their terms in any 
way.
Donald S. Clark,


Secretary.

[FR Doc. 97-2808 Filed 2-4-97; 8:45 am]
BILLING CODE 6750-01-P