Colo. AG, feds obtain court order
DENVER (Legal Newsline) - Colorado Attorney General John Suthers announced Friday that his office and the Federal Trade Commission have obtained a court order barring a company from airing misleading infomercials.
The company is the Dalbey Education Institute, formerly known as American's Note Network. It is based in Westminster, Colo.
The order stems from a lawsuit the Attorney General's Office and FTC filed in May.
According to their complaint, filed in the U.S. District Court for the District of Colorado, the company and its principals engaged in deceptive trade practices connected to the misleading infomercials.
Suthers and the FTC alleged the company created, marketed and ran an infomercial called "Winning in the Cash Flow Business" since 2002. It lead consumers to believe they could get rich by dealing seller-financed promissory notes or cash flow notes.
The infomercials, which ran across the United States and Canada, sold informational materials for initial prices ranging from $39.95 to $159.
Consumers also were offered thousands of dollars in additional products and services to help with their promissory note businesses.
According to the attorney general and FTC's complaint, consumers were told they could make tens of thousands of dollars in a matter of days by purchasing the materials.
However, very few consumers ever broke into the promissory notes business and most never earned any money as a result, the attorney general said.
"These infomercials preyed on consumers desire to get rich quick," Suthers said in May. "Infomercials and other materials promising large returns with minimal training or effort are almost always scams. Consumers should remember that if an offer sounds too good to be true, it probably is."
Last week's court order, also filed in the U.S. District Court for the District of Colorado, requires that the company and its principals cease the broadcast of any infomercials claiming that consumers can get rich quick though the sale of promissory notes.
Under the preliminary injunction, any infomercials the institute runs until the case is resolves or a permanent injunction is entered would be required to highlight the low success rate of consumers purchasing its products.
According to a survey the FTC conducted as part of its investigation, only 0.8 percent of consumers who purchased less than $500 of the institute's products ever sold a promissory note. The survey also found that only 2.8 percent of consumers who paid $500 or more for the institute's products ever sold a promissory note.
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.