U.S. Settles with Net Scam Artists

The U.S. Federal Trade Commission (FTC) said Tuesday it has reached a settlement with two Connecticut residents who operated what the FTC called an "elaborate" Internet pyramid scheme that conned thousands of consumers out of more than US$430,000.

The defendants -- David Martinelli, Jr. and Deana Plourde of Terryville, Connecticut -- agreed to pay $72,312 in consumer redress. The FTC believes that the scam took in a total of $430,140, an amount that the defendants are liable to pay if they misrepresented their financial status.

FTC attorney Katie Harrington McBride told the E-Commerce Times that the defendants, who operated under the name DP Marketing, did not keep "good records" and that it was difficult to determine exactly how much they took in or how many consumers they scammed.

McBride added that although she has no hard numbers, she feels that the Internet makes it easier for scams of this ilk to proliferate, because scam artists can reach large quantities of people quickly and fairly inexpensively by "saturating" the Internet with ads.

"It allows them to make a much bigger splash," McBride said.

No Experience Necessary

According to the FTC, DP Marketing sent out thousands of unsolicited e-mails that offered wages of $13.50 an hour for those who agreed to "handle office duties from home."

People who responded to the ad, either by visiting DP Marketing's Web site or calling the operation, were told that the $13.50 per hour jobs involved "processing orders" for the company and that no experience was necessary.

However, the respondents were also told that they needed to send in a "registration fee," ranging from $9.95 to $28.72, in order to begin work. The fee was said supposed to cover DP Marketing's cost of mailing out telephone scripts, product sheets, time sheets and an ID number, the FTC said.

The Not-So-Fine Print

Those who sent in their money received a kit instructing them to place advertisements identical to the one they responded to and then read the same script to people who responded to their ads. McBride said that a number of the victims did in fact place a version of DP Marketing's ad.

The victims of the scam also learned that they would not be earning $13.50 an hour, but rather that their earnings would be based on the number of new people they could recruit.

Settlement Agreement

By misrepresenting to consumers that DP Marketing was offering jobs at a specific salary, and by providing the "means and instrumentalities" to others to commit deceptive acts, the defendants violated federal law, according to the FTC.

As part of their settlement, Martinelli and Plourde agreed to conditions that bar them from future participation in pyramid schemes and from misrepresentation of earnings and income potential.

If they ever participate in another multilevel marketing program, Martinelli and Plourde are required to "clearly and conspicuously" disclose the actual profits made by participants and the percentage of participants who have made such profits before accepting payment from investors, the FTC said.

McBride said that the FTC was pleased with the "strong behavioral provisions" included in the settlement, because the defendants were both under the age of 25 and could have long careers in the business world.