Grant Gross
Senior Writer

FTC settles with ‘boiler room’ marketers

news
Aug 22, 20072 mins

The Results Group has been banned from telemarketing and has been ordered to return customers' money for misrepresenting the nature of its business

The Results Group, a telemarketing firm that sold Web site services, has been banned from further phone sales and will return $435,000 to customers under a settlement with the U.S. Federal Trade Commission (FTC).

The Phoenix-based company and its owners will also give up the proceeds from the sale of luxury cars and a Las Vegas real estate deal in the settlement, which the FTC announced Tuesday. The U.S. District Court for the District of Arizona approved the settlement Monday.

The operation, which the FTC called a “boiler room,” charged customers between $99 and $599 to build and host Web sites supposedly affiliated with the Web sites of large online retailers, such as Amazon.com and Overstock.com. Supposedly, customers would make money when those retailers paid commissions for sales made through the consumers’ Web sites, the FTC said in its complaint.

The defendants claimed that tens of thousands of Web users would be driven by advertisements to click on the Web sites, the FTC said.

After customers purchased the business system, company employees, calling themselves “business coaches,” would call and pressure them to spend more money on advertising. The Results Group coaches said the advertising was necessary to make the business successful, the FTC said.

For many customers, the contact from the business coaches was the first time they heard that the business was not a “turn-key” operation, as promised, the FTC said.

The defendants misrepresented that consumers who purchased their business system were likely to earn a substantial income with little risk, the FTC said. The company claimed that some of their customers were making more than $50,000 per month in commissions, but most customers never earned any income, the agency said.

The settlement with The Results Group, Edward R. Longoria, and Amber R. Halverson bans all three defendants from telemarketing. The order contains a $19.5 million judgment that will be suspended based on their sworn financial statements. If the FTC finds that the defendants misrepresented their financial status, or if they fail to make the payments to customers agreed to in the order, then the full amount will be due.

Grant Gross

Grant Gross, a senior writer at CIO, is a long-time IT journalist who has focused on AI, enterprise technology, and tech policy. He previously served as Washington, D.C., correspondent and later senior editor at IDG News Service. Earlier in his career, he was managing editor at Linux.com and news editor at tech careers site Techies.com. As a tech policy expert, he has appeared on C-SPAN and the giant NTN24 Spanish-language cable news network. In the distant past, he worked as a reporter and editor at newspapers in Minnesota and the Dakotas. A finalist for Best Range of Work by a Single Author for both the Eddie Awards and the Neal Awards, Grant was recently recognized with an ASBPE Regional Silver award for his article “Agentic AI: Decisive, operational AI arrives in business.”

More from this author