FTC goes after consumer giving false testimonial

Michelle Singletary | FTC holds endorsers liable for falsehoods


WASHINGTON — For the first time, the Federal Trade Commission has charged a consumer with providing a false testimonial to help promote what it says is a get-rich-quick business program.

The case against Marsha Kellogg of Ohio is significant because the FTC moved aggressively not just against a business promoter whom it alleges is defrauding customers but also a customer whom it claims, in several infomercials, inflated how much the promoted business helped her earn.


http://www.courier-journal.com/article/20110611/BUSINESS/306110069/1003/Miche...


The FTC, joined by Colorado Attorney General John W. Suthers, filed a complaint recently in U.S. District Court against Russell Dalbey, the CEO and founder of the entrepreneurial marketing program Winning in the Cash Flow Business.


Dalbey, his wife and his company, the Dalbey Education Institute, are charged with defrauding consumers by making false and unsubstantiated marketing claims that customers could earn fast and easy money by finding, brokering and earning commissions on promissory notes or cash flow notes. The notes are basically IOUs in which one party agrees to pay another party a sum of money over time. Such notes could include a mortgage or a lottery winning payout.
Consumers spent $40 to $160 each on Dalbey's initial cash flow program and were later encouraged to spend hundreds or thousands of dollars more for seminars, coaching sessions and lists that would help them find promissory note holders, the FTC said.


In one of Dalbey's infomercials, hosted by TV personality Gary Collins, 14 people are seated with Dalbey sharing how they made amazing amounts of money, in some cases in as little as a few hours. One man says he made more than $23,000 in a short period of time, spending just two hours a week. A man identified as Garland says he made $128,000.
People might have missed the tiny captions that read: “Extraordinary results. Individual results will vary and depend on using the materials, effort and other factors. Testimonial purchased additional products.”
Among all the testimonies, the FTC and the state of Colorado focused on that of Kellogg, who is identified as Marsha B. from Ohio (the B stood for her maiden name). The complaint against Kellogg contends that she falsely represented earning $79,975.01 from one promissory note transaction using Dalbey's cash flow program. Her actual take was $50,000 less.

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http://www.courier-journal.com/article/20110611/BUSINESS/306110069/1003/Miche...
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