The Federal Trade Commission reached settlements yesterday with two direct marketing companies that work in the electronic media. Home Shopping Network, the TV retailer that reaches more than 70 million households, has agreed to pay $1.1 million. iMall, which operates an Internet shopping mall and hosts sellers of a variety of goods and services, will pay $4 million.
HSN agreed to settle charges that it aired ads for a variety of skin care, weight-loss and PMS/menopause products containing claims it could not substantiate, in violation of a 1996 FTC order. In that earlier order, HSN and two subsidiaries settled FTC charges and were bound by an order that required that they have “competent and reliable scientific evidence” to support advertising claims for any product that they claim could “have any effect on the structure or function of the human body.”
iMall and its principals have agreed settle FTC charges that they made false earnings claims for Internet-based business opportunities they promoted and that they violated the Franchise Rule.
In addition to the money settlement, Craig R. Pickering, past president of iMall, and Mark R. Corner, its current president, also would be barred for life from selling any Internet or pay-per-call business opportunity and barred for 10 years from selling franchies.
Between July 1995 and August 1998, iMall marketed two programs using direct mail and other means designed to induce investors to attend free seminars where they would hear about the business opportunities. The programs offered people a way to make money by selling Web pages on the iMall site but the FTC said iMall inflated how much people could earn.
