|FOR RELEASE: MAY 5, 1997
FTC SETTLEMENT WITH WORLD CLASS NETWORK
|World Class Network, Inc., a multi-level marketer of travel agent
credentials and a work- at-home travel agency business opportunity, which was charged by
the Federal Trade Commission in a March 1997 crackdown on travel-related fraud, has agreed
along with four individual defendants in the case to pay more than $3 million into a
consumer redress fund. The money will be used to provide refunds to many of the more than
51,000 consumers who purchased World Class Networks travel tutorial. The settlement
agreement the FTC has obtained from these defendants also bars them from operating any
type of pyramid scheme, or any multi-level marketing scheme for travel-related business
opportunities, in the future. In connection with future direct sales of any travel
tutorials, World Class Network is required to provide a full refund policy and a 90-day
"cooling off" period. In addition, World Class Network is required to review any
advertising disseminated by its independent distributors to ensure that it does not
violate any of the terms of the settlement, which bars misrepresentations of earnings
claims and the travel benefits, such as discounts and upgrades, that result from joining
the World Class Network.
On Feb. 28, the FTC filed charges against World Class Network, Inc. (WCN), of Irvine, California; World Class Travel, L.L.C., of Calabasas, California; and the following officers: WCN Board Chairman Daniel R. Dimacale and Secretary Denise L. Dimacale, both of Newport Beach; WCN Executive Vice President and CFO Robert C.K. Lee, Mission Viejo; WCN President and CEO Howard K. Cooper, of Woodland Hills; and World Class Travel Chairman and CEO Jerome L. Goldberg, of Oxnard. A judge immediately issued a temporary restraining order halting the challenged practices, freezing the defendants assets, and placing the companies into receivership. The settlements announced today are with WCN, the Dimacales, Lee and Cooper. Charges against World Class Travel and Goldberg are still pending. The charges were filed as part of "Operation Trip-Up," a federal-state campaign involving the FTC and 12 state Attorneys General targeting a wide range of travel-related frauds, and netting 36 law enforcement actions in all. (See the FTCs March 13, 1997 news release and related consumer education materials regarding travel fraud at the FTCs website at www.ftc.gov/opa/9703/tripup1.htm. The consumer materials were produced in cooperation with the American Society of Travel Agents.)
In its court complaint in the WCN case, the FTC alleged that the defendants offered a travel tutorial kit that purportedly would allow purchasers to receive the professional courtesy discounts and upgrades traditionally available to travel agents on their own travel accommoda tions, and to operate and achieve specified earnings in an at-home travel business. Distributors also could receive commissions by recruiting new distributors and reselling the tutorial to these recruits. In fact, the FTC charged, purchasers could not obtain the promised discounts and upgrades for personal travel because many travel industry service providers did not recognize World Class Networks proprietary I.D. and the travel tutorials were inadequate to allow purchasers to open and operate a functioning business. As to earnings claims, World Class Networks own records indicate that only about 4 percent of the more than 51,000 purchasers earned more than $1,000 in commissions in 1996, and that more than 35,000 of the network members received no commissions at all last year.
The FTC said that while the settlement would allow WCN to remain in business, it contains provisions that ensure that the challenged deceptive practices are halted. The FTC also said that it worked closely with the California Attorney Generals office, which is expected to announce a separate settlement shortly. The FTCs settlement has been submitted to the court and requires the courts approval to become binding. The settlement would:
The FTC vote to approve the settlement for filing in court was 5-0. It was filed this morning in U.S. District Court for the Central District of California, in Los Angeles.
NOTE: This consent judgment is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.
Copies of the proposed settlement are available from the FTCs web site at http://www.ftc.gov and also from the FTCs Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. X970031)
|Jeffrey A. Babener
Babener & Associates
121 SW Morrison, Suite 1020
Portland, OR 97204
|Jeffrey A. Babener, the principal attorney in the
Portland, Oregon law firm of Babener & Associates, represents many of the leading
direct selling companies in the United States and abroad.
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