Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, April 13, 1990 TAG: 9004130119
SECTION: BUSINESS PAGE: B6 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Medium
The company and its owner, Ajit Khubani, will pay a $30,000 civil penalty under a proposed consent decree filed with the U.S. District Court's Southern District of New York, the FTC said. The company also is prohibited from violating the rule in the future.
The complaint from the New York office of FTC against Direct Marketing, sometimes trading as USA Buyers Network, said the company failed to ship ordered merchandise to buyers in the time stated in its ads. When no delivery time was stated, the company did not ship within 30 days, the FTC said.
The company was in trouble more than a year ago, when it agreed with state Attorney General Mary Sue Terry to resolve 650 customer complaints. Direct Marketing in December 1988 also agreed that it would not misrepresent its baldness treatments and abdomen-toner products.
The company sells a variety of low-priced items such as portable electric shavers and sunglasses for $5 to $10 through ads in Sunday newspaper supplements.
Matt Rittberg, president of Corpac, the fulfillment arm of Direct Marketing, and John Edwards, the company's Roanoke attorney, said they did not know of the FTC complaint. Bob Ullman, the firm's New York attorney, did not return a reporter's phone call.
The FTC said the Justice Department filed the complaint. The consent decree is subject to court approval but does not constitute admission of a violation, the FTC said.
Rittberg said complaints have declined while the volume of shipments from the Patterson Avenue warehouse has grown. The company's work force is up to 180 people and daily shipments have been as high as 60,000 parcels, he said.
The company has a policy of "without question, giving a refund or sending the product as soon as our customer service manager receives a complaint," Edwards said.
Fran Stephanz, executive director of the Better Business Bureau of Western Virginia, said about 50 complaints a week still come in. Her office packs them up "in a brown envelope and mails them to the attorney general's office in Richmond every Friday."
Jim Wheeler, an assistant attorney general, did not return a reporter's call Thursday. But he said in a Feb. 7 letter to the Roanoke BBB that his office had resolved more than 4,200 complaints against USA Buyers Network. Cash refunds have exceeded $68,000, the letter said.
Stephanz acknowledged that the company is settling the complaints as they come back from the attorney general's office, "but they are not addressing the underlying cause."
Rittberg said, "We are not out to rip anybody off. If you rip people off, you go out of business."
Khubani has settled for an undisclosed sum a complaint from Interwood Marketing Ltd., a Toronto manufacturer of spot remover. The maker of Didi Seven spot remover claimed that Direct Marketing of Virginia sold counterfeit copies of its product, according to the Cleveland, Ohio, BBB.
Stephanz said her office received more than 800 inquiries in October alone from consumers who said they did not receive a "magic changer," a clothes-closet arranger device.
She said her office is getting "tons of complaints" about Direct Marketing's headphones, advertised to "hear a whisper up to 100 feet away." One model can be ordered from the company's Roanoke address for $19.95; another model has a Vinton mailing address and a cost of $7.95.
Edwards said some problems are inevitable when companies handle a high volume of products. Among the potential glitches, he said, are wrong addresses, computer error, a Postal Service delay or depleted stock.
Rittberg said the Vinton address is used for marketing. "Nobody comes out to see the letters we get from customers, saying how great they think we are," he said.
by CNB