ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, September 20, 1996 TAG: 9609200037
SECTION: BUSINESS PAGE: A-5 EDITION: METRO
SOURCE: MAG POFF AND MEGAN SCHNABEL STAFF WRITERS
Telebrands Corp., a Roanoke mail- and telephone-order company, and its owner have settled with the Federal Trade Commission resolving charges that they violated merchandising rules.
The government said Thursday that Telebrands and owner Ajit Khubani agreed to pay a $95,000 civil penalty as part of the settlement. They also agreed that they would be prohibited from violating the rules in the future.
Executives at the Telebrands facility on Patterson Avenue could not be reached.
John Desiderio, a New York City lawyer who represented Telebrands before the FTC, said the company denies any liability in the case.
The commission charged that Telebrands violated the Mail or Telephone Order Merchandise Rule by failing to provide consumers with timely notification of a delay in shipping their orders. The rule requires companies to ship products within the time stated in its ads or catalogs. If no time frame is included, the company must send the merchandise within 30 days of receiving the order.
If the company is unable to ship the order before the deadline, it must give the consumer the choice of agreeing to a delay or canceling the order for a full refund.
Other FTC charges involved allegations that Telebrands and Khubani made unsubstantiated and false claims in advertising two of their products, the WhisperXL, a sound amplification device, and the Sweda Power Antenna. The agency also said that Telebrands misrepresented its money-back guarantee in the case of the antenna.
According to the FTC complaint, Telebrands advertised WhisperXL in Parade magazine and other publications as a major breakthrough in sound enhancement technology. It said that it allowed the user to hear a whisper from as far away as 100 feet.
The commission said the advertising claim is false. The settlement requires any future advertising to be based on competent and reliable evidence.
The same allegations and requirements were made involving the antenna, which was purported to improve television and radio reception without cable installation.
Desiderio said the company weighed the cost of mounting a defense against the lower cost of a settlement without admitting guilt.
"Telebrands tries to be a reputable company. It is a reputable company," Desiderio said. He added that the company dropped the two products involved in the dispute some time ago although it had some studies that found the products were effective.
Desiderio said the company always refunds money to dissatisfied customers and stands behind its products.
However, the Better Business Bureau of Western Virginia, which assisted the FTC in its investigation, said it has collected an "unbelievable" file of complaints against Telebrands.
The BBB file includes complaints that the company cashed payment checks but never sent the products. It also states that the products, if they did arrive, didn't work, and that Telebrands wouldn't issue refunds.
The FTC settlement represents the second time Khubani has been charged with violating the mail-order rule. Khubani and a company he then owned, Direct Marketing of Virginia Inc. of Roanoke, paid a $30,000 civil penalty in 1990.
BBB Executive Director Fran Stephanz also said attorneys general in 18 states recently sued Telebrands, accusing the company of misrepresenting WhisperXL in advertising.
Telebrands' agreement on the $95,000 payment is subject to routine approval by the U.S. District Court for Western Virginia at Roanoke, where the papers were filed Wednesday.
The settlement order on the advertising will not be binding until after the FTC concludes a 60-day public comment period. Comments can be sent to the FTC's Office of Secretary, Sixth Street and Pennsylvania Ave. N.W., Washington, D.C. 20580.
LENGTH: Medium: 76 lines ILLUSTRATION: PHOTO: ERIC BRADY Staff. Telebrands settled charges that theby CNBmail- and phone-order firm misled customers. But the company still
denies any liability. color.