FTC Wants Consumer Redress From Mega SystemsThe Federal Trade Commission asked a federal judge on Dec. 15, 1998, to order defunct infomercial marketer Mega Systems International Inc., Lansing, IL, to comply with an FTC order demanding it pay $500,000 in consumer redress after finding that the company's infomercial and direct response radio ads were false and misleading.
"Mega Systems violated a court order by not paying the redress," said C. Steven Baker, director of the FTC's Chicago Regional Office. "We are now asking the district court to issue an order that would force them to pay."
Jeffrey Salberg, president of Mega Systems, and his nine co-defendants agreed to settle the lawsuit filed by the FTC in July. However, Salberg has yet to comply with the agreement of the settlement, according to court documents.
"This is a particular order that applies to Salberg and Mega Systems," Baker said. "Other defendants were sworn separate orders."
Baker would not comment on whether any of the co-defendants have honored their settlements, but said the FTC would file separate complaints similar to the one filed against Mega Systems and Salberg if they did not settle.
(The table below lists information on this case and other infomercial cases involving the FTC.)
Salberg and the rest of the defendants were charged with false advertising for the self-help and health-related products they marketed. Among the products were Eden's Secret Nature's Purifying Product, Sable Hair Farming System, Kevin Trudeau's Mega Memory System, Howard Berg's Mega Reading, and Jeanie Eller's Action Reading.
The FTC complaints quote segments of the infomercials when testimonials allegedly are either false and misleading or had no basis in fact for the representations that were made in the advertisements.
In addition to consumer redress, the FTC order barred the defendants from making deceptive claims about the products they marketed, and required them to include disclosure statements stating the program was paid advertising. They also could not misrepresent conclusions or interpretations of any test, study or research that was independently done on the products.
In addition to the $500,000, the FTC is going to charge interest and seek civil penalties against the defendant. The complaint, which was unanimously approved by the commission, was filed in U.S. District Court for the Northern District of Illinois, Eastern Division.
Mega Systems closed its office in September. Salberg did not answer interview requests.
Mega System's media agency, Corinthian Media Buying Inc., New York, is owed back payments on unpaid commissions. The agency is planning to file a claim against Salberg to recoup its losses. Mega Systems was a Corinthian client for nine months.
Salberg, either personally or on behalf of Mega Systems, has yet to file for bankruptcy in Illinois or Indiana, where he lives in Schererville.
"Bankruptcy would not exempt him from the order," said Baker. "It would be a matter of assets and who would be paid in what order. If he does not pay as per a judge's order then civil contempt of court charges would be filed."