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FTC wins record settlement
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August 14, 1996: 9:30 p.m. ET
Computer company to pay $5 million on charges it misled investors
From Correspondent Kelli Arena
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WASHINGTON (CNNfn) -- The Federal Trade Commission reached a record $5 million settlement Wednesday with a computer firm charged with falsely promising clients large profits in misleading advertisements.
The company, Computer Business Services Inc., agreed to pay the fine - the largest the FTC has ever collected prior to filing of a formal complaint -- but did not admit wrongdoing.
CBSI marketed computer hardware and more than 40 software programs that the company said investors could use to sell services to other consumers. The company said investors could make about $4,000 a month with very little effort.
But Jodie Bernstein, the FTC's consumer-protection director, said the products were useless, and no one came close to netting any money. (231K WAV) or (231K AIF)
All told, the FTC said more than 15,000 people lost millions of dollars between them.
Grace Miranda was one of the alleged victims. She poured $10,000 into what she thought would be a booming business.
"I'm frustrated with myself because, in retrospect, I feel like I was very gullible," Miranda said. "They told me exactly what I wanted to hear, and I bought it."
Under Wednesday's settlement, officials will distribute the $5 million among the alleged victims. CBSI must also stop using the questionable ads.
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