Court Closes Vending Machine Scheme

WASHINGTON, Nov. 21, 2002 -- A federal district court has halted the operations of companies accused of making false earnings claims and other deceptive representations to sell vending machine business opportunities.

The Federal Trade Commission will ask the court to bar permanently the alleged misrepresentations and to order redress for consumers who lost money by investing in the scheme, promoted by Manhattan Vending, LLC, a New York company based in Greenlawn, New York.

In its complaint, the FTC alleges that the defendants advertised "tremendous returns" for their vending machine routes in classified ads placed in newspapers across the country and on their own Web site. The ads commonly touted "established vending machine routes" with big money potential for products such as soda and snack food. The ads directed consumers to call a toll-free number, where the consumers received a sales pitch making specific earnings claims.

Following the call, the consumers received a packet of promotional material typically claiming that a $1,500 investment in a vending machine would generate approximately $5,300 in profit a year. According to the FTC, the earnings claims are false.

Investors signed contracts that claimed they could cancel if the defendants didn't deliver the machines within 30 business days. The FTC alleges that, while some consumers received their vending machines late, others did not receive them at all. According to the FTC, in most instances, consumers were not able to cancel their orders.

The FTC has charged that the deceptive earnings and delivery claims violate the FTC Act. The FTC also alleges the defendants failed to provide the disclosure documents that the FTC's Franchise Rule requires.

The FTC named Manhattan Vending, and its predecessor companies, Essex Marketing Group, Inc., Westbrook Marketing Group, Inc., and Westbrook Marketing Associates, LLC, as well as its principals, as defendants.

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