On Monday, the Federal Trade Commission (FTC) announced that it has agreed to settle with Wellco Inc. and its CEO George M. Moscone regarding claims that the company “sold hundreds of thousands of indoor TV antennas and signal amplifiers to consumers using deceptive claims that the products would let users cancel their cable service and still receive all of their favorite channels for free.”
According to the Southern District of New York complaint, since 2017 the defendants have “advertised, offered for sale, sold, and distributed indoor, television and associated television antenna amplifiers … under the TV Scout, SkyWire, SkyLink, and Tilt TV brand names.” The FTC noted that a Wellco TV Antenna ranged from $22.53 to $39.95 and a Wellco TV Amplifier cost $32.00, buying more than one device reduced the price per device. Allegedly, the defendants sold more than 800,000 antennas and 272,000 amplifiers, “resulting in approximately $35 million in sales after product returns. The FTC claimed that the defendants advertised
The FTC averred that the defendants violated the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce” by making various false or unsubstantiated efficacy claims, such as that the defendants’ tv antennas “are the #1 rated indoor HDTV antenna in America,” that their TV antennas “enable consumers to stop paying for cable or satellite TV subscription and still receive all of their favorite TV channels,” or that the antennas “receive 100+ premium channels in HD,” among other allegedly false or misleading claims. As a result, the FTC asserted that these claims were deceptive and violated the FTC Act. The defendants also allegedly engaged in false advertising via consumer endorsers, which the FTC averred that in multiple instances “in connection with the advertising, marketing, promotion, offering for sale, or sale of the” antennas, the defendants “have represented … that consumer endorsements contained in Wellco TV Antenna advertisements represent the actual experiences, findings, opinions, or beliefs of consumers who have used the Wellco TV Antenna.” However, in actuality, according to the FTC, the defendants “fabricated the consumer endorsements.” The FTC claimed that the defendants engaged in other misrepresentations that also violated the FTC Act. The Commission proffered that the defendants’ conduct has caused consumer injury and harm.
“The defendants used every trick in the book to sell their antennas and amplifiers to people, including older adults, who wanted to save money on cable and satellite TV channels,” Daniel Kaufman, Acting Director of the FTC’s Bureau of Consumer Protection, said in a press release. “People should be able to trust the claims companies make, not discover after buying that they were told lies.”
Pursuant to the motion for settlement and related proposed stipulation, the defendants would be prohibited from making claims about: “the product’s absolute or relative ratings or raking, or the product’s superiority to other products”; “the channels, cable channels, subscription channels, favorite channels, premium channels, or clear channels users of the product can or will likely receive, including the number of such channels users can or will likely receive”; or “any material aspect of the product’s performance, efficacy, nature, or central characteristics, unless the representation is non-misleading.” The defendants are also barred from making any misrepresentation “that any endorsement is a truthful endorsement or by an actual user of such product”; “through the use of any endorsement of such product”; “that any website or other publication is an objective news report”; that objective news reporters have performed independent tests of any product”; or “that independent tests demonstrate the effectiveness of any product.”
The proposed order imposes a $31.82 million monetary judgment against the defendants for their alleged violations. However, the judgment will be suspended upon the defendants’ $650,000 payment to the FTC based on their inability to pay the full judgment.
The press release noted that the agency voted 4-0 approving the complaint and proposed settlement.