FTC slams maker of WordSmart -- touted by Alex Trebek -- for ripping off parents

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The maker of educational software -- touted in a 30-minute infomercial by Jeopardy host Alex Trebek -- has reached a settlement with the Federal Trade Commission over charges of deceptive marketing and abuse of the national Do Not Call Registry.

From an FTC press release:

The settlement order prohibits WordSmart and (company president) David A. Kay from misrepresenting the benefits of educational goods or services, and from violating the agency’s Telemarketing Sales Rule (TSR). …

The defendants’ allegedly false and unsubstantiated claims included that, by using WordSmart for a total of 20 hours, students were guaranteed to improve letter grades by at least one GPA point, SAT scores by at least 200 points, ACT scores by at least four points, GRE and GMAT scores by at least 100 points, and IQ scores. They also falsely claimed they would provide a full refund within 30 days if the buyer was not satisfied.

In addition, the defendants allegedly repeatedly called consumers whose phone numbers are listed on the National Do Not Call Registry, refused to honor requests to stop calling, and failed to connect a consumer to a sales representative within two seconds after a consumer answered the phone, as required by the TSR.

The terms of the settlement would seem to indicate that WordSmart and Kay are crying poormouth, as an $18.7 million judgment will be knocked down to only $147,400 provided they have not “misrepresented their financial condition.”

Why that benefit of the doubt would be granted is a mystery, given that WordSmart and Kay have been misrepresenting so many things since 1993.

As for Trebek, it’s not clear from the FTC documents whether he had any knowledge of company’s spurious claims. Let’s hope it was just a case of an actor looking for a paycheck. However, in 2007, Trebek did allow his name to be attached to this quote in a WordSmart press release trumpeting his appearance in the infomercial: “This program gives students the tools to close the vocabulary and comprehension gap and puts them on the road to success in the classroom and beyond. And it’s something students enjoy and want to use because of its instant gratification and long lasting boost to self-confidence and self-esteem.”

Words he’d probably like to have back today.

(Update: The FTC clarifies that what happened here is not literally a fine, which was the word used in the original headline. “Just wanted to point out that the FTC did not ‘fine’ this company,” writes a spokesman in an email. “We don’t have the authority to do that. The company agreed to pay this money to settle the FTC’s charges against them. In most cases like this, at least some of this money goes back to defrauded consumers.”)

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