Purpose
Universal Account Servicing, LLC (“UAS”) wants to make you aware of two bodies of legislation we expect all participants in the UGA Finance Program to acknowledge and adhere to. 1. Section 5 of the FTC Act (15 USC 45) 2. 16 CFR § 437.4 – Earnings claims.Summary
Section 5 of the FTC Act (15 USC 45) prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce.” 16 CFR § 437.4 details violations and unfair or deceptive acts or practices as it relates to earnings claims. Explanations of key terms found in this legislation are provided below, though we recommend you review them in full. This rule has taken place to ensure that the use of false, unsubstantiated, or otherwise misleading earnings claims are not taking place. If a seller has violated this rule & it is of interest to the public, they will receive a complaint and/or notice and further action may be taken.Definitions
Unfair Acts or Practices
An act or practice is unfair when one or more of the following takes place:- Causes or is likely to cause substantial injury to consumers;
- Cannot be reasonably avoided by consumers, and
- Is not outweighed by countervailing benefits to consumers or to competition.
Deceptive Acts or Practices
An act or practice is deceptive when one or more of the following takes place:- A representation, omission, or practice misleads or is likely to mislead the consumer;
- A consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances; and
- The misleading representation, omission, or practice is material.
Earnings Claim
Earnings claim means any oral, written, or visual representation to a prospective purchaser that conveys, expressly or by implication, a specific level or range of actual or potential sales, or gross or net income or profits.Notice of Penalty Offenses
If a seller violates this Rule, the FTC will send a Notice, reminding the business they must follow this well-settled law when making earnings claims to potential participants, workers, and buyers. If they use the illegal practices in the future, they can face penalties of up to $43,792 per violation.Exceptions
It is a violation of Section 5 of the FTC Act, for the seller to make any earnings claim to a prospective purchaser, unless the seller has accomplished one or more of the following:- Has a reasonable basis for its claim at the time the claim is made;
- Has written materials in its possession that substantiate its claim at the time the claim is made;
- Makes the written substantiation available upon request to the prospective purchaser and to the Commission; and
- Provides to the prospective purchaser an earnings claim statement.