Investment Software Vendors Settle With Federal Trade Commission

Mike Godfrey, Tax-news.com, Washington

30 January 2001

A US based investment software company has agreed to settle Federal Trade Commission charges that its claims were deceptive, it was revealed recently. The FTC charged the company, Indigo Investment Systems, and its CEO, Frank Alphonso, with making false and unsupported claims about the performance of the $3,000 stock price predicting software.

The company allegedly advertised their product with lurid bar graphs, supposedly showing the huge returns reaped by previous Indigo users, but which were in fact merely hypothetical models based on historical data. The advertisements featured glowing customer testimonials featuring claims such as 'I have made a 200% profit in about 80 days' which were also judged to have been deliberately misleading.

Indigo agreed to immediately cease making unsubstantiated claims about the abilities of their product, to provide substantiation for any future earning claims, and not to mislead customers about the high risk nature of stock trading.

This settlement is part of the continuing multi-agency crackdown launched by the FTC, Commodity Futures Trading Commission, and the Securities and Exchange Commission in May of last year to combat phoney online investment schemes which threaten the wealth of the unwary investor.

The FTC advised consumers to remember that there is no failafe way to trade without risk, and that extravagant profit claims and glowing testimonials are likely to be exaggerated or totally fabricated.

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