CarePatrol, Inc. offers a franchise opportunity based on its senior care services referral program.  UnhappyFranchisee.Com asks:  Is CarePatrol’s franchise disclosure misleading regarding an FTC complaint for making false and misleading claims?

(UnhappyFranchisee.Com) Franchisors, like CarePatrol, Inc., are required to disclose certain information to prospective franchisees in a document called a Franchise Disclosure Document, or FDD.

According to the FTC Franchise Rule Compliance Guide:

The franchisor must disclose whether it… is subject to a currently effective injunctive or restrictive order or decree resulting from a pending or concluded action brought by a governmental agency – such as the FTC, SEC, or state Attorney General – under a federal, state, or Canadian franchise, securities, antitrust, trade regulation, or trade practice law, or that otherwise relates to the franchise…

In December, 2013 the FTC issued a Complaint and Decision and Order against CarePatrol for allegedly making false and misleading advertising claims.

Read more and see CarePatrol FDDs here:  CAREPATROL Investigation: Documents & Links

UnhappyFranchisee.Com has raised the concern that CarePatrol may have misrepresented and minimized the severity of the FTC Complaint, as its disclosure wording seems to imply that the FTC was simply requesting some web site wording changes (which CarePatrol complied with), that “there was no intent to deceive” on the part of CarePatrol.  and that there “was no fine or penalty imposed.”

CarePatrol, Inc. neglects to disclose the existence of the FTC Decision and Order FTC which imposes prohibitions, restrictions, record-keeping and disclosure obligations on CarePatrol, its employees, officers, agents and franchisees for a term of not less than 20 years.

CarePatrol’s Franchise Disclosure Raises Questions & Concerns

UnhappyFranchisee.com has serious questions and concerns about CarePatrol’s required disclosure to franchise agencies and prospective franchisees.

We invite Mr. Bongiovanni, CarePatrol, the FTC and state franchise regulators to review our point-by-point comments below.

CarePatrol states:  “On December 3, 2012, The Federal Trade Commission issued a complaint against CAREPATROL, Inc., regarding certain wording on CAREPATROL’s web site.”

UnhappyFranchisee.com comments:  Actually, on December 3, the Federal Trade Commission not only issued a complaint against CarePatrol, Inc. charging CarePatrol with making false and misleading advertising claims that “constitute deceptive acts or practices… in violation of Section 5(a) of the Federal Trade Commission Act,”  the FTC also issued an official Decision and Order that imposed restrictions and obligations on CarePatrol and CarePatrol franchisees for a term of 20 years.  Why does CarePatrol fail to mention the Decision and Order in its FDD and state registrations?

 

CarePatrol states: “The Commission objected to wording that seemed to imply that CAREPATROL “monitors or grades the care history of all or a substantial majority, of assisted living facilities in a consumer’s desired location…”

UnhappyFranchisee.com comments:  The Complaint doesn’t say the FTC “objected to wording that seemed to imply.”  In fact, the FTC Complaint is much more direct:

…CarePatrol has made representations, expressly or by implication that… It monitors or grades the care history and violations of virtually all, or a substantial majority, of all assisted living facilities in a consumer’s desired location… In truth and in fact…  CarePatrol does not monitor or grade the care history and violations of virtually all, or a substantial majority, of assisted living facilities in a consumer’s desired location. In most states listed on CarePatrol’s website, it has not monitored or graded any facilities…

CarePatrol states:  “that it was incorrect to list every state under a “Click Below to Meet Our Consultants” heading, in states in which CAREPATROL does not have franchises, as CAREPATROL does not have consultants in every state…”

UnhappyFranchisee.com comments:  The CarePatrol FDD disclosure statement seems to imply that the FTC was simply commenting on the format of the CarePatrol website.   In fact, the Complaint clearly alleges that CarePatrol falsely represented that it had representatives in every state when it does not:

…CarePatrol has made representations, expressly or by implication that… It provides services through a network of senior care consultants who are located in every state… In truth and in fact… CarePatrol does not provide its services through a network of senior care consultants who are located in every state…

CarePatrol states:  “and that CAREPATROL “does not monitor or grade assisted living facilities based on most recent state inspections.”

UnhappyFranchisee.com comments:  The FTC objection was not that CarePatrol does not monitor and grade assisted living based on the most recent state inspections, it was that CarePatrol falsely tells its clients and prospective clients that it DOES so.  The FTC complaint states:

   …CarePatrol has made representations, expressly or by implication that… It monitors or grades assisted living facilities based on a review of the facilities’ latest state inspection reports… In truth and in fact… In numerous instances, CarePatrol does not monitor or grade assisted living facilities based on a review of the facilities’ most recent state inspection reports.”

CarePatrol states:  “There was no intent to mislead…”

UnhappyFranchisee.com comments:  Nowhere in the Complaint or Decision and Order does it state that CarePatrol did not intend to mislead.  The complaint clearly states that CarePatrol made false and misleading claims and that CarePatrol communicated that it “possessed a reasonable basis that substantiated the representations” when it did not.  The inclusion of the statement “There was no intent to mislead” within a purported summary of the FTC complaint seems to imply that the FTC concluded that CarePatrol’s violations were accidental or inadvertent… an implication that could be construed as yet another attempt to mislead.

CarePatrol states:  “and the wording was for marketing and search engine optimization purposes only.”

UnhappyFranchisee.com comments:  OF COURSE the wording was for marketing purposes (!).  We believe that CarePatrol meant to state that “the wording was for search engine marketing and optimization (SEO) purposes only,” and to imply that the misrepresentations were the accidental result of well-intentioned SEO copywriting.  However, the FTC Complaint never states that the CarePatrol misrepresentations were unintentional or not meant to decieve.  The severe 20-year Order imposed on CarePatrol principals, employees, agents and franchisees suggests that the FTC does not chalk up these violations to an honest mistake.

Additionally, the fact that some of the same representations seem to appear in CarePatrol YouTube videos – where they provide no SEO benefit – discredit that claim (in our humble opinion, at least).

To see current CarePatrol videos and commercials we suspect may be in violation of the FTC Order, see:  CAREPATROL Videos & Commercials: STILL Misleading?

 

CarePatrol states:  “In compliance, CAREPATROL modified the wording on its web site per FTC instructions.  There was no fine or penalty imposed.  Federal Trade Commission Docket No C-4379.”

UnhappyFranchisee.com comments:  The statement that “There was no fine or penalty imposed” seems blatantly misleading, as the FTC imposed an official Order containing prohibitions, restrictions, record-keeping and disclosure obligations on CarePatrol, its employees, officers, agents and franchisees for a term of not less than 20 years.  We wonder if CarePatrol’s failure to disclose the existence and content of the FTC Decision and Order constitutes a breach of the disclosure requirements of the FTC Franchise Rule.

According to the FTC Franchise Rule Compliance Guide:

The franchisor must disclose whether it… is subject to a currently effective injunctive or restrictive order or decree resulting from a pending or concluded action brought by a governmental agency – such as the FTC, SEC, or state Attorney General – under a federal, state, or Canadian franchise, securities, antitrust, trade regulation, or trade practice law, or that otherwise relates to the franchise…

The statement implying that CarePatrol is “In compliance” is also questionable in our opinion.  The FTC Franchise Rule Compliance Guide states that a franchisor isn’t in full compliance as long as an Order is still in effect:

… a party cannot fully comply with an order to act or to refrain from acting (for example, to comply with the amended Franchise Rule) until the order expires by its own terms.

CarePatrol states:  “No other litigation is required to be disclosed in this Franchise Disclosure Document.”

UnhappyFranchisee.com comments:  The Federal Trade Commission requires franchisors to disclose major obligations and responsibilities expected of its franchisees in the document known as a Franchise Disclosure Document (FDD).

The December 3rd, 2013 FTC Order imposes advertising and sales restrictions and record-keeping and reporting obligations not only upon CarePatrol, Inc. but also its franchisees.

However, we cannot find any reference to the FTC Complaint or a disclosure of the restrictions and responsibilities upon franchisees in the CarePatrol FDDs we have reviewed.

CAREPATROL Investigation & Discussion Links

CAREPATROL Investigation: Documents & Links (Includes actual CarePatrol FDDs and FTC Documents)

CAREPATROL Videos & Commercials: STILL Misleading?

CAREPATROL Investigation: FTC Complaint Press Release

CAREPATROL Franchise Complaint – Updated  October 11, 2010

CAREPATROL: Franchisees Praise the CarePatrol Franchise    October 14, 2010

 

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