Mira Mesa software company in jeopardy?

San Diego-based educational software company WordSmart Corporation is being targeted by the Federal Trade Commission for fraud and for making false claims in regards to the effectiveness of its product. Since 2010, says a new complaint from the Federal Trade Commission, the company, located in Mira Mesa, has earned more than $18 million in revenue.

Profits have increased, not because of results but due to an aggressive marketing campaign that included using names of children in the homes they call and for affiliating themselves with their child's teachers and administrators. Another alleged tactic was to hire Jeopardy host Alex Trebek to host a 30-minute infomercial for its SAT/ACT preparation kits and so-called "Excellence Pack."

In his 30-minute infomercial, Trebek claims, "Thanks to WordSmart's Accelerated Reading and Comprehension Program you can learn ten to one hundred times faster. That's because WordSmart is based on multi-sensory technology that accelerates the way the human brain learns information."

According to WordSmart's website, they are "pioneers in effective learning environments and retention, WordSmart is an award-winning, privately owned company located in San Diego with over 100 employees responsible for Course and Content Development, Tutoring, and Educational Consulting."

Attorneys for the government say otherwise. They accuse Wordsmart's owner and founder David Kay of running a scam on parents of school-aged children. They claim the company completely disregarded telemarketing laws by calling numbers on the no-call list, offered no substantiation as to the product's effectiveness, and for refusing to give refunds.

"Defendants have often contacted consumers initially through unsolicited telemarketing calls made by WordSmart employees or intermediaries working on behalf of Defendants. During these sales calls, the telemarketers have usually used the name of a school-age child living in the home. They have frequently stated that the child expressed an interest in WordSmart goods or services. In addition, they have often given parents the impression that they were affiliated with the child’s school or with the administrators of a standardized test such as the ACT or the SAT. In fact, none of these things were true….

"Defendants have targeted parents of school-age children, and have used deceptive practices to take millions of dollars from such families at least as far back as January 2010. In marketing the ‘WordSmart’ educational goods and services to consumers throughout the United States, Defendants have used illegal methods and made false or unsubstantiated claims in media such as a television infomercial."

Attorneys for the federal government ask that a judge order the company to halt the marketing and telemarketing programs and order the company to rescind the claims it made, pay restitution, and send out refunds for so called "disgorgement of ill-gotten monies."