Federal Trade Commission v. AAFE Products Corp. et al
Filing
27
ORDER granting 26 Joint Motion for Permanent Injunction and Other Equitable Relief as to Robert Koch. Signed by Judge Anthony J. Battaglia on 9/6/2017. (acc)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF CALIFORNIA
FEDERAL TRADE COMMISSION,
) Case No.: 17cv0575 AJB (JMA)
)
Plaintiff,
) ORDER GRANTING JOINT
) MOTION FOR PERMANENT
v.
) INJUNCTION AND OTHER
) EQUITABLE RELIEF AS TO
AAFE PRODUCTS CORPORATION, et al. ) ROBERT KOCH
)
Defendants.
) (Doc. No. 26-2)
)
18
19
Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), filed its
20
Complaint for Permanent Injunction and Other Equitable Relief (“Complaint”) in
21
this matter, pursuant to Section 13(b) of the Federal Trade Commission Act (“FTC
22
Act”), 15 U.S.C. § 53(b), and Section 5 of the Restore Online Shoppers’
23
Confidence Act (“ROSCA”), 15 U.S.C. § 8404. The Commission and Defendant
24
25
26
Koch stipulate to the entry of this Stipulated Order for Permanent Injunction and
Other Equitable Relief as to Robert Koch (“Order”) to resolve all matters in
dispute in this action between them, regardless of any other judgment that the
27
Commission may obtain in this action.
28
THEREFORE, IT IS ORDERED as follows:
11
FINDINGS
22
33
1.
This Court has jurisdiction over this matter.
44
2.
The Complaint charges that Defendants participated in deceptive acts
55
or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, and Section 4
66
of ROSCA, 15 U.S.C. § 8403, in connection with Defendants’ marketing and sale
77
of cooking-related, golf, and other products and services through television
88
advertising and Defendants’ websites, including websites optimized for mobile.
99
3.
Defendant Robert Koch neither admits nor denies any of the
10
10
allegations in the Complaint, except as specifically stated in this Order. Only for
11
11
purposes of this action, Defendant Robert Koch admits the facts necessary to
12
12
establish jurisdiction.
13
13
14
14
15
15
16
16
17
17
18
18
19
19
4.
Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this
action through the date of this Order, and agrees to bear his own costs and attorney
fees.
5.
22
22
23
23
24
24
Defendant Robert Koch waives all rights to appeal or otherwise
challenge or contest the validity of this Order.
DEFINITIONS
20
20
21
21
Defendant Robert Koch waives any claim he may have under the
1.
“Billing Information” means any data that enables any person to
access a customer’s account, such as a credit card, checking, savings, share or
similar account, utility bill, mortgage loan account, or debit card.
2.
“Charge,” “Charged,” or “Charging” means any attempt to collect
25
25
money or other consideration from a consumer, including but not limited to
26
26
causing Billing Information to be submitted for payment, including against the
27
27
consumer’s credit card, debit card, bank account, telephone bill, or other account.
28
28
2
11
3.
“Clear(ly) and conspicuous(ly)” means that a required disclosure is
22
difficult to miss (i.e., easily noticeable) and easily understandable by ordinary
33
consumers, including in all of the following ways:
44
a.
In any communication that is solely visual or solely audible, the
55
disclosure must be made through the same means through which the
66
communication is presented. In any communication made through both
77
visual and audible means, such as a television advertisement, the disclosure
88
must be presented simultaneously in both the visual and audible portions of
99
the communication even if the representation requiring the disclosure is
10
10
11
11
12
12
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
made in only one means;
b.
A visual disclosure, by its size, contrast, location, the length of
time it appears, and other characteristics, must stand out from any
accompanying text or other visual elements so that it is easily noticed, read,
and understood;
c.
An audible disclosure, including by telephone or streaming
video, must be delivered in a volume, speed, and cadence sufficient for
ordinary consumers to easily hear and understand it;
d.
In any communication using an interactive electronic medium,
such as the Internet or software, the disclosure must be unavoidable;
e.
The disclosure must use diction and syntax understandable to
ordinary consumers and must appear in each language in which the
representation that requires the disclosure appears;
f.
The disclosure must comply with these requirements in each
25
25
medium through which it is received, including all electronic devices and
26
26
face-to-face communications;
27
27
28
28
g.
The disclosure must not be contradicted or mitigated by, or
inconsistent with, anything else in the communication; and
3
h.
11
When the representation or sales practice targets a specific
22
audience, such as children, the elderly, or the terminally ill, “ordinary
33
consumers” includes reasonable members of that group.
44
55
66
4.
“Close Proximity” means immediately adjacent to the triggering
representation. In the case of advertisements disseminated verbally or through
audible means, the disclosure shall be made as soon as practicable after the
77
88
99
10
10
11
11
triggering representation.
5.
“Defendant Koch” means Robert Koch.
6.
“Negative Option Feature” means, in an offer or agreement to sell or
provide any good or service, a provision under which the consumer’s silence or
12
12
failure to take affirmative action to reject a good or service or to cancel the
13
13
agreement is interpreted by the seller or provider as acceptance or continuing
14
14
acceptance of the offer.
15
15
7.
“Person” or “Persons” includes a natural person, an organization or
16
16
other legal entity, including a corporation, partnership, sole proprietorship, limited
17
17
liability company, association, cooperative, or any other group or combination
18
18
acting as an entity.
19
19
8.
“Plaintiff” means the Federal Trade Commission.
20
20
ORDER
21
21
I. PROHIBITION AGAINST MISREPRESENTATIONS
22
22
23
23
24
24
25
25
26
26
IT IS ORDERED that Defendant Koch, Defendant Koch’s agents,
employees, attorneys, and all other persons in active concert or participation with
any of them, who receive actual notice of this Order, whether acting directly or
indirectly, in connection with promoting or offering for sale any good or service,
are permanently restrained and enjoined from misrepresenting, or assisting others
27
27
28
28
4
11
22
33
in misrepresenting, expressly or by implication:
A.
Any cost to the consumer to purchase, receive, use, or return the
initial good or service;
44
B.
That the consumer will not be Charged for any good or service;
55
C.
That a good or service is offered on a “free,” “trial,” “sample,”
66
“bonus,” “gift,” “no obligation,” “discounted” basis, or words of similar import,
77
denoting or implying the absence of an obligation on the part of the recipient of the
88
offer to affirmatively act in order to avoid Charges, including where a Charge will
99
be assessed pursuant to the offer unless the consumer takes affirmative steps to
10
10
11
11
12
12
13
13
prevent or stop such a Charge;
D.
service, shipping, handling, or administrative fee with no further obligation;
E. The purpose(s) for which the consumer’s Billing Information will be
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
26
26
That the consumer can obtain a good or service for a processing,
used;
F.
The date by which the consumer will incur any obligation or be
Charged unless the consumer takes an affirmative action on the Negative Option
Feature;
G. That a transaction has been authorized by the consumer; and
H.
Any other fact material to the consumer concerning any good or
service, such as any material aspect of the nature or terms of a refund, cancellation,
exchange, or repurchase policy for the good or service.
Compliance with this Section is separate from, and in addition to, the
disclosures required by Sections II and III, infra.
II. REQUIRED DISCLOSURES RELATING TO NEGATIVE OPTION
FEATURES
27
27
28
28
IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s
5
11
agents, employees, attorneys, and all other persons in active concert or
22
participation with any of them, who receive actual notice of this Order, whether
33
acting directly or indirectly, in connection with promoting or offering for sale any
44
good or service with a Negative Option Feature, are permanently restrained and
55
enjoined from:
66
A.
77
88
99
any good or service that includes a Negative Option Feature is being offered on a
free, trial, no obligation, reduced, or discounted basis, without disclosing Clearly
and Conspicuously, and in Close Proximity to, any such representation:
10
10
1.
11
11
12
12
13
13
14
14
Representing, directly or indirectly, expressly or by implication, that
The extent to which the consumer must take affirmative
action(s) to avoid any Charges: (a) for the offered good or service, (b) of an
increased amount after the trial or promotional period ends, and (c) on a
recurring basis;
2.
15
15
The total cost (or range of costs) the consumer will be Charged
16
16
and, if applicable, the frequency of such Charges unless the consumer timely
17
17
takes steps to prevent or stop such Charges; and
3.
18
18
The deadline(s) (by date or frequency) by which the consumer
19
19
must affirmatively act in order to stop all recurring Charges.
20
20
B.
Obtaining Billing Information from a consumer for any transaction
21
21
involving a good or service that includes a Negative Option Feature, without first
22
22
disclosing Clearly and Conspicuously, and in Close Proximity to where a
23
23
consumer provides Billing Information:
24
24
25
25
26
26
27
27
1.
The extent to which the consumer must take affirmative
action(s) to avoid any Charges: (a) for the offered good or service, (b) of an
increased amount after the trial or promotional period ends, and (c) on a
recurring basis;
28
28
6
2.
11
The total cost (or range of costs) the consumer will be Charged,
22
the date the initial Charge will be submitted for payment, and, if applicable,
33
the frequency of such Charges unless the consumer timely takes affirmative
44
steps to prevent or stop such Charges;
3.
55
66
The deadline(s) (by date or frequency) by which the consumer
must affirmatively act in order to stop all recurring Charges;
4.
77
The name of the seller or provider of the good or service and, if
88
the name of the seller or provider will not appear on billing statements, the
99
billing descriptor that will appear on such statements;
10
10
5.
A description of the good or service;
11
11
6.
Any Charge or cost for which the consumer is responsible in
12
12
connection with the cancellation of an order or the return of a good; and
13
13
14
14
15
15
7.
Charges, as required by Section IV.
C.
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
The simple cancellation mechanism to stop any recurring
Failing to send the consumer:
1.
Immediately after the consumer’s submission of an online
order, written confirmation of the transaction by email. The email must
Clearly and Conspicuously disclose all the information required by
Subsection II.B, and contain a subject line reading “Order Confirmation”
along with the name of the product or service, and no additional information;
or
2.
Within two (2) days after receipt of a consumer’s order by mail
24
24
or telephone, a written confirmation of the transaction, either by email or
25
25
first class mail. The email or letter must Clearly and Conspicuously disclose
26
26
all the information required by Subsection II.B. The subject line of the
27
27
email must Clearly and Conspicuously state “Order Confirmation” along
28
28
with the name of the product or service, and nothing else. The outside of the
7
11
envelope must Clearly and Conspicuously state “Order Confirmation” along
22
with the name of the product or service, and no additional information other
33
than the consumer’s address, the Defendant Koch’s return address, and
44
postage.
55
66
77
88
III. OBTAINING EXPRESS INFORMED CONSENT
IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s
agents, employees, attorneys, and all other persons in active concert or
participation with any of them, who receive actual notice of this Order, whether
99
10
10
11
11
12
12
13
13
14
14
15
15
acting directly or indirectly, in connection with promoting or offering for sale any
good or service with a Negative Option Feature, are permanently restrained and
enjoined from using Billing Information to obtain payment from a consumer,
unless Defendant Koch first obtains the express informed consent of the consumer
to do so. To obtain express informed consent, Defendant Koch must:
A.
For all written offers (including over the Internet or other web-based
16
16
applications or services), obtain consent through a check box, signature, or other
17
17
substantially similar method, which the consumer must affirmatively select or sign
18
18
to accept the Negative Option Feature, and no other portion of the offer.
19
19
Defendant Koch shall disclose Clearly and Conspicuously and in Close Proximity
20
20
to such check box, signature, or substantially similar method of affirmative
21
21
consent, only the following, with no additional information:
22
22
1.
The extent to which the consumer must take affirmative
23
23
action(s) to avoid any Charges: (a) for the offered good or service, (b) of an
24
24
increased amount after the trial or promotional period ends, and (c) on a
25
25
recurring basis;
26
26
27
27
28
28
8
2.
11
The total cost (or range of costs) the consumer will be Charged
22
and, if applicable, the frequency of such Charges unless the consumer timely
33
takes affirmative steps to prevent or stop such Charges; and
3.
44
The deadline(s) (by date or frequency) by which the consumer
55
must affirmatively act in order to stop all recurring Charges.
66
B.
77
88
99
10
10
For all oral offers, prior to obtaining any Billing Information from the
consumer:
1.
Clearly and Conspicuously disclose the information contained
in Subsection II.B; and
2.
Obtain affirmative unambiguous express oral confirmation that
11
11
the consumer: (a) consents to being Charged for any good or service,
12
12
including providing, at a minimum, the last four (4) digits of the consumer’s
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
account number to be Charged, (b) understands that the transaction includes
a Negative Option Feature, and (c) understands the specific affirmative steps
the consumer must take to prevent or stop further Charges.
For transactions conducted through Telemarketing, Defendant Koch shall
maintain for three (3) years from the date of each transaction an unedited voice
recording of the entire transaction, including the prescribed statements set out in
Subsection III.B. Each recording must be retrievable by date and by the
consumer’s name, telephone number, or Billing Information, and must be provided
upon request to the consumer, the consumer’s bank, or any law enforcement entity.
IV. SIMPLE MECHANISM TO CANCEL NEGATIVE OPTION FEATURE
IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s
agents, employees, attorneys, and all other persons in active concert or
participation with any of them, who receive actual notice of this Order, whether
acting directly or indirectly, in connection with promoting or offering for sale any
28
28
9
11
good or service with a Negative Option Feature, are permanently restrained and
22
enjoined from failing to provide a simple mechanism for a consumer to: (1) avoid
33
being Charged, or Charged an increased amount, for the good or service; and (2)
44
immediately stop any recurring Charges. Such mechanism must not be difficult,
55
costly, confusing, or time consuming, and it must be at least as simple as the
66
mechanism the consumer used to initiate the Charge(s). In addition:
77
A.
For consumers who entered into the agreement to purchase a good or
88
service including a Negative Option Feature over the Internet or through other
99
web-based applications or services, Defendant Koch must provide a mechanism,
10
10
accessible over the Internet or through such other web-based application or service
11
11
that consumers can easily use to cancel the product or service and immediately
12
12
stop all further Charges.
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
B.
For consumers who entered into the agreement to purchase a good or
service including a Negative Option Feature through an oral offer and acceptance,
Defendant Koch must maintain a telephone number and a postal address that
consumers can easily use to cancel the product or service and immediately stop all
further Charges. Defendant Koch must assure that all calls to this telephone
number shall be answered during normal business hours and that mail to the postal
address is retrieved regularly.
V. PROHIBITION AGAINST BILLING CONSUMERS CURRENTLY
ENROLLED IN SUBSCRIPTION PLANS
IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s
24
24
agents, employees, attorneys, and all other persons in active concert or
25
25
participation with any of them, who receive actual notice of this Order, whether
26
26
acting directly or indirectly, with respect to any current customer of any good or
27
27
service with a Negative Option Feature whom Defendant Koch seeks to continue
28
28
to charge after the entry of this Order, are hereby permanently restrained and
10
11
22
33
enjoined from charging any existing customer who was first charged prior to
March 1, 2016, unless, prior to any future charge, Defendant Koch:
A.
Sends the customer written notice, either by email or first class mail,
44
in a form approved by FTC counsel, that includes the Clear and Conspicuous
55
disclosure of all the information required by Section II; and
66
77
B.
Obtains the customer’s express informed written consent in a manner
consistent with Section III.
88
99
10
10
11
11
12
12
13
13
14
14
15
15
16
16
17
17
VI. MONETARY JUDGMENT
IT IS FURTHER ORDERED that:
A.
Judgment in the amount of SIX HUNDRED THIRTY TWO
THOUSAND THREE HUNDRED FOUR DOLLARS ($632,304) is entered in
favor of the Commission against Defendant Koch, as equitable monetary relief.
B.
Defendant Koch is ordered to pay to the Commission the Judgment
set forth above in Section VI.A as follows:
1.
Within seven (7) days of entry of this Order, Defendant Koch
shall wire by electronic fund transfer the sum of ONE HUNDRED FIFTY
18
18
THOUSAND DOLLARS ($150,000) which, as Defendant Koch stipulates,
19
19
his undersigned counsel holds in escrow for no purpose other than payment
20
20
to the FTC. Defendant Koch shall wire these funds to the FTC in
21
21
accordance with instructions previously provided by a representative of the
22
22
Commission;
23
23
2.
Within one hundred and eighty (180) days of entry of this
24
24
Order, Defendant Koch shall wire by electronic fund transfer the sum of
25
25
ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000) to the FTC
26
26
in accordance with instructions previously provided by a representative of
27
27
28
28
11
11
the Commission;
3.
22
Within two hundred and seventy (270) days of entry of this
33
Order, Defendant Koch shall wire by electronic fund transfer the sum of
44
ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000) to the FTC
55
in accordance with instructions previously provided by a representative of
66
the Commission;
4.
77
Within three hundred and sixty (360) days of entry of this
88
Order, Defendant Koch shall wire by electronic fund transfer the sum of
99
ONE HUNDRED EIGHTY TWO THOUSAND THREE HUNDRED
10
10
FOUR DOLLARS ($182,304) to the FTC in accordance with instructions
11
11
previously provided by a representative of the Commission; and
12
12
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
5.
Notwithstanding the foregoing, Defendant Koch shall have the
right to prepay at any time, and without penalty, the remaining balance, or
any part thereof, due the Commission under this Order. Any such
prepayment made prior to an installment due date shall be credited as if
made on the next installment due date, and Defendant Koch shall be relieved
of making any further payments on the installment due date for any
prepayments to the extent of such prepayment. Nothing herein shall be
construed to relieve Defendant Koch of his obligation to make timely
payment for any installments as they become due which have not otherwise
fully been paid in advance.
C.
To secure the payment obligations under Section VI.B of this order,
24
24
Defendant Koch grants the Commission a security interest in certain property and
25
25
proceeds thereof (“Collateral”), as set forth in the Mortgage and Security
26
26
Agreement (“Mortgage,” attached as Attachment A), which is incorporated by
27
27
reference as if fully set forth verbatim and which grants a security interest in the
28
28
following Collateral: Defendant Koch and his spouse, Angela Koch, hereby grant
12
11
to the Commission, pursuant to the attached Mortgage, a lien on and security
22
interest in real property located at 6440 Aberdeen Lane, Medina, Ohio, 44256.
33
Defendant Koch shall submit to the clerk’s office for recording all security
44
documents used to perfect the Commission’s lien on the property within fourteen
55
(14) days after entry of this Order, and shall deliver to the Commission copies of
66
such officially recorded documents within seven (7) days after receipt of such
77
documents.
88
D.
In the event that Defendant Koch fails to make a required payment
99
when due under Section VI.B of the Order, or the Commission is not allowed to
10
10
retain any such payment, or if Defendant Koch fails to comply with the terms of
11
11
the Mortgage and such failure is not timely cured:
12
12
13
13
14
14
15
15
16
16
1.
shall immediately become due and payable by Defendant Koch. Interest
computed at the rate prescribed under 28 U.S.C. § 1961, as amended, shall
immediately begin to accrue on the unpaid balance. Time is of the essence
for the payments specified in this Section; and
17
17
2.
18
18
19
19
20
20
21
21
22
22
23
23
24
24
The entire judgment amount, less any amount previously paid,
Defendant Koch consents to the appointment of a receiver by
the Court for purpose of taking possession and control of and liquidating the
Collateral, with the rights and powers, and privileges of an equity receiver.
The costs and expenses of the receivership, including reasonable
compensation for the receiver and personnel retained by the receiver, shall
be paid solely from the proceeds of the Collateral.
E.
The Commission’s agreement to this Order is expressly based on the
25
25
material representations that Defendant Koch and Angela Koch have the right and
26
26
authority to enter into the Mortgage, and that such Collateral is not encumbered by
27
27
any lien, assignment, security interest, or other interest not otherwise disclosed in
28
28
the Mortgage.
13
1.
11
The Commission’s agreement to this Order is expressly based
22
on the material representations by Defendant Koch that the value of his
33
equity in the Collateral is at least $723,456.
2.
44
If, upon motion of the Commission, a Court determines that
55
Defendant Koch made a material misrepresentation or omitted material
66
information concerning ownership or authority to pledge the Collateral, any
77
encumbrance of the Collateral, or the value of the Collateral, the entire
88
Judgment amount ($632,304), less any amounts previously paid by
99
Defendant Koch, shall immediately become due and payable by Defendant
10
10
Koch. Interest computed at the rate prescribed under 28 U.S.C. § 1961, as
11
11
amended, shall immediately begin to accrue on the unpaid balance.
12
12
13
13
14
14
15
15
16
16
Provided that proceedings instituted under this provision would be in
addition to, and not in lieu of, any other civil or criminal remedies, as may
be provided by law, including but not limited to, contempt proceedings or
any other proceedings that the Commission may initiate to enforce this
Order.
17
17
VII. ADDITIONAL MONETARY PROVISIONS
18
18
19
19
20
20
21
21
22
22
23
23
IT IS FURTHER ORDERED that:
A.
Defendant Koch relinquishs dominion and all legal and equitable
right, title, and interest in all assets transferred pursuant to this Order and may not
seek the return of any assets.
B.
The facts alleged in the Complaint will be taken as true, without
24
24
further proof, in any subsequent civil litigation by or on behalf of the Commission,
25
25
including in a proceeding to enforce its rights to any payment or monetary
26
26
judgment pursuant to this Order, such as a nondischargeability complaint in any
27
27
bankruptcy case.
28
28
14
11
C.
The facts alleged in the Complaint establish all elements necessary to
22
sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the
33
Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral
44
estoppel effect for such purposes.
55
D.
Defendant Koch acknowledges that his Taxpayer Identification
66
Numbers (Social Security Numbers or Employer Identification Numbers), which
77
Defendant Koch previously submitted to the Commission, may be used for
88
collecting and reporting on any delinquent amount arising out of this Order, in
99
accordance with 31 U.S.C. § 7701.
10
10
E.
All money paid to the Commission pursuant to this Order may be
11
11
deposited into a fund administered by the Commission or its designee to be used
12
12
for equitable relief, including consumer redress and any attendant expenses for the
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
administration of any redress fund. If a representative of the Commission decides
that direct redress to consumers is wholly or partially impracticable or money
remains after redress is completed, the Commission may apply any remaining
money for such other equitable relief (including consumer information remedies)
as it determines to be reasonably related to Defendant Koch’s practices alleged in
the Complaint. Any money not used for such equitable relief is to be deposited to
the U.S. Treasury as disgorgement. Defendant Koch has no right to challenge any
actions the Commission or its representatives may take pursuant to this Subsection.
VIII. CUSTOMER INFORMATION
22
22
23
23
IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s
24
24
agents, employees, attorneys, and all other persons in active concert or
25
25
participation with any of them, who receive actual notice of this Order, are
26
26
permanently restrained and enjoined from directly or indirectly:
27
27
28
28
A.
Failing to provide sufficient customer information to enable the
Commission to efficiently administer consumer redress. If a representative of the
15
11
Commission requests in writing any information related to redress, Defendant
22
Koch must provide it, in the form prescribed by the Commission, within thirty (30)
33
days; and
44
B.
Disclosing, using, or benefitting from customer information, including
55
the name, address, telephone number, email address, Social Security number, other
66
identifying information, or any data that enables access to a customer’s account
77
(including a credit card, bank account, or other financial account), that Defendant
88
Koch obtained prior to entry of this Order in connection with the advertising,
99
marketing, promoting, offering for sale, or selling of any good or service using a
10
10
Negative Option Feature. Provided, however, that Defendant Koch may use
11
11
customer information for any current customer if Defendant Koch complies with
12
12
Subsection II.C of this Order.
13
13
14
14
15
15
16
16
IX. COOPERATION
IT IS FURTHER ORDERED that Defendant Koch must fully cooperate
with representatives of the Commission in this case and in any investigation related
to or associated with the transactions or the occurrences that are the subject of the
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
26
26
Complaint. Defendant Koch must provide truthful and complete information,
evidence, and testimony. Such Defendant must appear for interviews, discovery,
hearings, trials, and any other proceedings that a Commission representative may
reasonably request upon five (5) days written notice, or other reasonable notice, at
such places and times as a Commission representative may designate, without the
service of a subpoena.
X. ORDER ACKNOWLEDGMENTS
IT IS FURTHER ORDERED that Defendant Koch obtain
acknowledgements of receipt of this Order:
27
27
28
28
16
11
A.
Defendant Koch, within seven (7) days of entry of this Order, must
22
submit to the Commission an acknowledgement of receipt of this Order sworn
33
under penalty of perjury.
44
B.
For five (5) years after entry of this Order, Defendant Koch for any
55
business that such Defendant, individually or collectively with any other
66
Defendant, is the majority owner or controls directly or indirectly, must deliver a
77
copy of this Order to: (1) all principals, officers, directors, and LLC managers and
88
members; (2) all employees, agents, and representatives who participate in conduct
99
related to the subject matter of this Order; and (3) any business entity resulting
10
10
from any change in structure as set forth in the Section titled Compliance
11
11
Reporting. Delivery must occur within seven (7) days of entry of this Order for
12
12
current personnel. For all others, delivery must occur before they assume their
13
13
14
14
15
15
16
16
responsibilities.
C.
From each individual or entity to which Defendant Koch delivered a
copy of this Order, such Defendant must obtain, within thirty (30) days, a signed
and dated acknowledgement of receipt of this Order.
17
17
XI. COMPLIANCE REPORTING
18
18
19
19
20
20
21
21
22
22
23
23
IT IS FURTHER ORDERED that Defendant Koch make timely
submissions to the Commission:
A.
One (1) year after entry of this Order, Defendant Koch must submit a
compliance report, sworn under penalty of perjury:
1.
Defendant Koch must: (a) identify the primary physical, postal,
24
24
and email address and telephone number, as designated points of contact,
25
25
which representatives of the Commission may use to communicate with
26
26
such Defendant; (b) identify all of his businesses by all of their names,
27
27
telephone numbers, and physical, postal, email, and Internet addresses; (c)
28
28
describe the activities of each business, including the goods and services
17
11
offered, the means of advertising, marketing, and sales, and the involvement
22
of any other Defendant; (d) describe in detail whether and how Defendant
33
Koch is in compliance with each Section of this Order; (e) provide a copy of
44
each Order Acknowledgment obtained pursuant to this Order, unless
55
previously submitted to the Commission; and (f) if a customer covered by
66
Section V is charged after the entry of this Order, provide a copy of the
77
notice sent to the customer pursuant to Subsection V.A and the customer’s
88
written consent to the charge pursuant to Subsection V.B.
99
10
10
11
11
12
12
13
13
14
14
15
15
16
16
17
17
18
18
2.
Additionally, Defendant Koch must: (a) identify all of his
telephone numbers and all physical, postal, email and Internet addresses,
including all residences; (b) identify all of his business activities, including
any business for which such Defendant performs services whether as an
employee or otherwise and any entity in which such Defendant has any
ownership interest; and (c) describe in detail such Defendant’s involvement
in each such business, including title, role, responsibilities, participation,
authority, control, and any ownership.
B.
For ten (10) years after entry of this Order, Defendant Koch must
19
19
submit a compliance notice, sworn under penalty of perjury, within fourteen (14)
20
20
days of any change in the following:
21
21
1.
Defendant Koch must report any change in: (a) any designated
22
22
point of contact; or (b) the structure of any entity that Defendant has any
23
23
ownership interest in or controls directly or indirectly that may affect
24
24
compliance obligations arising under this Order, including: creation,
25
25
merger, sale, or dissolution of the entity or any subsidiary, parent, or affiliate
26
26
that engages in any acts or practices subject to this Order.
27
27
28
28
18
2.
11
Additionally, Defendant Koch must report any change in:
22
(a) his name, including aliases or fictitious name, or residence address; or (b)
33
his title or role in any business activity, including any business for which he
44
performs services whether as an employee or otherwise and any entity in
55
which he has any ownership interest, and identify the name, physical
66
address, and any Internet address of the business or entity.
77
C.
Defendant Koch must submit to the Commission notice of the filing
88
of any bankruptcy petition, insolvency proceeding, or similar proceeding by or
99
against such Defendant within fourteen (14) days of its filing.
10
10
D.
Any submission to the Commission required by this Order to be
11
11
sworn under penalty of perjury must be true and accurate and comply with 28
12
12
U.S.C. § 1746, such as by concluding: “I declare under penalty of perjury under
13
13
14
14
15
15
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
the laws of the United States of America that the foregoing is true and correct.
Executed on: _____” and supplying the date, signatory’s full name, title (if
applicable), and signature.
E.
Unless otherwise directed by a Commission representative in writing,
all submissions to the Commission pursuant to this Order must be emailed to
DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to:
Associate Director for Enforcement, Bureau of Consumer Protection, Federal
Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The
subject line must begin: FTC v. AAFE Products Corp., FTC Matter No. X170028.
XII. RECORDKEEPING
IT IS FURTHER ORDERED that Defendant Koch must create certain
25
25
records for ten (10) years after entry of the Order, and retain each such record for
26
26
five (5) years. Specifically, Defendant Koch, for any business that he, individually
27
27
or collectively with any other Defendant, is a majority owner or controls directly or
28
28
indirectly, must create and retain the following records:
19
A.
22
33
Accounting records showing the revenues from all goods or services
B.
11
Personnel records showing, for each person providing services,
sold;
44
whether as an employee or otherwise, that person’s: name, addresses, telephone
55
numbers, job title or position, dates of service, and (if applicable) the reason for
66
termination;
77
88
99
10
10
11
11
C.
Records of all consumer complaints and refund requests, whether
received directly or indirectly, such as through a third party, and any response;
D.
All records necessary to demonstrate full compliance with each
provision of this Order, including all submissions to the Commission; and
E.
A copy of each unique advertisement or other marketing material.
12
12
XIII. COMPLIANCE MONITORING
13
13
14
14
15
15
16
16
IT IS FURTHER ORDERED that, for the purpose of monitoring
Defendant Koch’s compliance with this Order:
A.
Within fourteen (14) days of receipt of a written request from a
17
17
representative of the Commission, Defendant Koch must: submit additional
18
18
compliance reports or other requested information, which must be sworn under
19
19
penalty of perjury; appear for depositions; and produce documents for inspection
20
20
and copying. The Commission is also authorized to obtain discovery, without
21
21
further leave of court, using any of the procedures prescribed by the Federal Rules
22
22
of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45,
23
23
and 69.
24
24
25
25
26
26
B.
For matters concerning this Order, the Commission is authorized to
communicate directly with Defendant Koch. Defendant Koch must permit
representatives of the Commission to interview any employee or other person
27
27
28
28
20
11
22
33
affiliated with Defendant Koch who has agreed to such an interview. The person
interviewed may have counsel present.
C.
The Commission may use all other lawful means, including posing,
44
through its representatives, as consumers, suppliers, or other individuals or entities,
55
to Defendant Koch or any individual or entity affiliated with Defendant Koch,
66
without the necessity of identification or prior notice. Nothing in this Order limits
77
the Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20
88
of the FTC Act, 15 U.S.C. §§ 49, 57b-1.
99
10
10
11
11
12
12
XIV. RETENTION OF JURISDICTION
IT IS FURTHER ORDERED that this Court retains jurisdiction of this
matter for purposes of construction, modification, and enforcement of this Order.
IT IS SO ORDERED.
13
13
14
14
15
15
Dated: September 6, 2017
16
16
17
17
18
18
19
19
20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28
21
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?