Federal Trade Commission v. Tarr Inc. et al

Filing 7

Stipulated Order for Permanent Injunction and Monetary Judgment Against All Defendants. Signed by Judge Larry Alan Burns on 11/13/2017. (lrf)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

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Case No. 17CV2024 LAB KSC

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FEDERAL TRADE COMMISSION,
Plaintiff,

STIPULATED ORDER FOR
PERMANENT INJUNCTION
AND MONETARY JUDGMENT
AGAINST ALL DEFENDANTS

v.
TARR INC., et al.
Defendants.

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Plaintiff, the Federal Trade Commission (“Commission” or “FTC”), filed its
Complaint for Permanent Injunction and Other Equitable Relief (“Complaint”) for
a permanent injunction and other equitable relief in this matter, pursuant to Section
13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b),
Section 5 of the Restore Online Shoppers’ Confidence Act (“ROSCA”), 15 U.S.C.
§ 8404, and Section 918(c) of the Electronic Fund Transfer Act (“EFTA”), 15

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U.S.C. § 1693o(c). The Commission and Defendants Tarr Inc., Ad Kings LLC,

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Apex Advertising LLC, Brand Development Corp., Coastal Ads LLC, Delux

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Advertising LLC, Diamond Ads LLC, Digital Nutra LLC, Exclusive Advertising

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LLC, Iron Ads, LLC, LeadKing Advertising LLC, Lead Seeker LLC, Mints

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Marketing LLC, Onyx Ads, LLC, Product Center, LLC, Rebem, LLC, Supertiser

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LLC, Verticality Advertising, LLC, White Dog Marketing, LLC, Richard Fowler,

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Ryan Fowler, and Nathan Martinez stipulate to the entry of this Stipulated Order

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for Permanent Injunction and Monetary Judgment Against All Defendants

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(“Order”) to resolve all matters in dispute in this action among them.

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THEREFORE, IT IS ORDERED as follows:

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FINDINGS

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1.

This Court has jurisdiction over this matter.

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2.

The Complaint charges that Defendants participated in deceptive and

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unfair acts or practices in violation of Sections 5(a) and 12 of the FTC Act, 15

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U.S.C. §§ 45 and 52; Section 4 of ROSCA, 15 U.S.C. § 8403; Section 907(a) of

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EFTA, 15 U.S.C. § 1693e(a); and Section 1005.10(b) of Regulation E, 12 C.F.R.

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§ 1005.10(b), in connection with the deceptive labeling, advertising, marketing,

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promotion, offering for sale, or sale of Dietary Supplements, skin creams, Add-On

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products, and other products, services, and programs.
3.

Defendants neither admit nor deny any of the allegations in the

Complaint, except as specifically stated in this Order. Only for purposes of this
action, Defendants admit the facts necessary to establish jurisdiction.
4.

Defendants waive any claim that they may have under the Equal

Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action
through the date of this Order, and agree to bear their own costs and attorney fees.
5.

Defendants and the Commission waive all rights to appeal or

otherwise challenge or contest the validity of this Order.
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DEFINITIONS

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For the purpose of this Order, the following definitions apply:
A.

“Add-On” means any additional product, service, or program that is

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offered to the consumer for purchase immediately preceding, at the time of, or

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closely proximate in time after the consumer’s purchase of a different product,

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service, or program, where the different product, service, or program is or was

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advertised, marketed, promoted, or offered for sale by Defendants, whether

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directly or through an intermediary, including by consulting, planning,

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participating, facilitating, or advising.

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B.

“Affiliate” means any person, including any third-party marketer,

who participates in an Affiliate Program.
C.

“Affiliate Network” means any person who provides another person

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with Affiliates for an Affiliate Program or with whom any person contracts as an

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Affiliate to promote any product, service, or program.

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D.

“Affiliate Program” means any arrangement under which any

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Defendant pays, or offers to pay, or provides, or offers to provide, any form of

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consideration to any third party, either directly or through an Affiliate Network

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(i) to provide any Defendant with, or refer to any Defendant, potential or actual

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service, or program on behalf of any Defendant.

customers; or (ii) otherwise to market, advertise, or offer for sale any product,
E.

“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.
F.

“Charge,” “charged,” or “charging” means any attempt to collect

money or other consideration from a consumer, including causing Billing
Information to be submitted for payment, including against the consumer’s credit
card, debit card, bank account, telephone bill, or other account.
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G.

“Clear and Conspicuous” or “Clearly and Conspicuously” means

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that a required disclosure is difficult to miss (i.e., easily noticeable) and easily

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understandable by ordinary consumers, including in all of the following ways:

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1.

In any communication that is solely visual or solely audible, the

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disclosure must be made through the same means through which the

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communication is presented. In any communication made through both visual and

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audible means, such as a television advertisement, the disclosure must be presented

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simultaneously in both the visual and audible portions of the communication even

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if the representation requiring the disclosure is made in only one means;

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2.

A visual disclosure, by its size, contrast, location, the length of

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time it appears, and other characteristics, must stand out from any accompanying

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text or other visual elements so that it is easily noticed, read, and understood;

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3.

An audible disclosure, including by telephone or streaming

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video, must be delivered in a volume, speed, and cadence sufficient for ordinary

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consumers to easily hear and understand it;

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4.

In any communication using an interactive electronic medium,

such as the Internet or software, the disclosure must be unavoidable;
5.

On a product label, the disclosure must be presented on the

principal display panel;
6.

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;
7.

The disclosure must comply with these requirements in each

medium through which it is received, including all electronic devices and
face-to-face communications;
8.

The disclosure must not be contradicted or mitigated by, or

inconsistent with, anything else in the communication; and
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9.

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When the representation or sales practice targets a specific

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audience, such as children, the elderly, or the terminally ill, “ordinary consumers”

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includes reasonable members of that group.

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H.

“Close Proximity” means immediately adjacent to the triggering

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representation. In the case of advertisements disseminated verbally or through

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audible means, the disclosure shall be made as soon as practicable after the

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triggering representation.

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I.

“Corporate Defendants” means Tarr Inc., Ad Kings LLC, Apex

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Advertising LLC, Brand Development Corp., Coastal Ads LLC, Delux Advertising

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LLC, Diamond Ads LLC, Digital Nutra LLC, Exclusive Advertising LLC, Iron

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Ads, LLC, LeadKing Advertising LLC, Lead Seeker, LLC, Mints Marketing LLC,

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Onyx Ads, LLC, Product Center, LLC, Rebem, LLC, Supertiser LLC, Verticality

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Advertising, LLC, and White Dog Marketing, LLC, and their successors and

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assigns.

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J.

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“Cosmetic” means:
1.

articles to be rubbed, poured, sprinkled, or sprayed on,

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introduced into, or otherwise applied to the human body or any part thereof

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intended for cleansing, beautifying, promoting attractiveness, or altering the

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appearance; and
2.

articles intended for use as a component of any such article,

except that such term shall not include soap.
K.

“Covered Product” means any Dietary Supplement, Food, or Drug,

including Alpha Rush Pro, Beauty Labs, Bella Labs Instant Wrinkle Reducer,
Biofinite, Brain Storm Elite, Cellublast, Crème del Mar, Dermarose Eye Serum,
Dermarose Face Cream, Elite Test 360, Fat Burn X, Fat Shred X, Flawless
Raspberry Ketone, Forskolin Belly Buster, Garcinia Cambogia Slim Fast, Green
Coffee Fat Burn, Jacked Muscle X, La Crème Anti-Wrinkle Cream, Miracle
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Garcinia Cambogia, Miracle Green Coffee, Miracle Muscle, Miracle

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Phytoceramides, Miracle Saffron, Perfect Age Skin Care, Ripped Muscle X,

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Superior Muscle X, Superior Test X, The Memory Plus, Try Miracle Cleanse, and

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Ultimate Muscle Black Edition.

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L.

Corporate Defendants, individually, collectively, or in any combination.
M.

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“Defendants” means all of the Individual Defendants and the
“Dietary Supplement” means:
1.

any product labeled as a dietary supplement or otherwise

represented as a dietary supplement; or

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2.

any pill, tablet, capsule, powder, softgel, gelcap, liquid, or other

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similar form containing one or more ingredients that are a vitamin, mineral, herb or

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other botanical, amino acid, probiotic, or other dietary substance for use by humans

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to supplement the diet by increasing the total dietary intake, or a concentrate,

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metabolite, constituent, extract, or combination of any ingredient described above,

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that is intended to be ingested, and is not represented to be used as a conventional

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Food or as a sole item of a meal or the diet.

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N.

“Drug” means:
1.

articles recognized in the official United States Pharmacopoeia,

official Homeopathic Pharmacopoeia of the United States, or official National
Formulary, or any supplement to any of them;
2.

articles intended for use in the diagnosis, cure, mitigation,

treatment, or prevention of disease in humans or other animals;
3.

articles (other than Food) intended to affect the structure or any

function of the body of humans or other animals; and
4.

articles intended for use as a component of any article specified

in Subsection (1), (2), or (3); but does not include devices or their components,
parts, or accessories.
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O.

“Essentially Equivalent Product” means a product that contains the

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identical ingredients, except for inactive ingredients (e.g., binders, colors, fillers,

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excipients), in the same form and dosage, and with the same route of

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administration (e.g., orally, sublingually), as the Covered Product; provided that

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the Covered Product may contain additional ingredients if reliable scientific

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evidence generally accepted by experts in the field indicates that the amount and

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combination of additional ingredients is unlikely to impede or inhibit the

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effectiveness of the ingredients in the Essentially Equivalent Product.

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P.

“Food” means:

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1.

any article used for food or drink for humans or other animals;

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2.

chewing gum; and

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any article used for components of any such article.

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Q.

“Including” means including but not limited to.

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R.

“Individual Defendants” means Richard Fowler, Ryan Fowler, and

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Nathan Martinez.
S.

“Negative Option Feature” means, in an offer or agreement to sell or

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provide any product, service, or program, a provision under which the consumer’s

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silence or failure to take affirmative action to reject a product, service, or program,

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continuing acceptance of the offer.

or to cancel the agreement, is interpreted by the seller or provider as acceptance or
T.

“Plaintiff,” “Commission,” or “FTC” means the Federal Trade

Commission.
U.

“Related Companies” means American Homerise LLC, Ball

Enterprises LLC, Black Series, LLC, Corsa LLC, Creative Ads Inc., Electra Media
LLC, FFM LLC, Force of Nature LLC, Gimme Enterprises LLC, Inferno LLC,
Luxlense LLC, Martinex Motors, LLC, MK55 Tactical LLC, New Paradigm Inc.,
and Shadowhawk Tactical, LLC, and their successors and assigns.
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V.

“Reliably Reported,” for a human clinical test or study (“test”),

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means a report of the test has been published in a peer-reviewed journal, and such

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published report provides sufficient information about the test for experts in the

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relevant field to assess the reliability of the results.

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W.

“Telemarketing” means any plan, program, or campaign which is

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conducted to induce the purchase of any product, service, plan, or program by use

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of one or more telephones, and which involves a telephone call, whether or not

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covered by the Telemarketing Sales Rule, 16 C.F.R. Part 310.

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ORDER

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I.

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BAN ON CERTAIN NEGATIVE OPTION SALES

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IT IS ORDERED that Defendants are permanently restrained and enjoined

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from advertising, marketing, promoting, or offering for sale, whether directly or

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through an intermediary, including by consulting, planning, participating,

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facilitating, or advising, any product, service, or program with a Negative Option

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Feature in the following circumstances:

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A.

Where the product, service, or program is or relates to a Cosmetic,

Food, Dietary Supplement, or Drug, or is for a diet or weight-loss service or
program;
B.

Where the product, service, or program is or relates to an Add-On

product, service, or program; or
C.

Where the product, service, or program is advertised, marketed,

promoted, or offered for sale as either “free,” a “trial,” a “sample,” a “bonus,” a
“gift,” “no obligation,” or using any other words, depictions, or illustrations that
denote or imply the absence of an obligation on the part of the recipient of the offer
to affirmatively act in order to avoid Charges.

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II.

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PROHIBITED BUSINESS ACTIVITIES

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IT IS FURTHER ORDERED that Defendants, Defendants’ officers,

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agents, employees, and attorneys, and all other persons in active concert or

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participation with any of them, who receive actual notice of this Order, whether

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acting directly or indirectly, in connection with the advertising, marketing,

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promotion, offering for sale, or sale of any product, service, or program are

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permanently restrained and enjoined from:

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A.

Before a consumer consents to pay for such product, service, or

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program, failing to disclose, or assisting others in failing to disclose in a Clear and

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Conspicuous manner, expressly or by implication, all material terms and

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conditions of any offer, including:

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1.

the total cost or price of the product, service, or program, as

well as the price per unit;

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2.

the amount, timing, and manner of all fees, Charges, or other

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amounts that a consumer will be charged or billed, including the date of the Charge

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and whether it will be a credit card or checking account Charge; and

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3.
B.

the mechanism for consumers to stop a Charge.

Before a consumer consents to pay for such product, service, or

program, failing to disclose, or assisting others in failing to disclose in a Clear and
Conspicuous manner, expressly or by implication, all material terms and
conditions of any refund or cancellation policy, including:
1.

the specific steps and means by which such requests must be

2.

the customer service telephone number or numbers that a

submitted;
customer must call to cancel and/or return products, services, or programs;

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3.

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the email address, web address, or street address to which such

requests must be directed;
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any mechanism that customers must use to return any products,

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including any requirement for specific tracking methods or delivery confirmation

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for a package;

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5.

a statement regarding any policy of not making refunds or

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cancellations, including any requirement that a product will not be accepted for

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return or refund unless it is unopened and in re-sellable condition; and

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6.

the duration of Defendants’ refund and cancellation policy,

including the date that it begins to run.
C.

Misrepresenting, or assisting others in misrepresenting, expressly or

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by implication, any fact material to consumers concerning any product, service, or

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program, such as:

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1.
2.

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that a product, service, or program is free, risk free, a bonus, a

or program;

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that the consumer will not be Charged for any product, service,

gift, without cost, or without obligation;
3.

that the consumer can obtain a product, service, or program for

a processing, service, shipping, handling, or administrative fee with no further
obligation;
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the purpose(s) for which the consumer’s Billing Information

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the date by which the consumer will incur any obligation or be

will be used;
Charged unless the consumer takes an affirmative action with respect to a Negative
Option Feature that is not banned under the Section of this Order entitled “Ban on
Certain Negative Option Sales”;

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6.

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money-back guarantee;
7.

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that a purchase is offered with a satisfaction guarantee or with a
that Defendants will provide full refunds to all consumers who

request them;
8.

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that any advertisement for a product, service, or program sold

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by Defendants is an objective source of information, such as an unaffiliated news

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report or magazine article;

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9.

that an endorsement is by a bona fide user of the product,

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service, or program and reflects the honest opinions, findings, beliefs, or

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experience of the endorser;

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10.

experiences with the product, service, or program;

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11.
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the total cost to purchase, receive, or use any product, service,

13.

any material restrictions, limitations or conditions to purchase,

or program;

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that independent tests demonstrate the effectiveness of any

product, service, or program, including any Covered Product;

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that any consumer testimonial reflects typical consumer

receive, or use the product, service, or program;
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that a transaction has been authorized by a consumer;

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any material aspect of the performance, efficacy, nature, or

central characteristics of the product, service, or program; and
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any material aspect of the nature or terms of a refund,

cancellation, exchange, or repurchase policy for the product, service, or program.
D.

Failing, in connection with the advertising, promotion, marketing,

offering for sale, sale, or provision of any product, service, or program through an
Affiliate Program to:

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1.

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Require each Affiliate and/or Affiliate Network to provide to

Defendants the following identifying information:
a.

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In the case of a natural person, the Affiliate’s or Affiliate

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Network’s first and last name, physical address, country, telephone number, email

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address, and complete bank account information as to where payments are to be

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made to that person;

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b.

In the case of a business entity, the Affiliate’s or Affiliate

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Network’s name and any and all names under which it does business, state of

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incorporation, registered agent, and the first and last name, physical address,

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country, telephone number, and email address for at least one natural person who

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owns, manages, or controls the Affiliate or Affiliate Network, and the complete

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bank account information as to where payments are to be made to the Affiliate or

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Affiliate Network;

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c.

If Defendants only have access to certain Affiliates

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through an Affiliate Network, then Defendants shall contractually require each

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Affiliate Network to obtain and maintain from those Affiliates the identifying

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information set forth in Subsections D.1.a and D.1.b of this Section prior to the

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Affiliate’s or Affiliate Network’s participation in the Defendants’ Affiliate

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Program.
2.

As a condition of doing business with any Affiliate or Affiliate

Network or such Affiliate or Affiliate Network’s acceptance into Defendants’
Affiliate Program: (a) provide each such Affiliate or Affiliate Network a copy of
this Order; (b) obtain from each such Affiliate or Affiliate Network a signed and
dated statement acknowledging receipt of this Order and expressly agreeing to
comply with this Order; and (c) clearly and conspicuously disclose in writing that
engaging in acts or practices prohibited by this Order will result in immediate
termination of any Affiliate or Affiliate Network and forfeiture of all monies owed
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to such Affiliate or Affiliate Network; provided, however, that if Defendants only

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have access to certain Affiliates through an Affiliate Network, then Defendants

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shall contractually require that the Affiliate Network provide the information

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required by this Subsection to each of those Affiliates and retain proof of the same

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prior to any such Affiliate being used in Defendants’ Affiliate Program; and if

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Defendants should acquire any entity that has an existing program of selling

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through Affiliates, the entity must complete all steps in this Subsection prior to

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Defendants’ acquisition of the entity.

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3.

Require that each Affiliate or Affiliate Network, prior to the

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public use or dissemination of any marketing materials, including websites, emails,

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and pop-ups used by any Affiliate or Affiliate Network to advertise, promote,

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market, offer for sale, or sell any products, services, or programs through

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Defendants’ Affiliate Program, provide Defendants with the following

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information: (a) copies of all materially different marketing materials to be used by

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the Affiliate or Affiliate Network, including text, graphics, video, audio, and

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photographs; (b) each location the Affiliate or Affiliate Network maintains, or

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directly or indirectly controls, where the marketing materials will appear, including

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the URL of any website; (c) for hyperlinks contained within the marketing

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hyperlink, including the URL of any website; and (d) the range of dates that the

materials, each location to which a consumer will be transferred by clicking on the
marketing materials will be publicly used or disseminated to consumers; provided,
however, that if Defendants only have access to certain Affiliates through an
Affiliate Network, then Defendants shall contractually require that the Affiliate
Network obtain and maintain the same information set forth above from each of
those Affiliates who are part of Defendants’ Affiliate Program prior to the public
use or dissemination of any such marketing materials, and provide proof to
Defendants of having obtained the same.
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4.

Promptly review the marketing materials specified in Section

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II.D.3 above as necessary to ensure compliance with this Order. Defendants shall

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also promptly take steps as necessary to ensure that the marketing materials

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provided to Defendants under Section II.D.3 above are the marketing materials

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publicly used or disseminated to consumers by the Affiliate or Affiliate Network.

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If Defendants determine that the use of any marketing material does not comply

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with this Order, Defendants shall inform the Affiliate or Affiliate Network in

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writing that approval is denied and shall not pay any amounts to the Affiliate or

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Affiliate Network for such marketing, including any payments for leads, “click-

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throughs,” or sales resulting therefrom; provided, however, that if Defendants only

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have access to certain Affiliates through an Affiliate Network, then Defendants

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shall contractually require that the Affiliate Network comply with the procedures

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set forth in this Subsection as to those Affiliates.

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5.

Promptly and completely investigate any complaints that

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Defendants receive through any source to determine whether any Affiliate or

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Affiliate Network is engaging in acts or practices prohibited by this Order, either

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directly or through any Affiliate that is part of Defendants’ Affiliate Program.

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6.

Upon determining that any Affiliate or Affiliate Network has

engaged in, or is engaging in, acts or practices prohibited by this Order, either
directly or through any Affiliate that is part of Defendants’ Affiliate Program,
immediately:
a.

Disable any connection between the Defendants’

Affiliate Program and the marketing materials used by the Affiliate or Affiliate
Network to engage in such acts or practices prohibited by this Order;
b.

Immediately halt the processing of any payments or

charges generated by the Affiliate or Affiliate Network;

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c.

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Fully refund, or cause to be refunded, within five (5)

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business days, each consumer charged by Defendants whose sale originated from

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the Affiliate or Affiliate Network on or after the date the Affiliate or Affiliate

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Network engaged in acts or practices prohibited by this Order; and
d.

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Immediately terminate the Affiliate or Affiliate Network;

66

provided, however, Defendants shall not be in violation of this subsection if

77

Defendants fail to terminate an Affiliate Network in a case where Defendants’ only

88

access to an Affiliate who has engaged in acts or practices prohibited by this Order

99

is through an Affiliate Network and Defendants receive notice that the Affiliate

10
10

Network immediately terminated the Affiliate violating this Order from any

11
11

Affiliate Program maintained by the Defendants.

12
12

III.

13
13

REQUIRED DISCLOSURES RELATING TO

14
14

NEGATIVE OPTION FEATURES

15
15

IT IS FURTHER ORDERED that Defendants, Defendants’ officers,

16
16

agents, employees, and attorneys, and all other persons in active concert or

17
17

participation with any of them, who receive actual notice of this Order, whether

18
18
19
19

acting directly or indirectly, in connection with promoting or offering for sale any

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

product, service, or program covered under the Section of this Order entitled “Ban

product, service, or program with a Negative Option Feature, other than any
on Certain Negative Option Sales,” are permanently restrained and enjoined from:
A.

Obtaining Billing Information from a consumer for any transaction

involving a product, service, or program that includes a Negative Option Feature,
without first disclosing Clearly and Conspicuously, and in Close Proximity to
where a consumer provides Billing Information:
1.

The extent to which the consumer must take affirmative

action(s) to avoid any Charges on a recurring basis;
15

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 the frequency of

33

such Charges unless the consumer timely takes affirmative steps to prevent or stop

44

such Charges;

55

3.

66

The deadline(s) (by date or frequency) by which the consumer

must affirmatively act in order to stop all recurring Charges;

77

4.

The name of the seller or provider of the product, service or

88

program and, if the name of the seller or provider will not appear on billing

99

statements, the billing descriptor that will appear on such statements;

10
10

5.

A description of the product, service, or program;

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 product; and

13
13
14
14
15
15
16
16

7.

The simple cancellation mechanism to stop any recurring

Charges, as required by Section V of this Order.
B.

Failing to send the consumer:
1.

Immediately after the consumer’s submission of an online

17
17

order, written confirmation of the transaction by email. The email must Clearly

18
18
19
19

and Conspicuously disclose all the information required by Subsection III.A, and

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

contain a subject line reading “Order Confirmation” along with the name of the
product, service, or program and no additional information; or
2.

Within two (2) days after receipt of the consumer’s order by

mail or telephone, a written confirmation of the transaction, either by email or first
class mail. The email or letter must Clearly and Conspicuously disclose all the
information required by Subsection III.A. The subject line of the email must
Clearly and Conspicuously state “Order Confirmation” along with the name of the
product, service, or program and nothing else. The outside of the envelope must
Clearly and Conspicuously state “Order Confirmation” along with the name of the
16

11

product, service, or program and no additional information other than the

22

consumer’s address, the seller’s return address, and postage.

33

IV.

44

OBTAINING EXPRESS INFORMED CONSENT

55

IT IS FURTHER ORDERED that Defendants, Defendants’ officers,

66

agents, employees, and attorneys, and all other persons in active concert or

77

participation with any of them, who receive actual notice of this Order, whether

88

acting directly or indirectly, in connection with promoting or offering for sale any

99

product, service, or program with a Negative Option Feature, other than any

10
10

product, service, or program covered under the Section of this Order entitled “Ban

11
11

on Certain Negative Option Sales,” are permanently restrained and enjoined from

12
12

using, or assisting others in using, Billing Information to obtain payment from a

13
13

consumer, unless Defendants first obtain the express informed consent of the

14
14

consumer to do so. To obtain express informed consent, Defendants must:

15
15

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
19
19

to accept the Negative Option Feature, and no other portion of the offer.

20
20
21
21
22
22
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24
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25
26
26
27
27
28
28

such check box, signature, or substantially similar method of affirmative consent,

Defendants shall disclose Clearly and Conspicuously, and in Close Proximity to
only the following, with no additional information:
1.

The extent to which the consumer must take affirmative

action(s) to avoid any Charges on a recurring basis;
2.

The total cost (or range of costs) the consumer will be Charged

and, if applicable, the frequency of such Charges unless the consumer timely takes
affirmative steps to prevent or stop such Charges; and

17

3.

11
22
33
44

must affirmatively act in order to stop all recurring Charges.
B.

For all oral offers, prior to obtaining any Billing Information from the

consumer:
1.

55
66

The deadline(s) (by date or frequency) by which the consumer

Clearly and Conspicuously disclose the information contained

in Subsection III.A; and

77

2.

Obtain affirmative unambiguous express oral confirmation that

88

the consumer: (a) consents to being Charged for any product, service, or program,

99

including providing, at a minimum, the last four (4) digits of the consumer’s

10
10

account number to be Charged, (b) understands that the transaction includes a

11
11

Negative Option Feature, and (c) understands the specific affirmative steps the

12
12

consumer must take to prevent or stop further Charges.

13
13

C.

For transactions conducted through Telemarketing, Defendants shall

14
14

maintain for three (3) years from the date of each transaction an unedited voice

15
15

recording of the entire transaction, including the prescribed statements set out in

16
16

Subsection IV.B. Each recording must be retrievable by date and by the

17
17

consumer’s name, telephone number, or Billing Information, and must be provided

18
18
19
19

upon request to the consumer, the consumer’s bank, or any law enforcement entity.

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

SIMPLE MECHANISM TO CANCEL

V.
NEGATIVE OPTION FEATURE
IT IS FURTHER ORDERED that Defendants, Defendants’ officers,
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
product, service, or program with a Negative Option Feature, other than any
product, service, or program covered under the Section of this Order entitled “Ban
18

11

on Certain Negative Option Sales,” are permanently restrained and enjoined from

22

failing to provide a simple mechanism for the consumer to immediately stop any

33

recurring Charges. Such mechanism must not be difficult, costly, confusing, or

44

time consuming, and must be at least as simple as the mechanism the consumer

55

used to initiate the Charge(s). In addition:

66

A.

For consumers who entered into the agreement to purchase a product,

77

service, or program including a Negative Option Feature over the Internet or

88

through other web-based applications or services, Defendants must provide a

99

mechanism, accessible over the Internet or through such other web-based

10
10

application or service that consumers can easily use to cancel the product, service,

11
11

or program and to immediately stop all further Charges.

12
12

B.

For consumers who entered into the agreement to purchase a product,

13
13

service, or program, including a Negative Option Feature through an oral offer and

14
14

acceptance, Defendants must maintain a telephone number and a postal address

15
15

that consumers can easily use to cancel the product, service, or program and to

16
16

immediately stop all further Charges. Defendants must assure that all calls to this

17
17

telephone number shall be answered during normal business hours and that mail to

18
18
19
19

the postal address is retrieved regularly.

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

VI.
BANNED WEIGHT-LOSS CLAIMS
IT IS FURTHER ORDERED that Defendants, whether acting directly or
indirectly, in connection with the manufacturing, labeling, advertising, promotion,
offering for sale, sale, or distribution of any Dietary Supplement, over-the-counter
Drug, patch, cream, wrap, or other product worn on the body or rubbed into the
skin, are permanently restrained and enjoined from representing, or assisting others
in representing, in any manner, expressly or by implication, including through the

19

11

use of a product name, endorsement, depiction, illustration, trademark, or trade

22

name, that such product:

33

A.

without dieting or exercise;

44
55

B.

66
77

C.

Causes permanent weight loss even after the consumer stops using the
product;

D.

10
10
11
11

Causes substantial weight loss no matter what or how much the
consumer eats;

88
99

Causes weight loss of two pounds or more a week for a month or more

Blocks the absorption of fat or calories to enable consumers to lose
substantial weight;

E.

12
12

Safely enables consumers to lose more than three pounds per week for
more than four weeks;

13
13

F.

Causes substantial weight loss for all users; or

14
14

G.

Causes substantial weight loss by wearing a product on the body or

15
15

rubbing it into the skin.

16
16

VII.

17
17

PROHIBITED REPRESENTATIONS:

18
18
19
19

WEIGHT-LOSS CLAIMS

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

IT IS FURTHER ORDERED that Defendants, Defendants’ officers,
agents, employees, and 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 the manufacturing, labeling,
advertising, promotion, offering for sale, sale, or distribution of any Covered
Product, are permanently restrained and enjoined from making, or assisting others
in making, expressly or by implication, including through the use of a product
name, endorsement, depiction, or illustration, any representation, other than

20

11

representations covered under the Section of this Order entitled “Banned Weight-

22

Loss Claims,” that, in humans, such Covered Product:

33

A.

Causes, or assists in causing, weight loss or any specific amount of
weight loss;

44
55

B.

Causes, or assists in causing, rapid or sustained weight loss;

66

C.

Causes, or assists in causing, loss of belly fat; or

77

D.

Cures, mitigates, or treats any disease;

88
99

unless the representation is non-misleading and, at the time of making such

10
10

representation, they possess and rely upon competent and reliable scientific

11
11

evidence substantiating that the representation is true. For purposes of this

12
12

Section, competent and reliable scientific evidence shall consist of human clinical

13
13

testing of the Covered Product, or of an Essentially Equivalent Product, that is

14
14

sufficient in quality and quantity, based on standards generally accepted by experts

15
15

in the relevant disease, condition, or function to which the representation relates,

16
16

when considered in light of the entire body of relevant and reliable scientific

17
17

evidence, to substantiate that the representation is true. Such testing must be:

18
18
19
19

(1) randomized, double-blind, and placebo-controlled; and (2) conducted by

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

addition, all underlying or supporting data and documents generally accepted by

researchers qualified by training and experience to conduct such testing. In
experts in the field as relevant to an assessment of such testing as described in the
Section of this Order entitled “Preservation of Records Relating to Competent and
Reliable Human Clinical Tests or Studies” must be available for inspection and
production to the Commission. Persons covered by this Section shall have the
burden of proving that a product satisfies the definition of Essentially Equivalent
Product.

21

11

VIII.

22

PROHIBITED REPRESENTATIONS:

33

OTHER STRUCTURE OR FUNCTION AND

44

HEALTH-RELATED CLAIMS

55

IT IS FURTHER ORDERED that Defendants, Defendants’ officers,

66

agents, employees, and attorneys, and all other persons in active concert or

77

participation with any of them, who receive actual notice of this Order, whether

88

acting directly or indirectly, in connection with the manufacturing, labeling,

99

advertising, promotion, offering for sale, sale, or distribution of any Covered

10
10

Product, are permanently restrained and enjoined from making, or assisting others

11
11

in making, expressly or by implication, including through the use of a product

12
12

name, endorsement, depiction, or illustration, any representation, other than

13
13

representations covered under the Sections of this Order entitled “Banned Weight-

14
14

Loss Claims” and “Prohibited Representations: Weight-Loss Claims,” about the

15
15

health benefits, performance, efficacy, safety, or side effects of any Covered

16
16

Product, including that the Covered Product (1) causes, or assists in causing,

17
17

increased muscle growth or muscle mass, or (2) permanently, significantly, and/or

18
18
19
19

dramatically eliminates or lessens sagging skin, wrinkles or age spots, unless the

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

they possess and rely upon competent and reliable scientific evidence that is

representation is non-misleading, and, at the time of making such representation,
sufficient in quality and quantity based on standards generally accepted by experts
in the relevant disease, condition, or function to which the representation relates,
when considered in light of the entire body of relevant and reliable scientific
evidence, to substantiate that the representation is true.
For purposes of this Section, competent and reliable scientific evidence
means tests, analyses, research, or studies (1) that have been conducted and
evaluated in an objective manner by experts in the relevant disease, condition, or
22

11

function to which the representation relates; (2) that are generally accepted by such

22

experts to yield accurate and reliable results; and (3) that are randomized, double-

33

blind, and placebo-controlled human clinical testing of the Covered Product, or of

44

an Essentially Equivalent Product, when such experts would generally require such

55

human clinical testing to substantiate that the representation is true. In addition,

66

when such tests or studies are human clinical tests or studies, all underlying or

77

supporting data and documents generally accepted by experts in the field as

88

relevant to an assessment of such testing as set forth in the Section of this Order

99

entitled “Preservation of Records Relating to Competent and Reliable Human

10
10

Clinical Tests or Studies” must be available for inspection and production to the

11
11

Commission. Persons covered by this Section have the burden of proving that a

12
12

product satisfies the definition of Essentially Equivalent Product.

13
13

IX.

14
14

PROHIBITED REPRESENTATIONS REGARDING TESTS OR STUDIES

15
15

IT IS FURTHER ORDERED that Defendants, Defendants’ officers,

16
16

agents, employees, and attorneys, and all other persons in active concert or

17
17

participation with any of them, who receive actual notice of this Order, whether

18
18
19
19

acting directly or indirectly, in connection with the manufacturing, labeling,

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

Product, are permanently restrained and enjoined from misrepresenting, or

advertising, promotion, offering for sale, sale, or distribution of any Covered
assisting others in misrepresenting, in any manner, expressly or by implication,
including through the use of any product name, endorsement, depiction, or
illustration:
A.

That any Covered Product is clinically proven to cause weight loss,

muscle growth, or wrinkle reduction;
B.

The existence, contents, validity, results, conclusions, or

interpretations of any test, study, or research; or
23

11
22

C.

That the performance or benefits of any product are scientifically or

clinically proven or otherwise established.

33

X.

44

FDA APPROVED CLAIMS

55

IT IS FURTHER ORDERED that nothing in this Order prohibits

66

Defendants, Defendants’ officers, agents, employees, and attorneys, and all other

77

persons in active concert or participation with any of them, from:

88

A.

For any Drug, making a representation that is approved in labeling for

99

such Drug under any tentative or final monograph promulgated by the Food and

10
10

Drug Administration, or under any new drug application approved by the Food and

11
11

Drug Administration; and

12
12

B.

For any product, making a representation that is specifically

13
13

authorized for use in labeling for such product by regulations promulgated by the

14
14

Food and Drug Administration pursuant to the Nutrition Labeling and Education

15
15

Act of 1990 or permitted under Sections 303-304 of the Food and Drug

16
16

Administration Modernization Act of 1997.

17
17

XI.

18
18
19
19

PRESERVATION OF RECORDS RELATING TO COMPETENT AND

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

RELIABLE HUMAN CLINICAL TESTS OR STUDIES
IT IS FURTHER ORDERED that, with regard to any human clinical test
or study (“test”) upon which Defendants rely to substantiate any claim covered by
this Order, Defendants shall secure and preserve all underlying or supporting data
and documents generally accepted by experts in the field as relevant to an
assessment of the test, including:
A.

All protocols and protocol amendments, reports, articles, write-ups, or

other accounts of the results of the test, and drafts of such documents reviewed by
the test sponsor or any other person not employed by the research entity;
24

11

B.

All documents referring or relating to recruitment; randomization;

22

instructions, including oral instructions, to participants; and participant

33

compliance;

44

C.

Documents sufficient to identify all test participants, including any

55

participants who did not complete the test, and all communications with any

66

participants relating to the test; all raw data collected from participants enrolled in

77

the test, including any participants who did not complete the test; source

88

documents for such data; any data dictionaries; and any case report forms;

99

D.

All documents referring or relating to any statistical analysis of any

10
10

test data, including any pretest analysis, intent-to-treat analysis, or between-group

11
11

analysis performed on any test data; and

12
12

E.

All documents referring or relating to the sponsorship of the test,

13
13

including all communications and contracts between any sponsor and the test’s

14
14

researchers.

15
15

Provided, however, the preceding preservation requirement does not apply to

16
16

a Reliably Reported test, unless the test was conducted, controlled, or sponsored, in

17
17

whole or in part by: (1) any Defendant; (2) any of Defendants’ officers, agents,

18
18
19
19

representatives, or employees; (3) any other person or entity in active concert or

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

on behalf of any Defendant; (5) any supplier of any ingredient contained in the

participation with any Defendant; (4) any person or entity affiliated with or acting
product at issue to any of the foregoing or to the product’s manufacturer; or (6) the
supplier or manufacturer of such product.
For any test conducted, controlled, or sponsored, in whole or in part, by
Defendants, Defendants must establish and maintain reasonable procedures to
protect the confidentiality, security, and integrity of any personal information
collected from or about participants. These procedures must be documented in
writing and must contain administrative, technical, and physical safeguards
25

11

appropriate to Corporate Defendants’ size and complexity, the nature and scope of

22

Defendants’ activities, and the sensitivity of the personal information collected

33

from or about the participants.

44

XII.

55

PROHIBITIONS AGAINST VIOLATION OF THE ELECTRONIC

66

FUND TRANSFER ACT

77

IT IS FURTHER ORDERED that Defendants and Defendants’ officers,

88

agents, employees, and attorneys, and all other persons in active concert or

99

participation with any of them, who receive actual notice of this Order, whether

10
10

acting directly or indirectly, in connection with the sale of any product, service, or

11
11

program are hereby permanently restrained and enjoined from:

12
12

A.

Engaging in any recurring debiting of a consumer’s account without

13
13

first obtaining a valid written pre-authorization for preauthorized electronic fund

14
14

transfers from the consumer’s account, which pre-authorization is clear and readily

15
15

understandable, identifiable as a pre-authorization, and reflects the consumer’s

16
16

assent, as required by Section 907(a) of the Electronic Fund Transfer Act, 15

17
17

U.S.C. § 1693e(a), and Section 1005.10(b) of Regulation E, as more fully set out in

18
18
19
19

Section 1005.10(b) of the Consumer Financial Protection Bureau’s Official Staff

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

C.F.R. § 1005.10(b), cmts. 5 and 6, Supp. I;

Commentary to Regulation E (“Official Staff Commentary to Regulation E”), 12
B.

Engaging in any recurring debiting of a consumer’s account without

first providing a copy of a valid written pre-authorization to the consumer for
preauthorized electronic fund transfers from the consumer’s account, which copy is
clear and readily understandable, identifiable as a pre-authorization, and reflects
the consumer’s assent, as required by Section 907(a) of EFTA, 15 U.S.C.
§ 1693e(a), and Section 1005.10(b) of Regulation E, as more fully set out in

26

11

Section 1005.10(b) of the Official Staff Commentary to Regulation E, 12 C.F.R.

22

§ 1005.10(b), cmts. 5 and 6, Supp. I; and

33

C.

Failing to maintain procedures reasonably adapted to avoid an

44

unintentional failure to obtain a written authorization for preauthorized electronic

55

fund transfers, as required in Section 1005.10(b) of the Official Staff Commentary

66

to Regulation E, 12 C.F.R. § 1005.10(b), cmt. 7, Supp. I.

77

XIII.

88

MONETARY JUDGMENT AND PARTIAL SUSPENSION

99

IT IS FURTHER ORDERED that:

10
10

A.

Judgment in the amount of one hundred seventy-nine million dollars

11
11

($179,000,000) is entered in favor of the Commission against Defendants, jointly

12
12

and severally, as equitable monetary relief. Upon complete payment and transfer

13
13

to the Commission of all assets listed in Subsections XIII.B-D below, the

14
14

remainder of the judgment is suspended, subject to Subsections XIII.F-H below.

15
15

B.

In partial satisfaction of the monetary judgment set forth above,

16
16

Defendants hereby relinquish and assign to the Commission all legal and equitable

17
17

right, title, control, or interest in the assets listed below effective upon entry of this

18
18
19
19

Order, and the following transfers of assets shall occur within seven (7) days of

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

provided by a representative of the Commission:

entry of this order by electronic fund transfer in accordance with instructions
1.

The Defendants shall transfer to the Commission four million,

seventy-two thousand, three hundred fifty-five dollars ($4,072,355), which, as the
Defendants stipulate, their counsel holds in escrow for no purpose other than
payment to the Commission.
C.

In partial satisfaction of the monetary judgment set forth above,

Defendants hereby relinquish and assign to the Commission all legal and equitable
right, title, control, or interest, in the following assets listed below (in the amount
27

11

of at least two million, three hundred eight thousand, eight hundred ninety dollars

22

($2,308,890)) effective upon entry of this Order, and the following transfers of

33

assets shall occur within seven (7) days of entry of this order by electronic fund

44

transfer in accordance with instructions provided by a representative of the

55

Commission:

66

1.

Chase Paymentech, a division of JPMorgan Chase & Co., shall

77

transfer to the Commission all assets, including reserve funds, held in the name of

88

or for the benefit of any of the Defendants or Related Companies, including the

99

Chase Paymentech accounts identified in Appendix 1 to this Order;

10
10

2.

Cynergy Data, LLC (“Cynergy”), now doing business as

11
11

Priority Payment Systems LLC, shall transfer to the Commission all assets,

12
12

including reserve funds, held in the name of or for the benefit of any of the

13
13

Defendants or Related Companies, including the Cynergy accounts identified in

14
14

Appendix 1 to this Order;

15
15

3.

Elavon Inc. (“Elavon”) shall transfer to the Commission all

16
16

assets, including reserve funds, held in the name of or for the benefit of any of the

17
17

Defendants or Related Companies, including the Elavon accounts identified in

18
18
19
19

Appendix 1 to this Order;

20
20
21
21
22
22
23
23
24
24
25
25
26
26
27
27
28
28

Commission all assets, including reserve funds, held in the name of or for the

4.

Electronic Merchant Services (“EMS”) shall transfer to the

benefit of any of the Defendants or Related Companies, including the EMS
accounts identified in Appendix 1 to this Order;
5.

First National Bank of Omaha (“First National”) shall transfer

to the Commission all assets, including reserve funds, held in the name of or for
the benefit of any of the Defendants or Related Companies, including the First
National accounts identified in Appendix 1 to this Order;

28

6.

11

Global Merchant Advisors shall transfer to the Commission all

22

assets, including reserve funds, held in the name of or for the benefit of any of the

33

Defendants or Related Companies, including the Global Merchant Advisors

44

accounts identified in Appendix 1 to this Order;
7.

55

Ignite Payments, LLC (“Ignite Payments”) shall transfer to the

66

Commission all assets, including reserve funds, held in the name of or for the

77

benefit of any of the Defendants or Related Companies, including the Ignite

88

Payment accounts identified in Appendix 1 to this Order;

99

8.

Merchant e-Solutions shall transfer to the Commission all

10
10

assets, including reserve funds, held in the name of or for the benefit of any of the

11
11

Defendants or Related Companies, including the Merchant e-Solutions accounts

12
12

identified in Appendix 1 to this Order;

13
13

9.

National Bank of California, now doing business as

14
14

Commercial Bank of California, shall transfer to the Commission all assets,

15
15

including reserve funds, held in the name of or for the benefit of any of the

16
16

Defendants or Related Companies, including the National Bank of California

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accounts identified in Appendix 1 to this Order;

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10.

National Merchants Association (“NMA”) shall transfer to the

Commission all assets, including reserve funds, held in the name of or for the
benefit of any of the Defendants or Related Companies, including the NMA
accounts identified in Appendix 1 to this Order;
11.

Powerpay, LLC (“Powerpay”), now doing business as EVO

Payments International, shall transfer to the Commission all assets, including
reserve funds, held in the name of or for the benefit of any of the Defendants or
Related Companies, including the Powerpay accounts identified in Appendix 1 to
this Order;

29

12.

11

Priority Payment Systems LLC (“Priority Payment”) shall

22

transfer to the Commission all assets, including reserve funds, held in the name of

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or for the benefit of any of the Defendants or Related Companies, including the

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Priority Payment accounts identified in Appendix 1 to this Order;
13.

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Processing.com, LLC (“Processing.com”) shall transfer to the

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Commission all assets, including reserve funds, held in the name of or for the

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benefit of any of the Defendants or Related Companies, including the

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Processing.com accounts identified in Appendix 1 to this Order;

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14.

Select Bankcard shall transfer to the Commission all assets,

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10

including reserve funds, held in the name of or for the benefit of any of the

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11

Defendants or Related Companies, including the Select Bankcard accounts

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12

identified in Appendix 1 to this Order;

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15.

Signature Processing Inc. (“Signature Processing”) shall

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14

transfer to the Commission all assets, including reserve funds, held in the name of

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or for the benefit of any of the Defendants or Related Companies, including the

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Signature Processing accounts identified in Appendix 1 to this Order;

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16.

Synovus Financial Corp. (“Synovus”) shall transfer to the

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Commission all assets, including reserve funds, held in the name of or for the

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accounts identified in Appendix 1 to this Order;

benefit of any of the Defendants or Related Companies, including the Synovus
17.

TransFirst shall transfer to the Commission all assets, including

reserve funds, held in the name of or for the benefit of any of the Defendants or
Related Companies, including the TransFirst accounts identified in Appendix 1 to
this Order;
18.

U.S. Merchant Systems (“USMS”) shall transfer to the

Commission all assets, including reserve funds, held in the name of or for the

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11

benefit of any of the Defendants or Related Companies, including the USMS

22

accounts identified in Appendix 1 to this Order;
19.

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Vantiv, Inc. (“Vantiv”) shall transfer to the Commission all

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assets, including reserve funds, held in the name of or for the benefit of any of the

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Defendants or Related Companies, including the Vantiv accounts identified in

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Appendix 1 to this Order;

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20.

Woodforest National Bank (“Woodforest”) shall transfer to the

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Commission all assets, including reserve funds, held in the name of or for the

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benefit of any of the Defendants or Related Companies, including the Woodforest

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10

accounts identified in Appendix 1 to this Order; and

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21.

Worldpay Group plc (“Worldpay”) shall transfer to the

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12

Commission all assets, including reserve funds, held in the name of or for the

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benefit of any of the Defendants or Related Companies, including the Worldpay

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accounts identified in Appendix 1 to this Order.

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15

D.

If the aggregate amount held in the reserve accounts of the entities

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listed in Subsection XIII.C above as of the date of entry of this Order (“the

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17

Aggregate Reserve Amount”) is less than two million, three hundred eight

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thousand, eight hundred ninety dollars ($2,308,890), then Defendants are ordered

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three hundred eight thousand, eight hundred ninety dollars ($2,308,890) within 30

to pay to the Commission the difference between such amount and two million,
days of entry of this Order by electronic fund transfer in accordance with
instructions previously provided by a representative of the Commission.
E.

Defendants shall execute, or cause to be executed, within three (3)

days of written notice of this Order, all documents necessary to effectuate the
transfer of the Aggregate Reserve Amount, including providing any documents
necessary to determine the Aggregate Reserve Amount.

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F.

The Commission’s agreement to the suspension of part of the

22

judgment is expressly premised upon the truthfulness, accuracy, and completeness

33

of Defendants’ sworn financial statements and related documents (collectively,

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“financial representations”) submitted to the Commission, namely:

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1.

the Financial Statement of Individual Defendant Richard

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Fowler signed on June 29, 2017, including all documents attached or incorporated

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by reference therein;

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2.

the Financial Statement of Individual Defendant Ryan Fowler

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signed on June 29, 2017, including all documents attached or incorporated by

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10

reference therein;

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11

3.

the Financial Statement of Individual Defendant Nathan

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Martinez signed on June 29, 2017, including all documents attached or

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incorporated by reference therein;

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14

4.

the Financial Statement of Corporate Defendant Ad Kings LLC

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signed by Sean Colwell, Chief Executive Officer, on June 27, 2017, including all

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documents attached or incorporated by reference therein;

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5.

the Financial Statement of Corporate Defendant Apex

Advertising LLC signed by Adrian Skibine, Chief Executive Officer, on June 27,
2017, including all documents attached or incorporated by reference therein;
6.

the Financial Statement of Corporate Defendant Brand

Development Corp. signed by Rodney Fetaya, Chief Executive Officer, on June
27, 2017, including all documents attached or incorporated by reference therein;
7.

the Financial Statement of Corporate Defendant Coastal Ads

LLC signed by Oscar Maria, Chief Executive Officer, on June 27, 2017, including
all documents attached or incorporated by reference therein;

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8.

the Financial Statement of Corporate Defendant Delux

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Advertising LLC signed by Jack Cooper, Chief Executive Officer, on June 27,

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2017, including all documents attached or incorporated by reference therein;

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9.

the Financial Statement of Corporate Defendant Diamond Ads

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LLC signed by Nathan Martinez, Chief Executive Officer, on June 27, 2017,

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including all documents attached or incorporated by reference therein;

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10.

the Financial Statement of Corporate Defendant Digital Nutra

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LLC signed by Hadi Assposito, Owner and Officer, on June 27, 2017, including all

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documents attached or incorporated by reference therein;

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10

11.

the Financial Statement of Corporate Defendant Exclusive

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Advertising LLC signed by Marco Fregoso, Chief Executive Officer, on June 27,

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12

2017, including all documents attached or incorporated by reference therein;

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13

12.

the Financial Statement of Corporate Defendant Iron Ads, LLC

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signed by Nathan Martinez, Chief Executive Officer, on June 27, 2017, including

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all documents attached or incorporated by reference therein;

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13.

the Financial Statement of Corporate Defendant LeadKing

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Advertising LLC signed by Nathan Martinez, Chief Executive Officer, on June 27,

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2017, including all documents attached or incorporated by reference therein;

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LLC signed by Ryan Fowler, Chief Executive Officer, on June 27, 2017, including

14.

the Financial Statement of Corporate Defendant Lead Seeker,

all documents attached or incorporated by reference therein;
15.

the Financial Statement of Corporate Defendant Mints

Marketing LLC signed by Zoe Abel, Chief Executive Officer, on June 27, 2017,
including all documents attached or incorporated by reference therein;
16.

the Financial Statement of Corporate Defendant Onyx Ads,

LLC signed by Kyle Lawrence, Chief Executive Officer, on June 29, 2017,
including all documents attached or incorporated by reference therein;
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17.

the Financial Statement of Corporate Defendant Rebem, LLC

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signed by Emma Baker, Owner, on July 12, 2017, including all documents

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attached or incorporated by reference therein;

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18.

the Financial Statement of Corporate Defendant Supertiser LLC

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signed by Richard Fowler, Chief Executive Officer, on June 27, 2017, including all

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documents attached or incorporated by reference therein;

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19.

the Financial Statement of Corporate Defendant TARR Inc.

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signed by Richard Fowler, Chief Executive Officer, on June 27, 2017, including all

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documents attached or incorporated by reference therein;

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10

20.

the Financial Statement of Corporate Defendant Verticality

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Advertising, LLC signed by Richard Fowler, Chief Executive Officer, on June 27,

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2017, including all documents attached or incorporated by reference therein;

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21.

the Financial Statement of Corporate Defendant White Dog

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Marketing, LLC signed by Rinata Dominguez, Chief Executive Officer, on June

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27, 2017, including all documents attached or incorporated by reference therein;

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22.

the additional documentation submitted by letter dated April 3,

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2017, from the law firm of Rutan & Tucker, LLP, explaining the interests of

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Individual Defendants Richard Fowler and Ryan Fowler in a family trust and

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family partnership;
23.

the additional documentation submitted by letter dated April 24,

2017, from the law firm of Venable LLP, explaining the ownership interests of the
assets held in a Wells Fargo account;
24.

the additional documentation submitted by email dated July 17,

2017, from the law firm of Venable LLP, with accompanying attachments,
confirming the amounts held on behalf of the Corporate Defendants in certain
merchant reserve accounts; and

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25.

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the additional documentation submitted by email dated July 28,

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2017, from the law firm of Venable LLP, confirming the amounts held on behalf of

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the Defendants and the Related Companies in certain bank, investment, and

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merchant reserve accounts.

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G.

The suspension of the judgment will be lifted as to any Defendant if,

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upon motion by the Commission, the Court finds that Defendant failed to disclose

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any material asset, materially misstated the value of any asset, or made any other

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material misstatement or omission in the financial representations identified above.

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H.

If the suspension of the judgment is lifted, the judgment becomes

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immediately due as to that Defendant in the amount specified in Subsection

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XIII.A. above (which the parties stipulate only for purposes of this Section

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represents the consumer injury alleged in the Complaint), less any payment

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previously made pursuant to this Section, plus interest computed from the date of

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entry of this Order.

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XIV.

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ADDITIONAL MONETARY PROVISIONS

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IT IS FURTHER ORDERED that:

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A.

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Defendants relinquish 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

further proof, in any subsequent civil litigation by or on behalf of the Commission,
including in a proceeding to enforce its rights to any payment or monetary
judgment pursuant to this Order, such as a nondischargeability complaint in any
bankruptcy case.
C.

The facts alleged in the Complaint establish all elements necessary to

sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the
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Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral

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estoppel effect for such purposes.

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D.

Defendants acknowledge that their Taxpayer Identification Numbers

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(Social Security Numbers or Employer Identification Numbers), which Defendants

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previously submitted to the Commission, may be used for collecting and reporting

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on any delinquent amount arising out of this Order, in accordance with 31 U.S.C.

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§ 7701.

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E.

All money paid to the Commission pursuant to this Order may be

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deposited into a fund administered by the Commission or its designee to be used

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for equitable relief, including consumer redress and any attendant expenses for the

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administration of any redress fund. If a representative of the Commission decides

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that direct redress to consumers is wholly or partially impracticable or money

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remains after redress is completed, the Commission may apply any remaining

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money for such other equitable relief (including consumer information remedies)

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as it determines to be reasonably related to Defendants’ practices alleged in the

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Complaint. Any money not used for such equitable relief is to be deposited to the

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U.S. Treasury as disgorgement. Defendants have no right to challenge any actions

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the Commission or its representatives may take pursuant to this Subsection.

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XV.
CUSTOMER INFORMATION
IT IS FURTHER ORDERED that Defendants and Defendants’ officers,
agents, employees, and 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, are hereby permanently restrained and enjoined from
directly or indirectly:
A.

failing to provide sufficient customer information to enable the

Commission to efficiently administer consumer redress. If a representative of the
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Commission requests in writing any information related to redress, Defendants

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must provide it, in the form prescribed by the Commission, within 14 days;

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B.

disclosing, using, or benefitting from customer information, including

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the name, address, telephone number, email address, social security number, other

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identifying information, or any data that enables access to a customer’s account

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(including a credit card, bank account, or other financial account), that any

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Defendant obtained prior to entry of this Order in connection with the sale of any

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Covered Product or Add-On product, service, or program; and

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C.

failing to destroy such customer information in all forms in their

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possession, custody, or control within 30 days after receipt of written direction to

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do so from a representative of the Commission.

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Provided, however, that customer information need not be disposed of, and

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may be disclosed, to the extent requested by a government agency or required by

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law, regulation, or court order.

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XVI.

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COOPERATION

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IT IS FURTHER ORDERED that Defendants must fully cooperate with

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representatives of the Commission in this case and in any investigation related to

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Complaint. Such Defendants must provide truthful and complete information,

or associated with the transactions or occurrences that are the subject of the
evidence, and testimony. Such Individual Defendants must appear and such
Corporate Defendants must cause Defendants’ officers, employees,
representatives, or agents to appear for interviews, discovery, hearings, trials, and
any other proceedings that a Commission representative may reasonably request
upon 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.

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XVII.

22

ORDER ACKNOWLEDGMENTS

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IT IS FURTHER ORDERED that Defendants obtain acknowledgments of
receipt of this Order:
A.

Each Defendant, within 7 days of entry of this Order, must submit to

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the Commission an acknowledgment of receipt of this Order sworn under penalty

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of perjury.

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B.

For 5 years after entry of this Order, each Individual Defendant for

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any business that such Defendant, individually or collectively with any other

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Defendant, is the majority owner or controls directly or indirectly, and each

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Corporate Defendant, must deliver a copy of this Order to: (1) all principals,

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12

officers, directors, and LLC managers and members; (2) all employees, agents, and

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representatives who participate in conduct related to the subject matter of the

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14

Order; and (3) any business entity resulting from any change in structure as set

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forth in the Section titled Compliance Reporting. Delivery must occur within 7

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days of entry of this Order for current personnel. For all others, delivery must

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occur before they assume their responsibilities.

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C.

From each individual or entity to which a Defendant delivered a copy

of this Order, that Defendant must obtain, within 30 days, a signed and dated
acknowledgment of receipt of this Order.
XVIII.
COMPLIANCE REPORTING
IT IS FURTHER ORDERED that Defendants make timely submissions to
the Commission:
A.

One year after entry of this Order, each Defendant must submit a

compliance report, sworn under penalty of perjury:

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1.

11

Each Defendant must: (a) identify the primary physical, postal,

22

and email address and telephone number, as designated points of contact, which

33

representatives of the Commission may use to communicate with Defendant;

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(b) identify all of that Defendant’s businesses by all of their names, telephone

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numbers, and physical, postal, email, and Internet addresses; (c) describe the

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activities of each business, including the products, services, and programs offered,

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the means of advertising, marketing, and sales, and the involvement of any other

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Defendant (which Individual Defendants must describe if they know or should

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know due to their own involvement); (d) describe in detail whether and how that

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10

Defendant is in compliance with each Section of this Order; and (e) provide a copy

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of each Order Acknowledgment obtained pursuant to this Order, unless previously

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12

submitted to the Commission.

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2.

Additionally, each Individual Defendant must: (a) identify all

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14

telephone numbers and all physical, postal, email and Internet addresses, including

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15

all residences; (b) identify all business activities, including any business for which

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such Defendant performs services whether as an employee or otherwise and any

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entity in which such Defendant has any ownership interest; and (c) describe in

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detail such Defendant’s involvement in each such business, including title, role,

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responsibilities, participation, authority, control, and any ownership.
B.

For 15 years after entry of this Order, each Defendant must submit a

compliance notice, sworn under penalty of perjury, within 14 days of any change
in the following:
1.

Each Defendant must report any change in: (a) any designated

point of contact; or (b) the structure of any Corporate Defendant or any entity that
Defendant has any ownership interest in or controls directly or indirectly that may
affect compliance obligations arising under this Order, including: creation,

39

11

merger, sale, or dissolution of the entity or any subsidiary, parent, or affiliate that

22

engages in any acts or practices subject to this Order.
2.

33

Additionally, each Individual Defendant must report any

44

change in: (a) name, including aliases or fictitious name, or residence address, or

55

(b) title or role in any business activity, including any business for which such

66

Defendant performs services whether as an employee or otherwise and any entity

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in which such Defendant has an ownership interest, and identify the name, physical

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address, and any Internet address of the business or entity.

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C.

Each Defendant must submit to the Commission notice of the filing of

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10

any bankruptcy petition, insolvency proceeding, or similar proceeding by or

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11

against such Defendant within 14 days of its filing.

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12

D.

Any submission to the Commission required by this Order to be

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sworn under penalty of perjury must be true and accurate and comply with 28

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14

U.S.C. § 1746, such as by concluding: “I declare under penalty of perjury under

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15

the laws of the United States of America that the foregoing is true and correct.

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Executed on: _____” and supplying the date, signatory’s full name, title (if

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17

applicable), and signature.

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E.

Unless otherwise directed by a Commission representative in writing,

all submissions to the Commission pursuant to this Order must be emailed to
[e-mail] 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. Tarr Inc., et al.
XIX.
RECORDKEEPING
IT IS FURTHER ORDERED that Defendants must create certain records
for 15 years after entry of the Order, and retain each such record for 5 years.
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11

Specifically, Corporate Defendants and each Individual Defendant for any business

22

that such Defendant, individually or collectively with any other Defendant, is a

33

majority owner or controls directly or indirectly, must create and retain the

44

following records:

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A.

accounting records showing the revenues from all products, services,

and programs sold;
B.

personnel records showing, for each person providing services,

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whether as an employee or otherwise, that person’s: name; addresses; telephone

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numbers; job title or position; dates of service; and (if applicable) the reason for

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termination;

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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.

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XX.

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COMPLIANCE MONITORING

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IT IS FURTHER ORDERED that, for the purpose of monitoring
Defendants’ compliance with this Order:
A.

Within 14 days of receipt of a written request from a representative of

the Commission, each Defendant must: submit additional compliance reports or
other requested information, which must be sworn under penalty of perjury; appear
for depositions; and produce documents for inspection and copying. The
Commission is also authorized to obtain discovery, without further leave of court,
using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30
(including telephonic depositions), 31, 33, 34, 36, 45, and 69.

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11

B.

For matters concerning this Order, the Commission is authorized to

22

communicate directly with each Defendant. Defendants must permit

33

representatives of the Commission to interview any employee or other person

44

affiliated with any Defendant who has agreed to such an interview. The person

55

interviewed may have counsel present.

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C.

The Commission may use all other lawful means, including posing,

77

through its representatives as consumers, suppliers, or other individuals or entities,

88

to Defendants or any individual or entity affiliated with Defendants, without the

99

necessity of identification or prior notice. Nothing in this Order limits the

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10

Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20 of

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11

the FTC Act, 15 U.S.C. §§ 49, 57b-1.

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12

D.

Upon written request from a representative of the Commission, any

13
13

consumer reporting agency must furnish consumer reports concerning Individual

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14

Defendants, pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C.

15
15

§ 1681b(a)(1).

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XXI.

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RETENTION OF JURISDICTION

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IT IS FURTHER ORDERED that this Court retains jurisdiction of this
matter for purposes of construction, modification, and enforcement of this Order.
The parties have consented to continuing jurisdiction over this case by a magistrate
judge. (Docket no. 4.) By a separate order, this case, including interpretation and
enforcement of this Order, is being referred to Magistrate Judge Karen Crawford or
another duly-authorized magistrate judge for all purposes.
IT IS SO ORDERED.
DATED: November 13, 2017

______________________________
Hon. Larry A. Burns
United States District Judge
42