Sellers of Girls Gone Wild Videos Charged with Deceptive Practices

On behalf of the Federal Trade Commission, the U.S. Department of Justice (DOJ) yesterday filed a complaint against California-based Mantra Films, Inc. (Mantra), and its sole officer and director Joseph R. Francis, the marketers and sellers of “Girls Gone Wild” videos and DVDs. The complaint seeks civil penalties for violations of previous Commission determinations concerning unfair and deceptive acts or practices and consumer redress. Violations of previous Commission determinations that an act or practice is unfair or deceptive and unlawful carry a civil penalty of up to $11,000 per violation.

The Commission’s complaint alleges that since December 2000, Mantra and Francis deceptively marketed Girls Gone Wild videos and DVDs to consumers, automatically shipped these unordered videos and DVDs to consumers, and charged consumers for them without consumers’ consent, according to the FTC. The defendants enrolled consumers who responded to Internet and television advertising for a single video or DVD into programs called “continuity” programs. Once consumers were enrolled in these programs, each month the defendants allegedly shipped additional unordered videos and DVDs on a “negative-option” basis, charging consumers’ credit and debit cards for each shipment until consumers took action to stop the shipments. According to the complaint, the defendants’ advertising failed to tell consumers how the continuity programs operated, failed to obtain consumers’ express consent to be enrolled, and did not give consumers an effective means to cancel their membership once they were enrolled.

“In a case of deceptive marketing gone wild, consumers were enrolled in a program of monthly deliveries without their knowledge,” said Howard Beales, Director of the FTC’s Bureau of Consumer Protection. “That’s out of bounds. If you sign consumers up for an ongoing plan without their permission, we'll do our best to unwind the transaction.”

The Commission’s Complaint

The Commission’s complaint charges defendants Mantra and Francis with violating the FTC Act, the Electronic Fund Transfer Act, and the Unordered Merchandise Statute. The complaint also charges the defendants with violating previous Commission determinations that shipping unordered merchandise and sending communications that seek to obtain payment for or return of merchandise shipped without the expressed consent of the recipient are unfair and deceptive acts or practices and are unlawful. Specifically, it alleges that the defendants:

• failed to disclose adequately that the purchase of a video/DVD results in enrollment in a continuity program, and the material terms and conditions of that program;
   
• misrepresented that consumers can cancel their continuity program membership at any time;
   
• caused charges to be submitted for payment for video/DVD shipments without the express informed consent of consumers;
   
• debited consumers’ checking accounts on a recurring basis without obtaining consumers’ written authorization for preauthorized electronic fund transfers from the accounts;
   
• shipped unordered merchandise to consumers and sent communications seeking payment for the unordered merchandise; and
   
• continued to ship unordered merchandise and to seek payment for the merchandise, even after they had actual knowledge that the FTC had determined that these practices are deceptive, unfair, and unlawful based on prior cease and desist orders against other companies.

In addition to seeking civil penalties and consumer redress, the complaint asks the court to bar the defendants from violating the FTC Act, the Electronic Fund Transfer Act, and the Unordered Merchandise Statute.

The Commission vote to request that the DOJ file the complaint was 5-0. The DOJ filed the complaint on behalf of the FTC in the U.S. District Court for the Central District of California on December 16, 2003.

NOTE: The Commission issues or files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the named parties have violated the law. The case will be decided by the court.

Copies of the Commission’s complaint are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 022-3004, Civ. No. CV03-9184)