|DEBRA A. VALENTINE
CHARLES A. HARWOOD
MARY T. BENFIELD, WSBA # 18835
Federal Trade Commission
UNITED STATES DISTRICT COURT
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS
EX PARTE MOTION FOR TEMPORARY RESTRAINING ORDER,
TABLE OF CONTENTS
II. THE PARTIES
Plaintiff, Federal Trade Commission ("FTC" or "Commission"), brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b for preliminary and permanent injunctive relief and other equitable remedies, including an ex parte temporary restraining order ("TRO"), asset freeze, restitution and disgorgement of ill- gotten gains. Plaintiff seeks to enjoin defendant from deceptively marketing advance fee loans and from assisting and facilitating other fraudulent advance fee loan companies, in violation of Sections 310.3 and 310.4 of the Telemarketing Sales Rule ("the Rule" or "Telemarketing Rule"), 16 C.F.R. §§ 310.3 and 310.4, and Section 5 of the FTC Act, 15 U.S.C. § 45. The Telemarketing Rule implements the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. § 6101 et seq., which directs the Commission to prescribe regulations prohibiting deceptive and abusive telemarketing acts or practices.
Defendant Gary Walton, doing business as Pinnacle Financial Services ("Pinnacle"), operates an advance fee loan scheme, offering loans to consumers with bad or no credit. He advertises on the Internet and in tabloids such as Star, Enquirer, and Globe magazines. Those who call in response to the ads are promised loans regardless of their credit histories in exchange for an advance fee of up to $89. After receiving consumers money, defendant ultimately sends these consumers a letter denying their loan request.
Defendant also assists at least six fraudulent Canadian advance fee loan companies that prey on U.S. consumers. These companies, located in several Canadian provinces, offer loans to people with poor credit, through U.S. newspaper and television advertisements. Consumers who respond by calling the advertised toll-free numbers are promised a loan in exchange for an advance fee of several hundred dollars. After the Canadian company receives the fee, it sends the consumers file to defendant and notifies the consumer that his or her loan will be handled by defendant. Defendant subsequently sends the consumer an application packet and a request for $15 for obtaining the consumers credit report. Weeks after the consumer sends defendant the $15 fee and the completed forms, defendant sends the consumer the same denial letter that he sends to those who apply to him directly. The Canadian companies pay defendant a fee for this service. Defendant is fully aware of the Canadian loan companies deceptive practices, yet he continues to provide his "turndown" services to them. It appears that this service comprises the majority of defendants business.
Defendants conduct violates Sections 310.3 and 310.4 of the Telemarketing Rule and Section 5(a) of the FTC Act.The FTC seeks a preliminary injunction to prevent further law violations pending a trial on the merits. A TRO is necessary because defendants continued violations will cause immediate and substantial financial injury to consumers before plaintiff has an opportunity to be heard on the issuance of a preliminary injunction.
An ex parte TRO and asset freeze are necessary to prevent continued consumer injury and to prevent defendant from concealing or dissipating assets during the pendency of the proceeding, thereby preserving this Courts ability to provide effective final relief. The requested relief has routinely been approved by district courts, including the District of Arizona, in cases instituted by the FTC alleging violations of the FTC Act and the Telemarketing Sales Rule.
The FTC is an independent agency of the United States Government created by statute. 15 U.S.C. § 41 et seq. It is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC is also charged with enforcing Commission trade regulation rules, including the Telemarketing Sales Rule. 15 U.S.C. §§ 57b and 6105(b). Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, authorize the Commission to initiate court proceedings to enjoin violations of the FTC Act and its trade regulation rules to secure such equitable relief as may be appropriate in each case, including obtaining restitution for injured consumers. FTC v. H.N. Singer, Inc., 668 F.2d 1107, 1110-13 (9th Cir. 1982).
Defendant Gary Walton, doing business as Pinnacle Financial Services, has a mailing address of 915 Hinman Street, Prescott, Arizona.(1) He lists his principal place of business as 1114-4 Willow Creek Road, Prescott, Arizona.(2) Until very recently, defendant was registered with the Arizona State Banking Department ("Banking Department") as an advance fee loan broker.(3) In November 1997, the Banking Department issued a denial of defendants registration renewal application.(4) Since October 28, 1997, defendant also has done business using the trade name "Inner Circle," and receives referrals from at least one Canadian company under that name.(5)
Defendant markets or has marketed advance fee loans to consumers through advertisements on the World Wide Web and in the classified advertising sections of various tabloid magazines, such as Enquirer, Globe, and Star. A typical ad states:
Defendants Internet ad states, in part:
When the consumer calls the accompanying telephone number, defendant requests certain information from the consumer by phone, such as the number of years the consumer has lived in the area and whether he or she is currently employed.(9) Defendant then tells the consumer that he or she is very likely to obtain a loan through Pinnacle. For example, defendant told one consumer that she was "preapproved" and quoted her an interest rate and a monthly payment amount.(10) Defendant told an FTC investigator, posing as a consumer, that it is illegal to guarantee a loan over the phone, but that defendant is "97% successful" in obtaining loans for people.(11) Defendant charges an advance fee of up to $89 for his service.(12)
If the consumer wishes to proceed, defendant sends a cover letter and a "General Agreement" for the consumer to sign. The cover letter states, in part:
Consumers who sign the agreement, complete the application, and send them to defendant with the specified fee later receive a denial letter that includes the following:
The letter then refers the consumer to a debt consolidation company.
In addition to offering loans directly to consumers, defendant also receives referrals from numerous fraudulent Canadian advance fee loan operations.(16) These companies advertise extensively in U.S. newspapers and on cable television.(17) A consumer who calls in response to an ad is asked by a representative to provide certain screening information such as name, address, telephone number, income, employer, and estimated debts.(18) The representative subsequently calls back to tell the consumer that the loan has been accepted or approved," but that he or she must pay a processing fee or a retainer of several hundred dollars by cashiers check or money order and provide certain identification and financial documents.(19) The Canadian company quotes attractive loan terms and quells any misgivings with various assurances and guarantees.(20) After the consumer sends the processing fee and the requested documents, the Canadian company sends the consumers "file" to defendant, along with a payment for each referral.(21) The Canadian company often refers to defendant as the "lender" when talking to consumers.(22)
Defendant then sends the consumer a letter stating that the consumers loan request has been referred to him. In the letter, defendant requests $15 for obtaining the consumers credit report and encloses an application and a form authorizing him to obtain the credit report.(23) Several weeks after the consumer submits the completed forms and the $15 fee, he or she receives substantially the same denial letter that defendant sends to consumers who apply to him directly,(24) as described above.(25)
The FTC seeks a permanent injunction and equitable relief to redress the injury caused by defendants deceptive practices. To prevent the defendant from committing further law violations pending resolution of this action and to preserve the possibility of effective final relief, the FTC also seeks a temporary restraining order, asset freeze, and preliminary injunction.
This Court has the authority to grant permanent relief pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), the All Writs Act, 28 U.S.C. § 1651(a), and Rule 65 of the Federal Rules of Civil Procedure. Section 13(b) of the FTC Act (second proviso) provides that "in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction."(26) A "proper case" includes any matter involving a violation of a law the FTC enforces. FTC v. Evans Products Co., 775 F.2d 1084, 1086 (9th Cir. 1985); Singer, 668 F.2d at 1113; FTC v. Pacific Medical Clinics Management, Inc., 1992-1 Trade Cas. (CCH) ¶ 69,777 at 67,587 (S.D. Cal.). Injunctive relief may be granted not only where the alleged violations are ongoing, but also where they are likely to recur. Evans, 775 F.2d 1087-1088. In actions brought under Section 13(b), the district court may exercise the full breadth of its equitable authority, including the imposition of additional relief necessary to accomplish complete justice such as restitution to consumers. FTC v. Pantron I Corp., 33 F.3d 1088, 1102 (9th Cir. 1994), cert. denied, 115 S. Ct. 1794 (1995); FTC v. Amy Travel Service, Inc., 875 F.2d 564, 571-572 (7th Cir.), cert. denied, 493 U.S. 954 (1989); Singer, 668 F.2d at 1113.
In addition to the equitable authority granted under Section 13(b), Section 19 of the FTC Act, 15 U.S.C. § 57b, and Sections 3 and 6 of the Telemarketing Act, 15 U.S.C. §§ 6102 and 6105, give this Court authority to grant permanent injunctive relief. Section 19(b) explicitly gives the Court jurisdiction to grant such relief as it finds necessary to redress injury resulting from a rule violation, including, but not limited to, rescission of contracts and refund of money. 15 U.S.C. § 57b(b). The Telemarketing Act gives to district courts all the authority granted by the FTC Act (including Sections 13(b) and 19) when remedying violations of the Telemarketing Rule. 15 U.S.C. §§ 6102(c) and 6105(b). The relief available under the Telemarketing Act is thus coextensive with that available under Sections 13(b) and 19 of the FTC Act.
Incident to its authority to issue permanent injunctive relief, district courts have the inherent equitable power to grant all temporary and preliminary relief necessary to effectuate ultimate relief under Section 13(b), including an order freezing assets for possible later restitution and rescission. Singer, 668 F.2d at 1113 (affirming preliminary injunction and personal and corporate asset freeze); FTC v. World Wide Factors, Ltd., 882 F.2d 344, 346-47 (9th Cir. 1989) (affirming district court's power to freeze assets). Preliminary ancillary relief of this sort is also authorized and has been granted under Section 19 of the FTC Act. Singer, 668 F.2d at 1112.(27)
To obtain a temporary restraining order and preliminary injunction the FTC must show a likelihood of ultimate success on the merits and that the equities weigh in favor of granting the temporary relief. World Wide Factors, 882 F.2d at 346. Harm to the public interest is presumed. Id. See also U.S. v. Odessa Union Warehouse Co-op, 833 F.2d 172, 175 (9th Cir. 1987) (where an injunction is authorized by statute, and the statutory conditions are satisfied, the enforcing agency need not show irreparable injury). Because irreparable injury is presumed in statutory enforcement cases, a federal agency need only demonstrate "some chance of probable success on the merits" to obtain preliminary relief. Odessa Union, 833 F.2d at 176. Further, in weighing the public and private equities in a statutory enforcement action, public equities should receive greater weight. World Wide Factors, 882 F.2d at 347. The Commission easily meets this standard in the present case.
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits unfair or deceptive acts or practices in or affecting commerce. An act or practice is deceptive under Section 5(a) if it involves a material misrepresentation or omission that is likely to mislead consumers acting reasonably under the circumstances. Cliffdale Associates, Inc., 103 F.T.C. 110, 164-165 (1984); Pantron I Corp., 33 F.3d at 1095-96; see also Kraft, Inc., 114 F.T.C. 40, 133-34 ( 1991) (materiality may be found based on evidence that the claim or omission is likely to be considered important to consumers), enforced, 970 F.2d 311 (7th Cir.), cert. denied, 113 S. Ct. 1254 (1992). Express false claims made to consumers are presumed to be material. Thompson Medical Co., Inc., 104 F.T.C. 648, 816 (1984), aff'd, 791 F.2d 189 (D.C. Cir. 1986), cert. denied, 479 U.S. 1086 (1987). Implied false claims are material when they pertain to the central characteristic of the product or service being offered. Southwest Sunsites, 105 F.T.C. 7, 149 (1985), aff'd, 785 F.2d 1431 (9th Cir.), cert. denied, 479 U.S. 828 (1986).
Using this standard, defendants practices are deceptive under Section 5(a). Defendant expressly represents, in advertising and during telephone sales pitches, that he has a high rate of success in obtaining loans for consumers. In his Internet advertisement, defendant claims to have a 97% success rate in getting loans for his clients.(28) Similarly, defendant tells consumers that Pinnacle is "97% successful" in obtaining loans for its customers.(29) In fact, defendant has successfully obtained few or no loans for consumers. Of the 50 noncomplaining Pinnacle consumers who responded to an FTC informal survey, none obtained a loan.(30)
Defendant also expressly represents -- in advertising, during telephone sales calls, and in written correspondence -- that consumers have a high likelihood of obtaining loans through him regardless of their credit histories. For example, defendants newspaper advertisements include such statements as "easy qualifying loans" and "bad/no credit OK."(31) In addition to claiming that he has a 97% success rate in getting loans for clients, his Internet ad states, "Got bad credit? Got no credit?? No problem!!!!"(32) During telephone sales pitches, he has orally represented that he is "quite successful" in getting loans for people with bad credit.(33) An FTC investigator posing as a consumer with a recent repossession was told "were 97% successful."(34) One consumer was told she was "guaranteed" to get a loan 30 to 45 days after defendant received her completed paperwork and the $89 fee, even though his representative did not ask any questions about the consumers credit history.(35) Contrary to defendants claims, however, there is little or no likelihood that consumers will obtain loans through defendant regardless of their credit histories.(36)
These misrepresentations are material, made to induce consumers to part with their money. Consumers agree to pay the requested fee based on defendants promises. Consumers reasonably believe the claims. Defendant makes a concerted effort to appear legitimate. Until recently, he was registered as an advance fee loan broker with the Arizona State Banking Department and provided that agencys telephone number to wary prospects.(37) Like a legitimate lender, he obtains financial and credit history information from applicants and obtains credit reports. He sends consumers what purports to be a legitimate denial letter. Thus, by making misrepresentations that are material and likely to mislead consumers acting reasonably, defendant is engaging in deceptive practices that violate Section 5(a) of the FTC Act.
Defendant also violates the Telemarketing Sales Rule, which became effective on December 31, 1995. Defendant is a "seller" or "telemarketer" and is engaged in telemarketing, as those terms are defined by the Rule. 16 C.F.R. § 310.2(r), (t), and (u).(38)
Section 310.4(a)(4) of the Rule, 16 C.F.R. § 310.4(a)(4), prohibits sellers and telemarketers from requesting or receiving payment of any fee in advance of obtaining a loan when the seller or telemarketer has guaranteed or represented a high likelihood of success in obtaining or arranging a loan. Defendant guarantees loans, promises a high likelihood of success, and requests payment in advance, thus violating the Rule. He represents in his advertisements that having bad credit or no credit is no problem, followed by oral representations that the consumer has "qualified" or been "preapproved" or that defendant has a "97% success rate."(39) Indeed, the guarantee is reinforced in the cover letter he sends to prospective customers, which states that the consumers application "has been ACCEPTED" and that defendant is offering a "GUARANTEED financial service" and a "45 day commitment on [the consumers] loan request."(40) The consumer thus reasonably believes that, despite a bad credit history, he or she is very likely to obtain a loan through defendant.
Section 310.3(a)(2)(ii) and (iii) of the Rule, 16 C.F.R. § 310.3(a)(2)(ii) and (iii), also prohibits sellers and telemarketers from misrepresenting any material restriction, limitation, or condition to purchase, receive, or use goods or services that are the subject of a sales offer; and any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of the sales offer. Defendant violates these provisions in numerous ways. As discussed above, he represents in his ads and over the phone that Pinnacles success rate for obtaining loans for applicants is 97%. In fact, defendants success rate is very likely quite low.(41) By the same token, his representation that consumers have a high likelihood of obtaining the requested loans regardless of their credit histories is also false. These false claims are express and are therefore presumed material. Thompson Medical, 104 F.T.C. at 816.
Section 310.3(b) of the Rule, 16 C.F.R § 310.3(b), prohibits providing substantial assistance or support to any seller or telemarketer while knowing or consciously avoiding knowing that the seller or telemarketer is engaged in any act or practice that violates Sections 310.3(a) or (c) or 310.4 of the Rule. Defendant has substantially assisted the fraudulent operations of at least six Canadian companies that have operated in violation of Sections 310.3(a) and 310.4(a)(4) of the Rule by falsely guaranteeing loans, charging an advance fee, and then referring the consumers to defendant.(42) Defendant contributes to those companies facade of legitimacy by purporting to be a legitimate third-party loan broker who independently processes consumers loan requests. By using defendant, the Canadian companies appear to nominally fulfill their contractual obligations, making it easier for them to later assert that the consumer is not entitled to a refund, and drawing out the time within which consumers comprehend that they have been defrauded. When defendant ultimately carries the scheme to its inevitable conclusion, "denial" of the loan, some consumers may incorrectly assume that the process is legitimate and not report it as the fraud that it is.
Defendant knows or consciously avoids knowing that the Canadian companies request and receive advance fees for guaranteed loans that never materialize. In November 1996, he told an Edmonton Police Service constable that he had received numerous complaints about one Canadian companys failure to provide promised loans and that he received "dozens and dozens" of referrals each week from that company.(43) Moreover, consumers themselves have told defendant about these Canadian companies advance fees and offers of guaranteed loans. Several told defendant that a Canadian loan company had "approved," "guaranteed," or "pre-approved" their loans and that they had paid the Canadian companies loan processing fees ranging from $265 to $365.(44) One consumer told defendant that the "Western Credit told me they had a lender who had approved me for the loan and that all I needed to do was send in the paperwork."(45) Another told defendants representative that "I had been guaranteed a loan by ACR [Allied Credit Referral], that I had paid ACR a $635 processing fee and that ACR told me that PFS [defendant] was my lender."(46) Yet another wrote to defendant twice, once when she received defendants introductory letter, and again when defendant denied her loan request. Each letter informed defendant of the Canadian companys guarantee and of the $395 advance fee she had paid.(47) Defendant has continued to assist the Canadian companies despite his actual or imputed knowledge of their illegal practices.
Finally, although the Rule contains seven exemptions, the inapplicability of six of them to defendant is apparent on their face. The remaining exemption, found in Section 310.6(e) of the Rule, 16 C.F.R. § 310.6(e), exempts "[t]elephone calls initiated by a customer in response to an advertisement through any media . . . provided, however, that this exemption does not apply to calls initiated by a customer in response to . . . advertisements that guarantee or represent a high likelihood of success in obtaining or arranging for extensions of credit, if payment of a fee is required in advance of obtaining the extension of credit." As discussed above, defendants Internet ad expressly claims that he has a 97% success rate in obtaining loans for consumers with bad or no credit. Similarly, his print ads include statements like "fast cash," "easy qualifying loans," and "bad/no credit ok," thereby assuring consumers with poor credit histories that they are highly likely to obtain loans. Thus, since defendant requires payment of an advance fee, his business is not exempt under Section 310.6(e) of the Rule.
As discussed above, preliminary relief is appropriate if, once the Commission establishes the likelihood of its ultimate success and the Court weighs the equities, such relief is in the public interest. The equities in this case weigh heavily in favor of preliminary injunctive relief. Defendant's conduct evidences a pattern of law violations central to the success of his business. Given the pervasive nature of the fraudulent activity, there is a strong likelihood that, absent injunctive relief, future law violations will occur. FTC v. Southwest Sunsites, Inc., 665 F.2d 711, 723 (5th Cir. 1982) (a large-scale systematic scheme tainted by fraudulent and deceptive practices gives rise to a fair inference of reasonable expectation of continued violations absent restraint), cert. denied, 456 U.S. 973 (1984).
The private equities in this case are not compelling. Compliance with the law is not an unreasonable burden. See World Wide Factors, 882 F.2d at 347 (citing district courts finding that "there is no oppressive hardship to defendants in requiring them to comply with the FTC Act, refrain from fraudulent representation or preserve their assets from dissipation or concealment"). The evidence demonstrates that the public equities -- protection of consumers, effective enforcement of the law, and the preservation of defendants assets for consumer redress -- weigh heavily in favor of granting the preliminary relief requested in this case.
As part of the permanent relief in this case, the FTC seeks restitution for consumers injured by defendants law violations. To preserve the possibility of such relief, the FTC seeks an immediate freeze of defendant's assets.
An asset freeze should be granted when the FTC has shown a likelihood of success on the merits and a possibility of dissipation of assets. FSLIC v. Sahni, 868 F.2d 1096, 1097 (9th Cir. 1989). The Commission has amply demonstrated a likelihood of success on the merits. Moreover, where business operations are permeated by fraud, there is a strong possibility assets may be dissipated during the pendency of the legal proceedings. See, e.g., World Wide Factors, 882 F.2d at 347; SEC v. Manor Nursing Centers, Inc., 458 F.2d 1082, 1106 (2d Cir. 1972). As in similar cases where courts have ordered asset freezes solely on the basis of pervasive fraudulent activity, an asset freeze is warranted here. See, e.g., Singer, 668 F.2d at 1113; U.S. Oil & Gas Corp., 748 F.2d at 1434.(48)
An ex parte temporary restraining order is warranted where the facts show that irreparable injury, loss, or damage will result before the defendants can be heard in opposition. Fed. R. Civ. P. 65(b); see also In re Vuitton et Fils S.A., 606 F.2d 1, 3-4 (2d Cir. 1979) (discussion of when an ex parte order should issue). Such relief has routinely been granted in appropriate FTC actions.(49) Here, the pervasive nature of defendants fraudulent conduct indicates a high risk that defendant will dissipate or conceal assets if provided notice of this action, and frustrate this Courts ability to grant effective final relief. Thus, an ex parte order is appropriate.
For the reasons set forth above, the FTC respectfully requests that this Court issue the proposed ex parte temporary restraining order, with asset freeze, and order the defendant to show cause why a preliminary injunction should not issue.
(1) Declaration of Laureen France ("France Dec."), Exh. 5, pp. 18-22.
(3) France Dec., Exh. 5, pp. 18-25.
(5) France Dec., Exh. 5, pp. 26-27. Defendants trade name application for Inner Circle states that the general nature of the business is "A Private Consulting Service Co. Credit Information and Evaluating Creditworthiness of Private Persons [sic]."
(6) Arizona does not license advance fee loan brokers. France Dec., Exh. 5, p. 18.
(7) See France Dec., ¶ 4, Exh. 1, pp. 1-2; Exh. 7, pp. 89-91.
(8) France Dec., ¶ 9, Exh. 4, pp. 14-17. The Website offers a choice of applying for a loan on- line or by telephone.
(9)France Dec., ¶¶ 5-7, Exh. 2, pp. 3-8; Exh. 7, pp. 89, 245, and 264.
(10) France Dec., Exh. 7, pp. 264-270. Defendant had previously sent this declarant a denial letter after she was referred by a Canadian company. Id. at pp. 257-263.
(11) France Dec., ¶¶ 5-7, Exh. 2, pp. 3-8.
(12)France Dec., ¶¶ 5-8, Exhs. 2-3, pp. 3-13; Exh. 7, pp. 82-106.
(13)France Dec.. ¶¶ 5-8, Exhs. 2-3, pp. 3-13; Exh. 7, pp. 82-106 and 264-270.
(14) Defendant refuses to disclose the identity of the "private lenders," even when asked. See, e.g., France Dec., Exhs. 5-6, pp. 18-34; Exh. 7, pp. 245-256.
(15) See, e.g., France Dec., Exh. 7, pp. 245-256. Defendants denial letter appears to violate Section 701(d) of the Equal Credit Opportunity Act, 15 U.S.C. § 1691(d), and Section 202.9(a)(2) of Federal Reserve Board Regulation B, 12 C.F.R. § 202.9(a)(2), by not disclosing the name and address of the lender that purportedly denied the consumers loan.
(16) It appears that most of defendants business involves referrals. The FTC sent a brief questionnaire to 250 consumers whose credit reports were accessed by defendant in 1997. Most of the 50 respondents indicated that they had been referred to defendant by a Canadian company. None of the respondents received a loan.
(17)See, e.g., France Dec., Exh. 7, pp. 35-81, 107-125, 132-221, 233-244, 257-263, 271-320; Exh. 8, pp. 321-342.
(18)See, e.g., France Dec., Exh. 7, pp. 51-81, 154-168, 185-232, 257-263, 271-312.
(19)See, e.g., France Dec., Exh. 7, pp. 35-81, 107-168, 201-221, 240-244, 257-263, 271-274, 297-320.
(20) France Dec., Exh. 7, pp. 35-50, 132-184, 240-244, 313-320; Exh. 8, pp. 336-338.
(21) cite to Pinnacles letter to Ideal; consumer decs.
(22) cite to Pinnacles letter to Ideal; consumer decs.
(23) cite to Pinnacles letter to Ideal; consumer decs.
(24) See, e.g., France Dec., Exh. 7, pp. 35-52, 201-232, 271-274.
(25) France Dec., Exh. 7, pp. 35-81, 132-153, 201-232, 257-263, 275-296; Exh. 8, pp. 321-342.
(26) France Dec., Exh. 7, pp. 169-184, 233-239, 257-263, 275-296.
(27) See note 15, supra. It appears that defendant waits until the 45-day refund period (disclosed in the "general agreement" letter) expires before sending the consumer a denial letter.
(28) The FTC proceeds here, as in Singer, under the second proviso of Section 13(b), quoted above. Cases brought under this proviso are not subject to the conditions set forth in the first proviso of Section 13(b) for the issuance of a preliminary injunction in aid of administrative proceedings. Singer, 668 F.2d at 1111 (routine fraud case may be brought under second proviso, without being conditioned on first proviso requirement that the Commission institute an administrative proceeding); FTC v. U.S. Oil & Gas Corp., 748 F.2d 1431, 1434 (11th Cir. 1984) ("Congress did not limit the court's powers under the [second and] final proviso of § 13(b).").
(29) See also note 48, infra.
(30) France Dec., ¶ 9, Exh. 4, pp. 14-17.
(31) France Dec., ¶¶ 5-7, Exh. 2, pp. 3-8.
(32) See France Dec., ¶ 15; see also note 16, supra.
(33)See note 7, supra, and accompanying text.
(34) See note 8, supra, and accompanying text.
(35)France Dec., Exh. 7, pp. 245-256; see also pp. 169-184, 233-239.
(36)See note 29, supra.
(37)France Dec., Exh. 7, pp. 264-270.
(38)See note 30, supra.
(39)France Dec., Exh. 7, pp. 89-106.
(40)Section 310.2(r) of the Rule defines seller as any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration. Section 310.2(t) of the Rule defines telemarketer as any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer. Section 310.2(u) of the Rule defines telemarketing, in relevant part, as a plan, program, or campaign which is conducted to induce the purchase of goods or services by use of one or more telephones and which involves more than one interstate telephone call.
(41) France Dec., ¶¶ 5-7, Exh. 2, pp. 3-8; Exh. 7, pp. 82-106, 264-270.
(42) See note 13, supra, and accompanying text.
(43) See note 30, supra, and accompanying text.
(44) France Dec., ¶ 10 and Exh. 7.
(45)France Dec., Exh. 6, pp. 28-34.
(46)France Dec., Exh. 7, pp. 37-50, 70-81, 107-119, 169-184, 240-244, 257-263, 271-274, 297-312, 321-342.
(47)France Dec., Exh. 7, pp. 297-312.
(48) France Dec., Exh. 7, pp. 35-38.
(49) France Dec., Exh. 8, pp. 321-342.
(50) The following is a sampling of recent FTC actions in the Ninth Circuit in which TROs and asset freezes were entered ex parte: FTC v. Jewelway International, Inc., et al., No. CV97-383 TUC JMR (D. Ariz. June 24, 1997); FTC v. Woofter Investment Corp., No. CV-S-97-00515-LDG (RLH) (D. Nev. April 29, 1997) (Telemarketing Rule case); FTC v. Dayton Family Productions, Inc., et al., CV-S-07- 00750-PMP (LRL) (D. Nev. June 20, 1997) (Telemarketing Rule case); FTC v. Intellicom Services, Inc., et al., No. 97-4572 TJH (Mcx) (C.D. Cal. June 23, 1997) (Telemarketing Rule case); FTC v. Mentor Network, Inc., et al., Civ. No. SACV96-1104 LHM (EEX) (C.D. Cal. Nov. 6, 1996); FTC v. Global Assistance Network for Charities, et al, No. 96-2494 PHX RCB (D. Ariz. Nov. 5, 1996); FTC v. American Exchange Group, Inc., CV-S-96-669-PMP (D. Nev. July 22, 1996) (Telemarketing Rule case); FTC v. Oasis Southwest, Inc., CV-S-96-654-PMP (D. Nev. July 15, 1996) (Telemarketing Rule case); FTC v. Ideal Credit Referral Services, Ltd., No. C96-0874R (W.D. Wash. June 6, 1996) (Advance Fee Loan/Telemarketing Rule Case); FTC v. Fortuna Alliance L.L.C., et al., C96-799M (W.D. Wash. May 24, 1996); FTC v. Silver State Western Publishing, Inc., CV-S-95-417-LDG (D. Nev. May 15, 1996) (Telemarketing Rule case); FTC v. FANS, Inc., CV-S-96-191-LDG (D. Nev. March 7, 1996) (Telemarketing Rule case); FTC v. Ellis, et al., SA CV 96-114 LHM (Eex) (C.D. Cal. 1996); FTC v. Genesis One Corp., et al., Civ. No. 96-1516 MRP (MCx) (C.D. Cal. 1996) (Franchise Rule Case); FTC v. Showcase Distributing, Inc., et al., CV-95-1368- PHX-SMM (D. Ariz. 1995) (Franchise Rule case).