Statement of Commissioner Orson Swindle
Concurring in Part And Dissenting in Part

In the Matter of

Hold Billing Services, Ltd., et al., File No. X980069

The Commission now approves a final judgment and order settling allegations that Veterans of America Association, Ltd. ("VOAA") and its officers engaged in deceptive acts or practices by misrepresenting that consumers were legally obligated to pay charges for VOAA's services and by failing to disclose to consumers that VOAA considered a consumer's completed entry form for a prize drawing to be an authorization to bill the consumer for its services. The complaint also alleged that VOAA acted unfairly by billing consumers who did not consent to be charged for its services. I support the provisions in the final judgment and order prohibiting VOAA from engaging in similar conduct in the future.(1)

The final judgment and order, however, also imposes a $100,000 performance bond on VOAA if it solicits charitable contributions or payments for goods or services for the benefit of any non-profit or charitable organization or any for-profit organization using a name that implies it is a non-profit or charitable organization. The order also includes a prohibition on misrepresentations in connection with the solicitation of a contribution to any non-profit or charitable organization. I am concerned about the lack of symmetry between the complaint and the order. Because there are no corresponding allegations in the complaint relating to solicitations for non-profit or charitable organizations (or solicitations for for-profit organizations with names similar to non-profit or charitable organizations), I object to these order provisions because they are not reasonably related to the violations alleged.

The majority responds to my objection on the ground that Count III of the complaint

(s 32-34) purportedly alleges that the VOAA's sweepstakes entry forms appear to be "in support of a veterans' charitable organization." This is plainly incorrect. Count III merely alleges that it was deceptive for VOAA to fail to disclose that it considered the sweepstakes entry form as an authorization to bill for services. Neither this count, nor anything else in the complaint, even remotely suggests that VOAA made any misrepresentations as to its charitable status or as to any other subject while engaged in charitable solicitation.

The majority also offers the explanation that while "perfect symmetry" between complaint allegations and relief imposed is "to be preferred," the Commission had to forgo such symmetry here if it was to obtain relief that would protect consumers from future harm. The majority posits a dilemma that the Commission never faced. All the Commission had to do to justify the relief obtained was to amend the complaint to include an appropriate supporting allegation. Assuming that I would have had reason to believe that VOAA violated the law as articulated in an additional allegation concerning charitable solicitation, I likely would have joined the majority in supporting relief like that contained in Part IV of the order.

The majority, however, is unwilling to amend the complaint to include any allegation that relates to charitable solicitations, apparently based on the conclusion that the minimal cost of doing so outweighs the benefits. The majority's calculus is dead wrong. Complaint allegations force the government to articulate with some specificity what it believes a defendant has done in violation of the law. The articulation provides the defendant with an opportunity to defend itself. It also gives adjudicators a reasoned basis for determining whether relief to be imposed is reasonably related to preventing the defendant from engaging in the same or similar violations. See United States v. Microsoft Corp., 56 F.3d 1448, 1460 (D.C. Cir. 1995) ("And since the claim is not made [in the complaint], a remedy directed to that claim [in the consent decree] is hardly appropriate."). Furthermore, the articulation provides the public, whom we ultimately serve, with an opportunity to evaluate whether the relief imposed is an appropriate response to the misconduct alleged. I do not think that it is in the public interest for the Commission to base relief on inchoate, unalleged theories of violation. In a system of limited governmental power, it is critical that the government articulate the reasons why a defendant has violated the law before it acts to restrict the defendant's individual freedom.

Finally, even assuming that the complaint had been amended to include an allegation relating to charitable solicitation, I believe the public interest would be better served if the Commission imposed forms of relief that are less restrictive than a substantial and permanent bond requirement burdening non-misleading, fully-protected speech.(2) See Riley v. National Fed'n of the Blind, 487 U.S. 781, 796 (1988). For example, if it were reasonably related to the violations alleged, a provision such as the prohibition on misrepresentations in solicitations of charitable donations found in Paragraph IV of the order would strike a better balance between a defendant's First Amendment rights and the Commission's power to prohibit false or misleading speech.

Accordingly, I dissent as to Paragraphs III and IV of the VOAA order.


1. I have also voted in favor of the final judgment and order settling allegations against Hold Billing Services, Ltd., HBS, Inc., Avery Communications, Inc., and Thomas M. Lyons. However, I want to emphasize that my support for the order provisions as a remedy for alleged law violations in this particular case does not necessarily mean that I would support imposing these requirements across the board on billing aggregators through either litigation or regulation.

2. Although this provision exempts volunteer fundraising for bona fide charities from the bond requirement, it still restricts the free speech rights of paid charitable fundraisers, which are also protected under the First Amendment. See Riley, 487 U.S. at 801 ("It is well settled that a speaker's rights are not lost merely because compensation is received; a speaker is no less a speaker because he or she is paid to speak.").