UNITED STATES DISTRICT
COURT
FOR THE WESTERN DISTRICT OF WASHINGTON
FEDERAL TRADE COMMISSION, Plaintiff,
v.
CYBERSPACE.COM, LLC, FRENCH DREAMS, COTO SETTLEMENT, ELECTRONIC
PUBLISHING VENTURES, LLC, OLYMPIC TELECOMMUNICATIONS, INC., IAN EISENBERG, and CHRIS
HEBARD, Defendants.
STIPULATED PERMANENT INJUNCTION
Plaintiff, Federal Trade Commission ("FTC" or "Commission"), has
filed a Complaint for permanent injunction and other relief in this matter, pursuant to
Sections 5 and 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.
§§ 45 and 53(b). Defendants Ian Eisenberg, French Dreams, and Olympic
Telecommunications ("defendants"), and counsel for the Commission hereby
STIPULATE and AGREE to the entry of the following Permanent Injunction Order, pending
final adjudication as to issues concerning the amount and distributions of consumer
redress.
FINDINGS
- 1. This Court has jurisdiction of the subject matter of this case and of the parties
hereto and venue is proper as to all parties in the Western District of Washington.
-
- 2. The activities of defendants are in or affecting commerce, as defined in the FTC Act,
15 U.S.C. § 44.
-
- 3. The Complaint states a claim upon which relief may be granted against defendants
under Sections 5 and 13(b) of the Federal Trade Commission Act15 U.S.C. § 45(a) and
53(b).
-
- 4. This Order does not constitute an admission that defendants have engaged in
violations of the Federal Trade Commission Act.
-
- 5. Defendants waive all rights to seek judicial review or otherwise challenge or contest
the validity of the Order. Defendants waive any claim that they may have held under the
Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this
action to the date of this Order. Each settling party shall bear its own costs and
attorneys' fees.
-
- 6. Entry of this Order is in the public interest.
DEFINITIONS
For purposes of this Order, the following definitions shall apply:
- 1. "Defendants" means Ian Eisenberg, French Dreams, and
Olympic Telecommunications.
-
- 2. "Solicitation check" means any check that, if deposited or
cashed by the consumer, obligates the consumer for any goods or services sold by
defendant, including Internet-related services.
-
- 3. "Internet" means a worldwide system of linked computer
networks that use a common protocol (TCP/IP) to deliver and receive information. The
"Internet" includes, but is not limited to, the following forms of electronic
communication: file transfers, electronic mail, the World Wide Web, newsgroups, Internet
Relay Chat, audio, and video.
-
- 4. "Internet-related Services" means any product or service
that assists persons to access, use, browse, advertise on, communicate through, or do
business on the Internet, including, but not limited to: design, hosting and maintenance
of web pages and web sites, providing Internet access or e-mail accounts, and establishing
domain names and virtual domain names.
-
- 5. "In or affecting commerce" is as defined in Section 4 of
the FTC Act, 15 U.S.C. § 44.
-
- 6. "Telephone-billed transaction" means any purchase or
purported purchase of a good or service that is charged to a line subscriber's telephone
bill, but excluding: (1) purchases solely of common carrier transmission services; (2)
purchases of intrastate services regulated by a state public service or public utility
commission; (3) purchases of calls to an international telephone number at tarriffed
rates; (4) purchases of services accessed by dialing a 900 number or other number that can
be blocked by the Line Subscriber pursuant to 47 U.S.C.§ 228(c); (5) purchases of goods
or services that are otherwise subject to billing dispute resolution procedures required
by Federal statute or regulation; and (6) purchases of goods or services pursuant to a
presubscription agreement that meets the requirements of 16 C.F.R. Part 308. For purposes
of this Order, any service in which the service provider advertises, promotes, directs,
controls, or provides the content of communications provided or exchanged through the
service is not a common carrier transmission service. In the event the Pay-Per-Call Rule,
16 C.F.R. Part 308, is amended in a manner that includes within the Rule's coverage any
service exempted from the definition of "telephone-billed transaction," pursuant
to subparts (1) through (3) above, the subpart exemption shall not apply, and such service
shall be deemed a "telephone-billed transaction" pursuant to this Order.
Conversely, in the event an amended Pay-Per-Call Rule excludes from the Rule's coverage
any service included within the above definition of "telephone-billed
transaction," then the above definition shall not apply to such service and such
service shall be deemed to be exempt from the definition of "telephone-billed
transaction" pursuant to this Order.
PROHIBITED BUSINESS PRACTICES
I.
IT IS THEREFORE ORDERED that defendants, and their successors,
assigns, officers, agents, directors, servants, employees, salespersons, corporations,
subsidiaries, affiliates, all other persons or entities directly or indirectly under their
control, and all other persons or entities in active concert or participation with them,
who receive actual notice of this Order by personal service or otherwise, whether acting
directly or through any corporation, subsidiary, division, or other device, are hereby
permanently restrained and enjoined from sending a bill, or causing a bill to be sent, to
any consumer for any product or service sold by any defendant without first obtaining
express, verifiable authorization that the consumer being charged has agreed to be charged
for the product or service in the amount and in the manner set forth in the bill which
defendants have sent or caused to be sent to that consumer; provided, however,
that defendants Eisenberg and/or Olympic Telecommunications, when acting as a third-party
billing aggregator for independent vendors, shall be enjoined from:
- A. Collecting or attempting to collect, directly or indirectly, charges for any
telephone-billed transaction not blockable pursuant to 47 U.S.C. § 228(c) where
defendants know or should have known that the charge was not expressly authorized by the
person from whom payment is being sought; and
-
- B. Collecting or attempting to collect, on behalf of any vendor or other entity,
directly or indirectly, charges for any telephone-billed transaction not blockable
pursuant to 47 U.S.C. § 228, unless defendants perform monthly a scientifically
designed random telephone survey of at least 50 or 5 percent (which ever is greater) of
the purchasers, up to a maximum of 250 purchasers, submitted by the vendor or other entity
to verify that the purchases been authorized by the person from whom payment is being
sought; and
-
- C. Billing or causing to be billed, or collecting or attempting to collect payment,
directly or indirectly, on behalf of any Vendor that is a party to any telephone-billed
transaction where the defendant knows or should know that the Vendor does not obtain
express authorization for such telephone-billed transaction from the Line Subscriber; and
-
- D. Failing to maintain, for a period of three years, records sufficient to demonstrate
compliance with Sections B and C of this paragraph.
II.
IT IS FURTHER ORDERED that defendants, and their successors, assigns,
officers, agents, directors, servants, employees, salespersons, corporations,
subsidiaries, affiliates, all other persons or entities directly or indirectly under their
control, and all other persons or entities in active concert or participation with them,
who receive actual notice of this Order by personal service or otherwise, whether acting
directly or through any corporation, subsidiary, division, or other device, in connection
with the advertising, promotion, marketing, offering for sale, sale, or provision of any
goods or services, are hereby permanently restrained and enjoined from making any false or
misleading representations, expressly or by implication, orally or in writing, that:
- A. A solicitation check is a refund, rebate, receivable, or other payment for services
based on a prior or ongoing business relationship;
-
- B. Consumers are legally obligated to pay charges for goods or services that were not
authorized by the consumers; and
-
- C. Consumers have or had a business relationship with any defendant.
III.
IT IS FURTHER ORDERED that defendants, and their successors, assigns,
officers, agents, directors, servants, employees, salespersons, corporations,
subsidiaries, affiliates, all other persons or entities directly or indirectly under the
control of defendants, and all other persons or entities in active concert or
participation with them, who receive actual notice of this Order by personal service or
otherwise, whether acting directly or through any corporation, subsidiary, division, or
other device, in connection with the advertising, promotion, marketing, offering for sale,
sale, or provision of any goods or services, are hereby permanently restrained and
enjoined from failing to disclose, clearly and conspicuously:
- A. On the face of any solicitation check, a statement that notifies the payee that
signing and cashing or depositing the check obligates the payee to pay a monthly charge;
-
- B. On the back of the check, and above the endorsement line, a statement that notifies
the payee of the amount and frequency of the charge that defendants will impose if the
payee deposits or endorses the check. No other information above the endorsement line may
be included by defendant on the back of the check; and
-
- C. In a notice attached to the solicitation check, a statement that contains all the
material terms associated with depositing or endorsing the solicitation check, including a
statement that informs the payee that by endorsing or cashing the check, the payee is
purchasing or signing up for defendants' goods or services; notifies the payee that
defendants will impose a charge if the payee deposits or endorses the check; discloses the
amount and frequency of the charge; explains how defendants will bill the payee; describes
the goods or services provided for the charge; explains how to cancel and obtain a full
refund for any purchase made by the consumer; and provides a customer service telephone
number for consumers to call with questions. The notice shall not resemble an invoice or
other form suggesting a prior or ongoing business relationship between the consumer and
defendants.
COOPERATION WITH THE COMMISSION
IV.
IT IS FURTHER ORDERED that defendants hereby agree to cooperate fully,
truthfully, and completely with the plaintiff, Federal Trade Commission, in the continuing
litigation of this matter. This cooperation includes, but is not limited to, meeting with
Commission investigators and attorneys, assisting in the preparation for testimony,
producing defendants' business and financial records, and testifying fully, truthfully,
and completely at any deposition, hearing or trial in this matter, if called upon to do
so, without the necessity of service of process upon them. Nothing contained in this
paragraph shall be deemed to: 1) waive any defendant's privilege against
self-incrimination; 2) waive any defendant's right to seek a protective order or assert
objections under the Federal Rules of Civil Procedure; or 3) to compel disclosure of a
trade secret or confidential commercial information.
Nothing contained in this Order shall limit the Commission from seeking modification of
this Order should counsel for the Commission determine that defendant has not complied
with any provision of this Order.
FINANCIAL DISCLOSURE
V.
IT IS FURTHER ORDERED that within ten (10) days of the signing of this
Order by defendants, defendants shall provide the Commission with a complete statement of
all billings, collections, disbursements, income, and expenses of Cyberspace.com, to the
extent the information is within their possession, custody, control, or knowledge.
CONSUMER REDRESS
VI.
IT IS FURTHER ORDERED that:
- A. Consumer redress, including defendants' respective contributions are to be determined
in the following manner through referral to a Special Master ("Master"):
-
- 1. The Master shall be selected by mutual consent of the parties within five (5) days of
the signing of this order. If the defendants fail to select a Master within the allotted
time period, the FTC shall select a Master within three (3) days;
-
- 2. Defendants agree to cooperate fully and to participate in good faith in the process
that shall be determined in the sole discretion of the Master after consultation with the
parties;
-
- 3. The Master shall be compensated at a reasonable rate by the defendants, each of whom
shall bear an equal portion of such costs;
-
- 4. The Master shall endeavor to obtain an agreement among the parties determining the
amount of consumer redress, the method of distribution, and the means of guaranteeing
payment of consumer redress by defendants named in the caption;
-
- 5. If the Master is not able to obtain such an agreement on the matters set forth in
Paragraph 4 within 30 days of the entry of this Order, then this matter shall proceed to
Court immediately under normal Court procedures.
-
- B. The parties agree that the provisions of Rule 53, Fed. R. Civ. P., do not apply to
this Section.
-
- C. Failure to fulfill all or any portion of this Section shall not affect any other
Section of this Order.
GENERAL REQUIREMENTS
VII.
Acknowledgment of Receipt of Order by Defendants
IT IS FURTHER ORDERED that, within five (5) business days after
receipt by defendants of this Order as entered by the Court, defendants shall submit to
the Commission truthful sworn statements, in the form shown on Attachment A to this Order,
that shall acknowledge receipt of this Final Order.
VIII.
Distribution of Order by Defendants
IT IS FURTHER ORDERED that, for a period of five (5) years from the
date of entry of this Order, defendants shall:
- A. Provide a copy of this Order to, and obtain a signed and dated acknowledgment of
receipt of same from, each owner, officer and director, each individual serving in either
a management or supervisory capacity immediately upon employing or retaining any such
persons, for any business where:
-
- (1) any defendant is the majority owner of the business or directly or indirectly
manages or controls the business, and where
-
- (2) the business uses solicitation checks to sign consumers up for any goods or services
marketed or sold by defendants; and
-
- B. Maintain for a period of three (3) years after creation, and upon reasonable notice,
make available to representatives of the Commission, the original signed and dated
acknowledgments of the receipt of copies of this Order, as required in Subsection (A) of
this Paragraph.
IX.
Record Keeping Provisions
IT IS FURTHER ORDERED that, for a period of five (5) years from the
date of entry of this Order, defendants, and defendants' successors, assigns, officers,
agents, directors, servants, employees, salespersons, corporations, subsidiaries,
affiliates, all other persons or entities directly or indirectly under the control of
defendants, and all other persons or entities in active concert or participation with
defendants who receive actual notice of this Order by personal service or otherwise,
whether acting directly or through any corporation, subsidiary, division, or other device,
in connection with any business where
- (1) any defendant is the majority owner of the business or directly or indirectly
manages or controls the business, and where
-
- (2) the business uses solicitation checks to sign consumers up for any goods or services
marketed or sold by any defendant are hereby restrained and enjoined from failing to
create, and from failing to retain for a period five (5) years following the date of such
creation, unless otherwise specified:
- A. Books, records, and accounts that, in reasonable detail, accurately and fairly
reflect the cost of goods or services sold, revenues generated, and the disbursement of
such revenues;
-
- B. Records accurately reflecting: the name, address, and telephone number of each person
employed by such business, including as an independent contractor; that person's job title
or position; the date upon which the person commenced work; and the date and reason for
the person's termination, if applicable. The businesses subject to this Paragraph shall
retain such records for any terminated employee for a period of two (2) years following
the date of termination;
-
- C. Records containing the names, addresses, phone numbers, dollar amounts paid, quantity
of items and services purchased, and description of the items and services purchased, for
all consumers to whom such business sold, invoiced, or shipped any goods and services;
-
- D. Records that reflect, for every consumer complaint or refund request, whether
received directly, indirectly, or through any third party:
-
- 1. the consumer's name, street address, telephone number, and dollar amount paid by the
consumer;
-
- 2. the complaint or refund request, if any, and the date of the complaint or refund
request;
-
- 3. the basis of the complaint, including the name of any salesperson complained against,
and the nature and result of any investigation conducted concerning the complaint;
-
- 4. each response by defendants and the date of the response;
-
- 5. any final resolution and the date of the resolution; and
-
- 6. in the event of a denial of a refund request, the reason for the denial; and
-
- E. Copies of all sales scripts, training materials, advertisements, or other marketing
materials created or used by defendants; provided that copies of all sales
scripts, training materials, advertisements, or other marketing materials utilized shall
be retained for three (3) years after the last date of dissemination of any such
materials.
X.
Compliance Reporting by Defendants
IT IS FURTHER ORDERED that, in order that compliance with the
provisions of this Order may be monitored:
- A. For a period of five (5) years from the date of entry of this Order, defendants shall
notify the Commission of the following:
-
- 1. Any changes in defendants' business address, mailing addresses, and telephone
numbers, within ten (10) days of the date of such change;
-
- 2. Any proposed change in the structure of any defendant and of any business entity
owned or controlled by any defendant involved in solicitation checks or the billing for
any business that uses solicitation checks, such as creation, incorporation, dissolution,
assignment, sale, merger, dissolution of subsidiaries, proposed filing of a bankruptcy
petition, or change in the corporate name or address, or any other change that may affect
compliance obligations arising out of this Order, thirty (30) days prior to the effective
date of any proposed change;
- B. Ninety (90) and one hundred eighty (180) days after the date of entry of this Order,
each defendant shall provide a written report to the FTC, sworn to under penalty of
perjury, setting forth in detail the manner and form in which it has complied and is
complying with this Order. This report shall include, but not be limited to:
-
- 1. Each defendant's then current business address, mailing addresses, and telephone
numbers, and a list of the names of all current officers and managers;
-
- 2. A description of each defendant's current business involved in solicitation checks or
the billing for any business that uses solicitation checks, including a description of all
marketing methods and goods and services sold;
-
- 3. A copy of each acknowledgment of receipt of this Order obtained by each defendant
pursuant to Paragraph VII of this Order;
-
- 4. A statement describing the manner in which each defendant has complied and is
complying with: (a) the injunctive provisions of this Order, and (b) the consumer redress
provisions of this Order;
-
- C. Upon written request by a representative of the Commission, each defendant shall
submit additional written reports (under oath, if requested) and produce documents on
fifteen (15) days notice with respect to any conduct subject to this Order;
-
- D. For the purposes of this Order, each defendant shall, unless otherwise directed by
the Commission's authorized representatives, mail all written notifications to the
Commission to:
Associate Director
Division of Marketing Practices
Federal Trade Commission, Room 238
600 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Re: FTC v. Cyberspace.com LLC and
- E. For purposes of the compliance reporting required by this Paragraph, the Commission
is authorized to communicate directly with any defendant.
XI.
Commission's Authority to Monitor Compliance
IT IS FURTHER ORDERED that the Commission is authorized to monitor and
investigate defendants' compliance with this Order by all lawful means, including, but not
limited to, the following:
- A. The Commission is authorized, without further leave of court, to obtain discovery
from any person in the manner provided by Chapter V of the Federal Rules of Civil
Procedure, Fed. R. Civ. P. 26-37, and the Local Rules of this Court, including the use of
compulsory process pursuant to Fed. R. Civ. P. 45, for the purpose of monitoring and
investigating defendants' compliance with any provision of this Order;
-
- B. Nothing in this Order shall limit the Commission's lawful use of compulsory process,
pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49 and 57b-1, to investigate
whether any defendant has violated any provision of this Order or Section 5 of the FTC
Act, 15 U.S.C. § 45.
XII.
Retention of Jurisdiction by This Court
IT IS FURTHER ORDERED that this Court will retain jurisdiction of this
matter for the purpose of enabling any of the parties to this Order to apply to the Court
at any time for such further orders or directives as may be necessary or appropriate for
the interpretation or modification of this Order, for the enforcement of compliance
therewith or the punishment of violations thereof.
SO ORDERED, this ___ day of ___________________________, 2000
___________________________
United States District Judge
The parties, by their respective counsel, hereby consent to the terms and conditions of
the Order as set forth above and consent to the entry thereof. Defendants waive any rights
that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412.
FOR DEFENDANTS ___________________________
Ian Eisenberg, (Date)
___________________________
French Dreams (Date)
___________________________
Olympic Telecommunications (Date)
___________________________
Joel Dichter, Esq. (Date)
485 Madison Avenue
New York, New York 10022
Counsel for defendants |
FOR THE COMMISSION ___________________________
Collot Guerard
Attorney for the Plaintiff
Federal Trade Commission
600 Pennsylvania Ave. NW
Washington, DC 20580
202-326-3338 (o)
202-326-3395 (fax)
cguerard@ftc.gov |
ATTACHMENT A
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WASHINGTON
FEDERAL TRADE COMMISSION, Plaintiff,
v.
CYBERSPACE.COM, LLC, FRENCH DREAMS, COTO SETTLEMENT, ELECTRONIC
PUBLISHING VENTURES, LLC, OLYMPIC TELECOMMUNICATIONS, INC., IAN EISENBERG, and CHRIS
HEBARD, Defendants.
AFFIDAVIT OF DEFENDANT
___________________________, being duly sworn, hereby states and affirms as follows:
1. My name is ___________________________. I am the President and Chief Executive
Officer of ___________________________ . I am authorized to execute this affidavit.
2. ___________________________ is a defendant in FTC v. Cyberspace.com et al.,
which has been filed in the Western District of Washington.
3. On ___________________________, I received, on behalf of a copy of the Order, which
was signed by the Honorable and entered by the Court on 2000.
A true and correct copy of the Order I received is appended to this Affidavit.
I declare under penalty of perjury under the laws of the United States that the
foregoing is true and correct.
___________________________
State of ___________________________, City of ___________________________
Subscribed and sworn to before me this _____ day of ___________________________, 2000
___________________________
Notary Public
My Commission Expires: ___________________________ |