UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
|FEDERAL TRADE COMMISSION, Plaintiff,
TY ANDERSON, et al.,Defendants.
STIPULATED ORDER FOR PERMANENT INJUNCTION, CONSUMER REDRESS, AND OTHER EQUITABLE RELIEF
Plaintiff, the Federal Trade Commission ("FTC"
or "Commission"), on October 27, 2000, filed a Complaint for
Permanent Injunction ("Complaint"), pursuant to Section 13(b) of the Federal
Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), charging Ty Anderson,
583 665 B.C. Ltd., Virtualynx Internet, Inc., and Charlo Barbosa with violating Section 5
of the FTC Act. On March 7, 2001, the FTC filed a Notice of Dismissal as to Defendant Ty
Defendants 583 665 B.C. Ltd., Virtualynx Internet, Inc., and Charlo Barbosa, on the one
hand, and the FTC on the other, have agreed to the entry of this Stipulated Order for
Permanent Injunction, Consumer Redress, and Other Equitable Relief ("Order") by
this Court to resolve all matters of dispute between them in this action.
NOW, THEREFORE, the defendants and the FTC have requested the Court to
enter this Order.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED as
1. This Court has jurisdiction of the subject
matter of this case and there is good cause to believe it has jurisdiction of the parties.
2. Venue is proper as to the parties in the Western
District of Washington.
3. The alleged activities of the defendants are in or
affecting commerce, as defined in the FTC Act, 15 U.S.C. § 44.
4. The Complaint states a claim upon which relief may be
granted against defendants under Section 5 of the FTC Act, 15 U.S.C. § 45(a).
5. Defendants waive all rights to seek appellate review or
challenge or contest the validity of this Order, and
further waive and release any claim defendants may have against the Commission, its
employees, and agents. However, defendants reserve the right to apply to the
Court for relief from this Order pursuant to Fed. R. Civ. P. 60(b), including, but not
limited to, an application based on a change in the law upon which the Complaint is based.
6. This Order does not constitute and shall not be
interpreted to constitute an admission by defendants that they have engaged in violations
of the FTC Act and the defendants have consented to the judgment for equitable monetary
relief for settlement purposes only.
7. The parties shall each bear their own costs and
attorneys' fees incurred in this action.
For purposes of this Order, the following definitions
- 1. "Document" is synonymous in meaning and equal
in scope to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes
writings, drawings, graphs, charts, photographs, audio and video recordings, computer
records, and other data compilations from which information can be obtained and
translated, if necessary, through detection devices into reasonably usable form. A draft
or non-identical copy is a separate document within the meaning of the term.
- 2. "Defendants" means 583 665 B.C. Ltd.,
Virtualynx Internet, Inc., and Charlo Barbosa, and each of
them and their successors, assigns, officers, agents, servants, employees, subsidiaries or
affiliates, and those persons 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 entity, corporation, subsidiary, division, or other device.
- 3. "Internet" means a worldwide system of linked
computer networks that use a common protocol to deliver and receive information. The
Internet includes, but is not limited to, the following forms of electronic communication:
electronic mail and mailing lists, the World Wide Web ("web"), bulletin boards
and news groups, chat groups, remote computer access (telnet), and file transfer protocol
- 4. A "Web site" is a set of electronic documents,
usually a home page and subordinate pages, readily viewable on a computer by anyone with
access to the Internet, standard software, and knowledge of the Web site's URL.
- 5. A "Web page" is a single electronic document
within a Web site, readily viewable on a computer by anyone with access to the Internet,
standard software, and knowledge of the Web page or Web site's URL. Web site visitors
generally first link to its "home page," which is a Web page that serves as an
index, or gateway, to the rest of the Web site's contents.
- 6. "Line subscriber" means an individual or
entity in the United States who has arranged with a local exchange carrier to obtain local
telephone service provided through an assigned telephone number or numbers, and to be
billed for such service on a monthly or other periodic basis.
- 7. "Local exchange carrier" means the telephone
company in the United States from which a line subscriber receives his or her telephone
- 8. "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 services accessed by a 900 number or other
number that can be blocked by the line subscriber pursuant to 47 U.S.C. § 228(c). 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.
- 9. "Dialer program" means software or other
device that, through an Internet connection, directly or indirectly causes a
telephone-billed transaction to occur;
- 10. "Telephone bill" means an invoice or other
demand for payment related to a telephone number or numbers, whether sent or made by a
local exchange carrier or by any other entity.
PROHIBITED BUSINESS PRACTICES
IT IS THEREFORE ORDERED that, in
connection with the offering for sale or sale of any product or service to consumers in
the United States, defendants are hereby permanently restrained and enjoined from:
- A. The use of a dialer program that does not require
express, verifiable authorization for access to any such product or service by the line
- B. Knowingly assisting others in the use of a dialer
program that does not require express, verifiable authorization for such access by the
Provided that, the fact that a telephone-billed
transaction may have originated from a line subscriber's telephone or telephone line does
not in and of itself constitute express, verifiable authorization for such access by the
IT IS FURTHER ORDERED that:
- A. Defendants shall pay to the FTC consumer redress in the
amount of $26,686.07 (U.S.) for which they are jointly and severally
liable, within ten (10) days of the entry of this Order. Payment shall be made to the FTC
by certified check or other guaranteed funds payable to and delivered to the FTC, or by
wire transfer in accord with directions provided by the FTC.
- B. The funds paid pursuant to paragraph II.A.
of this Order shall be deposited into a redress fund, administered by the FTC, to be used
for equitable relief, including but not limited to consumer redress and any attendant
expenses for the administration of any redress fund. If the FTC determines, in its sole
discretion, that redress to purchasers is wholly or partially impracticable, any funds not
so used shall be paid to the United States Treasury as disgorgement. Defendants shall be
notified as to how the funds are disbursed but shall have no right to contest the manner
of distribution chosen by the FTC. The FTC, in its sole discretion, may use a designated
agent to administer consumer redress. The FTC and defendants acknowledge and agree that
this judgment for equitable monetary relief is solely remedial in nature and is not a
fine, penalty, punitive assessment, or forfeiture.
- C. Defendants shall submit to the Commission, in the form
shown on Attachment A, a statement reaffirming and attesting to the truthfulness,
accuracy, and completeness of the representations made by them about the total revenue
they received from their use of a dialer program in the sale of any product or service
over the Internet ("dialer revenue"), including those made in their Preliminary
Response to Complaint, signed by defendant Charlo Barbosa and dated December 20, 2000, and
in the Declaration of Charlo Barbosa signed by defendant Charlo Barbosa and dated May 8,
2001. Plaintiff's agreement to this Order is expressly premised upon the truthfulness,
accuracy, and completeness of defendants' representations about their dialer revenue,
which constitutes material information upon which plaintiff relied in negotiating and
agreeing to the terms of this Order. If, upon motion of the plaintiff, this Court finds
that defendants failed to disclose any dialer revenue, or materially misrepresented the
dialer revenue they received, the Court may reopen the judgment for the purpose of
requiring additional monetary consumer redress in an amount equivalent to any resulting
understatement of defendants' dialer revenue, provided, however, that in all
other respects, this Order shall remain in full force and effect unless otherwise ordered
by this Court; and provided further that proceedings instituted under this paragraph are
in addition to, and not in lieu of, any other civil or criminal remedies as may be
provided by law, including any other proceedings plaintiff may initiate to enforce this
Order. For the purposes of paragraph II.C. of this Order, defendants
waive any right to contest any of the allegations in the Complaint filed in this matter.
- D. Any funds paid by defendants pursuant to paragraph II.C.
of this Order shall be paid to the FTC as described in paragraph II.A.
IT IS FURTHER ORDERED that, for a period
of three (3) years from the date of entry of this Order, in connection with (a) any
business owned or operated by any defendant, or any business where any defendant directly
or indirectly manages or controls the business, and where (b) the business is engaged in
the offering for sale or sale of any product or service to consumers in the United States
involving a dialer program, defendants are hereby permanently restrained
and enjoined from failing to create, and from failing to retain for a period of three (3)
years following the date of creation, records that reflect, for every consumer complaint
or refund request, whether received directly or indirectly or through any third party:
- 1. The consumer's name, address, telephone number and the
dollar amount paid by the consumer;
- 2. The written complaint or refund request, if any, and the
date of the complaint or refund request;
- 3. The basis of the complaint and the nature and result of
any investigation conducted concerning any complaint;
- 4. Each response and the date of the response;
- 5. Any final resolution and the date of the resolution;
- 6. In the event of a denial of a refund request, the reason
for the denial.
COMPLIANCE REPORTING BY DEFENDANTS
IT IS FURTHER ORDERED that for a period
of three (3) years from the date of entry of this Order:
- A. Defendants shall notify plaintiff in writing of any
employment or affiliation with any entity that defendants know is involved in the offering
for sale or sale of any product or service to consumers in the United States involving a
dialer program, where the defendants' involvement extends to the creation of, operation
of, or billing or collection for a dialer program. The notice required by this paragraph
shall include the entity's name and address, a statement of the nature of
the entity's business, and a statement of defendants' duties and responsibilities in
connection with the entity; and
- B. The defendants shall notify plaintiff in writing of any
proposed change in the structure of the corporate defendants that may affect compliance
obligations arising out of this Order.
- C. For the purposes of this Order, all notices and reports
required of defendants shall be delivered to the following address:
- Northwest Region
- Federal Trade Commission
- 915 Second Avenue, Suite 2896
- Seattle, WA 98174
IT IS FURTHER ORDERED that the Commission
is authorized to monitor defendants' compliance with this Order by all lawful means,
including but not limited to the following means:
- 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, 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 57(b)(1), to investigate whether defendants have violated any provision of
this Order or Section 5 of the FTC Act, 15 U.S.C. § 45.
ACKNOWLEDGMENT OF RECEIPT OF ORDER
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 a truthful sworn statement, in the form shown on
Attachment B, that shall acknowledge receipt of this Order.
IT IS FURTHER ORDERED that this Court
will retain jurisdiction of this matter for the purpose of enabling any of the defendants
or the FTC 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
SO ORDERED, this _____ day of __________, 2001.
United States District Judge
The defendants, and the FTC by counsel, hereby consent to
the terms and conditions of this Order 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, amended
by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996).
Charlo Barbosa, Individually
Charlo Barbosa, as President of 583 665 B.C. Ltd.,
and Virtualynx Internet, Inc.
Derek A. Newman
Attorney for Defendants 583 665 B.C. Ltd., Virtualynx Internet, Inc.,
Newman & Newman, LLP
1001 Fourth Avenue Plaza, Suite 3200
Seattle, WA 98154
Patricia A. Hensley
Thomas P. Rowan
and Charlo Barbosa
Federal Trade Commission
915 Second Avenue, Suite 2896
Seattle, WA 98174