SAMPLE ISSUE

FTC SETTLES WITH DEFENDANTS THAT ALLEGEDLY CLAIMED
"BOGUS" TIES TO GOOGLE

DEFENDANTS MUST SURRENDER ASSETS OF OVER $3.5 MILLION

An online marketer falsely claimed ties to Google Inc., according to FTC. That marketer has now been forced to stop operations as part of an FTC action that charged defendants with marketing an allegedly bogus work-at-home scheme and charging hidden monthly fees to consumers' credit card and bank accounts.

Under a settlement agreement reached with FTC, the defendants are banned from selling products through "negative option" transactions. "Negative option" transactions occur when the seller interprets consumers' silence or inaction as permission to charge them. The defendants also are barred from making misleading or unsupported claims while marketing or selling any product or service, and will give up cash and other assets exceeding $3.5 million.

"OPERATION SHORT CHANGE"

As part of "Operation Short Change", FTC announced a complaint in July 2009 against several defendants that allegedly sold a bogus work-at-home product under names including "Google Money Tree," "Google Pro," and "Google Treasure Chest." "Operation Short Change" is a crackdown on alleged scammers taking advantage of the economic downturn to bilk vulnerable consumers through a variety of schemes.

FTC charged that by using the name and logo of the Internet search company Google and falsely promising that consumers could earn $100,000 in six months, defendants lured consumers into divulging their financial account information to pay a modest shipping fee for a work-at-home kit. Defendants failed to disclose adequately, however, that buying the product would trigger automatic monthly charges of $72.21 for another product, and that those charges would continue until the consumer took steps to cancel, according to FTC's complaint.

FTC's COMPLAINT

FTC's complaint charged that defendants violated the FTC Act by–-

• failing to adequately disclose that consumers would be subjected to monthly charges;
• making false or unsupported claims that consumers were likely to earn substantial income; and
• falsely claiming that they were affiliated with Google Inc.

Defendants also violated the Electronic Fund Transfer Act and Regulation E by debiting consumers' bank accounts on a recurring basis without obtaining written authorization, according to FTC's complaint.

SETTLEMENT INCLUDES A $29.5 MILLION JUDGMENT

The settlement includes a $29.5 million judgment against these defendants.

Jonathan Eborn; Michael McLain Miller; Tony Norton; Infusion Media, Inc.; West Coast Internet Media, Inc.; Two Warnings, LLC; Two Part Investments, LLC; and Platinum Teleservices, Inc.

A fourth defendant, Stephanie Burnside, is subject to a judgment of $741,900. The defendants agreed to give up cash and other assets which total approximately $3.5 million, in partial satisfaction of the judgment. The unpaid portions of these judgments are suspended based on defendants' inability to pay. However, the full amounts will become due if the defendants have misrepresented their financial condition.

FTC's vote authorizing the staff to file the stipulated final order against the Google Money Tree defendants was 5-0. The FTC filed the proposed settlement in the U.S. District Court for the District of Nevada. It was signed by the judge on October 4, 2010.

NOTE: A stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

LAWYER's REFERENCE SERVICE

FTC v. Infusion Media, Inc., et al., United States District Court District of Nevada, Civil Action No. 09-CV-01112, FTC File No. 092 3060, October 18, 2010.

Volume XXX
Issue 21
November 1, 2010
Page 17-18

Advertising Compliance Service is a REFERENCE COMPENDIUM of JLCom Publishing Co., L.L.C.

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