ORDER
MIRANDA M. DU, District Judge.
ORDER FOR PERMANENT INJUNCTION AND MONETARY JUDGMENT AS TO DEFENDANTS TERRASON SPINKS AND JET PROCESSING, INC.
On August 18, 2017, following a bench trial in this matter, the Court found Defendant Terrason Spinks and his company, Defendant Jet Processing, Inc., liable for violations of Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), and of Section 917(c) of the Electronic Fund Transfer Act ("EFTA"), 15 U.S.C. § 1693o(c). Amended Findings of Fact and Conclusions of Law (ECF No. 2020). The Court held that the Commission is entitled to a permanent injunction against Terrason Spinks and Jet Processing, Inc., and determined that the amount of consumer injury caused by the deceptive scheme at issue in this case is $280,911,870, for which Terrason Spinks and Jet Processing, Inc. are jointly and severally liable. Id. The terms of the injunction and the monetary judgment are provided below.
DEFINITIONS
For the purpose of this Order, the following definitions shall apply:
1. "Affiliate Network" means any Person who provides Terrason Spinks or Jet Processing, Inc. with Marketing Affiliates for an Affiliate Program or with whom Terrason Spinks or Jet Processing, Inc. contract with as a Marketing Affiliate to promote any Product.
2. "Affiliate Program(s)" means any arrangement under which Terrason Spinks or Jet Processing, Inc. pay, offer to pay, or provide or offer to provide any form of consideration to any third party to: (1) provide Terrason Spinks or Jet Processing, Inc. or a Client of Terrason Spinks or Jet Processing, Inc. with, or refer to Terrason Spinks or Jet Processing, Inc., or a Client of Terrason Spinks or Jet Processing, Inc., potential or actual customers; or (2) otherwise market, advertise, or offer for sale any Product on behalf Terrason Spinks or Jet Processing, Inc. or a Client of Terrason Spinks or Jet Processing, Inc.
3. "Asset" means any legal or equitable interest in, right to, or claim to, any real, personal, or intellectual property, including chattel, goods, instruments, equipment, fixtures, general intangibles, effects, leaseholds, contracts, mail or other deliveries, shares or stock, securities, inventory, checks, notes, accounts, credits, receivables (as those terms are defined in the Uniform Commercial Code), insurance policies, lines of credit, cash, trusts (including asset protection trusts), lists of consumer names and reserve funds or any other accounts associated with any payments processed by, or on behalf of, any Defendant or entities that are under the control of the Receiver pursuant to the Order Granting Motion for Order Clarifying Preliminary Injunction Order (ECF No. 900), including such reserve funds held by payment processors, credit card processors, banks or other financial institutions.
4. "Assists Others" or "Assisting Others" means providing assistance or support to any Person, including providing any of the following services: (1) performing customer service functions including receiving or responding to consumer complaints; (2) formulating or providing, or arranging for the formulation or provision of, any promotional material; (3) providing names of, or assisting in the generation of, potential customers; (4) verifying, processing, fulfilling, or arranging for the fulfillment of orders; (5) hiring, recruiting, or training personnel; (6) performing promotional or marketing services of any kind; or (7) processing or arranging for processing of credit cards, debit cards, Automated Clearinghouse (ACH) debits, remotely-created checks, or payments through any other system.
5. "Clear(ly) and Conspicuous(ly)" means that a required disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers, including in all of the following ways:
a. In any communication that is solely visual or solely audible, the disclosure must be made through the same means through which the communication is presented. In any communication made through both visual and audible means, such as a television advertisement, the disclosure must be presented simultaneously in both the visual and audible portions of the communication even if the representation requiring the disclosure is made in only one means.
b. A visual disclosure, by its size, contrast, location, the length of time it appears, and other characteristics, must stand out from any accompanying text or other visual elements so that it is easily noticed, read, and understood.
c. An audible disclosure, including by telephone or streaming video, must be delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand it.
d. In any communication using an interactive electronic medium, such as the Internet or software, the disclosure must be unavoidable.
e. The disclosure must use diction and syntax understandable to ordinary consumers and must appear in each language in which the representation that requires the disclosure appears.
f. The disclosure must comply with these requirements in each medium through which it is received, including all electronic devices and face-to-face communications.
g. The disclosure must not be contradicted or mitigated by, or inconsistent with, anything else in the communication.
h. When the representation or sales practice targets a specific audience, such as children, the elderly, or the terminally ill, "ordinary consumers" includes reasonable members of that group.
6. "Client" means any third party to which Terrason Spinks or Jet Processing, Inc. provide any of the services listed in the definition of Assisting Others.
7. "Commission" or "FTC" means the Federal Trade Commission.
8. "Continuity Program" means any plan, arrangement, or system under which a consumer is periodically charged to maintain a service or periodically receive any Product including access to a "member only" website.
9. "Corporate Defendants" means
1) Anthon Holdings Corp.
2) Big Bucks Pro, Inc.
3) Blue Net Progress, Inc.
4) Blue Streak Processing, Inc.
5) Bolt Marketing, Inc.
6) Bottom Dollar, Inc.
7) Bumble Marketing, Inc.
8) Business First Inc.
9) Business Loan Success, Inc.
10) Cloud Nine Marketing, Inc.
11) Cold Bay Media, Inc.
12) Costnet Discounts, Inc.
13) CPA Upsell, Inc.
14) CS Processing, Inc.
15) Cutting Edge Processing, Inc.
16) Diamond J Media, Inc.
17) Ebusiness First, Inc.
18) Ebusiness Success, Inc.
19) Ecom Success, Inc.
20) Elite Debit, Inc.
21) Employee Plus, Inc.
22) Excess Net Success, Inc.
23) Fiscal Fidelity, Inc.
24) Fitness Processing, Inc.
25) Funding Search Success, Inc.
26) Funding Success, Inc.
27) GG Processing, Inc.
28) GGL Rewards, Inc.
29) Highlight Marketing, Inc.
30) Hooper Processing, Inc.
31) Internet Business Source, Inc.
32) Internet Economy, Inc.
33) Internet Fitness, Inc.
34) IWorks, Inc.
35) Jet Processing, Inc.
36) JRB Media, Inc.
37) LifeStyles for Fitness, Inc.
38) Market Funding Solutions, Inc.
39) Mist Marketing, Inc.
40) Money Harvest, Inc.
41) Monroe Processing, Inc.
42) Net Business Success, Inc.
43) Net Commerce, Inc.
44) Net Discounts, Inc.
45) Net Fit Trends, Inc.
46) Network Agenda, LLC
47) Optimum Assistance, Inc.
48) Power Processing, Inc.
49) Premier Performance, Inc.
50) Pro Internet Services, Inc.
51) Razor Processing, Inc.
52) Rebate Deals, Inc.
53) Revive Marketing, Inc.
54) Simcor Marketing, Inc.
55) Success Marketing, Inc.
56) Summit Processing, Inc.
57) The Net Success, Inc.
58) Tranfirst, Inc.
59) Tran Voyage, Inc.
60) Unlimited Processing, Inc.
61) xCel Processing, Inc.
10. "Defendants" means Jeremy Johnson, Ryan Riddle, Scott Leavitt, Bryce Payne, Loyd Johnston, Duane Fielding, Terrason Spinks, Andy Johnson, Kevin Pilon, Scott Muir, and the Corporate Defendants.
11. "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, Internet sites, Webpages, Websites, electronic correspondence, including e-mail and instant messages, photographs, audio and video recordings, contracts, accounting data, advertisements (including advertisements placed on the World Wide Web), FTP Logs, Server Access Logs, USENET Newsgroup postings, World Wide Web pages, books, written or printed records, handwritten notes, telephone logs, telephone scripts, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, computer records, and other data compilations from which information can be obtained and translated. A draft or non-identical copy is a separate document within the meaning of the term.
12. "Endorsement" means any advertising message (including verbal statements, demonstrations, or depictions of the name, signature, likeness or other identifying personal characteristics of an individual or the name or seal of an organization), which message consumers are likely to believe reflects the opinions, beliefs, findings, or experience of a party other than the sponsoring advertiser.
13. "Endorser" means the party whose opinions, beliefs, findings, or experience the message appears to reflect, and may be an individual, group or institution.
14. "Express Verifiable Authorization" means:
a. Express written authorization by the customer, which includes the customer's signature, and shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law;
b. Express oral authorization which is audio-recorded and made available upon request to the customer, and the customer's bank or other billing entity, and which evidences clearly both the customer's authorization of payment for the goods or services that are the subject of the transaction and the customer's receipt of all of the following information:
(i) An accurate description, Clearly and Conspicuously stated, of the goods or services for which payment authorization is sought;
(ii) The number of debits, charges, or payments (if more than one);
(iii) The date(s) the debit(s), charge(s), or payment(s) will be submitted for payment;
(iv) The amount(s) of the debit(s), charge(s), or payment(s);
(v) The customer's name;
(vi) The customer's billing information, identified with sufficient specificity such that the customer understands what account will be used to collect payment for the goods or services that are the subject of the transaction;
(vii) A telephone number for customer inquiry that is answered during normal business hours; and
(viii) The date of the customer's oral authorization; or
c. Written confirmation of the transaction, identified in a Clear and Conspicuous manner as such on the outside of the envelope, sent to the customer via first class mail prior to the submission for payment of the customer's billing information, and that includes all of the information contained in b(i)-(vii) above and a Clear and Conspicuous statement of the procedures by which the customer can obtain a refund in the event the confirmation is inaccurate; provided however, that this means of authorization shall not be deemed verifiable in instances in which goods or services are offered in a transaction involving a free-to-pay conversion and Preacquired Account Information.
15. "Financial Institution" means any institution the business of which is engaging in financial activities as described in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. § 1843(k)). An institution that is significantly engaged in financial activities is a Financial Institution.
16. "Forced Upsell" means the automatic bundling of any additional Product with the purchase of a Primary Product. For purposes of this Order, a Forced Upsell shall include any bundled additional Product from which consumers cannot opt out, as well as any Upsell that uses a pre-checked checkbox.
17. "Grant Product" means any Product, including a plan or program, that is represented, directly or by implication, to assist a consumer in any manner in obtaining a grant or similar financial assistance from the government or any other source.
18. "In Close Proximity" shall mean for any communication presented solely through visual means: on the same webpage, online service page, mobile device screen, or other electronic page, and immediately adjacent to the cost-related claim and viewable in conjunction with the cost-related claim in such a manner that the communication is viewable without requiring the consumer to scroll up, down, or sideways, or otherwise adjust their browser window or mobile device window in any way. Representations or disclosures in response to cost-related claims that are accessed or displayed through hyperlinks, pop-ups, interstitials, or other means are NOT "In Close Proximity."
19. "Investment Opportunity" means anything, tangible or intangible, including a program or plan, that is offered for sale, sold, or traded based wholly or in part on representations, either express or implied, about past, present, or future income, earnings, profit, or appreciation.
20. "Marketing Affiliate" means any Person, including third-party marketers and Affiliate Networks, who participates in an Affiliate Program.
21. "Material" means likely to affect a Person's choice of, or conduct regarding, a Product.
22. "Merchant Account" means any account with an acquiring bank or other Financial Institution, service provider, payment processor, independent sales organization, or other entity that enables an individual, a business, or other organization to accept payments of any kind.
23. "Negative Option Feature" means, in an offer or agreement to sell or provide any Product, a provision under which the customer's silence or failure to take an affirmative action to reject a Product or to cancel the agreement is interpreted by the seller or provider as acceptance of the offer.
24. "Person" means a natural person, organization, or other legal entity, including a corporation, partnership, proprietorship, association, cooperative, or any other group or combination acting as an entity.
25. "Preacquired Account Information" means any information that enables a seller to cause a charge to be placed against a consumer's account without obtaining the account number directly from the consumer during the transaction pursuant to which the account will be charged.
26. "Primary Product" means the chief or principal Product that is the subject of the marketing materials or sales offers.
27. "Product" means products, goods, and services, and includes online memberships.
28. "Receiver" means Robb Evans & Associates, the receiver appointed by the Court's Preliminary Injunction entered on February 10, 2011 [ECF 130].
29. "Sensitive Personal Information" means nonpublic information concerning an individual consumer including: Social Security number, in whole or in part; credit and/or debit card information, in whole or in part, including credit and/or debit card number, expiration date, and transaction detail records; Financial Institution account information or transaction records, in whole or in part, including the ABA routing number, account number, check number, and transaction detail records; and account information or transaction records relating to nontraditional payment systems, such as any telecommunications billing system, PayPal, and BillMeLater.
30. "Upsell" shall mean any Product that is offered to the consumer at the time the consumer purchases the Primary Product.
I. CONDUCT PROHIBITIONS
It is therefore ordered that Terrason Spinks and Jet Processing, Inc. and their representatives, agents, employees, and attorneys, and all other persons in active concert or participation with one or both of them, who receive actual notice of this Order, whether acting directly or indirectly, are hereby permanently restrained and enjoined from:
A. Advertising, marketing, promoting, offering for sale, or selling any Grant Product or Assisting Others engaged in advertising, marketing, promoting, offering for sale, or selling any Grant Product;
B. Advertising, marketing, promoting, offering for sale, or selling any Investment Opportunity or Assisting Others engaged in advertising, marketing, promoting, offering for sale, or selling any Investment Opportunity;
C. Advertising, marketing, promoting, offering for sale, or selling any Product in which consumers will be entered into a Continuity Program or that has a Negative Option Feature, or Assisting Others engaged in advertising, marketing, promoting, offering for sale, or selling any Product in which consumers will be entered into a Continuity Program or that has a Negative Option Feature;
D. Advertising, marketing, promoting, offering for sale, or selling any Product as a Forced Upsell, or Assisting Others engaged in advertising, marketing, promoting, offering for sale, or selling any Product as a Forced Upsell;
E. Holding any ownership or other financial interest in any business entity that:
1. Engages in or Assists Others in the advertising, marketing, promoting, offering for sale, or selling of any Grant Product;
2. Engages in or Assists Others in the advertising, marketing, promoting, offering for sale, or selling of any Investment Opportunity;
3. Engages in or Assists Others in the advertising, marketing, promoting, offering for sale, or selling any Product in which consumers will be entered into a Continuity Program or that has a Negative Option Feature; or
4. Engages in or Assists Others in the advertising, marketing, promoting, offering for sale, or selling any Product as a Forced Upsell;
F. Serving as an officer, director, or manager of any business entity, unless Terrason Spinks actually controls, participates in, or has general knowledge of the daily operations of that entity;
G. Acting as a signatory on any account for any business entity unless Terrason Spinks controls, participates in, or has general knowledge of the daily operations of that entity; and
H. Applying for any Merchant Account for any business entity unless Terrason Spinks controls, participates in, or has general knowledge of the daily operations of that business entity.
II. PROHIBITED PRACTICES
It is further ordered that:
A. Terrason Spinks and Jet Processing, Inc. and their representatives, agents, employees, and attorneys, and all other Persons in active concert or participation with one or both of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with the sale of any Product, are hereby permanently restrained and enjoined from:
1. Making or Assisting Others in making, either directly or indirectly, expressly or by implication, any false or misleading statement or representation of any statement that is likely to affect a Person's choice of, or conduct regarding, a Product;
2. Misrepresenting or Assisting Others in misrepresenting, either directly or indirectly, expressly or by implication:
a. The total cost to purchase, receive, or use, and the quantity of, any Product that is the subject of the sales offer;
b. The risks associated with a Product, including that a Product is Risk-Free, Low Risk, or otherwise results in no obligation to the consumer;
c. Any Material restrictions, limitations, or conditions to purchase, receive, or use any Product that is the subject of the sales offer;
d. Any Material aspect of the performance, efficacy, nature, or central characteristics of any Product that is the subject of the sales offer;
e. Any Material aspect of the nature or terms of the seller's refund, cancellation, exchange, or repurchase policies;
f. The status of any user or Endorser of a Product, including misrepresenting that the user or Endorser is an independent user or ordinary, unbiased consumer of the Product; or
g. That consumer Endorsements reflect typical consumer experiences with a Product;
3. Failing to disclose Clearly and Conspicuously:
a. The total cost to purchase, receive, or use any Product that is the subject of the sales offer;
b. The total cost to purchase, receive, or use any Product in equal or greater size and prominence, and in Close Proximity to, any request that consumers provide their name, address, telephone number, email address, or any Sensitive Personal Information; or
c. The total cost to purchase, receive, or use any Product subject to the sales offer, in equal or greater size and prominence, and in Close Proximity to, any cost-related claim including any claim that the Product is "free," has a minimal cost, or is being offered on a trial basis or at an introductory or limited-time reduced cost;
4. Failing to disclose Clearly and Conspicuously any other Material information including:
a. The quantity of any Product that is the subject of the sales offer;
b. Any Material term or condition including any restrictions, limitations, or conditions to purchase, receive, or use any Product that is the subject of the sales offer;
c. Any Material aspect of the nature or terms of a refund, cancellation, exchange, or repurchase policy for any Product including if there is a policy of not making refunds, cancellations, exchanges, or repurchases;
d. That Endorsers received funds or some other benefit, directly or indirectly, from any individual or entity manufacturing, advertising, labeling, promoting, offering for sale, selling, or distributing a Product that is the subject of an Endorsement including if Endorsers received funds or some other benefit from a non-profit charitable fund that is directly or indirectly associated with any individual or entity manufacturing, advertising, labeling, promoting, offering for sale, selling, or distributing a Product that is the subject of an Endorsement, provided that, this provision shall not apply where (1) the Endorser is an expert or Person known to a significant portion of the viewing public, and (2) the endorsement appears in an advertisement where payment would be ordinarily expected by viewers; and
e. Any relationship that materially affects the weight or credibility of any Endorsement and that would not be reasonably expected by consumers, when one exists, between any user or Endorser and any other individual or entity manufacturing, advertising, labeling, promoting, offering for sale, selling, or distributing a Product;
B. Terrason Spinks and Jet Processing, Inc. and their representatives, agents, employees, and attorneys, and all other persons in active concert or participation with one or both of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with the sale of any Product, are hereby permanently restrained and enjoined from charging or debiting a consumer's bank, credit, or other financial account, or otherwise assessing charges to a consumer, without first obtaining the consumer's Express Verifiable Authorization; and
C. In connection with applying for or maintaining Merchant Accounts, Terrason Spinks and Jet Processing, Inc. and their representatives, agents, employees, and attorneys, and all other persons in active concert or participation with one or both of them, who receive actual notice of this Order, whether acting directly or indirectly, are hereby permanently restrained and enjoined from:
1. Making or Assisting Others in making, expressly or by implication, any false or misleading statement or representation including any statement or representation concerning the identity of the owner, manager, director, or officer of the applicant for or holder of a Merchant Account, to an acquiring bank or other Financial Institution, service provider, payment processor, independent sales organization, or other entity that enables an individual, a business, or other organization to accept payments of any kind; or
2. Failing to disclose to an acquiring bank or other Financial Institution, service provider, payment processor, independent sales organization, or other entity that enables an individual, a business, or other organization to accept payments of any kind any Material information related to a Merchant Account including the identity of the owner, manager, director, or officer of the applicant for or holder of a Merchant Account, and any connection between the owner, manager, director, or officer of the applicant for or holder of a Merchant Account and any third Person who has been or is placed in a Merchant Account monitoring program, had a Merchant Account terminated by a payment processor or a Financial Institution, or has been fined or otherwise disciplined in connection with a Merchant Account by a payment processor or a Financial Institution.
III. PROHIBITION AGAINST VIOLATION OF THE ELECTRONIC FUND TRANSFER ACT
It is further ordered that Terrason Spinks and Jet Processing, Inc. and their representatives, agents, employees, and attorneys, and all other persons in active concert or participation with one or both of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with the sale of any Product, are hereby permanently restrained and enjoined:
A. Engaging in any recurring debiting of a consumer's account without first obtaining a valid written pre-authorization for preauthorized electronic fund transfers from the consumer's account, which pre-authorization is clear and readily understandable, identifiable as a pre-authorization, and reflects the consumer's assent, as required by Section 907(a) of EFTA, 15 U.S.C. § 1693e(a), and Section 205.10(b) of Regulation E, as more fully set out in Section 205.10 of the Federal Reserve Board's Official Staff Commentary to Regulation E, 12 C.F.R. § 205.10(b)(5) and (6), Supp. I;
B. Engaging in any recurring debiting of a consumer's account without first providing a copy of a valid written pre-authorization to the consumer for preauthorized electronic fund transfers from the consumer's account, which copy is clear and readily understandable, identifiable as a pre-authorization, and reflects the consumer's assent, as required by Section 907(a) of EFTA, 15 U.S.C. § 1693e(a), and Section 205.10(b) of Regulation E, as more fully set out in Section 205.10 of the Federal Reserve Board's Official Staff Commentary to Regulation E, 12 C.F.R. § 205.10(b) (5) and (6), Supp. I; and
C. Failing to maintain procedures reasonably adapted to avoid an unintentional failure to obtain a written authorization for preauthorized electronic fund transfers, as required in Section 205.10(b)(7) of the Federal Reserve Board's Official Staff Commentary to Regulation E.
IV. MONETARY JUDGMENT
It is further ordered that monetary judgment is entered in favor of the Commission and against Terrason Spinks and Jet Processing, Inc., jointly and severally, in the amount of $280,911,870, which represents the unreimbursed consumer injury caused by Defendants.
A. Terrason Spinks and Jet Processing, Inc. are ordered to pay the Commission $280,911,870, less any amounts paid by any other Defendant. Terrason Spinks and Jet Processing, Inc. must pay the judgment within sixty (60) days of the entry of this Order, via wire transfer in accordance with instructions provided by a representative of the Commission.
B. All Assets or funds paid to the Commission in satisfaction of the judgment pursuant to this Order and further instructions from the Court may be deposited into a fund administered by the Commission or its designee to be used for equitable relief, including consumer redress and any attendant expenses for the administration of any redress fund. If a representative of the Commission decides that direct redress to consumers is wholly or partially impracticable or money remains after redress is completed, the Commission may apply any remaining money for such other equitable relief (including consumer information remedies) as it determines to be reasonably related to Defendants' practices alleged in the Amended Complaint. Any money not used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement. Terrason Spinks and Jet Processing, Inc. have no right to challenge any actions the Commission or its representatives may take pursuant to this Subsection.
V. FINANCIAL DISCLOSURES
It is further ordered that Terrason Spinks, within thirty (30) days of the issuing of this Order, must prepare and deliver to Commission counsel: (a) a completed individual financial statement on the form attached to this Order as Attachment A (Financial Statement of Individual Defendant); and (b) completed corporate financial statements on the form attached to this Order as Attachment B (Corporate Financial Statement), for each business entity (1) under which Terrason Spinks conducts business, (2) of which he is an officer, or (3) over which he exerts direct or indirect control. Terrason Spinks must include in the individual and corporate financial statements a full accounting of all Assets, whether located inside or outside of the United States, that are: (a) titled in his name individually, jointly, or severally; (b) held by any Person for his benefit; or (c) under his direct or indirect control.
VI. BAN ON USE OF CONSUMER INFORMATION
It is further ordered that Terrason Spinks and Jet Processing, Inc. and their representatives, agents, employees, and attorneys, and all other persons in active concert or participation with one or both of them, who receive actual notice of this Order, whether acting directly or indirectly, are hereby permanently restrained and enjoined from:
A. Disclosing to any third party, using, or benefitting from consumer information, including the name, address, telephone number, e-mail address, Social Security number, other identifying information, or any data that enables access to a consumer's account (including a credit card, bank account, or other financial account), or would otherwise allow the assessing of a charge against a consumer's account, of any Person which Terrason Spinks or Jet Processing, Inc. obtained prior to entry of this Order in connection with the advertising, marketing, promotion, or sale of any Product;
B. Failing to provide to the Receiver such consumer information in all forms that is in Terrason Spinks or Jet Processing, Inc.'s possession, custody, or control within fourteen (1) business days after entry of this Order; and
C. Failing to dispose of such consumer information in all forms that is in Terrason Spinks or Jet Processing, Inc.'s possession, custody, or control within forty-five (45) days after either 1) entry of a final Order closing this case or 2) receipt of written direction to do so from a representative of the FTC. Disposal shall be by means that protect against unauthorized access to the consumer information, such as by burning, pulverizing, or shredding any papers, and by erasing or destroying any electronic media, to ensure that the consumer information cannot practicably be read or reconstructed.
Provided, however, that consumer information need not be disposed of, and may be disclosed, to the extent requested by a government agency or required by a law, regulation, or court order.
VII. MONITORING BY TERRASON SPINKS
It is further ordered that, for a period of eight (8) years from the date of entry of this Order, Terrason Spinks and his representatives, agents, and employees, and all other persons in active concert or participation with him, who receive actual notice of this Order, whether acting directly or indirectly, in connection with the advertising, marketing, promoting, offering for sale, selling, or provision of any Products on or through the Internet, the World Wide Web, or any web page or website, are hereby permanently restrained and enjoined from failing to:
A. Obtain contact information from any prospective Marketing Affiliate or Client. In the case of a natural person, Terrason Spinks shall obtain the prospective Marketing Affiliate's or Client's first and last name, physical address, country, telephone number, e-mail address, date of birth, and complete bank account information as to where payments are to be made. In the case of business entities, Terrason Spinks shall obtain the first and last name, physical address, country, telephone number, e-mail address, and date of birth for the natural person who owns, manages, or controls the prospective Marketing Affiliate or Client, and complete bank account information as to where payments are to be made;
B. Require each Affiliate Network to obtain from its Marketing Affiliates and maintain the identifying information set forth in Subsection A of this Section prior to the Marketing Affiliate's or Affiliate Network's participation in any Terrason Spinks Affiliate Program;
C. Provide each prospective Marketing Affiliate or Client prior to such prospective Marketing Affiliate's acceptance into any Terrason Spinks Affiliate Program or before Terrason Spinks providing services to a prospective Client: (1) a copy of this Order; and (2) a Clear and Conspicuous statement in writing that engaging in acts or practices prohibited by this Order will result in immediate termination of any Marketing Affiliate or Client and forfeiture of all monies received from or owed to the Marketing Affiliate or Client;
D. Obtain from each prospective Marketing Affiliate or Client prior to such prospective Marketing Affiliate's acceptance into any Terrason Spinks Affiliate Program or prior to providing services to a prospective Client a signed and dated statement acknowledging receipt of this Order and expressly agreeing to comply with this Order;
E. Routinely monitor all marketing materials, including websites, e-mails, and pop-ups used by each Marketing Affiliate to advertise, promote, market, offer for sale, or sell any Terrason Spinks Product(s);
F. Routinely monitor all marketing materials, including websites, e-mails, and pop-ups used by each Client to advertise, promote, market, offer for sale, or sell any Product(s) for which Terrason Spinks is providing services;
G. Promptly and completely investigate all complaints received by Terrason Spinks, directly or indirectly, through any source to determine whether any Marketing Affiliate or Client is engaging in acts or practices prohibited by this Order;
H. Review the sales websites for each Marketing Affiliate advertising, promoting, marketing, offering for sale, or selling any Terrason Spinks Product(s) at least once every thirty (30) days to determine whether any Marketing Affiliate is engaging in acts or practices prohibited by this Order;
I. Review the sales websites advertising, promoting, marketing, offering for sale, or selling each Client's Product for which Terrason Spinks provides services at least once every thirty (30) days to determine whether any Client is engaging in acts or practices prohibited by this Order;
J. Immediately halt the processing of any payments or charges generated by any Marketing Affiliate or Client that has engaged in, or is engaging in, acts or practices prohibited by this Order;
K. Fully refund, within five (5) business days of discovery, any consumer whose account Terrason Spinks has processed a charge against whose sale originated from any Marketing Affiliate or Client that is discovered to have engaged in, or is engaging in, acts or practices prohibited by this Order since the date of the most recent review by Terrason Spinks of the Marketing Affiliate's or Client's marketing materials, including the Marketing Affiliate's or Client's websites; and
L. Terminate, immediately, any Marketing Affiliate or Client that has engaged in, or is engaging in, acts or practices prohibited by this Order and cease payments to any such Person.
Provided, however, that this Section does not authorize or require Terrason Spinks to take any action that violates any federal or state law.
VIII. ORDER ACKNOWLEDGMENTS
It is further ordered that:
A. Terrason Spinks and Jet Processing, Inc., within seven (7) days of entry of this Order, must submit to the Commission an acknowledgment of receipt of this Order sworn under penalty of perjury.
B. For eight (8) years after entry of this Order, Terrason Spinks for any business that he owns, individually or collectively with any other Defendant, is the majority owner or controls directly or indirectly, must deliver a copy of this Order to: (1) all principals, officers, directors, and LLC managers and members; (2) all employees, agents, and representatives who participate in conduct related to the subject matter of this Order; and (3) any business entity resulting from any change in structure as set forth in the Section titled Compliance Reporting. Delivery must occur within seven (7) days of entry of this Order for current personnel. For all others, delivery must occur before they assume their responsibilities.
C. From each individual or entity to which Terrason Spinks or Jet Processing, Inc. delivered a copy of this Order, Terrason Spinks and Jet Processing, Inc. must obtain, within thirty (30) days, a signed and dated acknowledgment of receipt of this Order.
IX. COMPLIANCE REPORTING
It is further ordered that Terrason Spinks and Jet Processing, Inc. make timely submissions to the Commission:
A. One year after entry of this Order, Terrason Spinks and Jet Processing, Inc. must submit a compliance report, sworn under penalty of perjury, as follows:
1. Terrason Spinks must: (a) identify the primary physical, postal, and e-mail address and telephone number, as designated points of contact, which representatives of the Commission may use to communicate with him; (b) identify all of Terrason Spinks' businesses by all of their names, telephone numbers, and physical, postal, e-mail, and Internet addresses; (c) describe the activities of each business, including the goods and services offered, the means of advertising, marketing, and sales, and the involvement of any other Defendant (which Terrason Spinks must describe if he knows or should know due to his own involvement); (d) describe in detail whether and how he is in compliance with each Section of this Order; and (e) provide a copy of each Order Acknowledgment obtained pursuant to this Order, unless previously submitted to the Commission.
2. Additionally, Terrason Spinks must: (a) identify all telephone numbers and all physical, postal, e-mail and Internet addresses, including all residences; (b) identify all business activities, including any business for which Terrason Spinks performs services whether as an employee or otherwise and any entity in which he has any ownership interest; and (c) describe in detail his involvement in each such business, including his title, role, responsibilities, participation, authority, control, and any ownership.
B. For eight (8) years after entry of this Order, Terrason Spinks must submit a compliance notice, sworn under penalty of perjury, within fourteen (14) days of any change in the following:
1. Terrason Spinks must report any change in: (a) any designated point of contact; or (b) the structure of any entity that Terrason Spinks has any ownership interest in or controls directly or indirectly that may affect compliance obligations arising under this Order, including: creation, merger, sale, or dissolution of the entity or any subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order.
2. Additionally, Terrason Spinks must report any change in: (a) name, including aliases or fictitious name, or residence address; or (b) title or role in any business activity, including any business for which he performs services whether as an employee or otherwise and any entity in which he has any ownership interest, and identify the name, physical address, and any Internet address of the business or entity.
C. Terrason Spinks must submit to the Commission notice of the filing of any bankruptcy petition, insolvency proceeding, or similar proceeding by or against him within fourteen (14) days of its filing.
D. Any submission to the Commission required by this Order to be sworn under penalty of perjury must be true and accurate and comply with 28 U.S.C. § 1746, such as by concluding: "I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on: ____" and supplying the date, signatory's full name, title (if applicable), and signature.
E. Unless otherwise directed by a representative of the Commission in writing, all submissions to the Commission pursuant to this Order must be e-mailed to DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin FTC v. Jeremy Johnson, et al— Terrason Spinks, X-11-0011.
X RECORDKEEPING
It is further ordered that Terrason Spinks must create certain records for eight (8) years after entry of the Order, and retain each such record for five (5) years. Specifically, Terrason Spinks, for any business in which he, individually or collectively with any other Defendant, is a majority owner or directly or indirectly controls, must create and retain the following records:
A. Accounting records showing the revenues from all goods and services sold, all costs incurred in generating those revenues, and the resulting net profit or loss;
B. Personnel records showing, for each Person providing services, whether as an employee or otherwise, that Person's: name, addresses, and telephone numbers; job title or position; dates of service; and (if applicable) the reason for termination;
C. Records of all consumer complaints and refund requests, whether received directly or indirectly, such as through a third party, and any response;
D. All records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Commission; and
E. Non-duplicate copies of any advertisement or other marketing material, including web pages, pop ups, e-mail advertisements, and any audio files related to them.
XI COMPLIANCE MONITORING
It is further ordered that, for the purpose of monitoring Terrason Spinks and Jet Processing, Inc.'s compliance with this Order:
A. Within fourteen (14) days of receipt of a written request from a representative of the Commission, Terrason Spinks must: submit additional compliance reports or other requested information, which must be sworn under penalty of perjury; appear for depositions; and produce documents, for inspection and copying. The Commission is also authorized to obtain discovery, without further leave of court, using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, and 69;
B. For matters concerning this Order, the Commission is authorized to communicate directly with Terrason Spinks. Terrason Spinks must permit representatives of the Commission to interview any employee or other Person affiliated with him or any of his businesses who has agreed to such an interview. The Person interviewed may have counsel present;
C. The Commission may use all other lawful means, including posing, through its representatives, as consumers, suppliers, or other individuals or entities, to Terrason Spinks, or any individual or entity affiliated with him, without the necessity of identification or prior notice. Nothing in this Order limits the Commission's lawful use of compulsory process pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1; and
D. Upon written request from a representative of the Commission, any consumer reporting agency must furnish consumer reports concerning Terrason Spinks, pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681(b)(1).
XII RETENTION OF JURISDICTION
It is further ordered that this Court shall retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order.
Attachment A
FEDERAL TRADE COMMISSION
FINANCIAL STATEMENT OF INDIVIDUAL DEFENDANT
Definitions and Instructions:
1. Complete all items. Enter "None" or "N/A" ("Not Applicable") in the first field only of any item that does not apply to you. If you cannot fully answer a question, explain why.
2. "Dependents" include your spouse, live-in companion, dependent children, or any other person, whom you or your spouse (or your children's other parent) claimed or could have claimed as a dependent for tax purposes at any time during the past five years.
3. "Assets" and "Liabilities" include ALL assets and liabilities, located within the United States or any foreign country or territory, whether held individually or jointly and whether held by you, your spouse, or your dependents, or held by others for the benefit of you, your spouse, or your dependents.
4. Attach continuation pages as needed. On the financial statement, state next to the Item number that the Item is being continued. On the continuation page(s), identify the Item number(s) being continued.
5. Type or print legibly.
6. Initial each page in the space provided in the lower right corner.
7. Sign and date the completed financial statement on the last page.
Penalty for False Information:
Federal law provides that any person may be imprisoned for not more than five years, fined, or both, if such person:
(1) "in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or devise a material fact; makes any materially false, fictitious or fraudulent statement or representation; or makes or uses any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry" (18 U.S.C. § 1001);
(2) "in any . . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true" (18 U.S.C. § 1621); or
(3) "in any (. . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information . . . knowing the same to contain any false material declaration" (18 U.S.C. § 1623).
For a felony conviction under the provisions cited above, federal law provides that the fine may be not more than the greater of (i) $250,000 for an individual or $500,000 for a corporation, or (ii) if the felony results in pecuniary gain to any person or pecuniary loss to any person other than the defendant, the greater of twice the gross gain or twice the gross loss. 18 U.S.C. § 3571.
Attachment B
FEDERAL TRADE COMMISSION
CORPORATE FINANCIAL STATEMENT
Instructions:
1. Complete all items. Enter "None" or "N/A" ("Not Applicable") where appropriate. If you cannot fully answer a question, explain why.
2. The font size within each field will adjust automatically as you type to accommodate longer responses.
3. In completing this financial statement, "the corporation" refers not only to this corporation but also to each of its predecessors.
4. When an Item asks for information about assets or liabilities "held by the corporation," include ALL such assets and liabilities, located within the United States or elsewhere, held by the corporation or held by others for the benefit of the corporation.
5. Attach continuation pages as needed. On the financial statement, state next to the Item number that the Item is being continued. On the continuation page(s), identify the Item number being continued.
6. Type or print legibly.
7. An officer of the corporation must sign and date the completed financial statement on the last page and initial each page in the space provided in the lower right corner.
Penalty for False Information:
Federal law provides that any person may be imprisoned for not more than five years, fined, or both, if such person:
(1) "in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry" (18 U.S.C. § 1001);
(2) "in any . . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true" (18 U.S.C. § 1621); or
(3) "in any (. . . statement under penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information . . . knowing the same to contain any false material declaration." (18 U.S.C. § 1623)
For a felony conviction under the provisions cited above, federal law provides that the fine may be not more than the greater of (i) $250,000 for an individual or $500,000 for a corporation, or (ii) if the felony results in pecuniary gain to any person or pecuniary loss to any person other than the defendant, the greater of twice the gross gain or twice the gross loss. 18 U.S.C. § 3571.
