JAMES L. ROBART, District Judge.
Plaintiff, the Federal Trade Commission ("Commission" or "FTC"), filed its Complaint for a permanent injunction and other equitable relief in this matter, pursuant to Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b) and Section 5 of the Restore Online Shoppers' Confidence Act ("ROSCA"), 15 U.S.C. § 8404. The Commission and Defendants stipulate to the entry of this Stipulated Order For Permanent Injunction And Monetary Judgment ("Order") to resolve all matters in dispute in this action between them.
THEREFORE, IT IS ORDERED as follows:
1. This Court has jurisdiction over this matter.
2. The Complaint charges that Defendants have participated in deceptive and unfair acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, in connection with charging consumers using the mobile telephone application that Defendants have advertised, marketed, promoted, or distributed.
3. The Complaint further charges that Defendants have unlawfully charged consumers for the mobile telephone application service that Defendants have advertised, marketed, promoted, or distributed, in violation of Section 4 of the Restore Online Shoppers' Confidence Act, 15 U.S.C. § 8403.
4. Defendants neither admit nor deny any of the allegations in the Complaint, except as specifically stated to this Order. Only for purposes of this action, Defendants admit the facts necessary to establish jurisdiction.
5. Defendants waive any claim that they may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agree to bear their own costs and attorney fees.
6. Defendant and the Commission waive all rights to appeal or otherwise challenge or contest the validity of this Order.
For the purpose of this Order, the following definition apply:
A. "App" means any software application or code that can be transmitted to a mobile device. "App" shall also include any software referred to by the Company as an "App" or "Mobile App" in the course of its own communication or business practices.
B. "Billing Information" means any data that enables any person to access a customer's account, such as a credit card checking, savings, share or similar account, utility bill, mortgage loan account, or debit card.
C. "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:
D. "Current consumer" means consumer account with Pact, Inc. had not been deleted as of June 30, 2017.
E. "Close-Proximity" means immediately adjacent to the triggering representation. In the case of advertisements disseminated verbally of through audible means, the disclosure shall be made as soon as practicable after the triggering representation.
E. "Defendants" means all of the Individual Defendants and the Corporate Defendant, individually, collectively, or in any combination.
F. "Negative Option Feature" means in an offer or agreement to sell or provide any good or service, a provisions under which the consumer's silence of failure to take affirmative actions to reject a good or service or to cancel the agreement is interpreted by the seller or provider as accepting or continuing acceptance of the offer.
IT IS ORDERED that Defendants, Defendants' officers, agents, employees, and attorneys and all others in active concert or participation with any of them, who receive notice of this. Order, whether acting directly or indirectly, in connection with advertising, making, promoting, distributing, or offering for sale any app or software are permanently restrained and enjoined from misrepresenting expressly or by implication:
A. The circumstances under which they will charge consumers;
B. The circumstances under which consumers will receive any benefits, payments, or rewards; or
C. Any other fact material to consumers concerning any app or software such as: the total costs; any material restrictions, limitations, or conditions; or any material aspect of its performance, efficacy, nature, or central characteristics.
IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees, and attorneys and all others in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with advertising, marketing, promoting, distributing, or offering for sale any app or software, are permanently restrained and enjoined from charging consumers without having obtained the consumers' express, informed consent.
IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting or offering for sale any good or service with a Negative Option Feature, are permanently restrained and enjoined from obtaining Billing Information from a consumer for any transaction involving a good or service that includes a Negative Option Feature, without first disclosing Clearly and Conspicuously and in Close Proximity to the consumers' provision of Billing Information:
IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees, and attorneys and all others in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with the sale of any good or service, are permanently restrained and enjoined from violating the Restore Online Shoppers' Confidence Act, 15 U.S.C. §§ 8401-05, a copy of which is attached.
IT IS FURTHER ORDERED that:
A. Judgment in the amount of One Million Five Hundred Thousand dollars ($1,500,000) is entered in favor of the Commission against Defendants as equitable monetary relief.
B. Defendants are ordered to pay Nine Hundred Forty-Eight Thousand Seven Hundred Eighty-Eight dollars ($948,788.00) ("Payment Amount") as follows:
Upon such payments, the remainder of the judgment is suspended, subject to the Subsections below.
C. The Commission's agreement to the suspension of part of the judgment is expressly premised upon the truthfulness, accuracy, and completeness of Defendants' sworn financial statements and related documents (collectively, financial representations") submitted to the Commission, namely:
D. The suspension of the judgment will be lifted as to any Defendant if, upon motion by the Commission, the Court finds that Defendant failed to disclose any material asset, materially misstated the value of any asset, or made any other material misstatement or omission in the financial representations identified above.
E. If the suspension of the judgment is lifted, the judgment becomes immediately due as to that Defendant in the amount specified in Subsection A above (which the parties stipulate only for purposes of this Section represents the consumer injury alleged in the Complaint), loss any payment previously made pursuant to this Section, plus interest computed from the date of entry of this Order.
IT IS FURTHER ORDERED that:
A. Defendants relinquish dominion and all legal and equitable right, title, and interest in all assets transferred pursuant to this Order and may not seek the return of any assets.
B. The facts alleged in the Complaint will be taken as true, without further proof, in any subsequent civil litigation by or on behalf of the Commission, including in a proceeding to enforce its rights to any payment or monetary Judgment pursuant to this Order, such as a nondischargeability complaint in any bankruptcy case.
C. The facts alleged in the Complaint establish all elements necessary to sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral estoppel effect for such purposes.
D. Defendants acknowledge that their Taxpayer Identification Numbers (Social Security Numbers or Employer Identification Numbers), which Defendants previously submitted to the Commission, may be used for collecting and reporting or any delinquent amount arising out of this Order, in accordance with 31 U.S.C. § 7701.
E. All money paid tot he Commission pursuant to this Order may be deposited into a fund administered by the Commission or it 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 Complaint. Any money not used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement. Defendants have no right to challenge any actions the Commission or its representatives may take pursuant to this Subsection.
IT IS FURTHER ORDER that:
A. Defendants, Defendants' officers, agents, employees, and attorneys and all others in active concert or participation with any of then, who receive notice of this order, whether acting directly or indirectly, are permanently restrained and enjoined from directly or indirectly failing to provide sufficient customer information to enable the Commission to efficiently administer consumer redress. Defendants represent that they have provided this redress information to the Commission. If a representative of the Commission requests in writing any information related to redress, Defendants must provide it, in the form prescribed by the Commission, within 14 days.
B. Defendants shall, within two (2) days of entry of this order, provide notices in the forms set forth in Appendix A-1, A-2, and A-3 to each current consumer whose account with Corporate Defendant has outstanding credit, and the notice it he form set forth in Appendix A-4 to each current and former customer of Corporate Defendant. The notices cannot be modified or combined with other text or information, unless a representative of the Commission agrees in advance in writing to such modifications. Defendants shall make no other representation(s) contrary to, inconsistent with, or in mitigation of, the notices, including but not limited to, representations discouraging customers from seeking refunds or rewards, indicating that customers might not be able to get refunds or rewards, or that refunds or rewards will be difficult to obtain.
IT IS FURTHER ORDERED that Defendants obtain acknowledgments of receipt of this Order.
A. Each Defendant, within 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 3 years after entry of this Order, each Individual Defendant for any business that such Defendant, individually or collectively with any other Defendants, is the majority owner or controls directly or indirectly, and each Corporate Defendant 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 the marketing, promotion, offering for sale or sale of any app or software; and (3) any business entity resulting from any charges in structure as set forth in the Section titled Compliance Reporting. Delivery must occur within 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 a Defendant delivered a copy of this Order, that Defendant must obtain, within 30 days, signed and dated acknowledgment of receipt of this Order.
IT IS FURTHER ORDERED that Defendants make timely submissions to the Commission;
A. One year after entry of this Order, each Defendant must submit a compliance report, sworn under penalty of perjury.
B. For 10 years after entry of this Order, each Defendant must submit a compliance notice, sworn under penalty of perjury, within 14 days of any change in the following:
C. Each Defendant must submit to the Commission notice of the filing of any bankruptcy petition, insolvency proceeding, or similar proceeding by or against such Defendant within 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 Commission representative in writing, all submissions to the commission pursuant to this Order must he emailed 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. Pact, Inc.
IT IS FURTHER ORDERED that Defendants must create certain records for 10 years after entry of the Order, and retain each such record for 5 years. Specifically, Corporate Defendant and each Individual Defendant for any business that such Defendant, individually or collectively with any other Defendants, is a majority owner or controls directly or indirectly, must create and retain the following records;
A. accounting records showing the revenues from all goods or services sold;
B. Personnel records showing, for each person providing services, whether as an employed or otherwise, that person's; name; addresses; telephone number; 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 fall compliance with each provision of this Order, including all submission to the Commission; and
E. a copy of each unique advertisement of other marketing material.
IT IS FURTHER ORDERED that, of the purpose of monitoring Defendants' compliance with this order, including the financial representations upon which part of the judgment was suspended and any failure to transfer any assets as required by this Order:
A. Within 14 days of receipt of a written request from a representative of the Commission, each defendant 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 Defendants. Defendants must permit representatives of the Commission to interview any employee or other person affiliated with Defendants 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 Defendants or any individual or entity affiliated with Defendants, 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.
D. Upon written request from a representative of the Commission, any consumer reporting agency must furnish consumer reports concerning Individual Defendants, pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C. § 1681b(a)(1).
IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order.
Defendant shall send of out the foregoing notices pursuant to Section V of this order. In each instance it shall replace "<Date>" with the date that occurs 28 days after order entry and shall replace "<Use>" with the name of each recipient.
Dear <Use>,
We must send you all your reward money as a result of a settlement with the Federal Trade Commission.
If we don't have your PayPal info by <Date>, we can't your money to you, Please update or provide your PayPal account right away. Just open the Pact app, and go to Setting → Rewards.
OR
By <Date>, withdraw your rewards money yourself, even if it's less than $10. Simply open the app and tap Settings, then Rewards, then withdraw your money just like usual. If you have problems withdrawing your rewards contact us at https:www.pactapp.com/contact/form or through the app.
For more information, or if you don't get your money by <Date>, visit
Withdraw your Pact reward money now as part of a settlement with the FTC. You have until <Date> to update your PayPal info to get your money. Go to Setting → Rewards in the Fact app.
Get your Fact reward money now as part of an FTC settlement. By <Date>, update your PayPal info by going to Settings → Rewards in the Pact app. And if you don't want to wait for <Date>, you can withdraw your rewards yourself, even if it's less than $10. Visit ftc.gov/Paot for more details.
Subject line of email Refunds for Pact Users
Dear <User>,
You may be eligible for a refund from Pact as a result of a settlement with the Federal Trade Commission.
If you believe Pact charged you incorrectly, or didn't give you credit for reward money that you earned, you can request a remind by following these steps by <Date>:
Please note that Pact can only refund you for charges that have not been refunded already.
For more information, or if you have problems getting your refund, visit www.ftc.gov/Pact.
