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1
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COMPLAINT
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EXTRACTED KEY WORDS
ACT CONSUMERS CREDIT CARD TELEMARKETING FTC ACT VIOLATIONS PRACTICES LIBERTY RELIEF COMMISSION COURT ASCENDIX TSR PURCHASE CREDIT CARD PROTECTION CREDIT CARD ACCOUNT CHARGES DISTRICT LIBERTY DIRECT TRANSACTS GOODS FEDERAL TRADE COMMISSION UNITED STATES PLAINTIFF ASCENDIX GROUP DECEPTIVE ACTS TELEMARKETING SALES RULE UNAUTHORIZED CHARGES MONEY |
DEBRA A. VALENTINE
General Counsel
THOMAS SYTA (CA Bar # 116286)
RAYMOND E. MCKOWN (CA Bar # 150975)
TANYA NATHAN (CA Bar # 189090)
Federal Trade Commission
10877 Wilshire Blvd., Suite 700
Los Angeles, CA 90024
(310) 824-4343; Fax 824-4380
SUZANNE CHYNOWETH (Arizona Bar #6835)
Assistant United States Attorney
U.S. Courthouse
230 North 1st Avenue
Room 4000
Phoenix, Arizona 85025
(602) 514-7500
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
FEDERAL TRADE COMMISSION, Plaintiff,
vs.
LIBERTY DIRECT, INC., THE ASCENDIX GROUP, INC., PAUL L. WIGGS,
individually and as an officer of Liberty Direct, Inc., and The
Ascendix Group, Inc., and DAVID C. FURNIA, individually and as an
officer of Liberty Direct, Inc., and The Ascendix Group, Inc.,
Defendants.
CV 99-
COMPLAINT FOR INJUNCTION AND OTHER EQUITABLE RELIEF
Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), for
its complaint alleges:
1. The FTC brings this action under Sections 13(b) and 19 of the
Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b,
and the Telemarketing and Consumer Fraud and Abuse Prevention Act
("Telemarketing Act"), 15 U.S.C. § 6101 et seq., to obtain permanent
injunctive relief, rescission or reformation of contracts,
restitution, disgorgement, and other equitable relief for defendants'
deceptive acts or practices in violation of Section 5(a) of the FTC
Act, 15 U.S.C. § 45(a), and the FTC's Telemarketing Sales Rule
("TSR"), 16 C.F.R. Part 310.
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2
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FINAL JUDGMENT & ORDER
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EXTRACTED KEY WORDS
COURT COMPLAINT BUSINESS FTC ACT FURNIA WIGGS COMMISSION DEFENDANTS LIBERTY TSR LAW SALE PAUL DAVID ENTRY PERMANENT CREDIT CARD CONSUMER TELEMARKETING UNITED STATES JUDGEMENT INJUNCTION DEFENDANTS LIBERTY DIRECT EMPLOYEES FEDERAL TRADE COMMISSION FINANCIAL STATEMENT MATERIALS REPRESENTATIVES BUSINESS ENTITY PROPOSED CHANGE |
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10 IN THE UNITED STATES DISTRICT COURT
11 FOR THE DISTRICT OF ARIZONA
12 ______________________________) No. 2:99-cv-01637 - JAT
13 FEDERAL TRADE COMMISSION, ))
14 Plaintiff, )
) (Proposed)
15 vs. ) FINAL JUDGMENT AND
) ORDER FOR PERMANENT
16 LIBERTY DIRECT, INC., ) INJUNCTION AGAINST DEFENDANTS
) LIBERTY DIRECT, INC.,
17 ) PAUL L. WIGGS, AND DAVID C.
PAUL L. WIGGS, individually ) FURNIA
18 and as an officer of Liberty )
Direct Inc., and )
19 )
DAVID C. FURNIA, individually )
20 and as an officer of Liberty )
Direct, Inc., )
21 )
Defendants. )
22 ______________________________)
23
24 For good cause shown, including that found in the
25 Stipulation for Entry of Final Judgment and Order for Permanent
26 Injunction Against Defendants Liberty Direct, Inc., Paul L.
27 Wiggs, and David C. Furnia, this Court hereby orders the Clerk of
28 this Court to enter the following Order against the defendants:
D:\webstuff\2001\May 7\FINALlibORDER.wpd 5/7/01 Page 1
1 FINDINGS
2 1. This Court has jurisdiction of the subject matter of
3 this case and of the parties consenting hereto;
4 2. Venue is proper as to all parties in the District of
5 Arizona;
6 3. The activities of the defendants are in or affecting
7 commerce, as defined in the FTC Act, 15 U.S.C. § 44;
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3
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SWINDLE STATEMENT
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EXTRACTED KEY WORDS
CONSUMERS CREDIT CARD AUTHORIZATION SALES TELEMARKETING DISCLOSURES DECEPTION ACCOUNT ALLEGE COMPLAINT PROTECTION MISREPRESENTATIONS CHARGES REFUND POLICY PROVISION SPECIFICATIONS COST FACE-TO-FACE TRANSACTIONS DEBIT RELIEF PRACTICES PURCHASE LEGITIMATE ACTIVITIES ENJOINS REASON WARNING PREVENTING BANK SELLING |
Statement of Commissioner Orson Swindle
Concurring in Part and Dissenting in Part
in Liberty Direct, Inc., File No. X990096
________________________________________________________
I have voted to approve the Stipulated Final Judgment in this matter.
As a whole, the relief is entirely appropriate in light of the
practices alleged in the complaint. Nevertheless, I do not support the
requirement that the defendants obtain consumers' written
authorization to purchase any product or service. This provision is
over-broad and unnecessary to prevent deception and may have
unintended negative effects on legitimate activities.
The complaint alleged that the defendants deceptively telemarketed
credit card loss protection. The defendants allegedly misrepresented
that they were affiliated with consumers' credit card issuers and that
consumers could be held fully liable for all unauthorized charges to
their credit card accounts, when in fact consumers are liable only up
to $50. The defendants also allegedly charged consumers for their
services without authorization.
The order bans the defendants from future sales of credit card loss
protection and requires the defendants to post a $1 million bond
before any future telemarketing. It also enjoins the defendants from
making the same misrepresentations that gave rise to the complaint. I
have reason to believe that the defendants were engaged in fraudulent
practices, and therefore I believe that this relief is warranted and
will serve the public interest by deterring future unlawful conduct.
One provision of the order, however, goes beyond the goal of
preventing deception. Part III.F requires the defendants to obtain
consumers' written authorization on a specified form before debiting
their credit card or checking account for any good or service. The top
of the required authorization form states: "WARNING - DO NOT SIGN UP
OR PAY MONEY UNTIL YOU READ THIS NOTICE." The form contains 4
disclosures: (1) that the defendants are not related to Visa,
MasterCard or any bank that issues credit cards; (2) the cost of the
product or service; (3) the defendants' refund policy; and (4) if the
defendants are selling low interest credit cards, that the defendants
cannot help the consumer to obtain a credit card and that they are
merely selling a list of banks that offer credit cards. Consumers must
initial the form by each disclosure, sign it and provide their address
and telephone number.
Although this is a well-intentioned effort to ensure that consumers
are informed of certain information and that they have authorized
charges to their account, the order provision is over-broad and
unnecessary to prevent deception. The requirement applies to the sale
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4
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STIPULATION
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EXTRACTED KEY WORDS
COMMISSION UNITED STATES FEDERAL TRADE COMMISSION BUSINESS FURNIA LIBERTY WIGGS ENTRY SALE RAYMOND MCKOWN PAUL DAVID PERMANENT INJUNCTION MAYORKAS OFFICER CREDIT CARD TELEMARKETING CONSUMER LOS ANGELES UNITED STATES ATTORNEY LIBERTY DIRECT JUDGEMENT STIPULATION FTC ACT COMPLAINT WILSHIRE BLVD EMPLOYEES MATERIALS |
1 THOMAS SYTA (CA Bar # 116286)
RAYMOND E. MCKOWN (CA Bar # 150975)
2 TANYA MAYORKAS (CA Bar # 189090)
Federal Trade Commission
3 10877 Wilshire Blvd., Ste. 700
Los Angeles, CA 90024
4 (310) 824-4343; Fax (310) 824-4380
5 SUE A. KLEIN (AZ Bar # 11253)
Asst. United States Attorney
6 U.S. Courthouse
230 North 1st Avenue, Room 4000
7 Phoenix, AZ 85025
(602) 514-7740
8 LOCAL COUNSEL
9 Attorneys for Plaintiff
FEDERAL TRADE COMMISSION
10 IN THE UNITED STATES DISTRICT COURT
11 FOR THE DISTRICT OF ARIZONA
12 ______________________________
13 ) No. 2:99-cv-01637 - JAT
FEDERAL TRADE COMMISSION, )
14 )
Plaintiff, )
15 ) STIPULATION FOR ENTRY OF
vs. ) FINAL JUDGMENT AND
16 ) ORDER FOR PERMANENT
LIBERTY DIRECT, INC., ) INJUNCTION AGAINST DEFENDANTS
17 ) LIBERTY DIRECT, INC.,
) PAUL L. WIGGS, AND DAVID C.
18 PAUL L. WIGGS, individually ) FURNIA
and as an officer of Liberty )
19 Direct Inc., and )
)
20 DAVID C. FURNIA, individually )
and as an officer of Liberty )
21 Direct, Inc., )
)
22 Defendants. )
______________________________)
23
24 Plaintiff, the Federal Trade Commission ("Commission"), and
25 defendants Liberty Direct, Inc., Paul L. Wiggs, and David C.
26 Furnia hereby stipulate and agree to entry of a final judgment
27 and order for permanent injunction against the defendants under
28 the terms stated herein. This stipulation and the accompanying
D:\webstuff\2001\May 7\FINALlibSTIP.wpd 5/7/01 Page 1
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5
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STATEMENT OF COMMISSIONER THOMAS B LEARY
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EXTRACTED KEY WORDS
COMMISSIONER SWINDLE PROVISION CONSUMERS FACE-TO-FACE TRANSACTION DEFENDANTS CONSENT CREDIT DEBIT CHARGE DETER COMMISSIONER THOMAS CONCURRING DISSENTING LIBERTY DIRECT SPECIFIED DISCLOSURES WRITTEN CONSENT PRIOR BUYING DETER POTENTIAL EMPLOYERS HIRING OVER-THE-COUNTER SALES BUSINESS DEBIT CARD TRANSACTIONS COMPLAINT FULLY JUSTIFIES INJUNCTIVE RELIEF |
Statement of Commissioner Thomas B. Leary
Concurring in Part and Dissenting in Part
Liberty Direct, Inc., File Number X990096
I generally agree with the concerns about Part III.F of the Stipulated
Final Order that are detailed by Commissioner Swindle in his
statement. I am particularly concerned about the impact of this
provision on a face-to-face transaction because it would require the
defendants to present a form with specified disclosures to consumers
and to obtain written consent prior to any transaction that involves a
credit or debit charge. This provision is not necessary to ensure that
consumers have consented to a face-to-face transaction; it may, as
Commissioner Swindle points out, deter consumers from buying at all;
and it may also deter potential employers from hiring these
defendants, even as over-the-counter sales people, in any business
that involves potential credit or debit card transactions. The conduct
charged in the complaint fully justifies the injunctive relief
otherwise contained in the order, but this particular provision goes
too far.
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