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Federal Trade Commission v. In Deep Services

July 21, 2009

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
IN DEEP SERVICES, INC., DEFENDANTS.



STIPULATED PRELIMINARY INJUNCTION ORDER

On June 23, 2009, Plaintiff, the Federal Trade Commission ("FTC"), filed its Complaint for Injunction and Other Equitable Relief pursuant to Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. §§ 53(b) alleging that Defendants In Deep Services, Inc., Inc, Ryan Champion individually and as an officer of In Deep Services, Inc., and Joseph Fleming IV individually and as an officer of In Deep Services, Inc. violated Section 5(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45(a) and Section 907(a) of the Electronic Fund Transfer Act, 15 U.S.C. § 1693e(a).

Simultaneously with its Complaint, the FTC filed a noticed ex parte Application for a Temporary Restraining Order ("TRO") and supporting documents. The FTC provided adequate notice to Defendants of the FTC's Complaint, Application for a TRO, and supporting documents.

On June 23, 2009, the Court signed the TRO. The FTC served the signed TRO on Defendants' counsel and Defendants' counsel agreed to notify the Defendants of, and send to the Defendants, the signed TRO. Defendants received the signed TRO in the afternoon of June 23, 2009.

The FTC and Defendants have agreed to the following Stipulated Preliminary Injunction.

FINDINGS OF FACT

It appears to the satisfaction of the Court that:

1. Defendants In Deep Services, Inc., Ryan Champion, and Joseph Fleming were properly served with the Summons, Complaint, Temporary Restraining Order and all other papers filed in this case;

2. This Court has jurisdiction over the subject matter of this case, and there is good cause to believe it will have jurisdiction over all parties hereto and that venue in this district is proper;

3. Weighing the equities and considering Plaintiff's likelihood of ultimate success on the merits, a Preliminary Injunction Order with asset freeze and other equitable relief is in the public interest;

4. There is good cause to believe that Defendants IDS., also d/b/a Grants For You Now, Grant One Day, and Easy Grant Access, Ryan Champion, and Joseph C. Fleming IV, have engaged in and are likely to engage in acts and practices that violate Section 5(a) of the Federal Trade Commission Act, 15 U.S.C. § 45(a), and the Electronic Fund Transfer Act, 15 U.S.C. §§ 1693, et seq.; and

5. The Commission is an independent agency of the United States of America. No security is required of any agency of the United States for the issuance of a preliminary injunction order. Fed. R. Civ. P. 65(c).

ORDER

DEFINITIONS For the purpose of this Temporary Restraining Order ("Order"), the following definitions shall apply:

1. "Asset" means any legal or equitable interest in, right to, or claim to, any real and personal property, including, but not limited to, "goods," "instruments," "equipment," "fixtures," "general intangibles," "inventory," "checks," "notes" (as these terms are defined in the Uniform Commercial Code), and all chattel, leaseholds, contracts, mail or other deliveries, shares of stock, lists of consumer names, accounts, credits, premises, receivables, funds, reserve funds or other accounts held or controlled by credit card or payment processors or held at any bank on behalf of any credit card or payment processor that processed credit and debit card charges for Defendants, or reserve funds or other accounts at any merchant bank or acquiring bank, that are in any way associated with the processing of credit or debit cards or other payments on behalf of Defendants, and cash, wherever located.

2. "Assisting others" includes knowingly providing any of the following goods or services to another entity: (1) performing customer service functions, including, but not limited to, 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) performing promotional or marketing services of any kind; (5) hosting of websites; or (6) processing credit and debit card payments.

3. "Corporate Defendant" means In Deep Services, Inc., also d/b/a Grants For You Now, Grant One Day, and Easy Grant Access (hereinafter "IDS").

4. "Defendants" means IDS, Ryan Champion, and Joseph C. Fleming IV.

5. "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, but not limited to, 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.

6. "Individual Defendants" means Ryan Champion and Joseph C. Fleming IV.

7. "Plaintiff" or "Commission" or "FTC" means the Federal Trade Commission.

8. "Preauthorized Electronic Fund Transfer" means an electronic fund transfer authorized in advance to recur at substantially regular intervals. 15 U.S.C. § 1693(a)9.

I. PROHIBITED BUSINESS ACTIVITIES

IT IS THEREFORE ORDERED that, in connection with the advertising, marketing, promotion, offering for sale, or sale of government grant-related information services, programs or products, Defendants and their successors, assigns, officers, agents, servants, employees, and attorneys 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, affiliate or other device, are hereby preliminarily restrained and enjoined from:

A. Directly or indirectly misrepresenting, expressly or by implication, or from assisting others who are misrepresenting, any consumer's eligibility to receive, or the likelihood of receiving, a government grant;

B. Directly or indirectly misrepresenting, expressly or by implication, or from assisting others who are misrepresenting, any other fact material to a consumer's decision to purchase Defendants' grant-related information services, programs or products;

C. Making any representation concerning government grants without relying on a reasonable basis that substantiates the representation at the time the representation was made;

D. Failing to disclose, or to disclose in a clear and conspicuous manner likely to be seen and understood by a reasonable consumer, all applicable material terms regarding any grant-related services, programs, or products, including, but not limited to: (I) that consumers are signing up for a membership program with a trial period; (ii) the number of days of the trial period of the membership program; (iii) that Defendants will charge additional fees to consumers who fail to cancel the membership during the trial period; (iv) the manner and means a consumer can use to cancel the membership during the trial period; (v) the fees that Defendants impose on consumers who do not cancel within the trial period; (vi) that consumers may be charged by a third party for additional products and services; and (vii) the amount consumers may be charged by a third party for additional products and services;

E. Failing to disclose, or to disclose in a clear and conspicuous manner likely to be seen and understood by a reasonable consumer, all applicable material terms regarding any refund policy for Defendants' grant-related services, programs or products, including, but not limited to: (i) any non-refundable amounts; (ii) the time period from the date of their order before consumers can apply for a refund; (iii) the manner and means a consumer can use to apply for a refund; (iv) the content of the refund request; and (v) the consequences for contesting Defendants' charges or debits, including that consumers may be referred by Defendants to criminal authorities for theft of service;

F. Charging the credit or debit card, or debiting the bank account, of any consumer who has been enrolled in any of Defendants' grant-related membership programs;

G. 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;

H. 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. ยง 1693e(a) and Section 205.10(b) of Regulation E, as more fully set out in Section 205.10 ...


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