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Federal Trade Commission v. John Beck Amazing Profits

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


November 17, 2009

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
JOHN BECK AMAZING PROFITS, LLC, ET AL., DEFENDANTS.

The opinion of the court was delivered by: Honorable Florence-Marie Cooper United States District Court Judge

PRELIMINARY INJUNCTION

APPOINTMENT OF MONITOR AND OTHER EQUITABLE RELIEF

Plaintiff Federal Trade Commission ("FTC"or "Commission") filed a Complaint for Permanent Injunction and Other Equitable Relief and applied for a Preliminary Injunction against Defendants pursuant to Sections 13(b) and 19(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b(a), and the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. §§ 6101 et seq. In conjunction with the Order of this same date, granting in part Plaintiff's request for a Preliminary Injunction, Plaintiff's request is HEREBY GRANTED IN PART as follows.

FINDINGS OF FACT

The Court has considered the pleadings, declarations, exhibits, and memoranda filed in support of the Commission's motion and finds that:

1. This Court has jurisdiction of the subject matter of this case, there is good cause to believe it will have jurisdiction over all parties, pursuant to 15 U.S.C. §§ 45(a) and 53(b) and 28 U.S.C. §§1331, 1337(a) and 1345, and there is good reason to believe that venue is proper to all parties in the Central District of California. The Complaint states a claim upon which relief may be granted under Sections 5 and 13(b) of the FTC Act, 15 U.S.C. §§ 45 and 53(b).

2. There is good cause to believe that Defendants have engaged in and are likely to engage in acts and practices that violate Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the Telemarketing Sales Rule ("TSR"), 16 C.F.R. Part 310, and that the Commission is likely to prevail on the merits of this action.

3. There is good cause to believe that immediate and irreparable harm to consumers will result from Defendants' ongoing violations of the FTC Act and Telemarketing Sales Rule unless Defendants are immediately restrained and enjoined by Order of this Court.

4. Weighing the equities and considering the Commission's likelihood of ultimate success, this Preliminary Injunction with equitable relief is in the public interest.

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

DEFINITIONS

For purposes of this Order, the following definitions shall apply:

1. "Billing information" means any data, including but not limited to, name, address, telephone number, email address, account number, routing number, date of birth, or social security number, that enables any person to access a consumer's or donor's account, including but not limited to credit card, debit card, prepaid card, checking, savings, mortgage loan, share draft, or similar accounts.

2. "Coaching Services" shall mean coaching services, mentoring services, instructional services, teaching services, consulting services, or any other services or products marketed or sold by Defendants (as hereinafter defined), which relate in any way to the John Beck or Jeff Paul systems that Defendants sell in the Beck Infomercials (as hereinafter defined) or in the Paul Infomercials (as hereinafter defined), whether these services or products consist in whole or in part of additional written and/or electronic materials, or of one-on-one telephonic sessions, or of other types of telephonic sessions, or of a seminar or seminars.

3. "Clearly and conspicuously," or "clear and conspicuous," means:

a. In textual communications (e.g., printed publications or words displayed on the screen of an electronic device), the required disclosures are of a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend them, in print that contrasts with the background against which they appear;

b. In communications disseminated orally or through audible means (e.g., radio or streaming audio), the required disclosures are delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend them;

c. In communications disseminated through an electronic medium (such as television, video, and interactive media such as the Internet, online services and software), the required disclosures shall be presented simultaneously in both the audio and the visual portions of the communication. In any communication presented solely through visual or audio means, the required disclosures may be made through the same means in which the communication is presented. Any audio disclosures shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend them. Any visual disclosures shall be of a size and shade, with a degree of contrast to the background against which they appear and shall appear on the screen for a duration and in a location sufficiently noticeable for an ordinary consumer to read and comprehend them;

d. In all instances, the required disclosures shall be presented prior to the consumer incurring any financial obligation, in an understandable language and syntax, and with nothing contrary to, inconsistent with, or in mitigation of the disclosures used in any communication with them.

4. "Commerce" means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation, as defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

5. "Corporate Defendants" means John Beck Amazing Profits, LLC; Jeff Paul, LLC d/b/a Shortcuts to Millions, LLC; Mentoring of America, LLC; and Family Products, LLC, as well as their affiliates, subsidiaries, successors and assigns, and any other corporations or businesses under the control of any of them.

6. "Defendants" means the Individual Defendants and the Corporate Defendants, individually, collectively, or in any combination.

7. "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, photographs, audio and video recordings, computer records, and any other data compilations from which information can be obtained and translated, if necessary, through detection devices into reasonably usable form. A draft or non-identical copy is a separate document within the meaning of the term.

8. "Endorsement" is synonymous in meaning and equal in scope to the usage of the term in the FTC's "Guides Concerning Use of Endorsements and Testimonials in Advertising," 16 C.F.R. § 255.0(b), and includes 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. The party whose opinions, beliefs, findings, or experience the message appears to reflect will be called the endorser and may be an individual, group or institution.

9. "FTC" or "Commission" means the Federal Trade Commission.

10. "Individual Defendants" means John Beck, Douglas Gravink, Gary Hewitt, and Jeff Paul, and each of them, by whatever names they may be known.

11. "Infomercial" means any written or verbal statement, illustration, or depiction that is 120 seconds or longer in duration that is designed to effect a sale or create interest in the purchasing of any product or service, which appears in any media, including but not limited to radio, television, and the Internet.

12. "Material" means likely to affect a person's choice of, or conduct regarding, products or services or a charitable contribution.

13. "Monitored Defendants" means all Defendants over which a Monitor has been appointed pursuant to this Order. as well as their affiliates, subsidiaries, successors and assigns, and any other corporations or businesses under the control of any of them.

14. "Negative option feature" means, in an offer or agreement to sell or provide any product or service, a provision under which the consumer's silence or failure to take an affirmative action to reject products or services or to cancel the agreement is interpreted by the seller or provider as acceptance or continuing acceptance of the offer. Offers or agreements with negative option features include, but are not limited to:

a. Free or introductory price trial offers in which the consumer receives a product or service for free or at a nominal or introductory price for an initial period and will incur an obligation to pay or pay a greater amount for the product or service if he or she does not take affirmative action to cancel, reject, or return the product or service before the end of that period;

b. Continuity plans in which, subsequent to the consumer's agreement to the plan, the seller or provider automatically ships products or provides services to a consumer unless the consumer contacts the seller or provider within a certain time and requests that the seller or provider not to ship the products or provide the services; and

c. Automatic renewal plans in which the seller or provider automatically renews the agreement and charges the consumer unless the consumer cancels before renewal.

15. "Person" means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity.

16. "Plaintiff" means the Federal Trade Commission.

17. "Seller" means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide, products or services to a consumer in exchange for consideration.

18. "Telemarketer" means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a consumer or donor.

19. "Telemarketing" means a plan, program, or campaign which is conducted to induce the purchase of products or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call.

Order

I. Conduct Prohibitions (John Beck Infomercials)

IT IS HEREBY ORDERED that Defendants, as well as their officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with any of them who receive actual notice of this Order, whether acting directly or through any corporation or other entity, subsidiary, division, or other device, including but not limited to, fictitious business names, and each such person:

A. Are hereby restrained and enjoined, following the expiration of fifteen (15) business days after the date of this Order, from airing the "earlier"John Beck infomercial, which for the purposes of this Order is the version of the John Beck infomercial referenced in this litigation by the First Declaration of FTC Investigator Ann Stahl" ("First Stahl Decl."), ¶ 5 (hereinafter the "Earlier Beck Infomercial"), or the "later" John Beck infomercial, which for the purposes of this Order is the version of the John Beck infomercial referenced in this litigation by the First Stahl Decl., ¶ 6 (hereinafter, the "Later Beck Infomercial") (collectively, the "Beck Infomercials"), on television or on any other medium, without first adding the following disclaimers to these infomercials. These following disclaimers, which must be added to either or both of the Beck Infomercials that air, may not be modified by Defendants, and the disclaimers are listed immediately below, as items (1) through (11). These disclaimers, with the exception of (11), must be added in a font size identical to, or greater in size than, the font size of the scrolling text that appears at the bottom of the Later Beck Infomercial at approximately minute 6:20 -- 6:35 of the Later Beck Infomercial, which states, "Stay tuned to Receive FREE Lists of All the Tax Foreclosure Properties Available in Your Area!" Subject to any agreement Defendants may already have made or subsequently enter into not to air either of the Beck Infomercials, so long as the revised Beck Infomercials contain all of the following disclaimers, the Beck Infomercials may air for a period of up to 150 days from the date either one first airs in this revised form:

(1) Whenever there is an image or video featured of a house that was renovated more than a nominal amount after the purchase of the relevant tax lien or tax deed or other instrument, but before the photograph or video image was taken (or if Defendants have any doubt about whether any house shown has been thus renovated), the disclaimer, appearing during the entire time the image or video is shown: "This house is pictured as it appears after being renovated.";

(2) Whenever there is a group of images showing houses, some of which have been, or may have been, renovated more than a nominal amount after the purchase of the relevant tax liens or tax deeds or other instruments, but before the photographs were taken (or if Defendants have any doubt about whether any house in the group shown has been thus renovated), the disclaimer, shown for at least three seconds: "Some houses pictured after being renovated.";

(3) Whenever John Beck's "Property Vault," or "Free 30 Day Membership!" or "FREE 30 Day Membership" or "John Beck's amazing property vault" or "FREE Advisory Service!" or "FREE Property Vault Membership!" or any equivalent or similar phrase, is mentioned or referenced, the disclaimer, appearing for at least three seconds: "After the initial 30-days of free membership, or until you cancel, a monthly fee of $39.95 will automatically be charged.";

(4) Appearing approximately every five-to-seven minutes throughout the Beck Infomercials, and showing on screen for at least fifteen seconds at a time, and appearing at least five distinct times, the disclaimer: "Tax sale, foreclosure and lien programs vary widely from state-to-state. Significant restrictions and legal obstacles OFTEN EXIST. Other secured parties likely have a strong interest in protecting their legal interests. Vacant land is often easier to obtain than homes.";

(5) Appearing approximately every five-to-seven minutes throughout the Beck Infomercials, and showing on screen for at least fifteen seconds at a time, and appearing at least five distinct times: "It is the very exceptional situation when a valuable property is obtained, since owners do not normally give away their property for just back taxes.";

(6) Whenever there is an Endorsement and/or a testimonial, or a reference to an Endorsement and/or a testimonial, the disclaimer, appearing during the entire time any such endorser is speaking: "Endorser's results unique. Results not typical. Actual results vary widely.";

(7) Whenever there is an explicit or implicit reference to a "guarantee", or equivalent word or phrase, the disclaimer, which must also be complied with by Defendants: "Return your package within 30 days of receipt for a full refund, excluding shipping and handling costs.";

(8) Every time the phrase "pennies on the dollar" or "Pennies on the Dollar!" or any similar or equivalent catchphrase is used in the infomercial, the disclaimer, appearing for at least five seconds: "While property can theoretically be purchased for pennies on the dollar, it will likely take significant effort to find any such homes or land.";

(9) Every time the phrase "free and clear" or "Free & Clear" or any similar or equivalent catchphrase is used, the disclaimer, appearing for at least five seconds: "Purchase prices do not include closing and other costs, which vary by state. In many states legal title to property cannot be acquired immediately.";

(10) Whenever there is an Endorsement and/or a testimonial, or a reference to an Endorsement and/or a testimonial, then if Defendants do not possess concrete financial substantiation beyond an affidavit or other instrument signed by the endorser, the disclaimer, appearing during the totality of the endorsement: "Endorser's results self-reported, not independently verified.";

(11) One time at the beginning, once at or near the middle (if technologically feasible), and one time at the end of the Beck Infomercials, Defendants shall add a spoken audio disclaimer, which shall be spoken no faster than average speaking speed, and which will state all of the text of the above disclaimers listed in this section in items (2) through (10), except that as to item (10) the disclaimer therein need not be spoken if item (10) does not otherwise require it to appear elsewhere in the Beck Infomercials; if item (10) does require the disclaimer to appear elsewhere, then it shall be modified herein to state "Certain endorsers' results self-reported, not independently verified.";

B. Are hereby restrained and enjoined from airing any version of the Beck Infomercials on television or on any other medium, even as modified by the immediately preceding paragraph, unless the testimonials and/or Endorsements of Jimmie Chiappelli and Andrew Gold can be, and are first, edited out entirely;

C. Are hereby restrained and enjoined from airing any other John Beck Infomercials, other than the Beck Infomercials as revised by this Order, except as specified in the immediately subsequent paragraph below;

D. Are hereby restrained and enjoined from producing or causing to be produced any new John Beck Infomercial for airing (prior to the final resolution of this lawsuit as it pertains to the John Beck Infomercials), unless and until Defendants provide to the FTC, no later than fifteen (15) business days prior to filming, the script, excluding testimonials, for the proposed infomercial. At that point the FTC shall have ten (10) business days from receipt of the new infomercial script to review it and advise Defendants regarding the revised infomercial script. If the FTC and Defendants cannot agree on the content of the new Infomercial script, no filming of the new Infomercial shall take place until further order of this Court, and the proposed Infomercial script shall be presented to the Court, along with the parties' briefs on the issues, for consideration. After any such Infomercial has been completed but before it is aired on television or on any other medium, Defendants shall provide a copy of it to the FTC. The FTC shall have ten (10) business days to review the testimonials/Endorsements portion of the Infomercial and advise Defendants of any problems with the testimonials/Endorsements. If the parties cannot agree on the content of the testimonials/Endorsements in the Infomercial, the Infomercial will not be aired (prior to the final resolution of this lawsuit as it pertains to the John Beck Infomercials) until further order of this Court, and the testimonials/Endorsements shall be presented to the Court, along with the parties' briefs on the issues, for consideration. Alternatively, if Defendants have already begun the filming or have finished the filming of a new version of the John Beck Infomercial, Defendants shall not air the new infomercial (prior to the final resolution of this lawsuit as it pertains to the John Beck Infomercial) before Defendants provide a copy of it to the FTC. The FTC shall have fifteen (15) business days from receipt of the new Infomercial to review it and advise Defendants of any problems with the script and/or the testimonials/Endorsements. If the parties cannot agree on the content of the script and testimonials/Endorsements in such an infomercial, the Infomercial will not be aired (prior to the final resolution of this lawsuit as it pertains to the John Beck Infomercials) until further order of this Court, and the script and testimonials/Endorsements shall be presented to the Court, along with the parties' briefs on the issues, for consideration.

II. Conduct Prohibitions (Jeff Paul Infomercials)

IT IS HEREBY ORDERED that Defendants, as well as their officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with any of them who receive actual notice of this Order, whether acting directly or through any corporation or other entity, subsidiary, division, or other device, including but not limited to, fictitious business names, and each such person:

A. Are hereby restrained and enjoined, following the expiration of fifteen (15) business days after the date of this Order, from airing the "earlier" Jeff Paul Infomercial, which for the purposes of this Order is the version of the Jeff Paul Infomercial referenced in this litigation in the "Second Declaration of FTC Investigator Ann Stahl" ("Second Stahl Decl."), ¶ 17, att. 7.) (hereinafter, the "Earlier Paul Infomercial"), or the "later" Jeff Paul Infomercial, which for the purposes of this Order is the version of the Jeff Paul Infomercial referenced in this litigation by the Second Stahl Decl., ¶ 17, att. 8 (hereinafter, the "Later Paul Infomercial") (collectively, the "Paul Infomercials"), on television or on any other medium, without adding the following disclaimers to them. These following disclaimers, which must be added to either or both of the Paul Infomercials that air, may not be modified by Defendants, and the disclaimers are listed immediately below, as items (1) through (9). These disclaimers, with the exception of (9), must be added in a font size identical to, or greater in size than, the font size of the scrolling text that appears at the bottom of the Later Beck Infomercial at approximately minute 6:20 -- 6:35 of the Later Beck Infomercial, which states "Stay tuned to Receive FREE Lists of All the Tax Foreclosure Properties Available in Your Area!" Subject to any agreement Defendants may already have made or subsequently enter into not to air either of the Paul Infomercials, so long as the revised Paul Infomercials contain all of the following disclaimers, the Paul Infomercials may air for a period of up to 150 days from the date either one first airs in revised form:

(1) Whenever there is an Endorsement and/or a testimonial, or a reference to an Endorsement and/or a testimonial, then in addition to or in place of any present disclaimer, the disclaimer, appearing during the totality of the endorsement: "Endorser's results unique. Results not typical. Actual results vary widely.";

(2) Whenever there is an Endorsement and/or a testimonial, or a reference to an Endorsement and/or a testimonial, if Defendants do not possess concrete financial substantiation beyond an affidavit or other instrument signed by the endorser, the disclaimer, appearing during the totality of the endorsement: "Endorser's results self-reported, not independently verified.";

(3) Whenever Jeff Paul's "Big League," or "Internet Millionaires Club" or a "free 30-day membership" to the "Internet Millionaires Club," or "FREE 30 Day trial!" with reference to Big League (or any equivalent statement or representation) is mentioned or referenced, the disclaimer, appearing for at least three seconds: "After the initial free 30-day membership, or until you cancel, a monthly fee of $39.95 will automatically be charged.";

(4) Whenever there is a reference to "NO EXPERIENCE NEEDED!", or to not needing to know anything about computers or the Internet to make money, or "No computer skills needed!" or any similar or equivalent statement, the disclaimer, appearing for at least five seconds at a time: "The ability and willingness to learn and apply a significant amount of new information about the use of the internet, some technical, is likely required to achieve measurable success."

(5) Whenever there is a reference to the Jeff Paul system being "easy," or any similar or equivalent statement, the disclaimer, and showing on screen for at least five seconds at a time: "Extraordinary results achieved are not typical, and individual results will vary, in part, based on the amount of time and effort you use to develop and/or market products that you choose."

(6) Appearing approximately every five-to-seven minutes throughout the Paul Infomercials, and showing on screen for at least fifteen seconds at a time, and appearing at least five distinct times: "'Shortcuts to millions' or "shortcuts to internet millions" are catchphrases. They do not necessarily mean consumers of this system typically earn significant amounts of money.";

(7) Appearing approximately every five-to-seven minutes throughout the Paul Infomercials, and showing on screen for at least fifteen seconds at a time, and appearing at least five distinct times: "NOTE: Any free websites or website businesses provided to you will only earn money to the extent you can successfully market them.";

(8) Appearing approximately every five-to-seven minutes throughout the Paul Infomercials, and showing on screen for at least fifteen seconds at a time, and appearing at least five distinct times: "The Jeff Paul system provides basic websites that may potentially earn money by linking to other websites where products are sold. The system also provides marketing tips, and tips for finding your own products to market.";

(9) One time at the beginning, once at or near the middle (if technologically feasible), and one time at the end of the Paul Infomercials, Defendants shall add a spoken audio disclaimer, which shall be spoken no faster than average speaking speed, and which will state all of the text of the above disclaimers listed in this section in items (1) through (8), except that as to item (2) the disclaimer therein need not be spoken if item (2) does not otherwise require it to appear elsewhere in the Paul Infomercials; if item () does require the disclaimer to appear elsewhere, then it shall be modified herein to state "Certain endorsers' results self-reported, not independently verified.";

B. Are hereby restrained and enjoined from airing any other Jeff Paul Infomercials, other than the Paul Infomercials as revised by this Order, except as specified in the immediately subsequent paragraph below;

C. Are hereby restrained and enjoined from producing or causing to be produced any new Jeff Paul Infomercial for airing (prior to the final resolution of this lawsuit as it pertains to the Jeff Paul Infomercials), unless and until Defendants provide to the FTC, no later than fifteen (15) business days prior to filming, the script, excluding testimonials, for the proposed Infomercial. At that point the FTC shall have ten (10) business days from receipt of the new Infomercial script to review it and advise Defendants regarding the revised Infomercial script. If the FTC and Defendants cannot agree on the content of the new Infomercial script, no filming of the new Infomercial shall take place until further order of this Court, and the proposed Infomercial script shall be presented to the Court, along with the parties' briefs on the issues, for consideration. After any such Infomercial has been completed but before it is aired on television or on any other medium, Defendants shall provide a copy of it to the FTC. The FTC shall have ten (10) business days to review the testimonials/Endorsements portion of the Infomercial and advise Defendants of any problems with the testimonials/Endorsements. If the parties cannot agree on the content of the testimonials/Endorsements in the Infomercial, the Infomercial will not be aired (prior to the final resolution of this lawsuit as it pertains to the Jeff Paul Infomercials) until further order of this Court, and the testimonials/Endorsements shall be presented to the Court, along with the parties' briefs on the issues, for consideration. Alternatively, if Defendants have already begun the filming or have finished the filming of a new version of the Jeff Paul Infomercial, Defendants shall not air the new infomercial (prior to the final resolution of this lawsuit as it pertains to the Jeff Paul Infomercials) before Defendants provide a copy of it to the FTC. The FTC shall have fifteen (15) business days from receipt of the new infomercial to review it and advise Defendants of any problems with the script and/or the testimonials/Endorsements. If the parties cannot agree on the content of the script and testimonials/Endorsements in such an Infomercial, the Infomercial will not be aired (prior to the final resolution of this lawsuit as it pertains to the Jeff Paul Infomercials) until further order of this Court, and the script and testimonials/Endorsements shall be presented to the Court, along with the parties' briefs on the issues, for consideration.

III. Conduct Prohibitions (Telemarketing of Coaching Services)

IT IS HEREBY ORDERED that Defendants, as well as their officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with any of them who receive actual notice of this Order, whether acting directly or through any corporation or other entity, subsidiary, division, or other device, including but not limited to, fictitious business names, and each such person: in connection with the telemarketing of any coaching services by telephone, or by any other medium, in commerce, are hereby restrained and enjoined from:

A. Telemarketing coaching services to prior or future purchasers or consumers of the John Beck or Jeff Paul systems, following the expiration of five (5) business days after the date of this Order, unless Defendants:

1) Initially obtain each person's or consumer's or purchaser's permission (or otherwise comply with all applicable law in connection with the recording of any such calls) to record any such sales or telemarketing phone call, whether incoming or outgoing;

2) In fact record all such sales or telemarketing phone calls; and

3) Retain and maintain the recording of any sales or telemarketing phone calls, pertaining to a given person, before which, during which, or after which that person agrees to and does purchase any degree or form of coaching services from Defendants (or from any or all other persons or entities in active concert or participation with any of Defendants); and

4) Retain and maintain a recording of any compliance-related phone calls to or from, or phone session with, any person who purchases or consumes, or who has purchased or consumed, any degree or form of coaching services from Defendants (or from any or all other persons or entities in active concert or participation with any of Defendants);

B. Misrepresenting, expressly or by implication, that coaching services are "risk free" or that Defendants' tuition refund program removes the risk from paying for the coaching services;

C. Misrepresenting, expressly or by implication, that money charged to a credit card is "other people's money" (or any equivalent to that phrase), or misrepresenting, expressly or by implication, that money charged to a credit card does not ordinarily have to be paid off in its entirety by the user of that credit card;

D. Misrepresenting, expressly or by implication, any specific earnings claims, with regard to what consumers or purchasers of coaching services are likely to earn;

E. Representing, expressly or by implication, that persons who purchase or consume any form or degree of coaching services will quickly and/or easily earn substantial amounts of money, unless Defendants possess and rely upon a reasonable basis to substantiate any such representation at the time the representation is made;

F. Representing, expressly or by implication, that persons who purchase or consume any degree or form of coaching services will quickly and/or easily earn back a significant portion of the cost, or the cost, or substantially more than the cost of any degree or form of such coaching services, unless Defendants possess and rely upon a reasonable basis to substantiate any such representation at the time the representation is made;

G. Representing, expressly or by implication, the income, profit, or earnings typically achieved by persons who have purchased or consumed any degree or form of coaching services, unless Defendants possess and rely upon a reasonable basis to substantiate any such representation at the time the representation is made;

H. Representing, expressly or by implication, that purchasing or consuming any degree or form of coaching services will cause the person to experience greater, increased, or more substantial success, or earn more money, than the typical purchaser or consumer could or would experience or earn as a result of purchasing or consuming the basic John Beck or Jeff Paul systems (i.e., absent any coaching services), unless Defendants possess and rely upon a reasonable basis to substantiate any such representation at the time the representation is made.

IV. Required Disclosures

IT IS FURTHER ORDERED that in connection with the advertising, telemarketing, promotion, offering for sale or sale of any product or service, by telephone or otherwise in commerce, Defendants, as well as their officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with any of them who receive actual notice of this Order, whether acting directly or through any corporation or other entity, subsidiary, division, or other device, including but not limited to, fictitious business names, and each such person, shall disclose, clearly and conspicuously, before consumers are asked to pay money, reveal billing information, or submit consideration, or before any charge is incurred:

A. All fees and costs;

B. All material restrictions, limitations, or conditions applicable to the purchase, receipt, or use of the product or service that is the subject of the offer (including but not limited to any promotion associated with free products or services, or products or services available on a trial basis);

C. All material terms and conditions of any cancellation or refund policy, including but not limited to informing consumers if no cancellations or refunds are permitted; and

D. All material terms and conditions of any offer with a negative option feature, including but not limited to:

1. The dollar amount of the first payment and when it will be charged, withdrawn, or become due; the dates or frequency (e.g., monthly, quarterly) of all subsequent charges or payment(s); and the dollar amount or range of costs of all subsequent charges or payment(s);

2. If a withdrawal will be made or a charge assessed at the end of a trial period unless the consumer cancels: this fact; when the trial period begins; the length of the trial period; the specific steps and means by which a cancellation request must be submitted; and the date by or time period within which a cancellation request must be received to avoid a charge;

3. If products are automatically shipped to a consumer, or a membership, subscription, or agreement for products or services that are offered on a periodic basis is automatically renewed unless the consumer provides notification within a certain time not to ship or renew: this fact; the length of the subsequent renewal period; the manner in which a notice not to ship or renew must be submitted; the date by or time period within which a notice not to ship or renew must be received to avoid shipment or renewal (e.g., two weeks after the consumer is advised of an upcoming shipment); and the telephone number, email address, or street address to which such notice must be directed;

4. All material conditions, limitations and restrictions on the ability of the consumer to use any product or service that is offered as "free," "risk-free," "without obligation," or using words of similar import denoting or implying the absence of any obligation; and

5. The minimum number of purchases or minimum service period required by Defendants, if any.

V. Express Informed Consent

IT IS FURTHER ORDERED that in connection with the advertising, telemarketing, promotion, offering for sale or sale of any product or service, by telephone or otherwise in commerce, Defendants, as well as their officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with any of them who receive actual notice of this Order, whether acting directly or through any corporation or other entity, subsidiary, division, or other device, including but not limited to, fictitious business names, and each such person, are hereby restrained and enjoined from directly or indirectly using a consumer's billing information to obtain payment without first obtaining the consumer's express informed consent, which shall include express informed consent to be charged for the product or service using a specified billing account, and the clear and conspicuous disclosure of the information identified in Section IV of this Preliminary Injunction ("Required Disclosures"), in close proximity to the consumer's express consent to purchase such products or services.

A. In connection with the marketing of any product or service pursuant to an offer or agreement with a negative option feature, the following requirements must be met to ensure express informed consent:

1. The consumer's consent to be charged for the product or service using a specified billing account must be either in writing or audio-recorded, and must meet the following requirements:

a. If the consumer's consent is provided in written format, such consent must include the clear and conspicuous disclosure of each item of information set forth in Section IV ("Required Disclosures") of this Preliminary Injunction, as well as the consumer's signature (the term "signature" includes a verifiable electronic or digital form of signature, to the extent such form of signature is recognized as a valid signature under applicable federal law or state contract law);

b. If the consumer's consent is provided orally, such consent shall be audio-recorded, as follows:

i. The recording must evidence that the consumer, during that transaction, has provided at least the last four (4) digits of the account number to be charged;

ii. The recording must evidence that the disclosure requirements of Section IV ("Required Disclosures") have been complied with;

iii. The recording must include the entirety of the sales call (and not merely the portion of the call after the consumer has indicated that he or she desires to make a purchase) (Completion of installation of recording equipment for this purpose may take up to fifteen (15) business days from the entry of this order);

iv. The recording can be identified and located by either the consumer's name or telephone number; and

v. A copy of the recording must be provided upon request to the consumer, the consumer's bank, credit or debit card company or other billing entity, state attorney general or consumer protection agency, or the Commission.

2. For any transaction involving a service, within the lesser of ten (10) days after the date of the transaction or half the time of any trial period, the consumer must be sent written confirmation of the transaction that includes all of the information required by Subsection IV and a clear and conspicuous statement of the procedures by which the consumer can cancel or obtain a refund. The written confirmation shall be sent via first class mail in an envelope (and also in an email whenever a consumer has disclosed an email address), that clearly and conspicuously identifies the sender of the confirmation and the service the consumer ordered;

3. For any transaction involving a product, the first product shipment must contain written confirmation of the transaction that includes all of the information that is required to be disclosed pursuant to Section IV of this Preliminary Injunction, and a clear and conspicuous statement of the procedures by which the consumer can cancel or obtain a refund;

4. In the case of a membership, subscription, or agreement whose term is less than sixty (60) days, at least fifteen (15) days prior to renewing a consumer's membership, subscription, or agreement to purchase for any service and prior to the submission for payment of a consumer's billing information for such services, the consumer must be sent written confirmation of such renewal. The written confirmation shall include all of the information required by Subsection IV and a clear and conspicuous statement of the procedures by which the consumer can cancel such renewal, and shall be sent via first class mail in an envelope that clearly and conspicuously identifies the sender of the confirmation and the service the consumer ordered; and

5. In the case of a membership, subscription, or agreement whose term is more than sixty (60) days, at least thirty (30) days prior to renewing a consumer's membership, subscription, or agreement to purchase for any service and prior to the submission for payment of a consumer's billing information for such services, the consumer must be sent written confirmation of such renewal. The written confirmation shall include all of the information required by Subsection IV of this Preliminary Injunction and a clear and conspicuous statement of the procedures by which the consumer can cancel such renewal, and shall be sent via first class mail in an envelope that clearly and conspicuously identifies the sender of the confirmation and the service the consumer ordered.

B. With respect to previous customers, following the expiration of thirty (30) calendar days after this Order, Defendants shall not bill any consumer or accept payment from any consumer who, as of the date of this Order, has already been enrolled as a trial or paying customer of John Beck's "Property Vault" or Jeff Paul's "Big League" or "Internet Millionaires Club," unless and until Defendants obtain, after entry of this Order, the consumer's express informed consent, as described in this Section.

VI. Prohibition Against Violating Telemarketing Sales Rule

IT IS FURTHER ORDERED that in connection with the advertising, telemarketing, promotion, offering, or sale of any product or service, Defendants, as well as their officers, agents, servants, employees, and attorneys, and all other persons or entities in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, whether acting directly or through any corporation or other entity, subsidiary, division, or other device, including but not limited to fictitious business names, and each such person, are hereby restrained and enjoined from violating any provision of the Telemarketing Sales Rule, 16 C.F.R. Part 310, as currently promulgated or as hereinafter may be amended, including but not limited to:

A. violating Section 310.3(a)(1)(vii), of the TSR, 16 C.F.R. § 310.3(a)(1)(vii), by failing to disclose, or to disclose clearly and conspicuously, before a consumer pays for goods or services offered, all material terms and conditions of any negative option feature included in the offer, including, but not limited to, the fact that the customer's account will be charged unless the customer takes an affirmative action to avoid the charge(s), the date(s) the charge(s) will be submitted for payment, and the specific steps the customer must take to avoid the charge(s);

B. violating Section 310.4(a)(6) of the Telemarketing Sales Rule, 16 C.F.R. § 310.4(a)(6), by causing billing information to be submitted for payment, directly or indirectly, without the express informed consent of the customer or donor. In any telemarketing transaction, Defendants shall obtain the customer's or donor's express informed consent to be charged for the goods or services or charitable contribution, and consent to be charged using the identified account;

C. violating Section 310.4(b)(1)(iii)(A) of the Telemarketing Sales Rule, 16 C.F.R. § 310.4(b)(1)(iii)(A), by initiating or causing a telemarketer to initiate an outbound telephone call to any consumer who has previously stated that he or she does not wish to receive outbound telephone calls made by or on behalf of Defendants; and

D. violating Section 310.8 of the Telemarketing Sales Rule, 16 C.F.R. § 310.8, by failing to make and keep records required by that Section.

VII. Appointment of Monitor over Corporate Defendants

IT IS FURTHER ORDERED that _Rob Evans & Associates, LLC_is hereby appointed as Monitor for the purpose of monitoring the activities of, and compliance with this Order by, Corporate Defendants Family Products, LLC; Mentoring of America, LLC; John Beck Amazing Profits, LLC; Jeff Paul, LLC d/b/a Shortcuts to Millions, LLC, and their affiliates, subsidiaries, successors and assigns, and any other corporations or businesses under the control of any of them ("Monitored Defendants"). The Monitor shall be the agent of this Court, and solely the agent of this Court, in acting under this Order. The Monitor shall be accountable directly to this Court.

VIII. Monitor's Duties and Authority

IT IS FURTHER ORDERED that the Monitor shall have the following duties and authority:

A. The Monitor is directed to monitor the Monitored Defendants' business operations and compliance with this Order and is authorized to do so using whatever means the Monitor finds necessary and appropriate. Means that the Monitor is authorized to employ include, but are not limited to, the following:

1. Identifying and reviewing any and all of the Monitored Defendants' infomercials or revised infomercials that are airing or will air during the pendency of this Order;

2. Reviewing a reasonable number of recordings of telephone calls or portions of telephone calls with customers and prospective customers;

3. Listening to one or both sides of a reasonable number of telephone conversations between customers or prospective customers of any of the Monitored Defendants and any telemarketers, coachers, customer service representatives, or other personnel of any of the Monitored Defendants (provided that, to the extent that Monitor personnel listen to the customer's side of any conversation, notice is first provided to the customer);

4. Reviewing and copying recorded information that is played for customers and prospective customers who place telephone calls to any of the Monitored Defendants;

5. Reviewing and copying all scripts provided to or used by any personnel of the Monitored Defendants, including scripts used by telemarketers;

6. Interviewing personnel who work for any of the Monitored Defendants, including but not limited to telemarketers, coaches, and customer service representatives;

7. Reviewing and copying records pertaining to requests by consumers that they not receive telephone calls from any of the Monitored Defendants, as well as policies, procedures and practices of the Monitored Defendants for handling such requests;

8. Placing and recording a reasonable number of undercover calls to any of the Monitored Defendants in which Monitor personnel pose as a customer or prospective customer;

9. Monitoring and observing any officer, employee, independent contractor, subcontractor, representative, or other agent or entity involved in the provision of any service or product for, on behalf of, or to any of the Monitored Defendants;

10. Reviewing and copying financial records of any of the Monitored Defendants, and evaluating the liquidity and solvency of the Monitored Defendants;

11. Reviewing and copying other business records of any of the Monitored Defendants;

12. Appearing at the premises of any of the Monitored Defendants without prior notification; and

13. Identifying and reviewing Monitored Defendants' efforts to preserve all documents and recordings.

B. Nothing in this Order shall be construed as authorizing or directing the Monitor to go beyond monitoring Defendants' business operations and compliance with this Order. The Monitor shall not intervene in the administrative management of the Monitored Defendants and shall not direct the Monitored Defendants or any of their subordinates to take or to refrain from taking any specific action to achieve compliance.

IX. Cooperation with the Monitor

IT IS FURTHER ORDERED that Monitored Defendants and their officers, agents, servants, employees, attorneys, and all persons or entities directly or indirectly under their control or under common control with them, and all other persons or entities in active concert or participation with them, who receive actual notice of this Order by personal service or otherwise, shall fully cooperate with and assist the Monitor in the exercise of the Monitor's duties.

In the event that any of the Monitored Defendants or other persons or entities subject to this Section fails to cooperate with the Monitor as herein directed, or in any way interferes with the Monitor's ability or efforts to exercise his/her/its duties in a timely manner, the Monitor is authorized and directed to immediately notify the Court; and, if necessary, the Plaintiff may apply on an ex parte basis for an order to show cause why contempt sanctions should not be issued, or may otherwise may seek an appropriate remedy from the Court.

X. Reporting By Monitor

IT IS FURTHER ORDERED that the Monitor shall:

A. Prepare and submit periodic reports, observations, and recommendations to the Court, upon reasonable notice to the parties, and seek guidance and instructions from this Court as necessary. The first report shall be filed, with no further notice required, by no later than forty-five (45) days after the date of entry of this Order. The first report shall describe the efforts and activities that the Monitor has undertaken pursuant to this Order, and any other information that the Monitor believes is relevant to the Court. If the Monitor has any reason to believe that the report would reveal any trade secrets or similarly sensitive business information, the Monitor shall file his/her/its report under seal, or, alternatively, redact the report and file a key to the sensitive information under seal; and

B. Prepare and submit additional reports every sixty (60) calendar days thereafter.

XI. Compensation of the Monitor

IT IS FURTHER ORDERED that the Monitor and all personnel hired by the Monitor as herein authorized, including counsel to the Monitor and accountants, are entitled to reasonable compensation for the performance of duties pursuant to this Order and for the cost of actual out-of pocket expenses incurred by them, from the assets now held by or in the possession or control of, or which may be received by, the Monitored Defendants. To obtain payment, the Monitor shall file with the Court and serve a request for payment that details the fees and costs incurred. To the extent possible, the Monitor shall make a recommendation as to what percentage of the requested payment should be borne by each of the Monitored Defendants.

XII. Compliance Monitoring by Plaintiff

IT IS FURTHER ORDERED that the Commission is authorized to use all lawful means to monitor Defendants' compliance with this Order, including but not limited to:

A. obtaining discovery from any person relating to the issue of any Defendant's compliance with this Order; and

B. posing as consumers to Defendants, their employees, or any other entity managed or controlled in whole or in part by any Defendant, without the necessity of identification or prior notice.

XIII. Distribution of Order by Defendants

IT IS FURTHER ORDERED that Defendants shall deliver copies of the Order, and provide proof of delivery, as directed below:

A. Corporate Defendants: Each Corporate Defendant must deliver a copy of this Order to (1) all of its principals, officers, directors, and managers; and (2) all of its employees, agents, representatives (including but not limited to telemarketers and telemarketing call centers) who engage in conduct related to the subject matter of the Order. For current personnel, delivery shall be within five (5) days of entry of this Order. For new personnel, delivery shall occur prior to them assuming their responsibilities.

B. Individual Defendant as Control Person: For any business that an Individual Defendant controls, directly or indirectly, or in which such Defendant individually or jointly with any other Defendant has a majority ownership interest, such Defendant must deliver a copy of this Order to (1) all principals, officers, directors, and managers of that business; and (2) all employees, agents, and representatives of that business who engage in conduct related to the subject matter of the Order. For current personnel, delivery shall be within five (5) days of service of this Order upon such Defendant. For new personnel, delivery shall occur prior to them assuming their responsibilities.

C. Individual Defendant as Employee or Non-control Person: For any business where an Individual Defendant is not a controlling person of a business but otherwise engages in conduct related to the subject matter of this Order, such Defendant must deliver a copy of this Order to all principals and managers of such business before engaging in such conduct.

D. Defendants shall, within seven (7) business days from the date of entry of this Order, provide counsel for the Commission with a sworn statement that the Defendants have complied with this provision of the Order, which statement shall include the names and addresses of each such person or entity who received a copy of the Order.

XIV. Preservation of Records

IT IS FURTHER ORDERED that Defendants, and their officers, agents, servants, employees, and attorneys, all other persons or entities directly or indirectly under their control or under common control with any of them, and all other persons or entities in active concert or participation with any of them who receive actual notice of this Order by personal service or otherwise, are hereby restrained and enjoined from destroying, erasing, mutilating, concealing, altering, transferring or otherwise disposing of, in any manner, directly or indirectly, any documents that relate to the business practices, business finances, or personal finances of any Defendant, including, but not limited to, any contracts, accounting data, correspondence, advertisements, computer tapes, discs or other computerized records, books, written or printed records, handwritten notes, telephone logs, telephone scripts, recordings of telemarketing calls (except as provided for in Section III (A)(3) and III (A)(4) of this Preliminary Injunction Order), organizational charts, receipt books, ledgers, personal and business canceled checks and check registers, bank statements, appointment books, and copies of federal, state, or local business or personal income or property tax returns.

The persons subject to this Section specifically include but are not limited to each telemarketing call center that has been used by any of the Defendants.

XV. Correspondence

IT IS FURTHER ORDERED that, for the purposes of this Order, all correspondence and service of pleadings on Plaintiff shall be addressed to:

Jennifer M. Brennan Stacy R. Procter John D. Jacobs Federal Trade Commission 10877 Wilshire Blvd., Ste. 700 Los Angeles, CA 90024 Documents served by fax shall be sent to Jennifer M. Brennan/Stacy R. Procter at (310) 824-4380.

XVI. Service of this Order

IT IS FURTHER ORDERED that copies of this Order may be served by any means, including facsimile transmission, upon any financial institution or other entity or person that may have possession, custody, or control of any documents or assets of any Defendant or that may otherwise be subject to any provision of this Order. Service upon any branch or office of any financial institution shall effect service upon the entire financial institution.

IT IS SO ORDERED.

20091117

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