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Federal Trade Commission v. Commerce Planet

July 17, 2012

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
COMMERCE PLANET, INC., A CORPORATION, AND MICHAEL HILL, CHARLES GUGLIUZZA, AND AARON GRAVITZ, INDIVIDUALLY AND AS OFFICERS OF COMMERCE PLANET, INC., DEFENDANTS.



The opinion of the court was delivered by: Cormac J. Carney United States District Judge

JS-6

FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AGAINST DEFENDANT CHARLES GUGLIUZZA

FINAL JUDGMENT & ORDER: GUGLIUZZA Page 1

The Federal Trade Commission ("FTC" or "Commission") brought this action for injunctive and monetary equitable relief against Commerce Planet, Inc. ("Commerce Planet") and several of its directors and officers, including Michael Hill, Aaron Gravitz, and Charles Gugliuzza (collectively "Defendants"), for deceptive and unfair business practices. The FTC settled with all Defendants except for Mr. Gugliuzza, Commerce Planet's former president and consultant from July 2005 to November 2007. In the operative First Amended Complaint, the FTC asserted two counts against Mr. Gugliuzza for (1) deceptive practices and (2) unfair practices in violation of section 5(a) of the Federal Trade Commission Act (the "FTC Act" or "Act"), 15 U.S.C. § 45(a). The FTC requested injunctive and monetary equitable relief against Mr. Gugliuzza under section 13(b) of the FTC Act, 15 U.S.C. § 53(b).

The Court conducted a sixteen-day bench trial between January 31, 2012 and February 28, 2012. On June 22, 2012, the Court issued a Memorandum of Decision, (Dkt. No. 251), by which it issued its findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a). After carefully reviewing all the evidence, testimony, and arguments presented by the parties' counsel, the Court concluded that the FTC had proven by a preponderance of the evidence that Mr. Gugliuzza is individually liable for the deceptive and unfair marketing of OnlineSupplier in violation of section 5(a) of the FTC Act. The Court found that a permanent injunction against Mr. Gugliuzza is appropriate because there is a cognizable danger that he will repeat the deceptive and unfair marketing tactics he authorized and implemented with OnlineSupplier. The Court also found that monetary equitable relief against Mr. Gugliuzza is proper in the amount of $18.2 million as restitution for his wrongful and knowing participation in the deceptive marketing of OnlineSupplier. The Court further directed the FTC to file a proposed permanent injunction and a proposed judgment consistent with the Court's decision within ten (10) days of the Court's memorandum. On July 2, 2012, the FTC filed a timely proposed final judgment and order for permanent injunction against Defendant. On July 9, 2012, Defendant filed objections to the proposed final judgment and order for permanent injunction. The FTC submitted a reply to Defendant's objections on July 13, 2012. Based upon the record established in this case, and for the reasons set forth in the Court's Memorandum of Decision, the Court enters this Final Judgment and Order for Permanent Injunction Against Defendant Charles Gugliuzza.

DEFINITIONS

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

1. "Billing information" means any data that enables any person to access a consumer's account, including but not limited to a credit card, debit card, checking, savings, share or similar account, as well as phone numbers or other utility account information.

2. "Clear and conspicuous" or "clearly and conspicuously" means:

a. In textual communications (e.g., printed publications or words displayed on the screen of an electronic device), the disclosure shall be of a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend the disclosure, in print that contrasts with the background on which it appears;

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

c. In communications disseminated through video means (e.g., television or streaming video), the disclosure shall be in writing in a form consistent with Subsection A of this definition and shall appear on the screen for a duration sufficient for an ordinary consumer to read and comprehend the disclosure;

d. In communications made through interactive media such as the Internet, online services, and software:

i. The disclosure shall be "unavoidable," meaning that a disclosure must be presented in such a manner that consumers viewing an advertisement will be exposed to the disclosure in the course of the communication without having to take affirmative actions, such as scrolling down a page, clicking on a link to other pages, activating a pop-up window, or entering a search term to view the disclosure;

ii. The disclosure shall be presented in a form consistent with Subsection A of this definition in addition to any audio or video presentation of it; and

iii. "In close proximity" shall mean on the same webpage, online service page, or other electronic display, and proximate to the triggering representation, and shall not be accessed or displayed through hyperlinks, pop-ups, interstitials, or other means;

e. In communications that contain both audio and visual portions, the disclosure shall be presented simultaneously in both the audio and visual portions of the communication. Provided however, that in any communication disseminated solely through visual or audio means, the disclosure may be made through the same means in which the communication is presented.

f. In all instances, the disclosure 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 the consumer.

3. "Defendant" means Charles Gugliuzza.

4. "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 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 to a consumer unless the consumer notifies the seller or provider within a certain time not to ship the products; and

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

I.

BAN ON MISREPRESENTATION OF NEGATIVE ...


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