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Federal Trade Commission v. Hope For Car Owners

February 21, 2013

FEDERAL TRADE COMMISSION,
PLAINTIFF,
v.
HOPE FOR CAR OWNERS, LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Garland E. Burrell, Jr. Senior United States District Judge

DEFAULT JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AS TO DEFENDANT HOPE FOR CAR OWNERS, LLC

Plaintiff Federal Trade Commission ("FTC") commenced this civil action on March 27, 2012, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), to obtain preliminary and permanent injunctive and other equitable relief for Defendants' alleged violations of Section 5 of the FTC Act, 15 U.S.C. § 45, in connection with the marketing and sale of motor vehicle loan assistance relief services. See Dkt. No. 1. On April 4, 2012, the Court issued a Temporary Restraining Order. See Dkt. No. 17. On April 16, 2012, this action was referred to the Magistrate Judge pursuant to Local Rule 302(c)(21). See Dkt. No. 22 at 11; see also 28 U.S.C. § 636(c). On June 7, 2012, the Magistrate Judge recommended that a preliminary injunction be entered against Hope for Car Owners, LLC ("Hope for Car Owners"). See Dkt. No. 29. On July 21, 2012, the Court adopted the Magistrate Judge's findings and recommendation and granted the FTC's motion for preliminary injunction. See Dkt. No. 30.

Defendant Hope for Car Owners failed to file an answer or otherwise defend this action, and the Clerk entered default against Hope for Car Owners on June 5, 2012. See Dkt. No. 28. The FTC and defendant Patrick Freeman stipulated to the entry of a final order, which order was entered by the Court on November 30, 2012. See Dkt. No. 40. The FTC now having filed its Motion for Entry of Default Judgment and Order for Permanent Injunction and Other Equitable Relief Against the remaining defendant, Hope for Car Owners, LLC, and the Court having considered the FTC's Motion, and supporting exhibits, and the entire record in this matter, the FTC's Motion is hereby granted, and IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows:

FINDINGS

1. This is an action by the FTC instituted under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b). The Complaint seeks both permanent injunctive relief and equitable monetary relief for Hope for Car Owners' deceptive acts or practices as alleged therein.

2. This Court has jurisdiction over the subject matter of this case and has jurisdiction over Hope for Car Owners pursuant to 15 U.S.C. §§ 45(a) and 53(b), and 28 U.S.C. §§ 1331, 1337(a) and 1345.

3. Venue is proper in this District under 15 U.S.C. § 53(b) and 28 U.S.C. § 1391(b) and (c).

4. The Complaint states a claim upon which relief may be granted against Hope for Car Owners under Sections 5(a) and 13(b) of the FTC Act, 15 U.S.C. §§ 45(a) and 53(b).

5. Hope for Car Owners has been properly served with the Summons and Complaint, as required by Federal Rule of Civil Procedure 4.

6. Hope for Car Owners has failed to Answer or otherwise defend this action. The Clerk of the Court properly entered defaults against Hope for Car Owners on June 5, 2012.

7. Because of Hope for Car Owners' default, the allegations in the Complaint filed in this action are taken as true.

8. The FTC is an independent agency of the United States Government created by statute.

15 U.S.C. §§ 41 et seq. The FTC is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act, and to secure such equitable relief as may be appropriate in each case, including disgorgement. 15 U.S.C. § 53(b).

9. The activities of Hope for Car Owners, as alleged in the Complaint, are in or affecting commerce, as defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

10. As alleged in Count I of the Complaint, Hope for Car Owners, in connection with the advertising, marketing promotion, offering for sale, or sale of vehicle loan assistance relief services, has represented, directly or indirectly, expressly or by implication, that it generally will obtain for consumers a renegotiation, settlement, modification, or other alteration of the terms of consumers' vehicle loans that will make consumers' vehicle loan payments substantially more affordable. This material representation was false or was not substantiated at the time the representation was made. Therefore, Hope for Car Owners' representation is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

11. As alleged in Count II of the Complaint, Hope for Car Owners, in connection with the advertising, marketing promotion, offering for sale, or sale of vehicle loan assistance relief services, has represented, expressly or by implication, that it will give refunds to consumers if it fails to obtain for consumers a renegotiation, settlement, modification, or other alteration of the terms of consumers' vehicle loans that will make consumers' vehicle loan payments substantially more affordable. In numerous instances, Hope for Car Owners did not give refunds to consumers when it failed to obtain for consumers a renegotiation, settlement, modification, or other alteration of the terms of consumers' vehicle loans that will make consumers' vehicle loan payments substantially more affordable. Therefore, Hope for Car Owners' representation is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

12. Hope for Car Owners has caused consumer injury in the amount of $362,388.

13. The Court finds that, absent a permanent injunction, Hope for Car Owners is likely to continue to engage in the activities alleged in the Complaint.

14. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to issue injunctive and other relief against violations of the FTC Act and, in the exercise of its equitable jurisdiction, to order restitution and the disgorgement of profits resulting from Hope for Car Owners' unlawful acts or practices, and issue other ancillary equitable relief.

15. This Court is persuaded that the danger of future violations by Hope for Car Owners justifies the issuance of injunctive relief. Specifically, it is proper in this case to issue a permanent injunction that: (a) permanently bans Hope for Car Owners from marketing or selling assistance relief products or services for secured or unsecured loans or assisting others who do; (b) prohibits Hope for Car Owners from misrepresenting any fact material to a consumer's decision to purchase financial related products or services or other products or services; and (c) provides such other ancillary relief as is necessary to assist the FTC and the Court in monitoring Hope for Car Owners' compliance with such a permanent injunction.

16. It is proper in this case to enter an equitable monetary judgment against Hope for Car Owners for its violations of Section 5 of the FTC Act. The FTC is entitled to judgment against Hope for Car Owners in the amount of $362,388, the injury caused to consumers by it, even though this amount may exceed its unjust enrichment.

17. This Order is in addition to, and not in lieu of, any other civil or criminal remedies that may be provided by law.

DEFINITIONS

1. "Assisting others" includes, but is not limited to, providing any of the following goods or services to another person:

A. performing customer service functions, including, but not limited to, receiving or responding to consumer complaints;

B. formulating or providing, or arranging for the formulation or provision of, any telephone sales script or any other marketing material, including but not limited to, the text of any Internet website, email, or other electronic communication;

C. providing names of, or assisting in the generation of, potential customers;

D. performing marketing services of any kind; or

E. acting or serving as an owner, officer, director, manager, or principal of any entity.

2. "Competent and reliable evidence" means tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that has been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.

3. "Customer" means any person who has paid, or may be required to pay, for products, services, plans, or programs offered for sale or sold by any other person.

4. "Defaulting Defendant" means Hope for Car Owners, LLC and its successors and assigns.

5. "Document" is equal in scope and synonymous in meaning 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. A draft or non-identical copy is a separate document within the meaning of the term.

6. "Financial related product or service" means any product, service, plan, or program represented, expressly or by implication, to:

A. provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, credit, debit, or stored value cards;

B. improve, or arrange to improve, any consumer's credit record, credit history, or credit rating;

C. provide advice or assistance to any consumer with regard to any activity or service the purpose of which is to improve a consumer's credit record, credit history, or credit rating; or

D. provide any consumer, arrange for any consumer to receive, or assist any consumer in receiving, a loan or other extension of credit.

7. "Motor vehicle" means (a) any self-propelled vehicle designed for transporting persons or property on a street, highway, or other road; (b) recreational boats and marine equipment; (c) motorcycles; (d) motor homes, recreational vehicle trailers, and slide-in ...


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