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Federal Trade Commission v. Aafe Products Corporation

United States District Court, S.D. California

September 6, 2017

FEDERAL TRADE COMMISSION, Plaintiff,
v.
AAFE PRODUCTS CORPORATION et al. Defendants.

          ORDER GRANTING JOINT MOTION TO ENTER PERMAENT INJUNCTION AND OTHER EQUITABLE RELIEF AS TO AAFE PRODUCTS CORP., JBE INTERNATIONAL, LLC, BSDC, INC., KADC, INC., PURESTRIKE, INC., BNRI CORP., FKA BERNHEIM & RICE, INC., BRIAN BERNHEIM, JOSHUA BERNHEIM, AND JARED COATES (Doc. No. 26-1)

          HON. ANTHONY J. BATTAGLIA, UNITED STATES DISTRICT JUDGE.

         Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), filed its Complaint for Permanent Injunction and Other Equitable Relief (“Complaint”) in this matter, pursuant to Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), and Section 5 of the Restore Online Shoppers' Confidence Act (“ROSCA”), 15 U.S.C. § 8404. The Commission and Defendants AAFE Products Corp, JBE International, LLC, BSDC, Inc., KADC, Inc., Purestrike, Inc., BNRI Corp., fka Bernheim & Rice, Inc., Brian Bernheim, Joshua Bernheim, and Jared Coates stipulate to the entry of this Stipulated Order for Permanent Injunction and Other Equitable Relief (“Order”) to resolve all matters in dispute in this action between them.

         THEREFORE, IT IS ORDERED as follows:

         FINDINGS

         1. This Court has jurisdiction over this matter.

         2. The Complaint charges that Defendants participated in deceptive acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, and Section 4 of ROSCA, 15 U.S.C. § 8403, in connection with Defendants' marketing and sale of cooking-related, golf, and other products and services through television advertising and Defendants' websites, including websites optimized for mobile.

         3. Defendants neither admit nor deny any of the allegations in the Complaint, except as specifically stated in this Order. Only for purposes of this action, Defendants admit the facts necessary to establish jurisdiction.

         4. Defendants waive any claim they may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agree to bear their own costs and attorney fees.

         5. Defendants waive all rights to appeal or otherwise challenge or contest the validity of this Order.

         DEFINITIONS

         1. “Billing Information” means any data that enables any person to access a customer's account, such as a credit card, checking, savings, share or similar account, utility bill, mortgage loan account, or debit card.

         2. “Charge, ” “Charged, ” or “Charging” means any attempt to collect money or other consideration from a consumer, including but not limited to causing Billing Information to be submitted for payment, including against the consumer's credit card, debit card, bank account, telephone bill, or other account.

         3. “Clear(ly) and conspicuous(ly)” means that a required disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers, including in all of the following ways:

         a. In any communication that is solely visual or solely audible, the disclosure must be made through the same means through which the communication is presented. In any communication made through both visual and audible means, such as a television advertisement, the disclosure must be presented simultaneously in both the visual and audible portions of the communication even if the representation requiring the disclosure is made in only one means;

         b. A visual disclosure, by its size, contrast, location, the length of time it appears, and other characteristics, must stand out from any accompanying text or other visual elements so that it is easily noticed, read, and understood;

         c. An audible disclosure, including by telephone or streaming video, must be delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand it;

         d. In any communication using an interactive electronic medium, such as the Internet or software, the disclosure must be unavoidable;

         e. The disclosure must use diction and syntax understandable to ordinary consumers and must appear in each language in which the representation that requires the disclosure appears;

         f. The disclosure must comply with these requirements in each medium through which it is received, including all electronic devices and face-to-face communications;

         g. The disclosure must not be contradicted or mitigated by, or inconsistent with, anything else in the communication; and

         h. When the representation or sales practice targets a specific audience, such as children, the elderly, or the terminally ill, “ordinary consumers” includes reasonable members of that group.

         4. “Close Proximity” means immediately adjacent to the triggering representation. In the case of advertisements disseminated verbally or through audible means, the disclosure shall be made as soon as practicable after the triggering representation.

         5. “Defendants” means all of the Individual Defendants and the Corporate Defendants, individually, collectively, or in any combination.

         a. “Corporate Defendants” means AAFE Products Corp, JBE International, LLC, BSDC, Inc., KADC, Inc., Purestrike, Inc., and BNRI Corp., fka Bernheim & Rice, Inc., and their successors and assigns.

         b. “Individual Defendants” means Brian Bernheim, Joshua Bernheim, and Jared Coates.

         6. “Negative Option Feature” means, in an offer or agreement to sell or provide any good or service, a provision under which the consumer's silence or failure to take affirmative action to reject a good or service or to cancel the agreement is interpreted by the seller or provider as acceptance or continuing acceptance of the offer.

         7. “Person” or “Persons” includes a natural person, an organization or other legal entity, including a corporation, partnership, sole proprietorship, limited liability company, association, cooperative, or any other group or combination acting as an entity.

         8. “Plaintiff” means the Federal Trade Commission.

         ORDER

         I. PROHIBITION AGAINST MISREPRESENTATIONS

         IT IS ORDERED that Defendants, Defendants' officers, agents, employees, attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting or offering for sale any good or service, are permanently restrained and enjoined from misrepresenting, or assisting others in misrepresenting, expressly or by implication:

A. Any cost to the consumer to purchase, receive, use, or return the initial good or service;
B. That the consumer will not be Charged for any good or service;
C. That a good or service is offered on a “free, ” “trial, ” “sample, ” “bonus, ” “gift, ” “no obligation, ” “discounted” basis, or words of similar import, denoting or implying the absence of an obligation on the part of the recipient of the offer to affirmatively act in order to avoid Charges, including where a Charge will be assessed pursuant to the offer unless the consumer takes affirmative steps to prevent or stop such a Charge;
D. That the consumer can obtain a good or service for a processing, service, shipping, handling, or administrative fee with no further obligation;
E. The purpose(s) for which the consumer's Billing Information will be used;
F. The date by which the consumer will incur any obligation or be Charged unless the consumer takes an affirmative action on the Negative Option Feature;
G. That a transaction has been authorized by the consumer; and
H. Any other fact material to the consumer concerning any good or service, such as any material aspect of the nature or terms of a refund, cancellation, exchange, or repurchase policy for the good or service. Compliance with this Section is separate from, and in addition to, the disclosures required by Sections II and III, infra.

         II. REQUIRED DISCLOSURES RELATING TO NEGATIVE OPTION FEATURES

         IT IS FURTHER ORDERED that Defendants, Defendants' officers, agents, employees, attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting or offering for sale any ...


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