Federal Trade Commission v. AAFE Products Corp. et al, No. 3:2017cv00575 - Document 27 (S.D. Cal. 2017)
Court Description: ORDER granting 26 Joint Motion for Permanent Injunction and Other Equitable Relief as to Robert Koch. Signed by Judge Anthony J. Battaglia on 9/6/2017. (acc)
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA FEDERAL TRADE COMMISSION, ) Case No.: 17cv0575 AJB (JMA) ) Plaintiff, ) ORDER GRANTING JOINT ) MOTION FOR PERMANENT v. ) INJUNCTION AND OTHER ) EQUITABLE RELIEF AS TO AAFE PRODUCTS CORPORATION, et al. ) ROBERT KOCH ) Defendants. ) (Doc. No. 26-2) ) 18 19 Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), filed its 20 Complaint for Permanent Injunction and Other Equitable Relief (“Complaint”) in 21 this matter, pursuant to Section 13(b) of the Federal Trade Commission Act (“FTC 22 Act”), 15 U.S.C. § 53(b), and Section 5 of the Restore Online Shoppers’ 23 Confidence Act (“ROSCA”), 15 U.S.C. § 8404. The Commission and Defendant 24 25 26 Koch stipulate to the entry of this Stipulated Order for Permanent Injunction and Other Equitable Relief as to Robert Koch (“Order”) to resolve all matters in dispute in this action between them, regardless of any other judgment that the 27 Commission may obtain in this action. 28 THEREFORE, IT IS ORDERED as follows: 11 FINDINGS 22 33 1. This Court has jurisdiction over this matter. 44 2. The Complaint charges that Defendants participated in deceptive acts 55 or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, and Section 4 66 of ROSCA, 15 U.S.C. § 8403, in connection with Defendants’ marketing and sale 77 of cooking-related, golf, and other products and services through television 88 advertising and Defendants’ websites, including websites optimized for mobile. 99 3. Defendant Robert Koch neither admits nor denies any of the 10 10 allegations in the Complaint, except as specifically stated in this Order. Only for 11 11 purposes of this action, Defendant Robert Koch admits the facts necessary to 12 12 establish jurisdiction. 13 13 14 14 15 15 16 16 17 17 18 18 19 19 4. Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agrees to bear his own costs and attorney fees. 5. 22 22 23 23 24 24 Defendant Robert Koch waives all rights to appeal or otherwise challenge or contest the validity of this Order. DEFINITIONS 20 20 21 21 Defendant Robert Koch waives any claim he may have under the 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 25 25 money or other consideration from a consumer, including but not limited to 26 26 causing Billing Information to be submitted for payment, including against the 27 27 consumer’s credit card, debit card, bank account, telephone bill, or other account. 28 28 2 11 3. “Clear(ly) and conspicuous(ly)” means that a required disclosure is 22 difficult to miss (i.e., easily noticeable) and easily understandable by ordinary 33 consumers, including in all of the following ways: 44 a. In any communication that is solely visual or solely audible, the 55 disclosure must be made through the same means through which the 66 communication is presented. In any communication made through both 77 visual and audible means, such as a television advertisement, the disclosure 88 must be presented simultaneously in both the visual and audible portions of 99 the communication even if the representation requiring the disclosure is 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 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 25 25 medium through which it is received, including all electronic devices and 26 26 face-to-face communications; 27 27 28 28 g. The disclosure must not be contradicted or mitigated by, or inconsistent with, anything else in the communication; and 3 h. 11 When the representation or sales practice targets a specific 22 audience, such as children, the elderly, or the terminally ill, “ordinary 33 consumers” includes reasonable members of that group. 44 55 66 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 77 88 99 10 10 11 11 triggering representation. 5. “Defendant Koch” means Robert Koch. 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 12 12 failure to take affirmative action to reject a good or service or to cancel the 13 13 agreement is interpreted by the seller or provider as acceptance or continuing 14 14 acceptance of the offer. 15 15 7. “Person” or “Persons” includes a natural person, an organization or 16 16 other legal entity, including a corporation, partnership, sole proprietorship, limited 17 17 liability company, association, cooperative, or any other group or combination 18 18 acting as an entity. 19 19 8. “Plaintiff” means the Federal Trade Commission. 20 20 ORDER 21 21 I. PROHIBITION AGAINST MISREPRESENTATIONS 22 22 23 23 24 24 25 25 26 26 IT IS ORDERED that Defendant Koch, Defendant Koch’s 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 27 27 28 28 4 11 22 33 in misrepresenting, expressly or by implication: A. Any cost to the consumer to purchase, receive, use, or return the initial good or service; 44 B. That the consumer will not be Charged for any good or service; 55 C. That a good or service is offered on a “free,” “trial,” “sample,” 66 “bonus,” “gift,” “no obligation,” “discounted” basis, or words of similar import, 77 denoting or implying the absence of an obligation on the part of the recipient of the 88 offer to affirmatively act in order to avoid Charges, including where a Charge will 99 be assessed pursuant to the offer unless the consumer takes affirmative steps to 10 10 11 11 12 12 13 13 prevent or stop such a Charge; D. service, shipping, handling, or administrative fee with no further obligation; E. The purpose(s) for which the consumer’s Billing Information will be 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 That the consumer can obtain a good or service for a processing, 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 27 27 28 28 IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s 5 11 agents, employees, attorneys, and all other persons in active concert or 22 participation with any of them, who receive actual notice of this Order, whether 33 acting directly or indirectly, in connection with promoting or offering for sale any 44 good or service with a Negative Option Feature, are permanently restrained and 55 enjoined from: 66 A. 77 88 99 any good or service that includes a Negative Option Feature is being offered on a free, trial, no obligation, reduced, or discounted basis, without disclosing Clearly and Conspicuously, and in Close Proximity to, any such representation: 10 10 1. 11 11 12 12 13 13 14 14 Representing, directly or indirectly, expressly or by implication, that The extent to which the consumer must take affirmative action(s) to avoid any Charges: (a) for the offered good or service, (b) of an increased amount after the trial or promotional period ends, and (c) on a recurring basis; 2. 15 15 The total cost (or range of costs) the consumer will be Charged 16 16 and, if applicable, the frequency of such Charges unless the consumer timely 17 17 takes steps to prevent or stop such Charges; and 3. 18 18 The deadline(s) (by date or frequency) by which the consumer 19 19 must affirmatively act in order to stop all recurring Charges. 20 20 B. Obtaining Billing Information from a consumer for any transaction 21 21 involving a good or service that includes a Negative Option Feature, without first 22 22 disclosing Clearly and Conspicuously, and in Close Proximity to where a 23 23 consumer provides Billing Information: 24 24 25 25 26 26 27 27 1. The extent to which the consumer must take affirmative action(s) to avoid any Charges: (a) for the offered good or service, (b) of an increased amount after the trial or promotional period ends, and (c) on a recurring basis; 28 28 6 2. 11 The total cost (or range of costs) the consumer will be Charged, 22 the date the initial Charge will be submitted for payment, and, if applicable, 33 the frequency of such Charges unless the consumer timely takes affirmative 44 steps to prevent or stop such Charges; 3. 55 66 The deadline(s) (by date or frequency) by which the consumer must affirmatively act in order to stop all recurring Charges; 4. 77 The name of the seller or provider of the good or service and, if 88 the name of the seller or provider will not appear on billing statements, the 99 billing descriptor that will appear on such statements; 10 10 5. A description of the good or service; 11 11 6. Any Charge or cost for which the consumer is responsible in 12 12 connection with the cancellation of an order or the return of a good; and 13 13 14 14 15 15 7. Charges, as required by Section IV. C. 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 The simple cancellation mechanism to stop any recurring Failing to send the consumer: 1. Immediately after the consumer’s submission of an online order, written confirmation of the transaction by email. The email must Clearly and Conspicuously disclose all the information required by Subsection II.B, and contain a subject line reading “Order Confirmation” along with the name of the product or service, and no additional information; or 2. Within two (2) days after receipt of a consumer’s order by mail 24 24 or telephone, a written confirmation of the transaction, either by email or 25 25 first class mail. The email or letter must Clearly and Conspicuously disclose 26 26 all the information required by Subsection II.B. The subject line of the 27 27 email must Clearly and Conspicuously state “Order Confirmation” along 28 28 with the name of the product or service, and nothing else. The outside of the 7 11 envelope must Clearly and Conspicuously state “Order Confirmation” along 22 with the name of the product or service, and no additional information other 33 than the consumer’s address, the Defendant Koch’s return address, and 44 postage. 55 66 77 88 III. OBTAINING EXPRESS INFORMED CONSENT IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s agents, employees, attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether 99 10 10 11 11 12 12 13 13 14 14 15 15 acting directly or indirectly, in connection with promoting or offering for sale any good or service with a Negative Option Feature, are permanently restrained and enjoined from using Billing Information to obtain payment from a consumer, unless Defendant Koch first obtains the express informed consent of the consumer to do so. To obtain express informed consent, Defendant Koch must: A. For all written offers (including over the Internet or other web-based 16 16 applications or services), obtain consent through a check box, signature, or other 17 17 substantially similar method, which the consumer must affirmatively select or sign 18 18 to accept the Negative Option Feature, and no other portion of the offer. 19 19 Defendant Koch shall disclose Clearly and Conspicuously and in Close Proximity 20 20 to such check box, signature, or substantially similar method of affirmative 21 21 consent, only the following, with no additional information: 22 22 1. The extent to which the consumer must take affirmative 23 23 action(s) to avoid any Charges: (a) for the offered good or service, (b) of an 24 24 increased amount after the trial or promotional period ends, and (c) on a 25 25 recurring basis; 26 26 27 27 28 28 8 2. 11 The total cost (or range of costs) the consumer will be Charged 22 and, if applicable, the frequency of such Charges unless the consumer timely 33 takes affirmative steps to prevent or stop such Charges; and 3. 44 The deadline(s) (by date or frequency) by which the consumer 55 must affirmatively act in order to stop all recurring Charges. 66 B. 77 88 99 10 10 For all oral offers, prior to obtaining any Billing Information from the consumer: 1. Clearly and Conspicuously disclose the information contained in Subsection II.B; and 2. Obtain affirmative unambiguous express oral confirmation that 11 11 the consumer: (a) consents to being Charged for any good or service, 12 12 including providing, at a minimum, the last four (4) digits of the consumer’s 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 account number to be Charged, (b) understands that the transaction includes a Negative Option Feature, and (c) understands the specific affirmative steps the consumer must take to prevent or stop further Charges. For transactions conducted through Telemarketing, Defendant Koch shall maintain for three (3) years from the date of each transaction an unedited voice recording of the entire transaction, including the prescribed statements set out in Subsection III.B. Each recording must be retrievable by date and by the consumer’s name, telephone number, or Billing Information, and must be provided upon request to the consumer, the consumer’s bank, or any law enforcement entity. IV. SIMPLE MECHANISM TO CANCEL NEGATIVE OPTION FEATURE IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s 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 28 28 9 11 good or service with a Negative Option Feature, are permanently restrained and 22 enjoined from failing to provide a simple mechanism for a consumer to: (1) avoid 33 being Charged, or Charged an increased amount, for the good or service; and (2) 44 immediately stop any recurring Charges. Such mechanism must not be difficult, 55 costly, confusing, or time consuming, and it must be at least as simple as the 66 mechanism the consumer used to initiate the Charge(s). In addition: 77 A. For consumers who entered into the agreement to purchase a good or 88 service including a Negative Option Feature over the Internet or through other 99 web-based applications or services, Defendant Koch must provide a mechanism, 10 10 accessible over the Internet or through such other web-based application or service 11 11 that consumers can easily use to cancel the product or service and immediately 12 12 stop all further Charges. 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 B. For consumers who entered into the agreement to purchase a good or service including a Negative Option Feature through an oral offer and acceptance, Defendant Koch must maintain a telephone number and a postal address that consumers can easily use to cancel the product or service and immediately stop all further Charges. Defendant Koch must assure that all calls to this telephone number shall be answered during normal business hours and that mail to the postal address is retrieved regularly. V. PROHIBITION AGAINST BILLING CONSUMERS CURRENTLY ENROLLED IN SUBSCRIPTION PLANS IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s 24 24 agents, employees, attorneys, and all other persons in active concert or 25 25 participation with any of them, who receive actual notice of this Order, whether 26 26 acting directly or indirectly, with respect to any current customer of any good or 27 27 service with a Negative Option Feature whom Defendant Koch seeks to continue 28 28 to charge after the entry of this Order, are hereby permanently restrained and 10 11 22 33 enjoined from charging any existing customer who was first charged prior to March 1, 2016, unless, prior to any future charge, Defendant Koch: A. Sends the customer written notice, either by email or first class mail, 44 in a form approved by FTC counsel, that includes the Clear and Conspicuous 55 disclosure of all the information required by Section II; and 66 77 B. Obtains the customer’s express informed written consent in a manner consistent with Section III. 88 99 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 VI. MONETARY JUDGMENT IT IS FURTHER ORDERED that: A. Judgment in the amount of SIX HUNDRED THIRTY TWO THOUSAND THREE HUNDRED FOUR DOLLARS ($632,304) is entered in favor of the Commission against Defendant Koch, as equitable monetary relief. B. Defendant Koch is ordered to pay to the Commission the Judgment set forth above in Section VI.A as follows: 1. Within seven (7) days of entry of this Order, Defendant Koch shall wire by electronic fund transfer the sum of ONE HUNDRED FIFTY 18 18 THOUSAND DOLLARS ($150,000) which, as Defendant Koch stipulates, 19 19 his undersigned counsel holds in escrow for no purpose other than payment 20 20 to the FTC. Defendant Koch shall wire these funds to the FTC in 21 21 accordance with instructions previously provided by a representative of the 22 22 Commission; 23 23 2. Within one hundred and eighty (180) days of entry of this 24 24 Order, Defendant Koch shall wire by electronic fund transfer the sum of 25 25 ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000) to the FTC 26 26 in accordance with instructions previously provided by a representative of 27 27 28 28 11 11 the Commission; 3. 22 Within two hundred and seventy (270) days of entry of this 33 Order, Defendant Koch shall wire by electronic fund transfer the sum of 44 ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000) to the FTC 55 in accordance with instructions previously provided by a representative of 66 the Commission; 4. 77 Within three hundred and sixty (360) days of entry of this 88 Order, Defendant Koch shall wire by electronic fund transfer the sum of 99 ONE HUNDRED EIGHTY TWO THOUSAND THREE HUNDRED 10 10 FOUR DOLLARS ($182,304) to the FTC in accordance with instructions 11 11 previously provided by a representative of the Commission; and 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 5. Notwithstanding the foregoing, Defendant Koch shall have the right to prepay at any time, and without penalty, the remaining balance, or any part thereof, due the Commission under this Order. Any such prepayment made prior to an installment due date shall be credited as if made on the next installment due date, and Defendant Koch shall be relieved of making any further payments on the installment due date for any prepayments to the extent of such prepayment. Nothing herein shall be construed to relieve Defendant Koch of his obligation to make timely payment for any installments as they become due which have not otherwise fully been paid in advance. C. To secure the payment obligations under Section VI.B of this order, 24 24 Defendant Koch grants the Commission a security interest in certain property and 25 25 proceeds thereof (“Collateral”), as set forth in the Mortgage and Security 26 26 Agreement (“Mortgage,” attached as Attachment A), which is incorporated by 27 27 reference as if fully set forth verbatim and which grants a security interest in the 28 28 following Collateral: Defendant Koch and his spouse, Angela Koch, hereby grant 12 11 to the Commission, pursuant to the attached Mortgage, a lien on and security 22 interest in real property located at 6440 Aberdeen Lane, Medina, Ohio, 44256. 33 Defendant Koch shall submit to the clerk’s office for recording all security 44 documents used to perfect the Commission’s lien on the property within fourteen 55 (14) days after entry of this Order, and shall deliver to the Commission copies of 66 such officially recorded documents within seven (7) days after receipt of such 77 documents. 88 D. In the event that Defendant Koch fails to make a required payment 99 when due under Section VI.B of the Order, or the Commission is not allowed to 10 10 retain any such payment, or if Defendant Koch fails to comply with the terms of 11 11 the Mortgage and such failure is not timely cured: 12 12 13 13 14 14 15 15 16 16 1. shall immediately become due and payable by Defendant Koch. Interest computed at the rate prescribed under 28 U.S.C. § 1961, as amended, shall immediately begin to accrue on the unpaid balance. Time is of the essence for the payments specified in this Section; and 17 17 2. 18 18 19 19 20 20 21 21 22 22 23 23 24 24 The entire judgment amount, less any amount previously paid, Defendant Koch consents to the appointment of a receiver by the Court for purpose of taking possession and control of and liquidating the Collateral, with the rights and powers, and privileges of an equity receiver. The costs and expenses of the receivership, including reasonable compensation for the receiver and personnel retained by the receiver, shall be paid solely from the proceeds of the Collateral. E. The Commission’s agreement to this Order is expressly based on the 25 25 material representations that Defendant Koch and Angela Koch have the right and 26 26 authority to enter into the Mortgage, and that such Collateral is not encumbered by 27 27 any lien, assignment, security interest, or other interest not otherwise disclosed in 28 28 the Mortgage. 13 1. 11 The Commission’s agreement to this Order is expressly based 22 on the material representations by Defendant Koch that the value of his 33 equity in the Collateral is at least $723,456. 2. 44 If, upon motion of the Commission, a Court determines that 55 Defendant Koch made a material misrepresentation or omitted material 66 information concerning ownership or authority to pledge the Collateral, any 77 encumbrance of the Collateral, or the value of the Collateral, the entire 88 Judgment amount ($632,304), less any amounts previously paid by 99 Defendant Koch, shall immediately become due and payable by Defendant 10 10 Koch. Interest computed at the rate prescribed under 28 U.S.C. § 1961, as 11 11 amended, shall immediately begin to accrue on the unpaid balance. 12 12 13 13 14 14 15 15 16 16 Provided that proceedings instituted under this provision would be in addition to, and not in lieu of, any other civil or criminal remedies, as may be provided by law, including but not limited to, contempt proceedings or any other proceedings that the Commission may initiate to enforce this Order. 17 17 VII. ADDITIONAL MONETARY PROVISIONS 18 18 19 19 20 20 21 21 22 22 23 23 IT IS FURTHER ORDERED that: A. Defendant Koch relinquishs dominion and all legal and equitable right, title, and interest in all assets transferred pursuant to this Order and may not seek the return of any assets. B. The facts alleged in the Complaint will be taken as true, without 24 24 further proof, in any subsequent civil litigation by or on behalf of the Commission, 25 25 including in a proceeding to enforce its rights to any payment or monetary 26 26 judgment pursuant to this Order, such as a nondischargeability complaint in any 27 27 bankruptcy case. 28 28 14 11 C. The facts alleged in the Complaint establish all elements necessary to 22 sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the 33 Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral 44 estoppel effect for such purposes. 55 D. Defendant Koch acknowledges that his Taxpayer Identification 66 Numbers (Social Security Numbers or Employer Identification Numbers), which 77 Defendant Koch previously submitted to the Commission, may be used for 88 collecting and reporting on any delinquent amount arising out of this Order, in 99 accordance with 31 U.S.C. § 7701. 10 10 E. All money paid to the Commission pursuant to this Order may be 11 11 deposited into a fund administered by the Commission or its designee to be used 12 12 for equitable relief, including consumer redress and any attendant expenses for the 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 administration of any redress fund. If a representative of the Commission decides that direct redress to consumers is wholly or partially impracticable or money remains after redress is completed, the Commission may apply any remaining money for such other equitable relief (including consumer information remedies) as it determines to be reasonably related to Defendant Koch’s practices alleged in the Complaint. Any money not used for such equitable relief is to be deposited to the U.S. Treasury as disgorgement. Defendant Koch has no right to challenge any actions the Commission or its representatives may take pursuant to this Subsection. VIII. CUSTOMER INFORMATION 22 22 23 23 IT IS FURTHER ORDERED that Defendant Koch, Defendant Koch’s 24 24 agents, employees, attorneys, and all other persons in active concert or 25 25 participation with any of them, who receive actual notice of this Order, are 26 26 permanently restrained and enjoined from directly or indirectly: 27 27 28 28 A. Failing to provide sufficient customer information to enable the Commission to efficiently administer consumer redress. If a representative of the 15 11 Commission requests in writing any information related to redress, Defendant 22 Koch must provide it, in the form prescribed by the Commission, within thirty (30) 33 days; and 44 B. Disclosing, using, or benefitting from customer information, including 55 the name, address, telephone number, email address, Social Security number, other 66 identifying information, or any data that enables access to a customer’s account 77 (including a credit card, bank account, or other financial account), that Defendant 88 Koch obtained prior to entry of this Order in connection with the advertising, 99 marketing, promoting, offering for sale, or selling of any good or service using a 10 10 Negative Option Feature. Provided, however, that Defendant Koch may use 11 11 customer information for any current customer if Defendant Koch complies with 12 12 Subsection II.C of this Order. 13 13 14 14 15 15 16 16 IX. COOPERATION IT IS FURTHER ORDERED that Defendant Koch must fully cooperate with representatives of the Commission in this case and in any investigation related to or associated with the transactions or the occurrences that are the subject of the 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 Complaint. Defendant Koch must provide truthful and complete information, evidence, and testimony. Such Defendant must appear for interviews, discovery, hearings, trials, and any other proceedings that a Commission representative may reasonably request upon five (5) days written notice, or other reasonable notice, at such places and times as a Commission representative may designate, without the service of a subpoena. X. ORDER ACKNOWLEDGMENTS IT IS FURTHER ORDERED that Defendant Koch obtain acknowledgements of receipt of this Order: 27 27 28 28 16 11 A. Defendant Koch, within seven (7) days of entry of this Order, must 22 submit to the Commission an acknowledgement of receipt of this Order sworn 33 under penalty of perjury. 44 B. For five (5) years after entry of this Order, Defendant Koch for any 55 business that such Defendant, individually or collectively with any other 66 Defendant, is the majority owner or controls directly or indirectly, must deliver a 77 copy of this Order to: (1) all principals, officers, directors, and LLC managers and 88 members; (2) all employees, agents, and representatives who participate in conduct 99 related to the subject matter of this Order; and (3) any business entity resulting 10 10 from any change in structure as set forth in the Section titled Compliance 11 11 Reporting. Delivery must occur within seven (7) days of entry of this Order for 12 12 current personnel. For all others, delivery must occur before they assume their 13 13 14 14 15 15 16 16 responsibilities. C. From each individual or entity to which Defendant Koch delivered a copy of this Order, such Defendant must obtain, within thirty (30) days, a signed and dated acknowledgement of receipt of this Order. 17 17 XI. COMPLIANCE REPORTING 18 18 19 19 20 20 21 21 22 22 23 23 IT IS FURTHER ORDERED that Defendant Koch make timely submissions to the Commission: A. One (1) year after entry of this Order, Defendant Koch must submit a compliance report, sworn under penalty of perjury: 1. Defendant Koch must: (a) identify the primary physical, postal, 24 24 and email address and telephone number, as designated points of contact, 25 25 which representatives of the Commission may use to communicate with 26 26 such Defendant; (b) identify all of his businesses by all of their names, 27 27 telephone numbers, and physical, postal, email, and Internet addresses; (c) 28 28 describe the activities of each business, including the goods and services 17 11 offered, the means of advertising, marketing, and sales, and the involvement 22 of any other Defendant; (d) describe in detail whether and how Defendant 33 Koch is in compliance with each Section of this Order; (e) provide a copy of 44 each Order Acknowledgment obtained pursuant to this Order, unless 55 previously submitted to the Commission; and (f) if a customer covered by 66 Section V is charged after the entry of this Order, provide a copy of the 77 notice sent to the customer pursuant to Subsection V.A and the customer’s 88 written consent to the charge pursuant to Subsection V.B. 99 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 2. Additionally, Defendant Koch must: (a) identify all of his telephone numbers and all physical, postal, email and Internet addresses, including all residences; (b) identify all of his business activities, including any business for which such Defendant performs services whether as an employee or otherwise and any entity in which such Defendant has any ownership interest; and (c) describe in detail such Defendant’s involvement in each such business, including title, role, responsibilities, participation, authority, control, and any ownership. B. For ten (10) years after entry of this Order, Defendant Koch must 19 19 submit a compliance notice, sworn under penalty of perjury, within fourteen (14) 20 20 days of any change in the following: 21 21 1. Defendant Koch must report any change in: (a) any designated 22 22 point of contact; or (b) the structure of any entity that Defendant has any 23 23 ownership interest in or controls directly or indirectly that may affect 24 24 compliance obligations arising under this Order, including: creation, 25 25 merger, sale, or dissolution of the entity or any subsidiary, parent, or affiliate 26 26 that engages in any acts or practices subject to this Order. 27 27 28 28 18 2. 11 Additionally, Defendant Koch must report any change in: 22 (a) his name, including aliases or fictitious name, or residence address; or (b) 33 his title or role in any business activity, including any business for which he 44 performs services whether as an employee or otherwise and any entity in 55 which he has any ownership interest, and identify the name, physical 66 address, and any Internet address of the business or entity. 77 C. Defendant Koch must submit to the Commission notice of the filing 88 of any bankruptcy petition, insolvency proceeding, or similar proceeding by or 99 against such Defendant within fourteen (14) days of its filing. 10 10 D. Any submission to the Commission required by this Order to be 11 11 sworn under penalty of perjury must be true and accurate and comply with 28 12 12 U.S.C. § 1746, such as by concluding: “I declare under penalty of perjury under 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 the laws of the United States of America that the foregoing is true and correct. Executed on: _____” and supplying the date, signatory’s full name, title (if applicable), and signature. E. Unless otherwise directed by a Commission representative in writing, all submissions to the Commission pursuant to this Order must be emailed to DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to: Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The subject line must begin: FTC v. AAFE Products Corp., FTC Matter No. X170028. XII. RECORDKEEPING IT IS FURTHER ORDERED that Defendant Koch must create certain 25 25 records for ten (10) years after entry of the Order, and retain each such record for 26 26 five (5) years. Specifically, Defendant Koch, for any business that he, individually 27 27 or collectively with any other Defendant, is a majority owner or controls directly or 28 28 indirectly, must create and retain the following records: 19 A. 22 33 Accounting records showing the revenues from all goods or services B. 11 Personnel records showing, for each person providing services, sold; 44 whether as an employee or otherwise, that person’s: name, addresses, telephone 55 numbers, job title or position, dates of service, and (if applicable) the reason for 66 termination; 77 88 99 10 10 11 11 C. Records of all consumer complaints and refund requests, whether received directly or indirectly, such as through a third party, and any response; D. All records necessary to demonstrate full compliance with each provision of this Order, including all submissions to the Commission; and E. A copy of each unique advertisement or other marketing material. 12 12 XIII. COMPLIANCE MONITORING 13 13 14 14 15 15 16 16 IT IS FURTHER ORDERED that, for the purpose of monitoring Defendant Koch’s compliance with this Order: A. Within fourteen (14) days of receipt of a written request from a 17 17 representative of the Commission, Defendant Koch must: submit additional 18 18 compliance reports or other requested information, which must be sworn under 19 19 penalty of perjury; appear for depositions; and produce documents for inspection 20 20 and copying. The Commission is also authorized to obtain discovery, without 21 21 further leave of court, using any of the procedures prescribed by the Federal Rules 22 22 of Civil Procedure 29, 30 (including telephonic depositions), 31, 33, 34, 36, 45, 23 23 and 69. 24 24 25 25 26 26 B. For matters concerning this Order, the Commission is authorized to communicate directly with Defendant Koch. Defendant Koch must permit representatives of the Commission to interview any employee or other person 27 27 28 28 20 11 22 33 affiliated with Defendant Koch who has agreed to such an interview. The person interviewed may have counsel present. C. The Commission may use all other lawful means, including posing, 44 through its representatives, as consumers, suppliers, or other individuals or entities, 55 to Defendant Koch or any individual or entity affiliated with Defendant Koch, 66 without the necessity of identification or prior notice. Nothing in this Order limits 77 the Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20 88 of the FTC Act, 15 U.S.C. §§ 49, 57b-1. 99 10 10 11 11 12 12 XIV. RETENTION OF JURISDICTION IT IS FURTHER ORDERED that this Court retains jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order. IT IS SO ORDERED. 13 13 14 14 15 15 Dated: September 6, 2017 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 21
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