Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Billing scheme defendant settles FTC charges, (Mar 8, 2016)
Organizations Mentioned:I Works, Inc.
By Greg Hammond, J.D.
An individual accused of participating in a scheme that allegedly bilked more that $275 million from consumers through deceptive “trial” memberships for government-grant and money-making schemes has agreed to settle FTC charges that he violated the FTC Act and the Electronic Fund Transfer Act (EFTA) (FTC v. Johnson, File No. 102 3015, Dkt. 2:10-cv-02203-MMD-GWF).
The Commission’s complaint alleges that Loyd Johnston, Jeremy Johnson, and others operated an Internet enterprise that deceptively enrolled consumers into memberships for products or services and then repeatedly charged their credit cards or debited funds from their checking accounts without consumers’ knowledge or authorization for memberships the consumers never agreed to accept. The defendants’ websites were also allegedly replete with misrepresentations concerning the availability of grants for personal expenses and the likely profitability of certain money-making opportunities.
According to the terms of the proposed settlement, Johnston would be prohibited from: (1) advertising or selling any product as a forced upsell; (2) holding any ownership or financial interest in any business entity that engages or assists others in advertising or selling any product as a forced upsell; or (3) serving as an officer, director, of manager of any business entity, acting as a signatory for any business entity, or applying for any merchant account for any business entity, unless Johnston actually controls, participates in, or has knowledge of the daily operations of that entity.
In addition, Johnston would be restrained from: (1) making or assisting others in making false or misleading statements or representations of material fact; (2) misrepresenting or assisting other in misrepresenting the material terms and conditions concerning a negative-option feature or continuity program, the total cost to buy a product, the income or sales volume likely to come from an investment opportunity, among other types of misrepresentations; (3) failing to disclose clearly and conspicuously any other material information; and (4) violating the Electronic Fund Transfer Act.
An over $7 million monetary judgment would also be entered against Johnston. The judgment represents the total unreimbursed consumer injury allegedly caused by Johnston’s practices. However, the judgment will be suspended due to Johnston’s inability to pay.
Companies: I Works, Inc.
News: ConsumerProtection FederalTradeCommissionNews