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Case 2:11-cv-00461-JCM -RJJ Document 1 Filed 03/28/11 of 19

1 W illard K. TomGeneral Counsel

2Robin L. M oore

3 Benjamin J. Theisman '600 Pelm sylvania Avenue, NW

4 M ailstop M -8 l02BW ashington, DC 20580

5 Telephone: (202) 326-2167, -2223Fax: (202) 326-2558

6 Email: nnoore@ûc.gov, [email protected] Il

7 Blaine T. W elsh EAssistant United States Attorney

8 Nevada Bar No. 4790333 Las Vegas Blvd. South, Suite 5000

9 Las Vegas, NV 89101Telephone: (702) 388-6336

10 Fax: (702) 388-6787Email: [email protected]

l 1Attorneys for Plaintiff

12 Federal Trade Commission

13 IJNITED STATES DISTRICT COURTDISTRICT OF NEVADA

1 4

l 5FEDERAL TRADE COMM ISSION, 2'.1 1-CV-OO461-RLH -RJJ

1 6Plaintiff,

l 7

vs. (FILED IJNDER SEAUl 8

M ICHAEL BRUCE M ONEYM AKER, a/ll/a19 Bruce M oneym aker, M ike Sm ith, and M ichael

Bruce M illerd, individually, as an oflicer and20 director of tlle corporate defendants, and also

doing business as Fortress Secured,2 l

DANIEL DE LA CRUZ, individually, as an22 officer and director ()f tlle cgrporate

defendants, and also doing business as Fortress23 secured,

24 BELFORT CAPITAL VENTURES, INC., acorporation,

25


1 DYNAM IC ONLINE SO LUTIONS, LLC, alim ited Iiability company,

2H SC LABS, INC., a corporation,

3RED DUST STIJDIOS, INC-, a corporation,

4SEASIDE VENTURES TRUST, individually

5 and as an efficer and director of the corporatedefendants, and

6JOHN DOE NO. 1, in his capacit'y as trustee of

7 Seaside Ventures Trust,

8 Defendants.

9

10 COM PLAINT FOR PERM ANENT INJUNCTION AND OTHER EQUITABLE RELIEF

1 1 Plaintiff, the Federal Trade Commission (6TTC'') for its Complaint alleges:

12 l The FTC brings this action tmder Section l 3(b) of the Federal Trade Commission

13 Act (ttF'rc Act''), 15 U.S.C. j 53(b), to obtain tempormy preliminary, and pennanent injunctive14 lief rescission or reformation orcontracts

, restitution, the reftmd of m onies paid, disgorgem entre >

15 f ill-gotten m onies, tlze appointment of a receiver, and other equitable relief for Defendants'o

16 ts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. j 45(a).aC

17 Jtrm solcTlox Axo VENI;E

i 8 This Court has subject matterjurisdiction pursuant to 28 U.S.C. jj 1331 , l 337(a),19 d 1345 and 15 U

.S.C. jj 45(a) and 53(b).an ,20 venue is proper in this district tmder 28 U

.S.C. j 1391(b) and (c), and 15 U.S.C.21 5a(b),j22 pt

-yu x-jay'y-

23 4 'rhe Irerc is an independent agency of the United states Govemm ent created by

24

25 2


l statute. l 5 U.S.C. jj 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. j 45(a),

2 which prohibits unfair or deceptive acts or practices in or affecting commerce.

3 5. The FTC is authorized to initiate federal district court proceedings, by its own

4 attorneys, to enjoin violations of the FTC Act and to secure such equitable relief- as may be

5 appropliate in each case, including rescission or refonnation of contracts, restitm ion, the reftmd

6 of monies paid, and the disgorgement of ill-gotten monies. l 5 U.S.C. jj 53(b) and 56(a)(2)(A).

7 DEFENDANTS

8 6. Defendant Belfort Capital Ventures, Inc. tdtl3elfort''l; also doing business as

9 Centralized Customer Service, is a com oration with its principal place of business at 8668

10 Spring M ountain Road, Suite 10 1, Las Vegas, Nevada 891 17. Belfort also maintains mailing

l 1 addresses at: (1 ) 51 90 Neil Road, Suite 430, Reno, Nevada 89502,. and (2) 8550 West Dcscrt Inn

12 Road, Suite 102-381 , Las Vegas, Nevada 89 1 17. Belfort transacts or has transacted business in

13 this district and throughout the Unitcd Statcs.

l 4 7. Defcndant Dynamic Online Solutions, LLC tEtllylzamice'l is a limited liability

15 company w ith its principal place of business at 8550 W est Desert Inn Road, Suite 102-38 l , Las

16 Vegas, Nevada 89 l l 7. Dynamic also lists a m ailing address at 8550 W est Desert Inn Road,

l 7 Suite 10 l , Las Vegas, Nevada 891 17 in its corporate filings. Dynamic transacts or has

l 8 transactcd business in this district and throughout the United States.

19 8. Defendant HSC Labs, lnc. ($çHSC'') is a comoration with its prineipal place of

20 business at 8668 Spring M ountain Road, Las Vegas, Nevada 89 l 17. HSC also maintains

21 mailing addresses at: (1) 35 East Agate #501, Las Vegas, Nevada 89123,. and (2) P.O. Box

22 52080, Sparks, Nevada 89431 . HSC transacts or has transacted business in this district and

23 throughout the United States.

24

25 3


'

jr

i1Iiji!II

1 9. Defendant Red Dust Studios, Inc. (ç$Red Dust'') is a comoration with its principal

2 place of business at 8668 Spring M ountain Road, Las Vegas, Nevada 89l 17. Red Dust also

3 maintains a m ailing address at P.O . Box 27740, Las Vegas, Nevada 89126. Red Dust transacts

4 or has transacted business in this district and throughout the United States.

5 l0. Defendant Seaside Ventures Trust Ctseaside'') is the managing member of

6 Dynamic. Seaside m aintains a m ailing address at 8550 W est Desert I.111,1 Road, Suite l 01, Las

7 Vegas, Nevada 891 17. At a1l times material to this Complaint, acting alone or in concert with .1i

8 others, Seaside formulated, directed, controlled, had the authority to control, or participated in 'ki

9 the acts and practices set forth in this Com plaint. Defendant Seaside, in connection with the !IIl 0 matters alleged herein

, transacts or has transacted business in this district and throughout the !

Il l United States. i

12 1 l . Defendant John Doe No. 1 (tfDoe'') is the trustee of Seaside and holds legal title

's assets, including ownership of Dynamic. ln his capacity as trustee of Seaside, l13 to a1l of Seaside'

j14 Defendant Doe, at al1 times material to this Complaint, acting alone or in concert with others, !

15 formulated, directed, controlled, had the authority to control, or participated in the acts and

16 practices set forth in this Complaint. In his capacity as trustee of Seaside and in connection with

17 the matters alleged herein, Defendant Doe transacts or has transacted business in this district and

18 throughout the United States.

19 12. Defendant M ichael Bruce M oneym aker, also known as Bruce M oneymaker, M ike

20 Smith, and Michael Bruce Millerd (ttMoneymaker@'), is the registered Director, President,

2 l Trcasurer, and Secretaly of Belfort and was, until July 24, 2009, the registered President and

22 Treastlrer of HSC. Detkndant M oneymaker also does business as Fortress Secured. At al1 times

23 m aterial to this Complaint, acting with knowledge, alone or in concert with others, he

24

25 4


l formulated, directed, controlled, had the authority to control, or participated in the acts and

2 practices set fol'th in this Complaint. Defendant M oneymaker, in connection with the matters

3 alleged herein, transacts or has transacted business in tlzis district and tltroughout the United

4 States.

5 13. Defendant Daniel De La Cruz (1tDe La Cruz'') is the registered Director,

6 President, Treaslzrer, and Secretal'y of HSC. Defendant De La Cruz also does business as

7 Fortress Secured. At all times material to this Cemplaint, acting with knowledge, alone or in

8 concert with others, he formulated, directed, controlled, had the authority to control, or

9 participated in the acts and practices set forth in this Complaint. Defendant De La Cruz, in

10 connection with the matters alleged hepin, transacts or has transacted business in this district

1 1 and throughout the United States.

12 14. Defendants Belfol-t, Dynamic, HSC, and Red Dust (collectively, çforporate

l 3 Defendants'') have operated as a common enterprise while engaging in the deceptive and unfair

1 4 acts and practices alleged below. Defendants have conducted the business practices described

l 5 below tllrough an interrelated network of com panies that have comm on ownership, officers,

16 managers, business functions, employees, oftice locations, centralized payroll ftmctions, and

17 comm ingled ftmds. Because these Corporate Defendants have operated as a common enterprise,

18 each of thern is jointly and severally liable for the acts and practices alleged below. Defendants

19 M oneymaker, De La Cruz, Seaside, and Doe, acting with knowledge, formulated, directed,

20 controlled, had the authority to control, or participated in the acts and practices of the Corporate

2 1 Defendants that constitute the common enterprise.

22 COM M ERCE

23 l 5. At all tim es material to this Complaint, Defendants have maintained a substantial

24

25 $


1 cotlrse of trade in or affecting com merce, as itcomm erce'' is defined in Section 4 of the FTC Act;

2 15 U.S.C. j 44.

3 DEFENDANTS' BUSINESS ACTIVITIES

4 l6. Since at least August 2009, Defendants have been engaging in a comm on

5 entem rise in which they charge consumers' bank accounts without consum ers' knowledge or

6 consent. Defendants obtain consumers' bank account inform ation from websites that claim to

7 match consumers with payday lenders. W ith this information, Defendants enroll consumers in a

8 variety of tkontinuity prom am s,'' prop-ams for which they charge consumers an initial

9 enrollm ent fee as well as recurring fees on a weekly or m onthly basis tmtil consum ers take an

10 affinnative action to cancel. Consum ers leal'n of these charges only when they notice

l l withdrawals from their checking accounts.

12 1 7. Since August 2009, Defendants have used various nam es for their continuity

13 programs, including çluniguard '' tiFreedom Subscription,'' tflllustrious Perks,'' itselect Platinum5

14 Credit,'' and Et tonite Credit.'' These programs purport to provide consum ers a variety of

15 services, such a dtl7ree Stored Value Visa Card, Free Voice mail gsic), Free Airline Tickets and a

16 $10,000 secmed credit line.'' Defendants' business practices follow the same pattem , and

l 7 consum ers' experiences are essentially the same, for each of these plans.

I 8 l 8. ln nearly al1 instances, the consum ers that Defendants enroll in their continuity

19 programs tirst apply for a payday loan online. To apply, consumers provide personal

20 infonnation, including their nam e, bank routing number, and bank account num ber.

2 1 l9. Consumers submit these payday loan applications through payday loan m atching

22 sites websites that represent they will ûlmatch'' applicants with lenders by forwarding

23 applications to potential lenders. llz some instances, consumers submit a payday loan application

24

25 6@

!

!II


i'j

l directly through websites for payday loan lenders instead of a matching site.

2 20. ln numerous, if not all, instances, consumers do not see any advertisement for

3 Defendants' continuity programs or any disclosure informing them that they are agreeing to

4 enroll in a continuity program.

5 21. ln m any instances, however, aiter consumers subm it their personal information, a

6 pop-up box titled tt-f'erms and Conditions'' appears over a web page, which includes consum ers'

7 personal information and loan rate offel's. Consumers faced with this pop-up box on the heels of

8 their payday loan application believe it is associated with their loan application.

9 22. In fact, consum ers have leû the payday loan website and the pop-up box is from

10 Defendants. ln at least some instances, the web address for the website, including the pop-up

1 1 box, is within the all-cash-direct.com lnternet dom ain. This Internet dom ain is registered to

12 Fortress Secttred at 35 E. Agate, #50 1 , Las Vegas, Nevada 89 123, the same address included on

13 Defendant HSC'S m ost recent corporate filings. Additionally, the lnternet registration for this

14 dom ain lists Defendant De La Cruz as the domain's administrative contact.

15 23. The pop-up box, however, makes no mention of Defendants or their continuity

16 plans. Rather, the pop-up box instructs consumers to ltchoose an authorization process,'' and

l 7 provides consumers with a choice of providing a digital sigrtature with their m ouse or a voice

l 8 authorization indicating that consum ers çsagree to the tenns and conditions of this site, including

l 9 the third party trial offers that will automatically be extended to gthem) with this

20 application/offer.'' M any consum ers provide a digital signattzre or voiee authorization, believing

21 that they are providing this signature or authorization to the payday loan website.

22 24. M any consum ers, however, do not provide an authorization. Nonetheless,

23 Defendants charge them for Defendants' continuity programs.

24

25 7


!i!

1 25. Having obtained consum ers' bank account information through their payday loan

2 applications, Defendants create and deposit %iremotely created checks,'' which draw ftmds from

3 consum ers' bank accotmts as payment for the continuity program s. A rem otely created check

4 looks like a norm al check written by the consum er. But, it is in fact created by the payee

5 pum ol-tedly with the consumer's authorization. These types of checks are also som etimes

6 known as çttelechecks '' Vçpreauthorized drafts '' and içpaper drafts.''5. l

7 26. A typical check that Defendants create is made payable to one of Defendants'

8 continuity program s. Looking at the check's reverse side, consum ers can see that the check was

9 deposited in an account held by or for the benetit of Defendant Belfort or Defendant Dynamic.

10 In num erous instances, these checks also list a nam e for a third-party payment processor. ln

l 1 numerous instances, the checks list the processors as Checksite, CSI, AEC, or Elite Debit.

12 27. Depending on tlze continuity propam , Defendants deposit checks for enrollment

l 3 fees ranging from $8.42 to $49.99 and then deposit checks for weekly or monthly fees ranging

14 from $8.42 to $ 19.98.

l 5 28. Defendants do not provide the consumers who they enroll in their continuity

l 6 program s any inform ation about such programs.

17 29. Additionally, Defenclants provide little to no description of the benelits of these

l 8 continuity prop am s on the websites dedicated to them . For example, the Select Platinum Credit

19 website, www.spccredit.com, is a single page, the entire content of which is a toll-free customer

20 service number.

2 1 30. Likewise, the Freedom Subscription website, which is now disabled, consisted of .

22 a single page with only a toll-free customer sezvice number, a m ailing address, a link to a

23 different website where consum ers could purportedly access the digital or voice authorization

24

25 8

iII


l that Defendants claim consumers provided, and an interactive box where a consum er purportedly

2 could engage in a çt ive Chat'; with a representative.

3 31. An early version of the Illustrious Perks website was identical to the Freedom

4 Subscription website. Although a more recent version of the Illustrious Perks website has a list

5 of purpol-ted benetits available to lllustrious Perks members, information about these benclits

6 can only be accessed after consumers enter user nam es and passwords for their Illustrious Perks

7 accounts.

8 32. Like the latest Illustrious Perks website, the website for tonite Credit lists the

9 purported benetits available to tonite Credit m embers, but requires m embers to enter a user

10 nam e and password to access information about these purported benefits.

1 1 33. ln numerous, if not all, instances, Defendants do not provide consumers with user

12 nam es or passwords to access the lllustrious Perks or tonite Credit websites.

13 34. Defendants do not solicit consum ers to sign up for continuity programs on any of

14 their websites. Defendants do not provide an application for continuity prov ams on their

15 websites. '

16 35. Num erous consum ers do not discover that Defendants enrolled them into the

17 continuity program s until they review their bank statem ents and notice that a rem otely created

1 8 check has passed through their accounts, or until their banks contact them because Defendants'

19 remotely created checks caused their accounts to be overdrawn.

20 36. Once these consumers discover Defendants' charges, they often obtain a copy of

2 1 the remotely created check from their bank, either by visiting a physical branch or tllrough

22 online banking. Having obtained the checks, consumers then are able to see which continuity

23 program Defendants are billing them for. The consumers also can identify a web address or

24

25 9


i1iIIl

l phone number for the continuity program , one or both of which appear on the remotely created

2 checks,

3 37. M any of these consumers then call the phone numbels on the checks to inquire

4 why they were charged and to obtain a refund. Defendants manage m any of these phone

5 numbers through an account hetd by isFortress Secured'' and paid for by Defendant Belfort.

6 Defendant M oneym aker is the signatory for both the account with the phone company and for

7 the debit card in Defendant Belfort's name used to pay for the account.

8 38. In nttm erous instances, consumers who call the telephone numbers listed on the

9 remotely created checks or corresponding websites reach a call center located at 8668 Spring

l 0 M ountain Road Las Vegas, Nevada 89 l l 7. '7

1 1 39. This Las Vegas call center has an extcrior tçBelfort Capital Ventures'' sign. jE

12 Additionally, Red Dust and HSC are also located at this address and, in the past, have paid the '

! i

'

: l 3 call center employees. j: !! 14 40. Defendants M oneymaker and De La Cruz own and are in charge of this call i:

'

j: !15

center business. At times relevant to this complaint, both Defendants Moneymaker and De La !

16 Cnzz have m aintained personal oftice space at 8668 Spring M otmtain Road, l-as Vegas, Nevada 1!

1 7 89l 17. Defendants Moneymaker and De La Cruz have knowledge of consumer complaints of 118 unauthorized charges for Defendants' continuity programs. Furthermore, Defendant

19 M oneymaker is a managing member of a separate company, FK Grant Family LLC, which owns

20 the building at 8668 Spring M ountain Road, Las Vegas, Nevada 89 l 17, the call center's address.

2 l 41. Defendants instruct call center employees to state that they are a third-party call

22 center and further instnzct the employees that they should not reveal the call center's act-ual

23 address to consumers. Instead Defendants' call center employees tell consumers the company is7

24

25 10


l located at 8550 W est Desert 111:1 Road, Suite 102-381, Las Vegas, Nevada 891 17. This address

2 is a mail box located close to the call center. Beginning in the sum mer of 2010, however,

3 Defendants instm cted call center em ployees to inform consumers that Jllustrious Perks is located

4 at a specified address in Beaverton, Oregon and that Select Platinum Credit is located at a

5 specified address in Roclty M ount, Nol'th Carolina. Both of these addresses are mail boxes. In

6 addition, employees tell consumers that tonite Credit is located at a specified address in

7 Petaluma, Califomia. This address is also just a mail box.

8 42. M any consum ers call the numbers on the remotely created checks to ask why they

9 have been charged and to seek refunds for those charges. Defendants tell call center employees

l 0 they can expect that 90% of consum ers calling will be seeking a cancellation, seeking a refund,

1 1 or asking about the stat'us of a prom ised refund. Posing as a consumer, an FTC investigator

12 called a number on the Defendants' remotely created checks. A call center employee who

13 identified him self as Ktlames'' noted that the call center handles ççall the calls because a lot of

14 people will get signed up and say they don't want it (the continuity programâ, so they'll call and

l 5 they'll cancel it.''

16 43. Call center em ployees answeritlg calls from consumers about each continuity

l 7 program initially ask consum ers for identifying information to access consumers' accounts in

18 Defendants' database. Defendants instruct these employees not to tell consumers calling about a

l 9 particular continuity program about other continuity program s that Defendants m ay have

20 enrolled those consumers in unless the consumers raise the programs.

2 l Additionally, in situations where Defendants enrolled consum ers in multiple

22 continuity programs and those consum ers ask about more than one program during a single

23 phone call, Defendants have instructed call center employees to refuse to help consumers

24

25 1 l


i

il l regarding any continuity program other than the program tirst m entioned by those consumers.

I 2 As to any other continuity programs, Defendants have instructed call center employees to denyl

3 they have any knowledge of those continuity programs and to tell consumers to call the number

4 associated with Defendants' other continuity programs to dispute any related charges, even

5 though the number connects the consumers to the same call center.

6 45. Call center em ployees tell consum ers that within the past 60 days they applied for

7 a payday loan online and that the charge is for a third-party offer associated with that online

8 application. Call center employees then explain the purported benefits of the continuityIi 9 program . For m ost of the continuity programs, the purported benelits are identical. Specifically,

l 10 in responses to Better Business Bureau complaints, Defendants stated that tlze benetits for:

I

1 1 Freedom Subscription, lllustrious Perks, Select Platinum Credit, and tonite Credit were çtaiI 12 Free Stored Value Visa Card

, Free Voice mail gsicj, Free Airline Tickets and a $ 1 0,000 secttred:

i 13 credit line.'' Defendants state Uniguard is %ta comprehensive, consum er-focused, financial,;

14 credit, and legal program designed to help family gsicj deal with today's most pressing financial

15 challenges.''

16 46. To persuade complaining consumers that they authorized enrollment, call center

17 employees direct them to a website, wavw.loanterrns.cl, which they claim disclosed to consumers

18 that they would be enrolled in Defendants' continuity programs. That website contained a ten- i!

(t-l-erms and Conditionss'' in which Defendants buried a 1.19 page docum ent full of legalese titled

20 single paragraph stating that consum ers are approved for a t'Risk Free Trial Offcr'' for Freedom

2 l Subscription and authorize Defendants to debit their bank accounts. In numerous, if not all,

22 instances, the term s and conditions located at www.loantcrms.cl were not the terms and

23 conditions of the payday loan website that consum ers used to apply for payday loans.

24

25 12


1 47. Defendants have recently replaced www.loanterms,cl with

2 vv'w:x'.loantel'mstlnlîne.cflln. This latter website is a1l but identical to www.loantcnus.cl and

3 Defendants link to u'zwzNv,loantemlstlnlinc.ctln) from som e of their other current websites.

4 48. Defendants also instruct call center employees to tell consumers that when

5 Defendants emolled consum ers into their continuity program s, consumers received an email

6 with login information and a link to a m embership porlal.

7 49. ln num erous, if not all, instances, these consumers do not receive an email

8 regarding Defendants' continuity program s.

9 50. Defendmzts instruct call center employees to lim it the number of refunds offered.

10 At one point Defendants instructed call center employees that no more than 45% of consum ers

1 l should receive refunds. At that tim e, Defendants infonned call center employees that each

12 reftmd was a black m ark on the employee's performance.

13 51. Defendants take several steps to thwart consumers seeking refunds. In m any

14 instances, call center employees refuse to provide a refund or provide a refund only to the m ost

l 5 persistent consum ers who call repeatedly.

l 6 52. Additionally, in num erous instances, call center employees promise consum ers

17 refunds but the consumers never acmally receive them . Defendants prom ise these consumers

18 refunds in 7-10 days, or a similar period. After that time period expires, and Defendants have

19 not yet provided a reftm d coasumers call asking why they have not yet reccived a reftmd.5

20 Defendants instnzct call center employees to promise a refund within an additional period, in

2 1 many instances another 7- 10 days. Defendants continue these tactics indetinitely until

22 consumers stop calling about the promised refunds.

23 53. In some instances, call center employees tell consumers that the inquily is being

24

25


fdescalated'' to a manager who will call those consum ers. vln numerous instances, those

consumers receive no subsequent call from a call center manager.

Dttring some periods of time, consumers calling these numbers are not connected

to a representative. Instead these consum ers hear a voice message stating the consumers' phone7

numbers are being placed on a call log and that a customer selwice representative will call the

consumers at a later time. ln numerous, if not all, instances, these consumers receive no

subsequent call from any customer senrice representative.

55. ln other instances, when consumers call Defendants' custom er service numbers,

the phone rings for a long period of time and then the line goes dead, with no answer.

In other instances, Defendants place consum ers on hold indefinitely, never

connecting those consumers to a call center employee.

VIOLATIONS OF THE FTC ACT

57. Section 5(a) of the FTC Act, l 5 U.S.C. j 45(a), prohibits itunfair or deceptive acts

or practices in or affecting comm erce.''

58. M isrepresentations or deceptive om issions of m aterial fact constitute deceptive

acts or practices prohibited by Section 5(a) of the FTC Act. Acts or practices are tmfair under

Section 5 of the FTC Act if they cause substantial injury to consumers that consumers cannot

reasonably avoid themselves and that is not outweighed by countelwailing benefits to consumers

or competition. 15 U.S.C. j 45(n).

UNFAIR BILLING PILACTICES

Count I

59. ln numerous instances, Defendants obtain consumers' bank account inform ation

and debit those accounts without consumers' express informed consent.

14


!l!II

1 60. Defendants' actions cause or are likely to cause substantial injury to consumers

2 that consumers cannot reasonably avoid themselves and that is not outweighed by countenrailingI

3 benetits to consumers or com petition.

4 6 l . Therefore, Defendants' practices as described in Paragraph 59 of this Com plaint

5 constimte unfair acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. ïjj 45(a)

6 and 45(n).

7

8 DECEPTIVE BILLING PRACTICES

9 Count 11

1 0 62. In num erous instances, Defendants represent, directly or indirectly, expressly or

l 1 by implication that they will use consum ers' authorizations to further their payday loan

12 applications.

l 3 63. ln truth and in fact, in num erous of these instances Defendants do not use

14 consum ers' authorizations to further their payday loan applications, but instead to charge

15 consum ers for continuity programs.

16 64. Therefore, Defendants' representations set forth in Paragraph 62 of this

17 Complaint are false or m isleading and constitute deceptive acts or practices in violation of

18 Section 5(a) of the FTC Act, 15 U.S.C. j 45(a).

19 Count I1I

20 65. In numerous instances, Defendants make representations to consum ers that third-

2 1 party trial offers will autom atically be extended to them.

22 66. ln truth and in fact, when Defendants m ake this representation, Defendants do not

23 disclose clearly and conspicuously to consumers that they will be charged for Defendants'

24

25 15


l continuity program s.

2 67, Defendants' tàilure to disclose or disclose adequately the m aterial infonnation

3 described in Paragraph 66 of this Complaint in light of the representation described in Paragraph

4 65 of this Complaint constitutes a deceptive act or practice in violation of Section 5(a) of the

5 FTC Act, 15 U.S.C. j 45(a).

6

7 DECEPTIVE REFUND PM CTICES

8 Count IV

9 68. In numerous instances, when consumers contact Defendants to seek cancellations

1 0 and refunds, Defendants represent, directly or indirectly, expressly or by implication that

1 l consumers are not entitled to a refund because they agreed:

12 a. to enroll in Defendants' continuity program s;

l 3 b. to pay charges associated with Defendants's continuity progums; and

14 c. that they would be entitled to a reftmd for Defendants' continuity

15 program s only if they asked for a refund during the trial period;

16 69. In trtlth and in fact, in numerous instances in which Defendants make these

l 7 representations, consum ers did not agm e:

18 a. to enroll in Defendants' continuity program s;

19 b. to pay charges associated with Defendants' continuity programs; or

20 c. that they would be entitled to a refund for Defcndants' continuity

2 1 program s only if they asked for a refund during the trial period;

22 70. Therefore, Defendants' representations set forth in Paragraph 68 of this


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l Section 5(a) of the FTC Act, 15 U.S.C. j 45(a).

2 Count V

3 7 l . ln num erous instances, when consum ers contact Defendants to seek refunds,

4 Defendants represent, directly or indirectly, expressly or by implication that they will provide

5 reftmds.

6 72. In num erous of these instances, Defendants do not provide reftmds.

7 73. Therefore Defendants' representations set forth in Paragraph 7 l of this7


9 Section 5(a) of the FTC Act, 15 U.S.C. j 45(a).

10 CONSUM ER INJURY

l 1 74. Consumers have suffered and will continue to suffer substantial injury as a result

12 of Defendants' violations of the FTC Act. ln addition, Defendants have been unjustly enriched

13 as a result of their tmlawful acts or practices. Absent injunctive relief by this Court, Defendants

14 are likely to eontinue to injure consumers, reap unjust enrichment, and hann the public interest.

15 THIS COURT'S POW ER TO GRANT RELIEF

16 75. Section l3(b) of the FTC Act, 15 U.S.C. j 53(b), empowers this Court to grant

17 injunctive and such other relief as the Court may deem appropriate to halt and redress violations

18 of any provision of law enforced by the FTC. The Court, in the exercise of its equitable

19 jurisdiction, may award ancillary relief, including rescission or reformation of contracts,

20 restim tion, the reftmd of monies paid, and the disgorgement of ill-gotten m onies, to prevent and

2 1 rem edy any violation of any provision of law enforced by the FTC.

22 PRAYER FOR RELIEF

23 Wherefore, PlaintiffF'rc pursuant to Section 13(b) of the FTC Act, 1 5 U.S.C. dj 531),>

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1 and the Court's own equitable powers, requests that the Court:

2 A. Award Plaintiff such prelimina:y injunctive and ancillaa relief as may be necessaly to

3 avert the llkelihood of consumer injury during the pendency of this action and to preserve

4 the possibility of effective tinal relief, including but not lim ited to, tem poraa and

5 preliminal'y injunctions, an order freezing assets, immediate access, and thc appointment

6 of a receiver',

7 B. Enter a permanent injtmction to prevent f'uture violations of the FTC Act by Defendants;

8 C. Award such relief as the Court finds necessary to redress injury to consumers resulting

9 from Defendants' violations of the FTC Ad, including but not limited to, rescission or

1 0 retbrm ation of contractss restitution, the refund of monies paid, and the disgorgem ent of

l l ill-gotten m onies; and

12 D. Award Plaintiff the costs of bringing this action, as well as such other and additional

13 relief as the Court may determine to bejust and proper.

14 Respectfully submitted,

1 5 W ILLARD K. T0MGeneral Counsel . ,r

1 6 , .

17 oated: 15 z'L,- // .. .

,,..

. v'f-b , < . f. - z,.,, -.,ROBIN L. M OORE

18 BENJAM IN J. THEISM AN600 Pennsylvania Avenue, NW , M -8102B

19 W ashington, DC 20580Telephone: (202) 326-2167, -2223

20Attorneys for Plaintiff

21 FEDERAL TRADE COM M ISSION

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