UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION

FEDERAL TRADE COMMISSION,
Plaintiff,

v.

HOLD BILLING SERVICES, LTD.,
a Texas limited partnership;
HBS, INC.,
a Texas corporation;
AVERY COMMUNICATIONS, INC.,
a Texas corporation;
VETERANS OF AMERICA ASSOCIATION, LTD.,
a Pennsylvania corporation;
THOMAS M. LYONS, individually and as an officer of HBS, Inc.;
KEITH C. CALIL, individually and
as an officer of Veterans of America Association, Ltd.; and
MILFORD H. BALABAN, individually and
 as an officer of Veterans of America Association, Ltd.,
Defendants.

CIVIL NO. SA-98-CA-0629-FB

STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND CONSUMER REDRESS AS TO DEFENDANTS HOLD BILLING SERVICES, LTD., HBS, INC., AVERY COMMUNICATIONS, INC. AND THOMAS M. LYONS

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), has filed its complaint for permanent injunction and other relief pursuant to § 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), charging Defendants Hold Billing Services, Ltd., HBS, Inc., Avery Communications, Inc. and Thomas M. Lyons with violating Section 5 of the FTC Act, 15 U.S.C. § 45.

The parties have agreed to the entry of this Stipulated Final Judgment and Order for Permanent Injunction and Consumer Redress ("Order") by this Court to resolve all matters of dispute between them in this action.

NOW, THEREFORE, Plaintiff Federal Trade Commission and Defendants Hold Billing Services, Ltd., HBS, Inc., Avery Communications, Inc. and Thomas M. Lyons having requested the Court to enter this Order,

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED as follows:

FINDINGS

1. This Court has jurisdiction of the subject matter of this case and of the parties consenting hereto.

2. Venue is proper as to all parties in the Western District of Texas.

3. The activities of Defendants are in or affecting commerce, as defined in the FTC Act,

15 U.S.C. § 44.

4. The Complaint states a claim upon which relief may be granted against Defendants under Section 5 of the FTC Act, 15 U.S.C. § 45(a).

5. Defendants have waived all rights that may arise under the Equal Access to Justice Act, 28 U.S.C. § 2412, amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996).

6. This Order does not constitute an admission by Defendants that they have engaged in violations of the FTC Act.

7. Nothing in this Order shall be construed as relieving Defendants of any obligations they may have under any other rule or law enforced by the FTC or Federal Communications Commission.

DEFINITIONS

1. "Commission" or "FTC" means the Federal Trade Commission.

2. "Defendants" means Hold Billing Services, Ltd., HBS, Inc., Avery Communications, Inc. and Thomas M. Lyons, and their successors and assigns.

3. "LEC" or local exchange carrier means the local telephone company from which a Line Subscriber receives his or her telephone bill.

4. "Line Subscriber" means an individual or entity who has arranged with a LEC to obtain local telephone service provided through an assigned telephone number, and to be billed for such service on a monthly or other periodic basis.

5. "Person" means any individual, partnership, corporation, association or unincorporated association, government or governmental subdivision or agency, group, or other entity.

6. "Representatives" means Defendants' officers, partners, agents, employees, servants, attorneys and those Persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise.

7. "Telephone-Billed Transaction" means any purchase or purported purchase of a good or service that is charged to a Line Subscriber's telephone bill, including any voice mail or audiotext service, but excluding: (1) purchases solely of common carrier transmission services; and (2) purchases of services accessed by dialing a 900 number or other number that can be blocked by the Line Subscriber pursuant to 47 U.S.C. § 228(c).

8. "Vendor" means any Person, including any of the Defendants or their Representatives, who sells or offers to sell goods or services billable as a Telephone-Billed Transaction.

I. BAN ON SWEEPSTAKES AND NEGATIVE OPTION BILLING

IT IS THEREFORE ORDERED that Defendants and their Representatives are hereby permanently restrained and enjoined from billing or causing to be billed, or collecting or attempting to collect payment, directly or indirectly, from a Line Subscriber for any Telephone-Billed Transaction made as a result of an authorization obtained from a sweepstakes, prize promotion or negative option marketing plan.

II. PROHIBITED BUSINESS PRACTICES

IT IS FURTHER ORDERED that Defendants and their Representatives, in connection with the advertising, offering, promotion or sale of any Telephone-Billed Transaction, or with the billing or collection for a Telephone-Billed Transaction, are hereby permanently restrained and enjoined from:

1. Any misrepresentation that a Line Subscriber is legally obligated to pay for the purchase of any good or service that the Line Subscriber did not expressly authorize;

2. Any misrepresentation that a Line Subscriber is obligated to pay any charge on the basis that the good or service was purchased or accessed from the Line Subscriber's telephone, unless the Line Subscriber expressly authorized the purchase; and

3. Any misrepresentation that a Telephone-Billed Transaction has been authorized by the Line Subscriber;

Failing to answer promptly any telephone number for customer service that the Defendants or their Representatives cause to be placed on Line Subscribers' telephone bills, and to require Vendors to answer promptly any such number and any other number to which Defendants or their Representatives may refer customer complaints or inquiries.

III. LINE SUBSCRIBER AUTHORIZATION

IT IS FURTHER ORDERED that Defendants and their Representatives are hereby permanently restrained and enjoined from billing or causing to be billed, or collecting or attempting to collect payment, directly or indirectly, from a Line Subscriber for any Telephone-Billed Transaction, unless the charge for such Telephone-Billed Transaction was expressly authorized by the Line Subscriber.

IV. NO AUTHORIZATION FROM TELEPHONE NUMBER

IT IS FURTHER ORDERED that Defendants and their Representatives are hereby permanently restrained and enjoined from billing or causing to be billed, or collecting or attempting to collect payment, directly or indirectly, from a Line Subscriber for any Telephone-Billed Transaction, where the Vendor's basis for billing is its possession of the Line Subscriber's telephone number, whether obtained through Automatic Number Identification (ANI) or through any other means.

V. REQUIRED DISCLOSURES

IT IS FURTHER ORDERED that Defendants and their Representatives are hereby permanently restrained and enjoined from:

1. The total cost of the goods or services offered;

2. The number and amount of any payments to be made for the purchase;

3. That charges for the good or service will be billed to the Line Subscriber's telephone bill, if such is the case;

4. Any material term, condition, or limitation of the transaction or on the use of the offered good or service;

5. The Vendor's refund policy, if any, or if none, the fact that refunds will not be granted; and

6. The means, if any, by which the purchase can be canceled;

1. Does not obtain express authorization for such Telephone-Billed Transaction from the Line Subscriber; and

2. Does not create and maintain for a period of two (2) years from the date of such creation, records containing the names, addresses and telephone numbers of all Line Subscribers billed by Defendants or their Representatives for the Vendor, and make such records available to Defendants or their Representatives promptly upon request; and

1. An accurate description for each Telephone-Billed Transaction of the type of good or service being charged, and the amount of the charge; and

2. The local or toll-free telephone number where Line Subscribers can readily obtain resolution of their complaints and removal of unauthorized charges from their bills.

VI. CONSUMER REDRESS

IT IS FURTHER ORDERED that Defendants are jointly and severally liable for payment of equitable monetary relief, including, but not limited to, consumer redress and the cost of any attendant expenses of administration of any redress fund, in the amount of ONE MILLION SIX HUNDRED TWENTY-FOUR THOUSAND AND FIFTY-THREE DOLLARS ($1,624,053.00).

Credits to consumers for VOAA charges processed by Defendant Hold Billing Services Ltd.: $859,080

Reimbursement and expenses of administration paid by HBS to LECs for credits issued to consumers by the LECs for VOAA charges $514,973 $1,374,053

Accordingly, in view of the refunds to consumers already made by Defendants, ONE MILLION THREE HUNDRED SEVENTY-FOUR THOUSAND AND FIFTY-THREE DOLLARS ($1,374,053.00) of the judgment shall be suspended; subject to further order of the Court pursuant to Paragraph VII of this Order.

Time is of the essence for the payment specified above. In the event that Defendants, or any of them, do not fulfill, or only partially fulfill, the payment obligation set forth in this Paragraph, they shall be immediately liable for payment of the entire amount due, less any payments already made. Defendants agree that, in such event, the facts as alleged in the Complaint filed in this action shall be taken as true in any subsequent litigation filed by the Commission to enforce its rights pursuant to this Order, including but not limited to a nondischargeability complaint in any subsequent bankruptcy proceeding.

If the Commission, in its sole discretion, determines that redress is wholly or partially impractical, any funds not so used shall be deposited in the United States Treasury. The Commission, in its sole discretion, may use a designated agent to administer consumer redress. Defendants acknowledge and agree that this judgment for equitable monetary relief is solely remedial in nature and is not a fine, penalty, punitive assessment or forfeiture.

Defendants shall cooperate fully with the Commission and its agents in all attempts to collect the amount due pursuant to this Paragraph if Defendants, or any of them, fail to pay fully the amount due at the time specified by this Order. In such an event, Defendants agree to provide the Commission with their federal and state tax returns for the preceding two years, and with full financial disclosure, in the form attached as Appendix A-1 or A-2 hereto, as applicable, within ten (10) business days of receiving a request from the Commission to do so. Defendants further authorize the Commission to verify all information provided on their financial disclosure forms with all appropriate third parties, including but not limited to financial institutions.

VII. RIGHT TO REOPEN

IT IS FURTHER ORDERED that the Commission's agreement to this Order is expressly premised upon the financial condition of Defendants as represented in the "Financial Statement of Partnership Defendant" Hold Billing Services, Ltd." dated January 29, 1999, on the "Financial Statement of Corporate Defendant" Avery Communications, Inc. dated February 22, 1999, and on Defendants' representations in Paragraph VI.A. of this Order, which contain material information upon which the Commission relied in negotiating and consenting to this Order. If upon motion by the Commission, this Court finds that Defendants' representations in Paragraph VI.A. were materially misleading, or that their financial statement failed to disclose any material asset, materially misrepresented the value of any asset, or contained any other material misrepresentation or omission, the Commission may request that the judgment herein be reopened for the purpose of requiring payment of additional monetary redress or obtaining other equitable relief; Provided, however, that in all other respects this judgment shall remain in full force and effect, unless otherwise ordered by the Court.

VIII. BILLING LIST CONFIDENTIALITY

IT IS FURTHER ORDERED that Defendants and their Representatives are hereby permanently restrained and enjoined from selling or renting the name, address, telephone number, credit card number, bank account number, e-mail address, or other identifying information of any Line Subscriber or other Person whom Defendants or their Representatives billed or caused to be billed, at any time prior to entry of this Order, Provided, however, that Defendants and their Representatives may disclose such identifying information to a law enforcement or regulatory agency as required by any law, regulation, or court order.

IX. MAINTENANCE OF BUSINESS RECORDS

IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Order, for any business that Defendants or their Representatives, or any of them, now or in the future, directly or indirectly manage, control, or have a majority ownership interest in, that is engaged in billing or collection activities for Telephone-Billed Transactions, or assisting others engaged in those activities, Defendants and their Representatives are hereby restrained and enjoined from failing to create, and from failing to retain for a period of two (2) years following the date of such creation, unless otherwise specified:

Records accurately reflecting: the name, address, and home telephone number of each Person employed in any capacity by such business, including as an independent contractor; that Person's job title or position; the date upon which the Person commenced work; and if applicable, the date and reason for the Person's termination, at all times while any such Person is employed by Defendants or their Representatives and for a period of at least two (2) years thereafter;

Records containing the telephone numbers, quantity of all goods or services purchased or billed, and a description of all such goods or services, for all Line Subscribers who Defendants or their Representatives have billed or caused to be billed for any goods or services as a result of a Telephone-Billed Transaction, including, but not limited to, all electronic billing data submitted by Defendants or their Representatives to a LEC;

Records of every consumer complaint or refund request received by Defendants, whether directly, or indirectly through a third party, which records shall be organized and maintained so that all records relating to a particular Line Subscriber are retrievable by the Line Subscriber's telephone number, including, but not limited to:

1. The Line Subscriber's telephone number and the dollar amount paid or allegedly owed by the Line Subscriber;

2. A dated copy of the written complaint, inquiry or refund request, if any, and records reflecting the date and content of any complaint, inquiry or refund request made orally or by telephone;

3. If provided by the consumer, the basis of the complaint, including the name of any salesperson complained against, and the nature and result of any investigation conducted by Defendants concerning the complaint;

4. Each response by Defendants and the date of the response;

5. Any final resolution by Defendants and the date of the resolution; and

6. In the event of a denial of a refund request by Defendants, the reason for the denial;

For each Defendant and each Vendor for which it provides billing or collection services, a copy or recording, organized and maintained so that all materials relating to a particular Defendant or Vendor may be retrieved by the name of the entity and the dates of their use, of each materially different:

1. Print, television, radio, video or Internet advertisement or other item of promotional material;

2. Sales script;

3. Item of sales training material;

4. Consumer response script; and

5. Item of consumer response training material;

1. The total dollar amount of billings received from the Vendor, and the total dollar amount of billings transmitted to the LECs on behalf of the Vendor by Defendants or their Representatives, both in the aggregate and on a monthly basis;

2. The total number of written complaints and refund requests relating to the Vendor received by Defendants or their Representatives directly or through third parties, both in the aggregate and on a monthly basis;

3. The total number of telephone calls relating to the Vendor to all toll-free telephone numbers for Defendants or their Representatives that appear on Line Subscribers' telephone bills, whether inquiries, referrals, complaints or refund requests both in the aggregate and on a monthly basis;

4. The total dollar amount of credits for Line Subscribers received from the Vendor for transmittal to the LECs, both in the aggregate and on a monthly basis;

5. The total dollar amount of all LEC charge backs for the Vendor, both in the aggregate and on a monthly basis; and

6. The total number of oral and written complaints about unauthorized charges for Telephone-Billed Transactions received by Defendants, their Representatives and the Vendor, both in the aggregate and on a monthly basis.

X. COMPLIANCE REPORTING BY DEFENDANTS

IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:

1. Any changes in the residence, mailing address and telephone number of any individual Defendant, partner of any partnership Defendant and chief executive officer of any corporate Defendant, within ten (10) days of the date of such change;

2. Any change in the employment status (including self-employment) of any individual Defendant, partner of any partnership Defendant and chief executive officer of any corporate Defendant, within ten (10) days of such change. Such notice shall include the name and address of each business that such Person is affiliated with or employed by, a statement of the nature of the business, and a statement of such Person's duties and responsibilities in connection with the business or employment; and

3. Any proposed change in the business structure of any corporate or partnership Defendant, or any proposed change in the structure of any business entity engaged in billing or collection for Telephone-Billed Transactions that is majority owned, managed or controlled by the Defendants or their Representatives, or any of them, such as creation, incorporation, dissolution, assignment, sale, merger, dissolution of subsidiaries, filing of a bankruptcy petition, change in the corporate or partnership name or address, or any other change that may affect compliance obligations arising out of this Order, not less than thirty (30) days prior to the effective date of any proposed change; Provided, however, that, with respect to any proposed change in the corporation about which any Defendant learns less than thirty (30) days prior to the date such action is to take place, Defendant shall notify the Commission as soon as is practicable after learning of such proposed change;

1. The then-current residence address and telephone number of any individual Defendant, partner of a partnership Defendant, and chief executive officer of a corporate Defendant;

2. The then-current business or employment address and telephone number of any employer of any individual Defendant, partner of a partnership Defendant, and chief executive officer of a corporate Defendant; a description of the business activities of each employer, and Defendant's title and responsibilities for each employer;

3. A copy of each acknowledgment of receipt of this Order obtained by Defendants pursuant to Paragraph XIII.;

4. A statement describing the manner in which each Defendant has complied with and is complying with the injunctive and consumer redress provisions of this Order; and

For the purposes of this Order, Defendants shall, unless otherwise directed by the Commission's authorized representatives, mail all written notifications to the Commission to:

Associate Director
Division of Marketing Practices
Federal Trade Commission, Room 238
6^th Street and Pennsylvania Avenue, NW
Washington, D.C. 20580; and

XI. COMMISSION'S AUTHORITY TO MONITOR COMPLIANCE

IT IS FURTHER ORDERED that the Commission is authorized to monitor Defendants' compliance with this Order by all lawful means, including but not limited to the following:

The Commission is authorized to use representatives posing as consumers, potential clients and suppliers to Defendants, including holding incidental conversations with customer service and other representatives of the Defendants, without the necessity of identification, prior notice, or the presence of counsel; and

Nothing in this Order shall limit the Commission's lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C. §§ 49, 57b-1, to investigate whether Defendants have violated any provision of this Order, Section 5 of the FTC Act, 15 U.S.C. § 45, or any applicable rule or regulation promulgated and enforced by the Commission thereunder.

XII. ACCESS TO BUSINESS PREMISES

IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Order, for the purpose of further determining compliance with this Order, Defendants shall permit representatives of the Commission, within three (3) business days of receipt of written notice from the Commission:

Access during normal business hours to any office or facility storing documents, of any business that Defendants or their Representatives, or any of them, directly or indirectly manage, control, or have a majority ownership interest in, that is engaged in billing or collection activities for Telephone-Billed Transactions, or assisting others engaged in those activities. In providing such access, Defendants shall permit Commission representatives to remove originals of documents, or copies at Defendants' option and expense, relevant to Defendants' compliance with any provision of this Order for a period not to exceed five (5) business days so that the documents may be inspected, inventoried and copied; and

To interview the officers, directors, and employees, including all personnel involved in responding to consumer complaints or inquiries, and all sales personnel, whether designated as employees, consultants, independent contractors or otherwise, of any business to which Paragraph XII.A. applies, concerning matters relating to compliance with the terms of this Order. The Person interviewed may have counsel present; Provided, however, that, upon application of the Commission and for good cause shown, the Court may enter an ex parte order granting immediate access to Defendants' business premises for the purposes of inspecting and copying all documents relevant to any provision of this Order.

XIII. DISTRIBUTION OF ORDER BY DEFENDANTS

IT IS FURTHER ORDERED that, for a period of three (3) years from the date of entry of this Order, Defendants shall:

Provide a copy of this Order to, and obtain a signed and dated acknowledgment of receipt of the Order from, all officers, directors, and partners of any Defendant and each individual serving any Defendant in a management capacity, whether designated as employees, consultants, independent contractors or otherwise, within three (3) business days of the entry of this Order for any business that Defendants or their Representatives, or any of them, directly or indirectly manage, control, or have a majority ownership interest in, that is engaged in billing or collection activities for Telephone-Billed Transactions, or assisting others engaged in those activities;

Provide, in the form set forth in Appendix C, a copy of the injunctive provisions of this Order to, and obtain a signed and dated acknowledgment of receipt of the copy from, each current and future Vendor with which any Defendant has contracted or contracts to provide billing and collection services for Telephone-Billed Transactions, all of Defendants' personnel involved in responding to consumer complaints or inquiries, and all of Defendants' sales personnel, whether designated as employees, consultants, independent contractors or otherwise, within three (3) business days of the entry of this Order, of contracting with a Vendor, and of employing or retaining any such Person for any business that Defendants or their Representatives, or any of them, directly or indirectly manage, control, or have a majority ownership interest in, that is engaged in billing or collection activities for Telephone-Billed Transactions. or in assisting others engaged in those activities;

Maintain for a period of three (3) years after creation, and upon reasonable notice, make available to representatives of the Commission, the original signed and dated acknowledgments of receipt of copies of this Order required by Paragraphs XIII.A., and the original signed and dated acknowledgements of receipt of copies of the Notice required by Paragraph XIII.B. of this Order.

XIV. ACKNOWLEDGMENT OF RECEIPT OF ORDER BY DEFENDANTS

IT IS FURTHER ORDERED that within five (5) business days after receipt by Defendants of this Order as entered by the Court, each individual Defendant, chief executive officer of a corporate Defendant, and partner of a partnership Defendant shall submit to the Commission a truthful sworn statement, in the form shown on Appendix B, that shall acknowledge receipt of this Final Order.

XV. COSTS

IT IS FURTHER ORDERED that each party shall bear its own costs and attorney fees incurred in connection with this action.

XVI. RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court will retain jurisdiction of this matter for the purpose of enabling any of the parties to this Order to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Order, for the enforcement or compliance therewith, or the punishment of violations thereof.

The parties, by their counsel and individually, hereby consent to the terms and conditions of the Stipulated Final Judgment and Order for Permanent Injunction and Consumer Redress set forth above, and consent to the entry hereof.

FOR DEFENDANTS:

Byron LeFlore, Jr.
Attorney for Defendants
One Riverwalk Place, Suite 800
700 North St. Mary's Street
San Antonio, TX 78205-3596
(210) 354-4300
(210) 354-4034 (facsimile)

Rick Box, as President of HBS, Inc., sole
general partner of Hold Billing Services, Ltd.
4242 Medical Drive, Suite 2100
San Antonio, TX 78229
(210) 593-0222
(210) 593-9814 (facsimile)

Thomas M. Lyons, individually and as
President of Avery Communications, Inc.
938 Hills Creek Drive Suite 1710
McKinney, TX 75070
(972) 851-9191

FOR PLAINTIFF FEDERAL TRADE COMMISSION:

Craig Tregillus
Federal Trade Commission
Washington, DC 20580
(202) 326-2970
(202) 326-3395 (facsimile)

The parties, having agreed to the entry of this Order enjoining Defendants and their Representatives from violating Section 5 of the FTC Act, 15 U.S.C. § 45(a), and requiring payment of consumer redress, this Stipulated Final Judgment and Order For Permanent Injunction and Consumer Redress is hereby approved and adopted by the Court.

DATED UNITED STATES DISTRICT JUDGE
WESTERN DISTRICT OF TEXAS

APPENDIX B

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION

FEDERAL TRADE COMMISSION,
Plaintiff,

v.

HOLD BILLING SERVICES, LTD.,
a Texas limited partnership;
HBS, INC.,
a Texas corporation;
AVERY COMMUNICATIONS, INC.,
a Texas corporation;
VETERANS OF AMERICA ASSOCIATION, LTD.,
a Pennsylvania corporation;
THOMAS M. LYONS, individually and as an officer of HBS, Inc.;
KEITH C. CALIL, individually and
as an officer of Veterans of America Association, Ltd.; and
MILFORD H. BALABAN, individually and
 as an officer of Veterans of America Association, Ltd.,
Defendants.

AFFIDAVIT OF [NAME]

I, [Name of defendant], being duly sworn, hereby state and affirm as follows:

1. I am an individual defendant in FTC v. Hold Billing Services, Ltd., et al., Case No. SA-98-CA-0629-FB, in the United States District Court for the Western District of Texas.

[OR]

2. I am the [Title] of [Name of Entity], a defendant in FTC v. Hold Billing Services, Ltd., et al., Case No. SA-98-CA-0629-FB, in the United States District Court for the Western District of Texas.

3. On [date], I received a copy of the Stipulated Final Judgment and Order for Permanent Injunction and Consumer Redress, which was signed by the Honorable Fred Biery and entered by the Court on [date of entry of Order]. A true and correct copy of the Order I received is appended to this Affidavit.

I swear or affirm, under the penalty of perjury, with knowledge of the penalties for false statements provided by 18 United States Code Section 1001, and with the knowledge that this declaration is submitted by me to affect action by the Federal Trade Commission, that the foregoing is true and correct.

Executed on September ___, 1998, at [city], [state].

Full name of defendant, partner or chief executive officer

Subscribed and sworn to before me this day of , 1998.
Notary Public
My Commission Expires: .

IMPORTANT NOTICE TO EMPLOYEES AND BILLING CLIENTS OF
[Insert name of Defendant]

Pursuant to Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and a Stipulated Final Judgment and Permanent Injunction in Federal Trade Commission v. Hold Billing Services, Ltd., et al., Civil No. SA-98-CA-0629-FB, in the United States District Court for the Western District of Texas, Defendant [Insert name of Defendant] ("the Company"), hereby notifies its employees and billing clients of the following stipulated restrictions on the business practices of the Company, its employees and the Company's billing clients:

The Company is enjoined from billing or causing to be billed, or collecting or attempting to collect payment, directly or indirectly, from a Line Subscriber for any Telephone-Billed Transaction⁽¹⁾ made as a result of an authorization obtained from a sweepstakes, prize promotion or negative option marketing plan.

In connection with the advertising, offering, promotion or sale of any Telephone-Billed Transaction, or with the billing or collection for a Telephone-Billed Transaction, the Company is enjoined from:

1. Any misrepresentation that a Line Subscriber is legally obligated to pay for the purchase of any good or service that the Line Subscriber did not expressly authorize;

2. Any misrepresentation that a Line Subscriber is obligated to pay any charge on the basis that the good or service was purchased or accessed from the Line Subscriber's telephone, unless the Line Subscriber expressly authorized the purchase; and

3. Any misrepresentation that a Telephone-Billed Transaction has been authorized by the Line Subscriber;

C. Failing to answer promptly any telephone number for customer service that the Company causes to be placed on Line Subscribers' telephone bills, and to require billing clients to answer promptly any such number and any other number to which the Company may refer customer complaints or inquiries.

The Company is enjoined from billing or causing to be billed, or collecting or attempting to collect payment, directly or indirectly, from a Line Subscriber for any Telephone-Billed Transaction, unless the charge for such Telephone-Billed Transaction was expressly authorized by the Line Subscriber.

The Company is enjoined from billing or causing to be billed, or collecting or attempting to collect payment, directly or indirectly, from a Line Subscriber for any Telephone-Billed Transaction, where the billing client's basis for billing is its possession of the Line Subscriber's telephone number, whether obtained through Automatic Number Identification (ANI) or through any other means.

The Company is permanently restrained and enjoined from:

Billing or causing to be billed, or collecting or attempting to collect payment, directly or indirectly, from a Line Subscriber for any Telephone-Billed Transaction on behalf of any billing client that does not disclose clearly and conspicuously to the Line Subscriber before such Line Subscriber authorizes charges for the billing client's goods or services, the following information:

1. The total cost of the goods or services offered;

2. The number and amount of any payments to be made for the purchase;

3. That charges for the good or service will be billed to the Line Subscriber's telephone bill, if such is the case;

4. Any material term, condition, or limitation of the transaction or on the use of the offered good or service;

5. The billing client's refund policy, if any, or if none, the fact that refunds will not be granted; and

6. The means, if any, by which the purchase can be canceled;

Billing or causing to be billed, or collecting or attempting to collect payment, directly or indirectly, from a Line Subscriber for any Telephone-Billed Transaction on behalf of any billing client that:

1. Does not obtain express authorization for such Telephone-Billed Transaction from the Line Subscriber; and

2. Does not create and maintain for a period of two (2) years from the date of such creation, records containing the names, addresses and telephone numbers of all Line Subscribers billed by the Company for the Vendor, and make such records available to Defendants or their Representatives promptly upon request; and

1. An accurate description for each Telephone-Billed Transaction of the type of good or service being charged, and the amount of the charge; and

2. The local or toll-free telephone number where Line Subscribers can readily obtain resolution of their complaints and removal of unauthorized charges from their bills.

(Complete, detach and return the form below)

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

ACKNOWLEDGMENT OF RECEIPT

1. I, , am an employee/billing client [circle one] of Defendant [Insert name of Defendant].

2. By signing and dating this receipt, I acknowledge that I received a copy of the attached "Important Notice To Employees and Billing Clients of [Insert name of Defendant]," and have read and understood it, and retained the copy for my records.

(Date of Receipt) (Signature)

1. "Telephone-Billed Transaction" means any purchase or purported purchase of a good or service that is charged to a Line Subscriber's telephone bill, including any voice mail or audiotext service, but excluding: (1) purchases solely of common carrier transmission services; and (2) purchases of services accessed by dialing a 900 number or other number that can be blocked by the Line Subscriber pursuant to 47 U.S.C. § 228(c).