UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
FORT LAUDERDALE DIVISION

FEDERAL TRADE COMMISSION, Plaintiff,

v.

COMMUNICATION CONCEPTS & INVESTMENTS, INC., et al. Defendants.

Civil No. 98-7450 (Zloch)
Magistrate Judge Seltzer

STIPULATED FINAL JUDGMENT AND ORDER FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), has filed its complaint for permanent injunction and other relief pursuant to § 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b) and 57b, and the Telephone Disclosure and Dispute Resolution Act of 1992 ("TDDRA"), 15 U.S.C. § 5701 et seq., charging Defendants Communication Concepts & Investments, Inc. ("Crown"), Crown Communications Two, Inc. ("Crown Two"), Global Collections, Inc. ("Global"), Lawrence Levinson, Jordan Levinson, and Bruce Levinson with violating Section 5 of the FTC Act, 15 U.S.C. § 45, and with violating the Commission's Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992 ("Pay-Per-Call Rule"), 16 C.F.R. Part 308. The parties, represented by the attorneys whose names appear hereafter, are in agreement to settle the Complaint by entering into this Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief ("Order") upon the following terms and conditions, without adjudication of any issue of fact or law and without Defendants admitting liability for any of the matters alleged in the Complaint or of any wrongdoing whatsoever;

THEREFORE, on the joint motion of Plaintiff and all of the above-named Defendants, it is hereby ORDERED, ADJUDGED, and DECREED as follows:

FINDINGS

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

 

2. The Complaint alleges a claim upon which relief may be granted against the Defendants under §§ 5(a)(1), 13(b), and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a)(1), 53(b), and 57b, and under the Pay-Per-Call Rule, 16 C.F.R. Part 308.

 

3. Venue is proper as to all parties in the Southern District of Florida.

 

4. Defendants' activities, as described in the Commission's complaint, are in or affecting commerce, as defined in the FTC Act, 15 U.S.C. § 44.

 

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. Plaintiff and Defendants waive all rights to seek appellate review or otherwise challenge or contest the validity of this Order. Defendants further waive and release any claim Defendants may have against the Commission, its employees, agents, or representatives.

 

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

 

8. This Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief does not constitute and shall not be interpreted to constitute an admission by any Defendant that such Defendant has engaged in violations of the FTC Act, Pay-Per-Call Rule or any law, nor does it constitute evidence against or an admission of any Defendant with respect to any issue of law or fact herein or any fact alleged in the Commission's Complaint.

 

9. Entry of this Order is in the public interest.

DEFINITIONS

For the purposes of this Order, the following definitions shall apply:

1. "Audiotext" means an information or entertainment service provided and delivered through telephone lines, through any dialing pattern, or through return calls to a telephone, but excluding: (1) purchases solely of common carrier transmission services; (2) purchases of intrastate services regulated by a state public service or public utility commission; (3) purchases of directly-dialed calls to an international telephone number at tarriffed rates; and (4) services provided over the Internet. For purposes of this Order, any service in which the service provider advertises, promotes, directs, controls, or provides the content of communications provided or exchanged through the service is not a common carrier transmission service. In the event the Pay-Per-Call Rule is amended in a manner that includes within the Rule's coverage any service exempted from the definition of "audiotext," pursuant to subparts (1) through (4) above, the subpart exemption shall not apply, and such service shall be deemed "audiotext" pursuant to this Order. Conversely, in the event an amended Pay-Per-Call Rule excludes from the Rule's coverage any service included within the above definition of "audiotext" then the above definition shall not apply to such service and such service shall be deemed to be exempt from the definition of "audiotext" pursuant to this Order.

 

2. "Billing question" or "billing dispute notice" means any contact or communication, either written or oral, from a billed consumer or agent of a billed consumer requesting more information concerning, or questioning the accuracy of any charge any Defendant billed or caused to be billed. "Billing question" or "billing dispute notice" includes, but is not limited to, a request for more information concerning any charge, a denial of knowledge concerning a charge, a denial that the purchase to which a charge relates was made or authorized, a denial that the service to which a charge relates was received, or an assertion that any charge is incorrect or invalid.

 

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

 

4. "Defendants" means Defendants Communication Concepts & Investments, Inc. ("Crown"), Crown Communications Two, Inc. ("Crown Two"), Global Collections, Inc. ("Global"), Lawrence Levinson, Jordan Levinson, and Bruce Levinson and each of them.

 

5. "LEC" or local exchange carrier means the telephone company from which a line subscriber receives his or her telephone bill.

 

6. "Line Subscriber" means an individual or entity who has arranged with a local exchange carrier ("LEC") to obtain local telephone service provided through an assigned telephone number or numbers, and to be billed for such service on a monthly or other periodic basis. For the purposes of this Order only, "line subscriber" also includes the spouse or domestic partner of the line subscriber if state law provides that a spouse or domestic partner may be held liable for the debts of the other spouse or domestic partner. This definition is not applicable to Paragraph I of this Order, which requires Defendants to comply with the Pay-Per-Call Rule, 16 C.F.R. Part 308, as currently promulgated or as the Rule may hereafter be amended.

 

7. The "Pay-Per-Call Rule" or "Rule" means the Federal Trade Commission trade regulation rule located at Title 16 of the Code of Federal Regulations, Part 308, a copy of which is attached herewith as Appendix A and expressly incorporated herein by reference, or as the Rule may hereafter be amended.

 

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

 

9. "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 audiotext service or voice mail service, but excluding: (1) purchases solely of common carrier transmission services; (2) purchases of intrastate services regulated by a state public service or public utility commission; (3) purchases of directly-dialed calls to an international telephone number at tarriffed rates; (4) 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). For purposes of this Order, any service in which the service provider advertises, promotes, directs, controls, or provides the content of communications provided or exchanged through the service is not a common carrier transmission service. In the event the Pay-Per-Call Rule is amended in a manner that includes within the Rule's coverage any service exempted from the definition of "telephone-billed transaction," pursuant to subparts (1) through (3) above, the subpart exemption shall not apply, and such service shall be deemed a "telephone-billed transaction" pursuant to this Order. Conversely, in the event an amended Pay-Per-Call Rule excludes from the Rule's coverage any service included within the above definition of "telephone-billed transaction," then the above definition shall not apply to such service and such service shall be deemed to be exempt from the definition of "telephone-billed transaction" pursuant to this Order.

 

10. "Toll-free telephone number" means any telephone number containing the 800, 888, or 877 service access code, or any other telephone number advertised as or widely understood to be toll-free.

PROHIBITED BUSINESS ACTIVITIESI.

IT IS THEREFORE ORDERED:

A. That Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert or participation with any one or more of them who receive actual notice of this Order by personal service or otherwise, are hereby permanently enjoined from, directly or through any intermediary, violating any provision of the Pay-Per-Call Rule, 16 C.F.R. Part 308, as currently promulgated or as the Rule may hereafter be amended, including, but not limited to:

 

1. Using a toll-free number in a manner that results in a charge to a consumer for audiotext services, without having entered into a presubscription or comparable arrangement with the consumer to be billed for the charges, in violation of 16 C.F.R. § 308.5(i), or any corresponding provision of 16 C.F.R. Part 308, as the Rule may hereafter be amended, including, but, not limited to using a toll-free telephone number in a manner that results or would result in the calling party being called back collect for the provision of audiotext services, such as using a toll-free number as a mechanism:

(a) to provide a caller with instructions on how the calling party can be called back collect for the provision of audiotext services; or

(b) through which a caller receives audiotext services billed as a collect call.

2. Failing to ensure that Defendants' pay-per-call services are billed in the manner specified in 16 C.F.R. § 308.5(j), or any corresponding provision of 16 C.F.R. Part 308, as the Rule may hereafter be amended.

3. Failing to abide by the dispute resolution procedures for telephone-billed purchases in the manner specified in 16 C.F.R. § 308.7, or any corresponding provision of 16 C.F.R. Part 308, as the Rule may hereafter be amended.

B. In the event that the Rule is amended, Defendants shall obtain and review a copy of the amended Rule and shall provide plaintiff, upon request, with a signed acknowledgment that they have reviewed the amended Rule and agree to abide by its terms. Such acknowledgment shall be provided within 30 days of plaintiff's request for a signed acknowledgment.

 

C. To the extent the Pay-Per-Call Rule is hereinafter amended and there is a conflict between a provision of the amended Rule and a requirement or prohibition of this Order, then the provision of the amended Pay-Per-Call Rule shall prevail over the conflicting provision of this Order.

II.

IT IS FURTHER ORDERED that Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert or participation with any one or more of them who receive actual notice of this Order by personal service or otherwise, are hereby permanently enjoined from, directly or through any intermediary, billing or causing to be billed, or collecting or attempting to collect payment from, a line subscriber for any telephone-billed transaction, unless the charge for such telephone-billed transaction was expressly authorized by the line subscriber, after the line subscriber was informed of the material terms and conditions of the transaction; it is further provided that the fact that a telephone-billed transaction may have originated from a line subscriber's telephone or telephone line does not in and of itself constitute express authorization by the line subscriber to be billed for the charge for the transaction.

III.

IT IS FURTHER ORDERED that Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert or participation with any one or more of them who receives actual notice of this Order by personal service or otherwise, in connection with the advertising, offering, promotion, sale, servicing, or collection of any audiotext service or telephone-billed transaction, are hereby permanently enjoined from, directly or through any intermediary, making any express or implied misrepresentation of material fact, orally or in writing, including, but not limited to:

A. Any misrepresentation that any charge relates to a common carrier transmission charge, including but not limited to, misrepresenting that a charge is for long-distance telephone transmission or collect-call telephone transmission;

 

B. Any misrepresentation that a consumer, by calling any telephone number, can make contact with, be matched with, or be introduced to another person in that consumer's local area;

 

C. Any misrepresentation that a consumer, by calling any telephone number, can make contact with, be matched, or be introduced to another person free of charge or at no cost;

 

D. Any misrepresentation that a consumer can access or receive any service for free or without incurring any charge;

 

E. Any misrepresentation that any unpaid charge will be reported to consumer credit reporting agencies; or

 

F. Any misrepresentation that legal action will be taken to collect any unpaid charge.

IV.

IT IS FURTHER ORDERED that Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert or participation with any one or more of them who receives actual notice of this Order by personal service or otherwise, in connection with the advertising, offering, promotion, sale, servicing, or collection of any telephone-billed transaction, are hereby permanently enjoined from, directly or through any intermediary, making any express or implied misrepresentation of material fact, orally or in writing, including, but not limited to:

A. Any misrepresentation that a line subscriber is responsible for or legally obligated to pay any charge for any telephone-billed transaction that the line subscriber did not expressly authorize; provided, however, this subparagraph does not prohibit truthful representations that a spouse or domestic partner may be liable for the debts of the another spouse or domestic partner if state law so provides;

 

B. Any misrepresentation that a line subscriber is obligated or responsible to pay any charge for any telephone-billed transaction on the basis that the good or service to which the charge relates was purchased or accessed from the line subscriber's telephone, unless the line subscriber expressly authorized the purchase; and

 

C. Any misrepresentation that a telephone-billed transaction has been authorized by the line subscriber.

V.

IT IS FURTHER ORDERED that Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert or participation with any one or more of them who receive actual notice of this Order by personal service or otherwise, in connection with the advertising, offering, promotion, sale, servicing, or collection of any audiotext service or telephone-billed transaction, are hereby permanently enjoined from, directly or through any intermediary:

A. Failing, in a timely fashion, to respond to billing questions or billing dispute notices, and to investigate such questions or notices; or

 

B. Transmitting billing data to any LEC or other billing agent that fails to enable the LEC or agent to prepare a bill that, within the available billing formats, clearly and conspicuously discloses:

1. For each audiotext or other telephone-billed transaction, a concise, accurate description of the type of good or service being charged, and the amount of the charge; and

 

2. The local or toll-free telephone number, answered by customer service representatives during normal business hours, where line subscribers can obtain information concerning their billing questions and institute billing dispute procedures, including information on how to remove such charges from their telephone bill, if applicable.

VI.

IT IS FURTHER ORDERED that Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert or participation with any one or more of them who receive actual notice of this Order by personal service or otherwise, are hereby permanently enjoined from, directly or through any intermediary, selling, renting, leasing, transferring, or otherwise disclosing information, in any of Defendants' databases or other documents existing at the time of entry of this Order, the name, address, telephone number, credit card number, bank account number, e-mail address, or other identifying information of any person Defendants billed or caused to be billed for audiotext services or telephone-billed transactions; provided, however, that Defendants may disclose such identifying information for the purposes of maintaining a database of callers previously receiving a credit; screening calls to block access; obtaining credit card or other payment authorization; and ensuring that the person receives a credit or a refund in connection with Defendants' charges or providing information to a law enforcement agency or as required by any law, regulation, or court order.

REDRESS AND OTHER EQUITABLE RELIEF

VII.

IT IS FURTHER ORDERED that:

A. Defendants shall, jointly and severally, pay the Commission Two Hundred Ten Thousand, Six Hundred Ten Dollars ($210,610), which Defendants represent is the amount of money Defendants received from consumers who paid Defendants or Defendants' collection agents after those consumers received a collection letter or collection call from Defendants or any of Defendants' collection agents concerning any telephone-billed transaction. Upon signing this Order, Defendants shall immediately transmit Two Hundred Ten Thousand, Six Hundred and Ten Dollars ($210,610) into the Crown Communications Escrow Fund established pursuant to the Escrow Agreement, which is Appendix B to this Order. The Escrow Agent, within three (3) days after receiving notice of the entry of this Order, shall pay the $210,610 in funds held in the Crown Communications Escrow Fund to the Commission or to an agent designated by the Commission. Defendants acknowledge and agree that all monies paid by Defendants pursuant to this Order or to the Escrow Agreement is solely remedial in nature and no portion of any monies paid shall be deemed the payment of any fine, penalty, punitive assessment or forfeiture.

 

B. Time is of the essence for the payment specified above. In the event of any default on any obligation to make payment of the Two Hundred Ten Thousand, Six Hundred Ten Dollars ($210,610) provided for in this section, with such default continuing for ten (10) days beyond the due date of payment, the entire unpaid judgment, together with interest, as computed pursuant to 28 U.S.C. § 1961(a), from the date of default to the date of payment, shall immediately become due and payable.

 

C. In accordance with 31 U.S.C. § 7701, if Defendants, or any of them, fail to pay fully the amount due as specified above at the time specified by this Order, Defendants shall furnish to the Federal Trade Commission their respective taxpayer identifying numbers (social security number or employer identification number), which shall be used for purposes of collecting and reporting on any delinquent amount arising out of such person's relationship with the government. In addition, if Defendants, or any of them, fail to pay fully the amount due as specified above at the time specified by this Order, Defendants agree to provide the Commission with their federal and state tax returns for the preceding three years and with full financial disclosure, in the form attached as Appendix C-1 or C-2, 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 any financial disclosure forms provided pursuant to this subparagraph with all appropriate third parties, including but not limited to financial institutions.

 

D. Any and all interest or entitlement of the Defendants in funds held in reserve by the LECs or other entities in connection with telephone-billed charges shall be and hereby is assigned by Defendants to the Commission; however, such assignment shall remain subject to the legitimate claims of secured creditors.

VIII.

IT IS FURTHER ORDERED that the Commission may apply any or all funds received under Section VII of this Order, and any interest received thereon, to a consumer redress program and to related administrative services; provided, however, that if the Commission determines, in its sole discretion, that redress is wholly or partially impractical, the Commission may pay any funds not so used to the United States Treasury as disgorgement. In the event the Commission determines that a redress program is feasible, the Commission shall have full and sole discretion to delegate any and all tasks connected with such redress program to any individual, partnerships, or corporations; and pay the fees, salaries, and expenses incurred thereby from the payments made pursuant to Section VII of this Order and interest received thereon. Defendants shall not have any right to contest any decision or action of the Commission concerning the disbursement or disposition of the funds.

FORGIVENESS OF UNPAID CHARGES

IX.

IT IS FURTHER ORDERED that Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert or participation with any one or more of them who receive actual notice of this Order by personal service or otherwise, shall:

A. Forgive all outstanding debts for any telephone-billed transaction, including the forgiveness of approximately Thirty Six Million, Three Hundred Thousand Dollars ($36,300,000) which Defendants represent to be the approximate amount of Defendants' billings for telephone-billed transactions that the LECs or Defendants' billing agents have removed from or credited to consumers' telephone bills and for which Defendants have received no payment;

 

B. Waive all rights to collect outstanding debts, whether directly or through third party debt collectors, for telephone-billed transactions; and

 

C. Waive all prospective rights to sell outstanding receivables for telephone-billed transactions to any third parties.

RIGHT TO REOPEN

X.

IT IS FURTHER ORDERED that:

A. By agreeing to this Order, each of the Defendants reaffirms and attests to the truthfulness, accuracy, and completeness of the financial statements of Crown and Global, dated November 10, 1999 and November 11, 1999, respectively, provided to the Commission, designated the "Corporate Financial Statements," and to the truthfulness, accuracy, and completeness of the Corporate Defendants' Tax Returns provided to the Commission by letter dated September 29, 1999. Each of the Defendants also affirms and attests that the documents provided to the Commission by letters dated October 29, 1999 and December 15, 1999 concerning Global's income, designated the "Collection Income Documents," and which consists of a listing of deposits made by Global, copies of checks deposited, and a letter from Global's accountant dated December 9, 1999, truthfully, accurately, and completely reflect the income Defendants received from consumers who paid Defendants or Defendants' collection agents after those consumers received a collection letter or collection call from Defendants or any of Defendants' collection agents concerning any telephone-billed transaction. Each of the Individual Defendants further affirms and attests that his personal tax returns provided to the Commission by letters dated September 29, 1999 and December 15, 1999, designated the "Personal Tax Returns," truthfully, accurately, and completely reflect the income that individual defendant received from the Corporate Defendants.

 

B. The Commission's agreement to this Order is expressly premised upon the truthfulness, accuracy, and completeness of the Corporate Defendants' financial condition as represented in the Corporate Financial Statements and the Corporate Defendants' Tax Returns, upon the truthfulness, accuracy, and completeness of the Collection Income Documents, and the truthfulness, accuracy, and completeness of the Individual Defendants' representations concerning the income they received from the Corporate Defendants, as reflected in the Personal Tax Returns. These sets of documents, and Defendants' representations concerning such documents, contain material information upon which the Commission relied in negotiating and agreeing to the terms of this Order, including the agreement to Defendants' payment of a redress amount of $210,610 as provided for in Section VII of this Order.

 

C. If, upon motion by the Commission, this Court should find that any Defendant knowingly made a material misrepresentation or omission concerning the Corporate Defendants' financial condition, as reflected in Crown and Global's Corporate Financial Statements or in the Corporate Defendants' Tax Returns, the Defendants' collection income, as reflected in the Collection Income Documents, or the Individual Defendants' income received from the Corporate Defendants, as reflected in the Personal Tax Returns, this Final Order shall be reopened for the purpose of requiring payment of additional monetary redress or obtaining other equitable relief.

 

D. Provided, however, that in all other respects, this Order shall remain in full force and effect unless otherwise ordered by this Court; and provided further that proceedings instituted under this Section are in addition to, and not in lieu of, any other civil or criminal remedies as may be provided by law, including any other proceedings the Commission may initiate to enforce this Order.

MONITORING, RECORD KEEPING AND COMPLIANCE

XI.

IT IS FURTHER ORDERED that, for a period of four (4) years from the date of entry of this Order, Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert or participation with any one or more of them who receive actual notice of this Order by personal service or otherwise, in connection with any business engaged in the promotion, sale, servicing, billing, or collection for any audiotext or telephone-billed transaction, are enjoined from failing to create, and from failing to retain, for a period of three (3) years following the date of such creation, the following:

A. Books, records, and accounts that, in reasonable detail, accurately and fairly reflect the cost of services or goods sold, revenues generated, and the disbursement of such revenues;

 

B. Records accurately reflecting the name, address, and 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 the date and reason for the person's termination, if applicable. The businesses subject to this paragraph shall retain such records for any terminated employee for a period of three (3) years following the date of termination;

 

C. To the extent provided to Defendants or to the extent such information is generated by Defendants, records containing the names, addresses, phone numbers, dollar amounts paid, quantity of services purchased or billed, and description of the services purchased or billed for all consumers to whom such business has sold or billed services or from whom such business has accepted payment;

 

D. To the extent provided to Defendants or to the extent such information is generated by Defendants, records that reflect, for every consumer complaint, refund request, billing question or billing dispute notice, whether received directly or through any third party:

 

1. the consumer's name, address, telephone number, the dollar amount billed, and the dollar amount paid by the consumer;

2. the written complaint or summary of any oral complaint, refund request, or billing question or billing dispute notice, if any, and the date of the writing or the date the oral complaint was made;

3. the reasons for the complaint, refund request, or billing question or billing dispute notice;

4. if an investigation is warranted under the circumstances, a description of the nature and results of any such investigation concerning the complaint, refund request, or billing question or billing dispute notice.

5. the response to the complaint, refund request, or billing question or billing dispute notice and the date of the response;

6. any final resolution and the date of the resolution; and

7. in the event of a denial of a billing dispute notice or a refund or credit request, the reason for the denial;

E. Representative copies of all sales scripts, entertainment or information scripts, operator scripts, recorded preambles or introductory messages and associated transcripts, customer service scripts, training materials, advertisements, form letter responses, or other marketing or customer service materials. Copies of all such materials shall be retained for (3) years after the last date such materials were utilized or disseminated, whichever is later; and

 

F. Call transport records or billing records provided by any long distance carrier or other service provider that contain identifying information concerning the telephone numbers of consumers placing calls, in connection with purchasing or receiving audiotext services or telephone-billed transactions, for a period of three (3) years from the date such records were received.

XII.

IT IS FURTHER ORDERED that Defendants, their successors, subsidiaries, affiliates and assigns, and their officers, agents, servants, independent contractors, employees, and all persons in active concert or participation with any one or more of them who receive actual notice of this Order by personal service or otherwise, are hereby permanently enjoined from, directly or through any intermediary, failing to monitor advertisements for audiotext services or telephone-billed transactions, including advertising placed by Defendants' agents or other persons retained or compensated by Defendants (hereinafter designated as "advertisers"), to ensure that such advertisements are in compliance with this Order and with the Pay-Per-Call Rule, 16 C.F.R. Part 308, or as the Rule may hereafter be amended. In order to monitor compliance, Defendants shall:

A. Require advertisers to submit sample advertising, which Defendants shall review to ensure that such advertising is in compliance with this Order and the Pay-Per-Call Rule;

 

B. On a quarterly basis, purchase a representative sample, numbering not less than ten, of print publications in which advertisers advertise Defendants services to determine whether such advertisements comply with this Order and the Pay-Per-Call Rule;

 

C. Investigate any consumer complaint, inquiry, billing question or billing dispute notice in which the consumer alleges that or claims that the advertising was misleading, inaccurate or deceptive, including allegations that the advertising failed to adequately disclose the cost of the service, or that the service was advertised as free. Such an investigation shall include, but is not necessarily limited to, obtaining, to the extent possible, a copy of the advertisement at issue;

 

D. Immediately notify any advertiser found, through Defendants' monitoring program or through other any other means, not to be in compliance with the 900-Number Rule and this Order, and request that such advertiser retract and correct the noncompliant advertisement(s) and require such advertiser, as a condition of conducting further business, to provide documentation establishing that the advertising has been corrected; and

 

E. Terminate Defendant's contractual or business relationship with any advertiser that has failed to retract or correct noncompliant advertising or that has failed to provide documentation establishing that such advertising has been corrected after receiving the notification described in sub-paragraph D above.

XIII.

IT IS FURTHER ORDERED that, in order for the Commission to monitor compliance with the provisions of this Order:

A. For a period of four (4) years from the date of entry of this Order, Defendants shall notify the Commission of the following:

 

1. any changes in any individual defendant's residence, mailing addresses, and telephone numbers, within ten (10) days of the date of such change;

2. any changes in any individual defendant's employment status (including self-employment) related to audiotext or telephone-billed transactions within ten (10) days of such change. Such notice shall include the name and address of each business that any such defendant is affiliated with or employed by, a statement of the nature of the business, and a statement of such defendant's duties and responsibilities in connection with the business or employment; and

3. any proposed change in the corporate structure of any corporate defendant, or any proposed change in the structure of any business entity owned or controlled by any individual defendant that may affect compliance obligations arising out of this Order, such as creation, incorporation, dissolution, assignment, sale, merger, creation or dissolution of subsidiaries, proposed filing of a bankruptcy petition, or change in the corporate name or address, or any other change that may affect compliance obligations arising out of this Order, 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, such defendant shall notify the Commission as soon as is practicable after learning of such proposed change.

B. One hundred eighty (180) days after the date of entry of this Order, Defendants shall provide a written report to the FTC, sworn to under penalty of perjury, setting forth in detail the manner and form in which Defendants have complied and are complying with this Order. This report shall include but not be limited to:

 

1. each individual defendant's then current residence address and telephone number;

2. each individual defendant's then current employment related to audiotext or telephone billed transactions, if any, business addresses and telephone numbers, a description of the business activities of each such 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 Section XIV of this Order;

4. a statement describing the manner in which each such defendant has complied and is complying with the (a) the injunctive provisions of this Order, including, but not limited to, the monitoring, record keeping and compliance portions of this Order, and (b) the consumer redress provisions of this Order.

C. 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
6th Street & Pennsylvania Avenue, N.W.
Washington, D.C. 20580

Re: FTC v. Crown Communications, et al.

D. For a period of four (4) years from the date of entry of this Order, upon written request by a representative of the Commission, Defendants shall submit additional written reports (under oath, if requested) and produce documents on fifteen (15) business days' notice with respect to any conduct subject to this Order, subject to Defendants' right to object thereto and to seek relief from the Court under Rule 26(c) of the Federal Rules of Civil Procedure or under any other appropriate provision of the rules.

 

E. For the purposes of this Section, "employment" includes the performance of services as an employee, consultant, or independent contractor; and "employers" include any individual or entity for whom any Defendant performs services as an employee, consultant, or independent contractor.

 

F. For purposes of the compliance reporting required by this Section, the Commission is authorized to communicate with Defendants through their counsel at:

Klein, Zelman, Rothermel & Dichter, L.L.P.
485 Madison Ave.
New York, NY 10022
ATTN: Joel R. Dichter, Esq.

For the limited purpose of notices arising from this Order, the FTC is authorized to effectuate service upon a Defendant by service upon Defendant's counsel.

XIV.

IT IS FURTHER ORDERED that Defendants, and their successors and assigns, within five (5) business days of the entry of this Order and continuing for a period of four (4) years from the date of the entry of this Order, shall:

A. Provide a copy of this Order, the Pay-Per-Call Rule, and the Statement of Basis and Purpose for the Pay-Per-Call Rule to each officer, director, principal, and manager having responsibilities with respect to the subject matter of this Order, as well as all personnel involved in responding to consumer complaints, refund requests, billing questions or billing dispute notices, and, in the future, within five (5) business days upon employing or retaining any such persons, for any business where:

1. any Defendant owns a majority of the business or directly or indirectly manages or controls the business; and

2. the business is engaged in the advertising, promotion, sale, servicing, billing, or collecting for any audiotext service or telephone-billed transaction, or in assisting others engaged in such services or transactions.

B. Secure from each such person a signed and dated statement acknowledging receipt of a copy of this Order, the Rule, and the Statement of Basis and Purpose.

 

C. 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 the receipt of copies of this Order, as required in Sub-paragraphs A and B of this Section.

XV.

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 means:

A. The Commission is authorized, without further leave of court, to obtain discovery from any person in the manner provided by the Federal Rules of Civil Procedure, including Fed. R. Civ. P. 26 - 37 and the use of compulsory process pursuant to Fed. R. Civ. P. 45, for the purpose of monitoring and investigating Defendants' compliance with any provision of this Order, subject to Rules 26(c), 45(c) and any other provisions of the Rules providing the person with the right to object thereto and to seek relief from the Court;

 

B. 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 and 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 the Pay-Per-Call Rule.

XVI.

IT IS FURTHER ORDERED that, within five (5) business days after receipt by each Defendant of this Order as entered by the Court, each Defendant shall submit to the Commission a truthful sworn statement, in the form shown on Appendix D to this Order, that shall acknowledge receipt of the entered Order.

XVII.

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, or for the enforcement of compliance therewith or the punishment of violations thereof.

JUDGMENT IS THEREFORE ENTERED in favor of Plaintiff and against Defendants pursuant to all the terms and conditions recited above.

DONE AND ORDERED in chambers at Ft. Lauderdale, Florida, this day of _______, 2000.

_______________________________
William J. Zloch
UNITED STATES DISTRICT JUDGE

Defendants, by their counsel and individually, hereby consent to the terms and conditions of the Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief as set forth above and consent to the entry thereof.

FOR THE DEFENDANTS

FOR PLAINTIFF FEDERAL TRADE COMMISSION

_____________________________
Elizabeth Grant
Julie Abbate
Federal Trade Commission
600 Pennsylvania Ave., N.W., Rm. 238
Washington, DC 20580
Phone: (202) 326-3299; (202) 326-3639
Fax: (202) 326-3395; Email: EGrant@FTC.gov