Things To Avoid In 2014 – Stipulated Final Judgment
On its face, the term “Stipulated Final Judgment” doesn’t sound all that foreboding. I suppose I could think of worse things if I had some time. But I’m not so sure.
A “Stipulated Final Judgment” is what businesses and individuals enter with the Federal Trade Commission to terminate civil actions filed by the FTC. And the terms typically are a bit one sided. Go ahead and guess in whose favor they tend to lean. Let me give you a hint. The answer starts with FTC.
And what prompts this discussion is the case of the FTC v. CPATANK, INC., its president Vito Glazers, Eagle Web Assets, Inc. and its president Ryan Eagle. The FTC charged the defendants with violating Section 5(a) of the FTC Act. That provision broadly prohibits unfair or deceptive acts in or affecting commerce.
In the case, the defendants contracted with merchants to receive commissions for driving traffic to the merchants’ Web sites. The defendants then arranged with a network of affiliate marketers to accomplish the task. And that is where the trouble arose. The affiliate marketers sent tens of millions spam text messages promising “free” offers to consumers across the country. But as is so often the case, “free” was not exactly free. When the test recipients clicked to collect, they got diverted to the various merchant Web sites only to discover the “free” offer came with more strings attached than a Nike shoe factory.
The FTC filed the complaint on February 19. By February 25, the parties entered into the dreaded Stipulated Final Judgment. The Judgment prohibits a broad range of activities going forward, requires FTC compliance monitoring, and requires CPATANK and Glazer to pay a total of $20,000. Eagle Web and Ryan Eagle are required to pay $10,000.
Based on the Judgment, the defendants may have some cash flow issues. The Judgment sets out in surprising detail Glazer’s obligation to sell his 2007 Bentley and Eagle’s obligation to sell his 2006 Range Rover, to generate the funds for the settlement amount. According to the Judgment, the FTC retains veto over any offer for the vehicles.
Apparently, when it comes to the FTC, “if you like your car, you can’t keep your car.”