Alert August 07, 2012

FTC Issues Contempt Order for Online Check Marketers

The FTC filed a contempt order against defendants, online check writing marketers, for violating the terms of a final order issued against them.  In 2006, the FTC filed a complaint against defendants alleging violations of the Federal Trade Commission Act and sought a permanent injunction preventing defendants from creating or delivering any check for a consumer without taking measures to protect the consumer.  A final order was issued in January 2009 requiring the defendants to: (1) perform account and identify verification; (2) disclose certain information on each check directly or indirectly created or delivered; and (3) adequately provide for and respond to consumer complaints.

The FTC alleges that defendants failed to institute the measures required by the final order, pointing to, for example, “microprint” disclosures on defendants’ blank product checks that were insufficient and “illegible to the naked eye.”  The FTC ordered sanctions against the defendants in the amount of $10,000 per day until compliance is shown for violating the identity and account verification procedures, and $5,000 per day until compliance is shown for violating the contact information disclosure requirements of the final order.  The FTC also ordered a $100,000 fine for consumer restitution.