On May 25, the Federal Trade Commission (FTC) entered into a Order stipulated for monetary judgment against Publishers Business Services, Inc. (PBS) and its officers, Brenda Dantuma Schang, Dries Dantuma, Dirk Dantuma and Jeffrey Dantuma, imposing a suspended judgment of $14.47 million.
In 2008, as part of “Operation Tele-PHONEY,” the FTC partnered with more than 30 international, federal, state, and local law enforcement agencies, and targeted the largest fraud operation by telemarketing never coordinated by the agency at the time. The FTC has filed lawsuits in district court against 13 allegedly deceptive telemarketing transactions.
Specific to PBS, the FTC alleged violations of the FTC Act and the Telemarketing Sales Rule (TSR), stating that the scheme required individuals to pay for subscriptions to unwanted magazines that cost some victims several hundred dollars. per month. PBS allegedly disguised a telephone sales pitch as a survey, at the end of which they offer “free” or low-cost magazine subscriptions. When consumers complained or attempted to cancel, PBS reportedly told consumers they were obligated to pay the bill because they had entered into a “verbal contract”. PBS then attempted to collect the payments by threatening collection actions and threatening to report negative credit information.
This case is a prime example of the implications of a recent U.S. Supreme Court decision, AMG Capital Management, LLC v FTCwhich limits the power of the FTC to seek equitable monetary relief in federal court under Section 13(b) of the FTC Act, as we discussed here.
The most recent stipulated order follows a permanent injunction issued against PBS in 2010. It remained in place when the Nevada District Court initially awarded the FTC nearly $24 million in equitable monetary relief, the ninth circuit confirming the judgment in 2019. After his AMG Capital Management decision, the Supreme Court granted PBS’s application for certiorari, set aside the judgment, and remanded the case to the Ninth Circuit for further consideration. In June 2021, the Ninth Circuit upheld the district court’s permanent injunctive order and remanded the case for retrial to determine if another remedy was available. The district court then issued a “Mandate orderordering the parties to “discuss a stipulated judgment resolving this matter”. The $9.35 million reduction in equitable relief demonstrates the challenges the FTC now faces in seeking monetary judgments on behalf of consumers.
Despite the challenges presented by the AMG capital management ruling prohibiting the FTC from obtaining equitable monetary relief (for example, refund or disgorgement) under Section 13(b), FTC Consumer Protection Bureau Director Samuel Levine said, “The FTC shut down this subscription scam years ago. years, and today we hold its leaders accountable. We won’t back down from tough businesses that use tricks, traps, or threats when selling memberships or anything else.