Ninth Circuit Find Defendant in Violation of FTC Consent Decree and Affirms District Court's Contempt Order

Explore:  FTC Internet Marketing

The U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s finding that defendant had violated a consent decree entered into with the Federal Trade Commission in which defendant had agreed to clearly and conspicuously disclose costs, fees or charges to be incurred in connection with prepaid debit cards. The consent decree resolved an FTC case against EDebitPay LLC that alleged that EDebitPay’s online marketing of prepaid debit cards and short-term loans violated Section 5 of the Federal Trade Commission Act. Two years after the district court ordered the consent decree, EDebitPay marketed a “no cost” prepaid debit card that, among other things, involved a $9.95 monthly charge. EDebitPay’s website alternately buried the disclosure of the monthly charge in its 4,720-word “Terms & Conditions” document and failed to disclose the monthly charge entirely. The Ninth Circuit found that the district court did not abuse its discretion in interpreting the consent decree to encompass all EDebitPay products, and further agreed that the way in which EDebitPay marketed the “no cost” prepaid debit card did, in fact, violate the consent decree. Relying on a district court’s “broad equitable power to order appropriate relief in civil contempt proceedings,” the Ninth Circuit affirmed the district court’s order that EDebitPay pay the FTC the full amount lost by consumers and not just disgorge its profits.

FTC v. EDebitPay, LLC et al., No. 11-55431, 2012 WL 3667396 (9th Cir. Aug. 28, 2012).


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