21
separate stipulated order in this case as to another defendant required payment of $270,000.
100
In
another case, the Ninth Circuit primarily upheld the District Court’s injunction and monetary relief
against the individual appellant, Kyle Komoto, for violations of EFTA and the FTC Act related to
unauthorized recurring debits, among other things.
101
Finally, the FTC filed a complaint and
obtained a temporary restraining order against a marketer of diet supplements, Health Formulas, for
deceptive advertising and recurrent unauthorized withdrawals, in violation of the FTC Act and
EFTA; litigation continues in that matter.
102
2. Other Cases
Also in 2014, the Commission engaged in litigation in four other cases: three cases involved
payday lending cases and one involved retail financing.
The FTC obtained a settlement in a case previously-filed involving a payday lender, Payday
Financial, charged with violating several laws, including EFTA and Regulation E by requiring
consumers’ authorization for recurring electronic payments from their bank accounts as a condition
of obtaining payday loans.
103
The settlement imposed a monetary judgment of nearly $1 million for
all the violations, and prohibited the defendants, among other things, from conditioning the
extension of credit to consumers on repayment by preauthorized electronic fund transfers, and from
other violations of EFTA and Regulation E.
104
100
FTC v. Leanspa, LLC, No. 3:11-cv-01715 ((D. Conn. Jan. 9, 2014) (stipulated order for permanent injunction and
monetary judgment entered as to Boris Mizhen, Leanspa, LLC, NutraSlim, LLC, NutraSlim U.K. Ltd, and Angelina
Strana – with Commissioners Ohlhausen and Wright voting for issuance of the consent agreement and issuing separate
statements) (stipulated order as to Eric Chiang entered Feb. 28, 2014), respectively. The FTC and the State of
Connecticut jointly brought this action to stop an operation that allegedly used fake news websites to promote their
products with deceptive claims, causing millions of dollars of unauthorized credit and debit card charges. The
Commission also mailed out 400,000 claim forms to the consumer victims to begin the redress process. See FTC, Press
Release, Sept. 19, 2014, FTC Mails More Than 400,000 Claim Forms to Possible Victims of Alleged LeanSpa Scam,
available at http://www.ftc.gov/news-events/press-releases/2014/09/ftc-mails-more-400000-claim-forms-possible-
victims-alleged.
101
See FTC v. Grant Connect, No. 2:09cv1349 (D. Nev. Nov. 2, 2011) (final monetary judgment entered), appeal
docketed sub nom. FTC v. Kimoto, No. 11-18023 (9
th
Cir. Dec. 19, 2011); FTC v. Grant Connect, LLC, No. 11-18023
(9th Cir. Aug. 15, 2014) (affirming district court grant of injunction and monetary judgment as to individual appellant
Kimoto for all aspects of the scheme except for Acai Total Burn, vacating the district court order in part, and remanding
to the district court).
102
FTC v. Health Formulas, LLC, No. 2:14-cv-01649 (D. Nev. filed Oct. 7, 2014) (ex parte temporary restraining
order entered Oct. 9, 2014). See FTC, Press Release, Oct. 20, 2014, At FTC’s Request, Court Stops Supplement
Marketers from Deceptive Advertising and Illegally Debiting Consumers’ Accounts, available at
http://www.ftc.gov/news-events/press-releases/2014/10/ftcs-request-court-stops-supplement-marketers-deceptive.
Among other things, this is also the first FTC action alleging violations of the Restore Online Shoppers’ Confidence
Act, which prohibits marketers from charging consumers in an Internet transaction, unless the marketer has clearly
disclosed all material terms of the transaction and obtained the consumer’s express informed consent.
103
See FTC, Press Release, Payday Lenders That Used Tribal Affiliation to Illegally Garnish Wages Settle with FTC,
Apr. 11, 2014, available at http://www.ftc.gov/news-events/press-releases/2014/04/payday-lenders-used-tribal-
affiliation-illegally-garnish-wage.
104
See FTC v. Payday Financial, LLC, No. 11-3017 (D.S.D. Apr. 4, 2014) (stipulated order for permanent injunction
and civil penalties), available at https://www.ftc.gov/enforcement/cases-proceedings/112-3023/payday-financial-llc.