Federal Trade Commission v. Seek Capital, LLC

Summary

This document is a stipulated proposed order for permanent injunction, monetary judgment, and other relief in the Federal Trade Commission’s action against Seek Capital, LLC, Roy Ferman, and related defendants. It permanently prohibits specified business-financing, debt-relief, credit-repair, deceptive, telemarketing, unauthorized-charging, and unlawful-contract practices. The order enters a $48,280,328 joint and several judgment, requires an immediate $250,000 payment with the remainder suspended subject to conditions, and imposes cooperation, compliance, recordkeeping, and monitoring obligations.

Holdings

1. Seek's representations that it had special or direct lender relationships, access to programs unavailable to the public, and did not receive compensation from lending partners were misleading and violated Section 5 of the FTC Act and the Telemarketing Sales Rule.
2. Seek's representations that its credit cards had line-of-credit capabilities were misleading as a matter of law.
3. Seek's representations promising zero-percent APR or no interest for specified periods were false and misleading in violation of the FTC Act and TSR.
4. Seek's representations that it charged no upfront fees and charged only upon funding were false and misleading in violation of the FTC Act and TSR.
5. Seek's representations that its services involved no hard credit pulls and would not harm consumers' credit scores were misleading in violation of the FTC Act.
6. Summary judgment was denied because a genuine dispute existed concerning whether Seek's representations about business loans and lines of credit were misleading.
7. Summary judgment was denied on whether Seek's representations concerning overwhelmingly positive customer reviews were misleading.
8. Seek's early termination fees and charges for certain services not provided violated Section 5 of the FTC Act; summary judgment was denied concerning fee inflation and same-day funding fees.
9. Seek violated the Consumer Review Fairness Act by using a form contract that prohibited consumers from posting negative online reviews.
10. The two Seek corporate entities operated as a common enterprise and could be held liable for each other's deceptive acts and practices.
11. All affirmative defenses failed except the fifth defense insofar as it related to the scope of damages or injunctive relief.
12. Roy Ferman was individually liable for injunctive and monetary relief arising from Seek's violations.
13. The scope of injunctive and monetary relief could not be resolved on summary judgment because genuine disputes remained concerning Defendants' full liability and the amount and scope of appropriate relief.

Questions Presented

1. Whether specified representations concerning lender relationships, line-of-credit capabilities, financing terms, fees, and credit-score effects violated Section 5 of the FTC Act and the Telemarketing Sales Rule.
2. Whether Seek's representations concerning business loans and lines of credit and customer reviews presented genuine disputes of material fact precluding summary judgment.
3. Whether specified billing practices, including early termination fees and charges for services not provided, violated the FTC Act.
4. Whether Seek's form contract violated the Consumer Review Fairness Act.
5. Whether the two corporate entities operated as a common enterprise.
6. Whether Defendants' affirmative defenses failed as a matter of law or for lack of evidentiary support.
7. Whether Roy Ferman was individually liable for injunctive and monetary relief.
8. Whether the scope of requested injunctive and monetary relief could be resolved on summary judgment.
9. Whether the court was required to defer to the FTC concerning the requested scope of relief.

Disposition

other