“A conclusory, self-serving affidavit. lacking detailed facts and any supporting evidence. is insufficient to create a genuine issue of material fact.”
How later courts described this case
- “A conclusory, self-serving affidavit. lacking detailed facts and any supporting evidence. is insufficient to create a genuine issue of material fact.”
- disclaimer in contract that “consumers eventually sign” is insufficient where it “is not included in the representations”
- noting that “harm need not be monetary to qualify as injury” and finding that time consumers spent contesting unauthorized checks and “attempting to get their money back” contributed to substantial injury
- “Because the FTC seeks a permanent injunction in this case, good faith is to that extent a valid affirmative defense.”
Written by the judges who cited it.
The opinion
|_| MAYA SEQUEIRA (pro hac vice) JS6
msequeira@ftc.gov
2 || (202) 326-3719
3 | KATHERINE WORTHMAN (pro hac vice)
kworthman@ftc.gov
4 | (202) 326-2929
JULIA HEALD, (pro hac vice)
jheald@ftc.gov
6 || (202) 326-3589
7 | SALLY TIEU, Cal. Bar No. 346034
stieu@ftc.gov
8 || (202) 304-7313
g || FEDERAL TRADE COMMISSION
600 Pennsylvania Avenue, N.W.
10 | Mail stop CC-10232
1] || Washington, D.C. 20580
12 | AARON SCHUE, Cal. Bar No. 338760
13 || Local Counsel
aschue@ftc.gov
14 (310) 824-4306
15 | FEDERAL TRADE COMMISSION
10990 Wilshire Boulevard, Suite 400
16 || Los Angeles, CA 90024
17 || Attorneys for Plaintiff
18 UNITED STATES DISTRICT COURT
19 CENTRAL DISTRICT OF CALIFORNIA
20 2:24-cv-09511-RGK-MAA
1 FEDERAL TRADE COMMISSION, | CASE NO. 2tv-69SttERGE
Plaintiff,
73 y STIPULATED {PROPOSES}
ORDER FOR PERMANENT
24 INJUNCTION, MONETARY
SEEK CAPITAL, LLC, et al., JUDGMENT, AND OTHER
Defendants. RELIEF
26
57 [142]
1 Plaintiff, the Federal Trade Commission (“Commission” or “FTC”), filed its
2 || Complaint for Permanent Injunction, Monetary Judgment, and Other Relief in this
3 || matter, pursuant to Sections 13(b) and 19 of the Federal Trade Commission Act
4 | CFTC Act’), ISUS.C. §§ 53(b) & S57b. The Commission and Defendants
5 || stipulate to the entry of this Order for Permanent Injunction, Monetary Judgment,
6 | and Other Relief (“Order”) to resolve all matters in dispute in this action between
7 | them.
8 || THEREFORE, IT IS ORDERED as follows:
9 FINDINGS
10 1. This Court has jurisdiction over the subject matter of this case.
11 2. The Complaint charges that Defendants have participated in unfair and
12 || deceptive acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. §
13 | 45(a), the FTC’s Telemarketing Sales Rule (“TSR”), 16 C_F.R. Part 310, and
14 | conduct that violates the Consumer Review Fairness Act of 2016 (“CRFA”), 15
15 |] UWS.C_§ 45b(b)(1).
16 | 3. Defendants violated Section 5 of the FTC Act, 15 U.S.C. § 45(a) and (n), the
17 || TSR, 16 C.F.R. Part 310, and the CRFA, 15 U_S.C. § 45b(b)(1), in connection with
18 | business financing services, as set forth in Exhibit A.
19 | 4. Defendants waive any claim that they may have under the Equal Access to
20 || Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through
21 || the date of this Order, and agree to bear their own costs and attorney fees.
22 || 5. Defendants and the Commission waive all rights to appeal or otherwise
23 | challenge or contest the validity of this Order.
24 DEFINITIONS
25 For purposes of this Order, the following definitions shall apply:
26 || A. “Asset” means any legal or equitable interest in, right to, or claim to, any
27
-1-
1 property, wherever located and by whomever held.
2 | B. “Clear(ly) and conspicuous(ly)” means that a required disclosure is easily
3 noticeable (1.e., difficult to miss) and easily understandable by ordinary
4 Consumers, including in all of the following ways:
5 1. In any communication that is solely visual or solely audible, the disclosure
6 must be made through the same means through which the communication is
7 presented. In any communication made through both visual and audible means,
8 such as a television advertisement, the disclosure must be presented
9 simultaneously in both the visual and audible portions of the communication
10 even if the representation requiring the disclosure is made in only one means.
11 2. A visual disclosure, by its size, contrast, location, the length of time it
12 appears, and other characteristics, must stand out from any accompanying text
13 or other visual elements so that it is easily noticed, read, and understood.
14 3. An audible disclosure, including by telephone or streaming video, must be
15 delivered in a volume, speed, and cadence sufficient for ordinary Consumers to
16 easily hear and understand it.
17 4. In any communication using an interactive electronic medium, such as the
18 Internet or software, the disclosure must be unavoidable.
19 5. The disclosure must use diction and syntax understandable to ordinary
20 Consumers and must appear in each language in which the representation that
21 requires the disclosure appears.
22 6. The disclosure must comply with these requirements in each medium through
23 which it is received, including all electronic devices and face-to-face
24 communications.
25 7. The disclosure must not be contradicted or mitigated by, or inconsistent with,
26 anything else in the communication.
27
-2-
1 8. When the representation or sales practice targets a specific audience, such as
2 children, the elderly, or the terminally ill, “ordinary Consumers” includes
3 members of that group.
4 | C. “Credit Repair Product or Service” means any product or service
5 represented, expressly or by implication to: (1) improve any Consumer’s credit
6 report, credit record, credit history, credit profile, credit score, or credit rating;
7 or (2) provide advice or assistance to any Consumer with regard to any activity
8 or service the purpose of which is to improve a Consumer’s credit report, credit
9 record, credit history, credit profile, credit score or credit rating.
10 || D. “Consumer” means a natural person, an organization or other legal entity,
11 including a corporation, partnership, sole proprietorship, limited liability
12 company, association, cooperative, or any other group or combination acting as
13 an entity.
14 | E. “Corporate Defendant(s)” means Seek Capital, LLC, a Delaware limited
15 liability company, Seek Capital, LLC, a California limited liability company,
16 doing business as Seek Business Capital and SBC Business, and each of their
17 subsidiaries, affiliates, successors, and assigns.
18 || F. “Covered Products and Services” means any product, service, plan, or
19 program represented, expressly or by implication, to: provide any Consumer,
20 arrange for any Consumer to receive, or assist any Consumer in receiving,
21 directly or indirectly, funding, loans, lines of credit, or credit cards.
22 || G. “Defendants” means Corporate Defendants and Individual Defendant,
23 individually, collectively, or in any combination.
24 | H. “Express Informed Consent” means an affirmative act communicating
25 unambiguous assent to be charged, made after receiving and in close proximity
26 to a Clear and Conspicuous disclosure of all material information related to the
27 charge.
3-
1 | Ll. “Individual Defendant” means Roy Ferman.
2 || J. “Secured or Unsecured Debt Relief Product or Service” means:
3 a. With respect to any mortgage, loan, debt, or obligation between a person
4 and one or more secured or unsecured creditors or debt collectors, any
5 product, service, plan, or program represented, expressly or by
6 implication, to:
7 i. stop, prevent, or postpone any mortgage or deed of foreclosure sale
8 for a person’s dwelling, any other sale of collateral, any
9 repossession of a person’s dwelling or other collateral, or
10 otherwise save a person’s dwelling or other collateral from
11 foreclosure or repossession;
12 ll. negotiate, obtain, or arrange a modification, or renegotiate, settle,
13 reduce, or in any way alter any terms of the mortgage, loan, debt,
14 or obligation, including a reduction in the amount of interest,
15 principal balance, monthly payments, or fees owed by a person to a
16 secured or unsecured creditor or debt collector;
17 i. obtain any forbearance or modification 1n the timing of payments
18 from any secured or unsecured holder or servicer of any mortgage,
19 loan, debt, or obligation:
20 iv. negotiate, obtain, or arrange any extension of the period of time
21 within which a person may (1) cure his or her default on the
22 mortgage, loan, debt, or obligation, (11) reinstate his or her
23 mortgage, loan, debt, or obligation, (111) redeem a dwelling or other
24 collateral, or (iv) exercise any right to reinstate the mortgage, loan,
25 debt, or obligation or redeem a dwelling or other collateral;
26 v. obtain any waiver of an acceleration clause or balloon payment
27 contained in any promissory note or contract secured by any
_4-
1 dwelling or other collateral; or
2 vi. negotiate, obtain, or arrange (1) a short sale of a dwelling or other
3 collateral, (11) a deed-in-lieu of foreclosure, or (111) any other
4 disposition of a mortgage, loan, debt, or obligation other than a
5 sale to a third party that is not the secured or unsecured loan
6 holder;
7 The foregoing shall include any manner of claimed assistance, including
8 auditing or examining a person’s application for the mortgage, loan, debt,
9 or obligation.
10 b. With respect to any loan, debt, or obligation between a person and one or
11 more unsecured creditors or debt collectors, any product, service, plan, or
12 program represented, expressly or by implication, to: a. repay one or
13 more unsecured loans, debts, or obligations; or b. combine unsecured
14 loans, debts, or obligations into one or more new loans, debts, or
15 obligations
16 || K. “Telemarketing” means a plan, program, or campaign which is conducted to
17 induce the purchase of goods or services or a charitable contribution, by use of
18 one or more telephones and which involves more than one interstate telephone
19 call. The term does not include the solicitation of sales through the mailing of a
20 catalog which: contains a written description or illustration of the goods or
21 services offered for sale; includes the business address of the seller: includes
22 multiple pages of written material or illustrations; and has been issued not less
23 frequently than once a year, when the person making the solicitation does not
24 solicit customers by telephone but only receives calls initiated by customers in
25 response to the catalog and during those calls takes orders only without further
26 solicitation. For purposes of the previous sentence, the term “further
27 solicitation” does not include providing the customer with information about, or
5.
1 attempting to sell, any other item included in the same catalog which prompted
2 the customer's call or in a substantially similar catalog.
3 ORDER
4 I. BAN ON COVERED PRODUCTS AND SERVICES
5 IT IS ORDERED that Defendants are permanently restrained and enjoined
6 || from advertising, marketing, promoting, or offering for sale, or assisting in the
7 || advertising, marketing, promoting, or offering for sale Covered Products and
g_ || Services.
g | BAN ON SECURED AND UNSECURED DEBT RELIEF PRODUCTS AND
10 SERVICES
IT IS THEREFORE ORDERED that Defendants, whether acting directly or
D indirectly, are permanently restrained and enjoined from:
3 A. Advertising, marketing, promoting, offering for sale, or selling any Secured
4 or Unsecured Debt Relief Product or Service; and
B. Assisting others in the advertising, marketing, promoting, offering for sale,
or selling any Secured or Unsecured Debt Relief Product or Service.
16 III. BAN ON CREDIT REPAIR
IT IS THEREFORE ORDERED that Settling Defendants, whether acting
8 directly or indirectly, are permanently restrained and enjoined from:
19 A. Advertising, marketing, promoting, offering for sale, or selling any Credit
20 Repair Service; and
21 B. Assisting others in the advertising, marketing, promoting, offering for sale,
22 or selling any Credit Repair Service.
23 IV. PROHIBITION AGAINST MISREPRESENTATIONS
24 IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents,
25 || employees, and attorneys, and all other persons in active concert or participation
26 || with any of them, who receive actual notice of this Order, whether acting directly
27
-6-
1 | or indirectly, in connection with the advertising, marketing, promoting, or offering
2 || for sale of any goods or services, are permanently restrained and enjoined from
3 || misrepresenting expressly or by implication:
4 A. that Defendants are affiliated with a business or a type of business;
5 B. that Defendants’ services will not harm Consumers’ credit scores
6 C. that Defendants charge no upfront fees;
7 D. that Consumers have authorized the charges on their invoice;
8 E. that reviews of Seek were truthful reviews by actual users of
9 Defendants’ services; and
10 F. any other fact material to Consumers concerning any good or service
11 such as the total costs; any material restrictions, limitations, or conditions;
12 or any material aspect of its performance, efficacy, nature, or central
13 characteristics.
14 V. PROHIBITION ON TELEMARKETING
15 IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents,
16 || employees, and attorneys, and all other persons in active concert or participation
17 || with any of them, who receive actual notice of this Order, whether acting directly
1g || Or indirectly, in connection with Telemarketing of any goods or services, are
19 || Permanently restrained and enjoined from violating any provision of the TSR, 16
0 C.F.R. Part 310, attached as Attachment B.
1 VI. PROHIBITION AGAINST UNAUTHORIZED CHARGES
» IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents,
4 employees, and attorneys, and all other persons in active concert or participation
A with any of them, who receive actual notice of this Order by personal service or
otherwise, whether acting directly or indirectly, in connection with the advertising,
% marketing, promoting, or offering for sale of any goods or services, are
7 permanently restrained and enjoined from billing Consumers for any charges
_7-
1 | without having previously obtained Express Informed Consent, and having created
2 || and maintained a record of such consent.
3 VII. PROHIBITION AGAINST UNLAWFUL CONTRACT TERMS
4 IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents,
5 || employees, and attorneys, and all other persons in active concert or participation
6 || with any of them, who receive actual notice of this Order by personal service or
7 || otherwise, whether acting directly or indirectly, in connection with the advertising,
8 || marketing, promoting, or offering for sale of any goods or services, are
9 || permanently restrained and enjoined from prohibiting or restricting any Consumer,
10 || potential purchaser, or investor from communicating reviews, performance
11 || assessments, and similar analyses about Defendants’ products or services, or the
12 || conduct of Defendants; or threatening or imposing a penalty or fee against any
13 || Consumer, potential purchaser, or investor who engages in such communications.
14 VIII. COOPERATION
15 IT IS FURTHER ORDERED that:
16 Defendants must cooperate with representatives of the Commission in this
17 || case and in any investigation related to or associated with the transactions or
18 || occurrences that are the subject of the Complaint. Defendants must provide truthful
19 || and complete information, evidence, and testimony. Defendants must appear for
20 || interviews, discovery, hearings, trials, and any other proceedings that a
21 || Commission representative may reasonably request upon 5 days’ written notice, or
22 || other reasonable notice, at such places and times as a Commission representative
23 || may designate, without the service of a subpoena.
24 Ix. MONETARY JUDGMENT AND PARTIAL SUSPENSION
25 IT IS FURTHER ORDERED that:
26 A. Judgment in the amount of Forty-Eight Million Two Hundred Eighty
27 || Thousand Three Hundred Twenty-Eight Dollars ($48,280,328) is entered in favor
1 || of the Commission against Individual Defendant and Corporate Defendants jointly
2 || and severally, as monetary relief.
3 B. Defendants are ordered to pay to the Commission $250,000 within 20
4 | days of entry of this Order. Such payment must be made by electronic fund
5 || transfer in accordance with instructions provided by a representative of the
6 || Commission.
7 C. Upon such payment, the remainder of the judgment is suspended,
8 || subject to the Subsections below.
9 D. The Commission’s agreement to the suspension of part of the
10 || judgment is expressly premised upon the truthfulness, accuracy, and completeness
11 || of Defendants’ sworn financial statements and related documents (collectively,
12 || “financial representations”) submitted to the Commission, namely:
13 1. the Financial Statement of Individual Defendant Roy Ferman
14 signed on March 3, 2025, including the attachments:
15 2. the Financial Statement of Individual Defendant Roy Ferman
16 signed on September 10, 2025, including the attachments;
17 3. the Financial Statement of Corporate Defendants signed by
18 Defendant Roy Ferman on March 3, 2025, including the
19 attachments:
20 4. the Financial Statement of Corporate Defendants signed by
21 Defendant Roy Ferman on September 10, 2025, including the
22 attachments:
23 5. the additional documentation submitted by email from Defendants’
24 counsel Peter Steinman to Commission counsel Maya Sequeira
25 dated March 13, 2025:
26
27
-9-
1 6. Defendants’ responses to expedited interrogatories dated April 9,
2 2025;
3 7. Individual Defendant’s responses to second set of expedited
4 interrogatories dated May 16, 2025;
5 8. Individual Defendant’s further supplemental responses to second
6 set of expedited interrogatories dated September 3, 2025;
7 9. Individual Defendant’s update to Financial Statement by the
8 spreadsheet provided to Commission counsel on May 23, 2025;
9 10. the additional documentation submitted by email from Individual
10 Defendant’s counsel Matthew Rapkowski to Commission counsel
11 Maya Sequeira, Katherine Worthman, and Julia Heald dated
12 September 5, 8, 11, and 12, 2025; and
13 11. the additional documentation submitted by email from
14 Defendants’ counsel Collin H. Craig to Commission counsel Maya
15 Sequeira, Katherine Worthman, and Julia Heald dated September
16 6, 9, and 11, 2025.
17 E. — The suspension of the judgment will be lifted as to any Defendant if,
18 || upon motion by the Commission, the Court finds that Defendant failed to disclose
19 || any material Asset, materially misstated the value of any Asset, or made any other
20 || material misstatement or omission in the financial representations identified above.
21 F. Ifthe suspension of the judgment is lifted, the judgment becomes
22 || immediately due as to that Defendant in the amount specified in Subsection A
23 || above (which the parties stipulate only for purposes of this Section represents the
24 || Consumer injury alleged in the complaint), less any payment previously made
25 || pursuant to this Section, plus interest computed from the date of entry of this
26 | Order.
27
-10-
1 X. ADDITIONAL MONETARY PROVISIONS
2 IT IS FURTHER ORDERED that:
3 A. Defendants relinquish dominion and all legal and equitable right, title,
4 | and interest in all Assets transferred pursuant to this Order and may not seek the
5 || return of any Assets.
6 B. The facts alleged in the Complaint will be taken as true, without
7 || further proof, in any subsequent civil litigation by or on behalf of the Commission,
8 || including in a proceeding to enforce its rights to any payment or monetary
9 || judgment pursuant to this Order, such as a nondischargeability complaint in any
10 || bankruptcy case.
11 C. The facts alleged in the Complaint establish all elements necessary to
12 || sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the
13 || Bankruptcy Code, 1] U.S.C. § 523(a)(2)(A), and this Order will have collateral
14 || estoppel effect for such purposes.
15 D. — Each Defendant acknowledges that Defendant’s Employer
16 || Identification Number, Social Security Number, or other Taxpayer Identification
17 || Number (“TIN”), including all TINs that Defendants previously provided, may be
18 || used by the Commission for reporting and other lawful purposes, including
19 || collecting on any delinquent amount arising out of this Order in accordance with
20 | 3LUS.C, $7701.
21 E. — All money received by the Commission pursuant to this Order may be
22 || deposited into a fund administered by the Commission or its designee to be used
23 || for Consumer relief, such as redress and any attendant expenses for the
24 || administration of any redress fund. Ifa representative of the Commission decides
25 | that direct redress to Consumers is wholly or partially impracticable or money
26 || remains after such redress is completed, the Commission may apply any remaining
27 || money for such related relief (including Consumer information remedies) as it
-11-
1 || determines to be reasonably related to Defendants’ practices alleged in the
2 || Complaint. Any money not used for relief is to be deposited to the U.S. Treasury.
3 || Defendants have no right to challenge any actions the Commission or its
4 | representatives may take pursuant to this Subsection.
5 XI CUSTOMER INFORMATION
6 IT IS FURTHER ORDERED that Defendants, Defendants’ officers, agents,
7 || employees, and attorneys, and all other persons in active concert or participation
8 || with any of them, who receive actual notice of this Order by personal service or
9 || otherwise, are permanently restrained and enjoined from directly or indirectly:
10 A. failing to provide sufficient customer information to enable the
11 || Commission to efficiently administer Consumer redress. If a representative of the
12 || Commission requests in writing any information related to redress, Defendants
13 || must provide it, in the form prescribed by the Commission, within 14 days.
14 B. disclosing, using, or benefitting from customer information, including
15 || the name, address, telephone number, email address, social security number, other
16 || identifying information, or any data that enables access to a customer’s account
17 || (including a credit card, bank account, or other financial account), that any
18 || Defendant obtained prior to entry of this Order in connection with the advertising,
19 || marketing, promoting, or offering for sale of financial product or services; and
20 C. failing to destroy such customer information in all forms in their
21 || possession, custody, or control within 30 days after receipt of written direction to
22 || do so from a representative of the Commission.
23 Provided, however, that customer information need not be disposed of, and
24 || may be disclosed, to the extent requested by a government agency or required by
25 || law, regulation, or court order.
26 XII. ORDER ACKNOWLEDGMENTS
27
-12-
1 IT IS FURTHER ORDERED that Defendants obtain acknowledgments of
2 | receipt of this Order:
3 A. — Each Defendant, within 7 days of entry of this Order, must submit to
4 | the Commission an acknowledgment of receipt of this Order sworn under penalty
5 || of perjury.
6 B. For 10 years after entry of this Order, the Individual Defendant for
7 || any business that such Defendant, individually or collectively with any other
8 || Defendants, is the majority owner or controls directly or indirectly, and each
9 || Corporate Defendant, must deliver a copy of this Order to: (1) all principals,
10 | officers, directors, and LLC managers and members; (2) all employees having
11 || managerial responsibilities for conduct related to the subject matter of the Order
12 || and all agents and representatives who participate in conduct related to the subject
13 || matter of the Order; and (3) any business entity resulting from any change in
14 | structure as set forth in the Section titled Compliance Reporting. Delivery must
15 || occur within 7 days of entry of this Order for current personnel. For all others,
16 || delivery must occur before they assume their responsibilities.
17 C. From each individual or entity to which a Defendant delivered a copy
18 || of this Order, that Defendant must obtain, within 30 days, a signed and dated
19 || acknowledgment of receipt of this Order.
20 XII. COMPLIANCE REPORTING
21 IT IS FURTHER ORDERED that Defendants make timely submissions to
22 || the Commission:
23 A. One year after entry of this Order, each Defendant must submit a
24 || compliance report, sworn under penalty of perjury:
25 1. Each Defendant must: (a) identify the primary physical, postal,
26 and email address and telephone number, as designated points of contact,
27
-13-
1 which representatives of the Commission may use to communicate with
2 Defendant; (b) identify all of that Defendant’s businesses by all of their
3 names, telephone numbers, and physical, postal, email, and Internet
4 addresses; (c) describe the activities of each business, including the goods
5 and services offered, the means of advertising, marketing, and sales, and the
6 involvement of any other Defendant (which Individual Defendant must
7 describe if they know or should know due to their own involvement); (d)
8 describe in detail whether and how that Defendant is in compliance with
9 each Section of this Order; and (e) provide a copy of each Order
10 Acknowledgment obtained pursuant to this Order, unless previously
11 submitted to the Commission.
12 2. Additionally, the Individual Defendant must: (a) identify all
13 telephone numbers and all physical, postal, email and Internet addresses,
14 including all residences; (b) identify all business activities, including any
15 business for which such Defendant performs services whether as an
16 employee or otherwise and any entity in which such Defendant has any
17 ownership interest; and (c) describe in detail such Defendant’s involvement
18 in each such business, including title, role, responsibilities, participation,
19 authority, control, and any ownership.
20 B. For 20 years after entry of this Order, each Defendant must submit a
21 || compliance notice, sworn under penalty of perjury, within 14 days of any change
22 || in the following:
23 1. Each Defendant must report any change in: (a) any designated
24 point of contact; or (b) the structure of any Corporate Defendant or any
25 entity that Defendant has any ownership interest in or controls directly or
26 indirectly that may affect compliance obligations arising under this Order,
27
-]4-
1 including: creation, merger, sale, or dissolution of the entity or any
2 subsidiary, parent, or affiliate that engages in any acts or practices subject to
3 this Order.
4 2. Additionally, the Individual Defendant must report any change
5 in: (a) name, including aliases or fictitious name, or residence address; or
6 (b) title or role in any business activity, including any business for which
7 such Defendant performs services whether as an employee or otherwise and
8 any entity in which such Defendant has any ownership interest, and identify
9 the name, physical address, and any Internet address of the business or
10 entity.
11 C. Each Defendant must submit to the Commission notice of the filing of
12 || any bankruptcy petition, insolvency proceeding, or similar proceeding by or
13 || against such Defendant within 14 days of its filing.
14 D. Any submission to the Commission required by this Order to be
15 || sworn under penalty of perjury must be true and accurate and comply with 28
16 | US.C_§ 1746 such as by concluding: “I declare under penalty of perjury under
17 || the laws of the United States of America that the foregoing 1s true and correct.
18 || Executed on: ____” and supplying the date, signatory’s full name, title (if
19 || applicable), and signature.
20 E. — Unless otherwise directed by a Commission representative in writing,
21 || all submissions to the Commission pursuant to this Order must be emailed to
22 || DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to:
23 || Associate Director for Enforcement, Bureau of Consumer Protection, Federal
24 || Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The
25 || subject line must begin: FTC v. Seek Capital, LLC, et al., X250013.
26 XIV. RECORDKEEPING
27
-15-
1 IT IS FURTHER ORDERED that Defendants must create certain records for
2 || 20 years after entry of the Order, and retain each such record for 5 years.
3 || Specifically, Corporate Defendants in connection with the advertising, marketing,
4 | promoting, or offering for sale of any goods or services and the Individual
5 || Defendant for any business that such Defendant, individually or collectively with
6 || any other Defendants, is a majority owner or controls directly or indirectly must
7 || create and retain the following records:
8 A. accounting records showing the revenues from all goods or services
9 || sold;
10 B. _ personnel records showing, for each person providing services,
11 || whether as an employee or otherwise, that person’s: name; addresses; telephone
12 || numbers; job title or position; dates of service; and (if applicable) the reason for
13 |) termination;
14 C. □ records of all Consumer complaints and refund requests concerning
15 || the subject matter of this Order, whether received directly or indirectly, such as
16 || through a third party, and any response;
17 D. all records necessary to demonstrate full compliance with each
18 || provision of this Order, including all submissions to the Commission; and
19 E. — acopy of each unique advertisement or other marketing material.
20 XV. COMPLIANCE MONITORING
21 IT IS FURTHER ORDERED that, for the purpose of monitoring
22 || Defendants’ compliance with this Order, including the financial representations
23 || upon which part of the judgment was suspended, and any failure to transfer any
24 || Assets as required by this Order:
25 A. Within 14 days of receipt of a written request from a representative of
26 | the Commission each Defendant must: submit additional compliance reports or
27
-16-
1 || other requested information, which must be sworn under penalty of perjury: appear
2 || for depositions; and produce documents for inspection and copying. The
3 || Commission is also authorized to obtain discovery, without further leave of court,
4 | using any of the procedures prescribed by Federal Rules of Civil Procedure 29, 30
5 || (including depositions by remote means), 31, 33, 34, 36, 45, and 69.
6 B. For matters concerning this Order, the Commission is authorized to
7 || communicate directly with each Defendant. Defendant must permit
8 || representatives of the Commission to interview any employee or other person
9 | affiliated with any Defendant who has agreed to such an interview. The person
10 || interviewed may have counsel present.
11 C. The Commission may use all other lawful means, including posing,
12 || through its representatives as consumers, suppliers, or other individuals or entities,
13 || to Defendants or any individual or entity affiliated with Defendants, without the
14 || necessity of identification or prior notice. Nothing in this Order limits the
15 || Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20 of
16 || the FTC Act, JSUS.C. §§ 49, 57b-1.
17 D. Upon written request from a representative of the Commission, any
18 || consumer reporting agency must furnish consumer reports concerning Individual
19 || Defendant, pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C.
20 || $1681 b(a)(1).
21 XVI. RETENTION OF JURISDICTION
22 IT IS FURTHER ORDERED that this Court retains jurisdiction of this
23 || matter for purposes of construction, modification, and enforcement of this Order.
24 ORDERED this >? of SEPTEMBER a0 05.
25
26 (9 (Ractonas
07 Honorable R. Gary Klauser
United States District Judge
1 | SO STIPULATED AND AGREED:
2 | FOR PLAINTIFF:
3 || DATED: September 23, 2025 s/ Maya Sequeira
MAYA SEQUEIRA (pro hac vice)
4 msequeira@ftc.gov
5 (202) 326-3719
KATHERINE WORTHMAN (pro hac vice)
6 kworthman@ftc.gov
7 (202) 326-2929
JULIA E. HEALD (pro hac vice)
8 jheald@fic.gov
9 (202) 326-3589
SALLY TIEU, Cal. Bar No. 346034
10 stieu@ftc.gov
11 (202) 304-7313
FEDERAL TRADE COMMISSION
12 600 Pennsylvania Avenue, N.W.
13 Mail stop CC-10232
4 Washington, D.C. 20580
15 AARON SCHUE, Cal. Bar No. 338760
aschue@ftc.gov
16 (310) 824-4306
17 FEDERAL TRADE COMMISSION
10990 Wilshire Boulevard, Suite 400
18 Los Angeles, CA 90024
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COLLIN H. CRAIG (CA Bar No. 339194)
3 ccraig@porterscott.com
4 (916) 929-1481
MARTIN N. JENSEN (CA Bar No. 232231)
5 myjensen@porterscott.com
6 PORTER SCOTT, A PROFESSIONAL
CORPORATION
7 2180 Harvard Street, Suite 500
8 Sacramento, CA 95815
9 Attorneys for Defendants Seek Capital, LLC,
10 a Delaware limited liability company, Seek
Capital, LLC, a California Limited Liability
11 Company, and Roy Ferman
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RICHARD W. EPSTEIN (pro hac vice)
2 Richard.epstein@gmlaw.com
3 (954) 491-1120
GREENSPOON MARDER LLP
4 200 East Broward Blvd., Suite 1800
5 Fort Lauderdale, FL 33301
6 RICHARD GILLER (CA Bar No. 117823)
7 Richard. giller@gmlaw.com
(323) 880-0859
8 GREENSPOON MARDER LLP
9 1875 Century Park East, Suite 1900
Los Angeles, CA 90067
10
1 MATTHEW S. RAPKOWSKI
Matthew.rapkowski@gmlaw.com
12 (212) 524-4997
13 GREENSPOON MARDER LLP
1345 Avenue of the Americas, Suite 2200
14 New York, NY 10105
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1 | DATED: Yo/y
/-ROY FERMAR, Defendant
5 SEEK CAPITAL, LLC, a Delaware limited
6 liability company, Defendant
7 By: Roy Fe 7Chief Executive Officer
9 stk CAPITAL, LLC, a California limited
10 liability company, Defendant
1] By: Roy Ferman, Chief Executive Officer
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ATTACHMENT A
Case 2:24-cv-09511-RGK-MAA Document _ Filed 09/16/25 Pagei1of19 Page ID
#11220
. NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
Present: The Honorable R.GARY KLAUSNER, UNITED STATES DISTRICT JUDGE
Joseph Remigio Not Reported N/A
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiff: Attorneys Present for Defendants:
Not Present Not Present
Proceedings: (IN CHAMBERS) Order Re: The FTC’s Motion for Summary Judgment
[75]; Defendant Roy Ferman’s Motion for Partial Summary Judgment
[92]
L INTRODUCTION
On November 4, 2024, the Federal Trade Commission (the “FTC”) filed a Complaint against
Seek Capital, LLC, a Delaware limited liability company, Seek Capital. LLC, a California limited
liability company (both entities collectively, “Seek’), and the entities’ CEO, Roy Ferman (collectively,
“Detendants”). The FTC asserts claims for violations of Section 5(a) of the FTC Act (“FTCA”), the
Telemarketing Sales Rule (“TSR”), and the Consumer Review Faimess Act (“CRFA”). (ECF No. 1.)
On January 17, 2025, the FTC filed a Motion for a Preliminary Injunction, requesting the Court
enjoin Defendants from certain prohibited conduct. (ECF No. 30.) On February 20, 2025, the Court
granted and ordered the preliminary injunction. (ECF No. 50.)
Presently before the Court are two motions: the FTC’s Motion for Summary Judgment (ECF.
No. 75) and Ferman’s Motion for Partial Summary Judgment (ECF No. 92). For the following reasons,
the Court GRANTS in part the FTC’s Motion and DENIES Ferman’s Motion.
i. FACTUAL BACKGROUND
The following facts are uncontroverted! unless otherwise stated:
Ferman is the founder, CEO, and board member of Seek, a business funding matching company
that has marketed its services to new and aspiring small business owners. (The FTC’s Resp. to Statement
of Genuine Disputes of Material Fact (“FTC RSF”), 9 5, ECF No. 99-1]; Compl. § 2; Answer 4 14, ECF
' Defendants make numerous objections to the evidence presented in opposition to the FTC’s Motion. To the extent the Court
relies upon evidence to which Defendants have objected. the objections are OVERRULED. To the extent the Court does not
rely upon evidence to which Defendants have objected. the objections are DENIED as moot,
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NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
No. 24; Ferman Decl., □□ 4, 13, ECF No. 91-3 (“Ferman Decl.”).) Although Seek technically
encompasses two corporate entities, Seek functions and Defendants treat it as one: (FTC RSF 4] 12-13.)
As Seek’s founder and CEO, Ferman has participated in and has authority over Seek’s business
operations, including signing corporate formation documents, corporate bank accounts, and third-party
contracts as well as serving as the primary contact for Seek’s lead generators, payment processors, and
domain registrars and hirmg and firmg Seek personnel. (Jd. {J 5—8, 9, 10, 14-15, 16, 21, 24-31.)
Ferman has also been involved m Seek’s business with respect to its marketing strategy, lender
conununications, and reviewing and responding to consumer complaints concerning Seek’s business.
(Ud. 99 27, 28, 32, 34-35, 50-51, 115, 138.)
Defendants have marketed their purported services to consumers through internet
advertisements, Seek’s website, third-party websites, emails to consumers, and telemarketing. (See, e.¢.,
id. 9 41, 47, 54, 60, 64.) Within these marketing efforts, Defendants have made several types of
representations concerning their business, including that (1) they would secure business loans or lines of
credit for customers (id. 99 42-43, 45, 49-52 54, 57, 61, 64-66, 68-69); (2) Seek had a relationship with
lenders that provided Seek customers benefits unavailable to the public (id. §] 102-107); (3) they would
secure credit cards with line of credit capabilities (7d. 133-134, 136); (4) they would secure specific
financing terms, such as zero percent annual percentage rate (“APR”) for a specified time (id. JF 143-
46); (5) Seek would not charge fees until funding was approved (id. | 152-53, 155, 158, 159); (6)
Seek’s services would not harm customers’ credits scores (id. 57, 168-69, 174); and (7) Seek
received overwhelmingly positive customer reviews (see id. J] 182-83).
Seek’s business services involved applying exclusively for credit cards with lenders on behalf of
its customers. Ud. {ff 38, 93.) If consumers were interested in Seek’s services, Seek’s telemarketers
would call and send them a “Funding Estimate Agreement” (“FEA”), which outlined the business terms,
including fees. Ud. 9 78; Ferman Decl. { 28.) Soon after the FEA was signed, Seek would have
consumers sign a notarized Limited Powers of Attorney, which gave Seek the authority to submit credit
and loan facilities on a consumer’s behalf. (FTC RSF § 88.) After those agreements were signed, Seek
would conduct a verification call with customers to gather further information about their funding needs.
(Ud. § 89.) During or after this call, Seek would send customers a pre-filled form contract, the
“Verification and Compliance Questionnaire” (“VCQ”), for their signature. (/d. ¥ 90.) Since at least
November 4, 2021, the VCQ has contained a clause prohibiting customers from posting online any
negative comments, reviews, or complaints about Seek for three years. (/d. {| 217.) After the VCQ was
signed, Seek would submit the credit card applications to lenders. Ud. § 94.)
When applying for credit cards for customers, Seek has secured more credit than the maximum
funding amount a customer had explicitly approved. (/d. 4] 205, 207.) Additionally. Seek would acquire
eredit cards with varying financing terms, some with and without a zero percent APR. (/d. ¥ 147:
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#:11222
. NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et al.
Ferman Decl. (J 15-16.) During the credit card application process, “hard” credit inquiries were
conducted to check Seek’s customers’ credit scores. (FTC RSF 175.)
Defendants have received negative feedback from customers and lenders alike. For example,
Defendants have received and prepared responses to consumer complaints concerning Seek’s business
practices. (See id. 34-35, 39.) More specifically, Defendants have received feedback from some
customers that they were surprised and “unhappy” to learn their funding would be provided with credit
eards. (Ud. | 96.) Additionally, Defendants have recerved cease-and-desist letters from banks concerning
Defendants’ credit card application practices. (/d. 4] 113-16.)
Over the course of business operations, Defendants have charged customers several fees,
including funding fees (based on a percentage of the credit card limits Seek secured), application fees,
‘same-day funding fees (for optional expediting application services), and bank negotiation fees (for
optional bank negotiation services). (Id. [J 198, 201-02, 220, 229, 230.) Additionally, Defendants have
charged customers early termination fees when they have canceled services after signing the FEA and
before receiving funding. (/d. 160.) In total, these fees have resulted in customers paying Seek
$48,280,328.57, after subtracting credits, refunds, or disputes. Ud. { 231.)
Tit. JUDICIAL STANDARD
De. Motions for Summary Judgment
Under Federal Rule of Civil Procedure 56(a), a court may grant summary judgment only if “there
is No genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). To prevail on a summary judgment motion, the movant must show that there are
no genuine issues of material fact as to matters on which it has the burden of proof at trial. See Ce/otex
Corp. v. Catrett, A77 U.S. 317, 325 (1986). Upon such a showing, the Court may grant summary
judgment on all or part of the claim. Fed. R. Civ. P. 56(a).
To defeat a summary judgment motion, the non-moving party may not merely rely on its
pleadings or on conclusory statements. See Celotex, 477 U.S. at 324. Nor may the non-moving party
merely attack or discredit the moving party’s evidence. Nat’ Union Fire Ins. Co. v. Argonaut Ins. Co.,
701 F.2d 95, 96-97 (9th Cir. 1983). The non-moving party nist affirmatively present specific evidence
sufficient to create a genuine issue of material fact for trial. See Celotex, 477 US. at 324. The
materiality of a fact is determined by whether it might influence the outcome of the case based on the
contours of the underlying substantive law. Anderson v. Liberty Lobby, Inc., 477 ULS. 242, 248 (1986).
Disputes over such facts amount to genuine issues if a reasonable jury could resolve them in favor of the
nonmoving party. Id.
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#11223
. NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
The Court first addresses the FTC’s Motion for Summary Judgment before considermg Ferman’s
Motion for Partial Summary Judgment
IV. THE FTC’S MOTION FOR SUMMARY JUDGMENT
A. Discussion
The FTC moves for summary judgment, seeking judgment that: (1) Defendants’
misrepresentations violated the FTCA and TSR; (2) Defendants’ unauthorized and deceptive billing
practices violated the FTCA: (3) Defendants’ form contract violated the CRFA; (4) Defendants are
liable as a common enterprise; (5) Defendants’ affirmative defenses fail; and (6) Defendants are liable
for injunctive and monetary relief. The Court addresses each argument in turn.
iis Misrepresentations
Section 5 of the FTCA prohibits “unfair methods of competition in or affecting commerce. and
unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C. § 45(a)(1). Similarly, the FTC
enacted the TSR because of a directive from Congress to “preseribe miles prohibiting deceptive
telemarketing acts or practices and other abusive telemarketing acts or practices.” 15 ULS.C. §
6102(a)(1). Any violation of the TSR constitutes an unfair and deceptive act or practice in violation of
Section 5 of the FTC Act. 15 U.S.C. § 57a(d)(3), § 6102(b), (c).
Under the FTCA, a representation is considered deceptive if it is (1) likely to mislead consumers
acting reasonably under the circumstances, and (2) material. FTC v. Pantron I Corp., 33 F.3d 1088,
1095 (9th Cir. 1994). In assessing whether a representation or practice is likely to mislead consumers, a
court may consider the overall “net umpression” conveyed by the representation. F7C v.
Cyberspace.Com, LLC, 453 F.3d 1196. 1200 (9th Cir. 2006) (“A solicitation may be likely to mislead by
virtue of the net impression it creates even though the solicitation also contains truthful disclosures.”).
Evidence of past deception is “highly probative to show that a practice is likely to mislead consumers
acting reasonably under the circumstances.” /d. at 1201.
Similarly, the TSR prohibits telemarketing practices that include misrepresentations as to.
material information, like “[a]ny material aspect of the performance, efficacy, nature, or central
characteristics of goods or services that are the subject of a sales offer... .” 16 C.F.R. § 310.3(a)\(2)Gi)
Here, the FTC asserts Defendants misrepresent that: (1) they procure loans or lines of credit for
customers when they actually obtain credit cards; (2) they have relationships with lenders; (3) they offer
credit cards with “line of credit capability”; (4) they offer specific favorable financing terms, like zero
percent APR; (5) they charge no fees until their customer receives funding; (6) using their services will
not harm their customers’ credit scores; and (7) their business reviews are positive. Defendants do not
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. NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et al.
dispute making these representations. Nor do they dispute that these statements are material. Indeed,
express claims about the nature of a defendant’s services are presumed material. See Pantron J Corp., 33
E.3d at 1095—96. Instead, they dispute only whether the representations were false and misleading. The
Court analyzes each: representation in tum.
a. Business Loans and Lines of Credit
The FTC asserts that Defendants represent through advertisements, Defendants’ website,
representations on third-party websites, emails to consumers, and telemarketing calls that they procure
loans or lines of credit when, m practice, they only secure credit cards. Defendants concede such
representations were made, including claims like “Need a Business Startup Loan?” and confirming
consumers can obtain funding through “the line of credit route.” (See, e.g., FTC RSF § 43, 65.)
The FTC argues that these representations are false and misleading given that Defendants solely
apply for credit cards for customers, not loans or lines of credit, and many of these representations do
not specifically reference credit cards. Defendants do not dispute that they only procure credit cards for
customers. Instead, Defendants argue that these representations are truthful because credit cards are
technically lines of credit and are classified as revolving loans. Looking to the net impressions of these
representations, the Court finds that there is a genuine dispute of material fact as to whether these
representations concemung loans and lines of credit are misleading.
The FTC has pointed to persuasive evidence that indicates that these representations could be
misleading. For instance, when Defendants have explicitly referenced credit cards in their business
offermgs, the references were alongside offers for loans and lines of credit, which may mislead
consumers to believe that the loans or lines of credit were in addition to, rather than were themselves,
the credit cards. (See, e.¢., Limited Power of Attorney, Ex. E at § 1, ECF No. 91-8 (“pursuit and
acquisition of credit and loan facilities (credit and loan facilities will consist of one or more of the
following: business and personal credit cards, bank lines of credit and bank loans) .. . .”) Additionally,
Ferman agreed with a third party that Defendants representing that they could secure “loans” in
advertising copy was “misleading.” (FTC RSF 4 97.) In fact, Seek’s clients have confirmed they were
surprised and “unhappy” that the funding Seek had advertised about would be provided through credit
cards. Ud. 496.) See F.T.C. v. Cyberspace.Com LLC, 453 F.3d 1196, 1201 (9th Cir. 2006) (noting that
evidence that representations deceived consumers highly probative to show that a practice is likely to
mislead consumers acting reasonably under the circumstances”).
However, as Defendants argued mm their Opposition, courts im the Ninth Circuit have considered
credit cards to be lines of credit and are classified as revolving loan account arrangements. See Ward v.
Costco Wholesale Corp., 2009 WL_10670191, at *1 (C.D. Cal. May 6, 2009) (noting the outstanding
balance on a credit card is a line of credit): F.7.C. v.. Am. Standard Credit Sys., Inc., 874 F. Supp. 1080.
1085 (C.D, Cal, 1994) (referencing “credit card” synonymously with a “line of credit”); Hernandez v.
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. NO 586
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et al.
Experian Info. Sols., Inc., 2021 WL.2325019, at *3 (C_D. Cal. June 4, 2021), rev'd and remanded, 2022
WL 1315306 (9th Cir. May 3, 2022) (“for revolving loans like credit cards”); Du-Phillips v. Citibank,
N.A., No. CV 25-00034 JAO-RT, 2025 WL 1615329. at *6 (D. Haw. June 5, 2025) (noting that a credit
card is. a “revolving loan account arrangement”); but see Wisdom v. Wells Fargo Bank NA, 2012 WL
170900, at *1 (D. Ariz. Jan. 20, 2012) (differentiating between a plaintiffs personal credit card and a
line of credit on his home). This precedential understanding that credit cards are a type of line of credit
and are classified as revolving loans introduces a dispute of fact that could be reasonably resolved in the
Defendants’ favor. Thus, the Court finds that a genuine dispute of material fact exists as to whether
Defendants’ representations concernimg loans and lines of credit are misleading.
b. Relationships with Lenders
The FTC contends that Defendants misrepresent Seek’s relationships with lenders. It is
undisputed that Defendants have claimed in sales pitches to consumers that Seek has “special” and
“direct relationships” with lenders and banks, that they “do not accept a single penny” from their lending
partners, and that Seek can provide consumers with access to publicly unavailable programs. (FTC RSF
§§ 102-05, 108.) The parties dispute the veracity of these representations.
The FTC argues that these representations are false and misleading, noting that, in actuality,
banks have sent Seek cease-and-desist letters, admonishing its business practices, and have
automatically declined credit card applications connected with Defendants. (7d. 97 113-16, 126.)
Additionally, Defendants have adinitted that they do not have relationships with lenders that benefit
consumers, and that their only agreements with banks are to compensate Seek in exchange for matching
and referring customers. (7d. § 109.)
In their Opposition, Defendants offer no argument to contest the FTC’s assertions but rather
dispute ancillary facts to this issue. However, the record is clear that Defendants in fact did not have
relationships with lenders that would provide consumers any sort of unique benefit as they had
represented, Additionally, Defendants accepted compensation from lenders, which directly conflicts
with their marketing representations. The Court agrees with the FTC that these false claims were likely
to deceive consumers looking to benefit from Seek’s purported relationships with lenders. Thus, these
representations are misleading and violate the FTCA and TSR.
c. Line of Credit Capability
Next, the FTC asserts that when Defendants told consumers their services involve procuring
credit cards, they misrepresented that the cards have “line of credit capabilities,” which Defendants do
not dispute. id. Ff 129. 131-32.) The FTC further asserts that in actual practice, Defendants do not
obtain credit cards with line of credit capabilities, ike providing access to cash, which again Defendants
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. NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
do not dispute. (See, é.g., id. 142 (citmg Munoz Decl., Attach. D § 11, ECF No 8-3 (“Neither credit
card provided [my] business with a revolving line of credit allowing access to:cash as promised.”)).)
Defendants do dispute that this representation is misleading. Defendants argue that advertising
their credit cards “with line of credit capability” is not a misrepresentation but rather a descriptive add
on to describe a method in which the credit card could be used. Defendants claim that when paired with
Seek’s services, their offered credit cards have adopted characteristics of other types of lines of credit.
However, as this Court has noted previously. the fact that some credit cards have that feature
does not make Defendants’ indiscriminate use of the term “credit cards with line of credit capability”
nondeceptive. (ECF No. 50.) The undisputed record shows that consumers have been unable to use the
Seek-procured credit cards as another type of line of credit, like liquidating them for cash access, beyond
the features of a standard credit card. (FTC RSF 4 141.) It is clear to the Court that representations that a
credit card has line of credit capabilities would mislead a reasonable consumer to believe that the credit
card would have additional capabilities than those traditional to that funding source. Thus, there is no
genuine dispute that these misrepresentations are misleading.
d. Financing Terms
The FTC asserts that Defendants have represented that Seek offers consumers a zero percent
APR financing term, claiming there will be “no interest repayments for the first 12 months” and “0%
interest for first 12-18 months.” U/d. 4] 143-45.) Despite these representations to consumers, Defendants
have secured credit cards without such financing terms. For example, for one consumer, Defendants
‘secured at least ten credit cards, many of which did not have a twelve-month zero percent APR. Ud. §
148.)
Defendants have admitted that they have secured credit cards without a zero percent APR. Ud. §]
147.) However, they argue that the financing terms were truthful and not misleading because for the
credit cards secured at a non-zero percent rate, Defendants intended to merge those cards with zero
percent APR credit cards. Defendants assert that clients were informed of this funding strategy and were
told not to use the non-zero percent APR credit cards, and thus the net impression of the representations
regarding the financing terms was truthful. The Court disagrees.
Subsequent disclosures do not necessarily cure an initial deception. FTC v. Resort Car Rental
Sys., 518 F.2d 962. 964 (9th Cir. 1975). The FTCA “is violated if [the defendant] mduces the first
contact through deception, even if the buyer later becomes fully informed before entering the contract.”
Id. Thus, even if Defendants did clarify with customers after Seek applied for credit cards on their behalf
that some were non-zero percent APR credit cards, this subsequent disclosure does not cure the initial
misleading representation. Defendants fail to address that falsely advertismg specific financing terms is
inisleading to a reasonable consumer. Considering the net impressions of such representations along
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. NO 586
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et al.
with the subsequent disclosures, the Court finds that there is no genuine dispute that these
representations were false and misleading, in violation of the FTCA and TSR.
No Fees Until Funding
Next, the FTC contends that Defendants have claimed to consumers that Seek does not charge
“upfront fees,” its fees are results-based, and no costs are incurred until funding is approved. (FTC RSF
§ 152-53, 155.) The FTC argues that these claims are false, offering evidence that Defendants would
actually charge consumers early termination fees before they were approved for the promised funding if
consumers cancelled the transaction after the FEA was signed.
Defendants do not dispute that they made such representations or that Seek has charged
customers an early termination fee, which is non-contingent on funding approval or any other result.
Defendants argue that the early termination fee has been disclosed multiple times to customers in
writing and over the phone, including within the FEA in red font (which stands out against the all-black
type page). Defendants also argue that clients have the right to rescind the early termination fee during a
verification call with Seek personnel, and thus these representations are not misleading. The Court is not
convinced,
The undisputed fact remains that Defendants represented to consumers that Seek did not charge
any upfront fees and that its fees were results driven, but then did charge consumers a fee without
customers receiving funding approval or any other result. Moreover, the FTC has presented undisputed
evidence that Defendants’ customers have been rushed to sign the FEA and were told they did not need
to read it. Ud. $f] 84, 86.) As a result, the misrepresentation is not cured by the FEA disclosure. See FTC
v. Am. Fin. Benefits Ctr., 2018 WL11354861, at *9-10 (N.D. Cal. Nov. 29, 2018) (misrepresentations
not cured by disclosures in contracts consumers were rushed to e-sign at the end of sales calls); see also
FIC v. Gill, 7 F. Supp. 2d 1030, 1044 (C.D. Cal. 1999) (disclaimer in contract that “consumers
eventually sign” is insufficient where it “is not included in the representations”), Accordingly, the Court
finds that there is no genuine dispute of material fact that the misrepresentations about charging no fees
until funding violated the FTCA and TSR,
f. Credit Score Impact
The FTC posits that Defendants falsely represented to consumers that their applications only
involve “soft pull” credit inquiries and will not harm customers’ credit scores, but, in fact, they knew
that the applications involved “hard” credit inquiries. (RSF § 175.) Defendants do not dispute this
evidence, and they admit that “hard inquiries” can lower consumers’ credit scores. (See Def.’s Opp. at
10-11, ECE No. 91.)
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#11228
NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
Instead, Defendants argue that these representations concern only the initial preapproval
application, at which point Seek performs “soft credit pulls” that do not impact credit scores. Defendants
argue that after a consumer was deemed qualified based on these “soft” credit checks, Seek would
explain to the consumer that the lender would perform a “hard” credit inquiry in the next step of the
application.
However, Defendants fail to reconcile that a reasonable consumer would not know that
Defendants’ sales representations referred only to one part of the application process. Indeed. the
representations appear to concern the entire application process, not one part. For example, Ferman
drafted language for Seek’s webpage stating that Seek obtains funding for customers with “no hard
eredit pulls!” (FTC RSF § 168.) Thus, the Court finds there is no genuine dispute of material fact that
‘such representations are likely to mislead a reasonable consumer to believe there would be no “hard”
credit inquiries involved with Defendants’ services.
g. Customer Reviews
Finally, the FTC asserts that Defendants have made representations that they receive
overwhelmingly positive customer reviews, including “4.9/5 Stars,” and “98% recommend.” (FTC RSF
182.) The FTC purports that the reviews do not actually reflect consumer experience because
consumers (1) are barred from posting negative reviews for three years by the Defendants’ VCQ; and (2)
have been pressured by telemarketers into leaving positive reviews to continue through the approval
process.
Defendants do not dispute that they made such representations, nor do they dispute that the VCQ
contains such a clause barring negative feedback. Although Defendants dispute whether telemarketers
were trained to pressure consumers to leave positive reviews, they do not dispute whether telemarketers
did so in practice. Instead, Defendants argue that these representations are true because Seek does have
overwhelmingly positive reviews, citing to Ferman’s declaration discussing how the reviews appeared
authentic for support.’ Given these potentially authentic positive reviews, Defendants argue there is a
genuine dispute of material fact that their representations were accurate. The Court agrees.
The record does not demonstrate that most of the reviews are fake to the extent necessary to
render Defendants” representations undisputably false or misleading. Although there is no dispute that
Seek consumers are contractually barred from posting negative reviews for three years, the FTC failed to
? The FTC argues that Ferman’s declaration is self-serving and thus should be disregarded. Although in parts of the
declaration that may be true, here, Ferman’s statements about his analysis of the customer reviews are supported by some
facts. Thus, the Court finds them sufficient to: create a genuine issue of material fact. See FTC v. Publ’g Clearing House, Inc.
104 F.3d 1168. 1171 (9th Cir. 1997) (“A conclusory, self-serving affidavit. lacking detailed facts and any supporting
evidence. is insufficient to create a genuine issue of material fact.”).
€V-90 (06/04) CIVIL MINUTES - GENERAL Page 9 of 19
Case 2:24-cv-09511-RGK-MAA Document137 Filed 09/16/25 Page 10o0f19 Page
ID #:11229
. NO 586
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
establish that there is no genuine dispute that negative reviews would have existed to render Defendants’
claims misleading.
In sum, the Cout GRANTS the FTC’s Motion for Summary Judgment of violations of the
FTCA and TSR as to misrepresentations about relationships with lenders, line of credit capabilities,
financing terms, no fees until funding, and credit score impact. The Court DENIES the FTC’s Motion
for Summary Judgment of FTCA and TSR violations as to all other grounds for misrepresentation.
2. Deceptive Billing Practices
The FTC also asserts that Defendants’ billing practices violated the FTCA. A practice is unfair
under the FTCA where it “causes or is likely to cause substantial injury to consumers [that] is not
reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to
consumers or to competition.” 15 U.S.C. § 45(m). Additionally, as the Court outlined above, a practice is
deceptive “(1) if it is likely to mislead consumers acting reasonably under the circumstances (2) in a way
that is material.” Cyberspace.Com, LLC, 453 F.3d at 1199.
It is well settled that billing customers for unauthorized charges causes substantial injury. See
FIC vy, Amazon.com, Inc., 2016 WL 10654030, at *8 (W.D. Wash. Iuly 22, 2016) (collecting cases).
Consumers cannot avoid injury if they do not have a reason to anticipate impending harm and the means
to avoid it. See also FTC v, Neovi, Inc., 604 F.3d 1150, 1158 (9th Cir. 2010).
Here, the FTC asserts that Defendants have had three deceptive billing practices: (1) inflating
fees; (2) charging early termination fees; and (3) charging fees without providing the related service.
First, the FTC has presented evidence that Defendants inflate their fees by securing more credit than
their customers want. For example, a consumer requested Defendarits secure $40,000 in funding so that
he could purchase a trailer for his trucking company. (FTC RSF § 208.) Defendants told him that they
could secure $50,000 to $60,000 and ultimately sent him an invoice indicating that they had secured
more than $60,000 in credit. (ed) Defendant have admitted that they have a practice of obtaining about
“115% of Funding Proposal offered to client and in contract” when securing “actual funding.” (Ud.
207.) The FTC argues that since Defendants charge fees based on the percentage of the credit secured,
Defendants have unfairly inflated their fees without customer authorization by securing higher limits.
Defendants do not contest that they have inflated their fees in such a manner. Instead, they justify this
billing practice by arguing that they received customer approval via the signed FEA, which permits
Defendants to secure up to twenty percent above the maximum approved funding. (Ferman Decl. {J 31,
39; FEA, Ex. D, ECF No. 91-7.)
The Court finds the record to be unclear about whether this disclosure in the FEA is sufficient to
imform consumers that they agree to potentially twenty percent more funding, and thus:a larger service
fee to Seek, when signing the contract. Additionally, there is a genuine dispute as to whether a higher
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ID #:11230
NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
eredit limit, which is what the inflated fee is based on, benefits consumers by providing them access to
additional funding, thus potentially outweighing the costs of the related fees. Thus, the FTC fails to
establish that there is no genuine dispute as to whether this billing practice is unfair or deceptive.
Second, the FTC claims that Defendants’ early termination fees are an unfair billing practice. In
their Opposition, Defendants proffer a similar argument as they did for the fee inflation billing practice.
noting how the fee was disclosed verbally and in writing, including in the FEA. (Ferman Decl. 4 31,
37, FEA, Ex. D.) Whereas the record is unclear as to the inflated fees, there does not seem to be a
genuine dispute that the early termination fee is a deceptive billing practice in light of Defendants’
marketing representations concerning their fees. See supra Section IV.A.1-e. As the Court explained
above, Defendants’ representations that they charge no fees until funding is approved has been likely
misleading to consumers given that Defendants have charged customers the early termination fee prior
to funding approval. Defendants arsue that this practice was not deceptive because, along with other
arguments already addressed above, customers could request to rescind this early termination fee.
However, spending the time to make such a request is another type of harm caused by this billing
practice. See F.T.C. v. Neovi, Inc., 598 F. Supp. 2d 1104, 1115 (S-D. Cal. 2008) (noting that “harm need
not be monetary to qualify as injury” and finding that time consumers spent contesting unauthorized
checks and “attempting to get their money back” contributed to substantial injury). Thus, there appears
to be no genuine dispute of material fact that the early termination fee is a deceptive billing practice.
Finally, the FTC asserts that Defendants have charged consumers that opted for additional
‘services fees without providing the related services. As one example, the FTC posits that Defendants
charged consumers same-day finding fees to expedite their applications, but then processed the
applications in the order they were received. (FTC RSF § 201.) Defendants dispute this fact, declaring
that if a cent paid for the same day funding fee, Seek would expedite the application and would not
place it in the regular queue. Given the conflicting deposition testimonies concerning this issue, there
appears to be a genuine dispute about whether Defendants provided the same-day service. See Anderson,
477 US. at 249—50 (noting that the weight of evidence is not for the court to decide on motion for
stummary judgment).
As another example, the FTC claims that Defendants have charged customers a fee for bank
negotiation services while requiring customers to still do the work. Defendants do not dispute that
Defendants hid their involvement from numerous banks and imstructed customers who requested bank
negotiation services to speak with the bank themselves and not mention Seek. (FTC RSF § 204.) Thus, it
appears that there is no genuine dispute that consumers were charged a fee without receiving the benefit
of the requested service, and the cost-benefit prong of the unfairness test is easily satisfied. See FTC v.
JK. Publ’ns, Inc., 99 F. Supp. 2d 1176, 1201 (C.D. Cal. 2000).
Accordingly, the Court GRANTS the FTC’s Motion for Summary Judgment of FTCA violations
as to Defendants’ unfair and deceptive billing practices related to its early termination fees and charging
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Case 2:24-cv-09511-RGK-MAA Document137 Filed 09/16/25 Page 12o0f19 Page
ID #:11231
. NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et al.
for certain services not provided. The Court DENIES the FTC’s Motion for Summary Judgment of
FTCA violations as to all other alleged unfair and deceptive billing practices.
Form Contract
The CRFA prohibits offering a form contract that prohibits or restricts the ability of consumers
to leave reviews. 15 U.S.C. § 45b (b), (c). Here, the FTC has provided evidence that Defendants’ form
contract, the VCQ, contains a provision barring consumers from posting negative online reviews about
Defendants for three years. (FTC RSF 4 188.) Defendants do not dispute any material fact concerning
this violation.
Accordingly, the Court finds there is no genuine dispute of material fact that Defendants violated
the CRFA and the Court GRANTS the FTC’s Motion.
4. Common Enterprise Liability
The FTC moves to establish that Seek has acted as a common enterprise. “Where one or more
corporate entities operate in common enterprise, each may be held liable for the deceptive acts and
practices of the others.” FTC v. John Beck Amazing Profits, LLC, 865 F. Supp. 2d 1052. 1082 (C.D. Cal.
2012). When determining common enterprise liability, courts look to four factors: “(1) common control;
(2) sharing office space and offices; (3) whether business is transacted through a ‘maze of interrelated
companies’; and (4) commingling of funds,” Jd.
Here, the FTC asserts that both corporate entities were controlled by Ferman, shared the same
location, and functioned as one entity. (FTC RSF □□□ 12-13.) Defendants do not dispute these facts nor
that common enterprise lability exists. Thus, the Court finds that no fact issues exists as to whether
Seek acted as a cominon enterprise, and GRANTS the FTC’s Motion.
a. Affirmative Defenses
The FTC moves for summary judgment on all twenty of Defendants’ affirmative defenses,
arguing that they are either (1) improper negative defenses, (2) entirely unsupported, or (3) irrelevant.
Defendants do not oppose. The Court considers the affirmative defenses in the groupings the FTC
challenges them in.
a. Improper Negative Defenses
The FTC asserts that Defendants’ first (failure to state a claim), second (deficient pleading), third
(no irreparable injury), fourth (no fraudulent or deceptive business practice), sixth (no
lisrepresentations), seventh (advertising not false and deceptive), thirteenth (no reason to believe),
nineteenth (no reliance), and twentieth (no individual liability) defenses are improper negative defenses,
€V-90 (06/04) CIVIL MINUTES - GENERAL Page 12 of 19
Case 2:24-cv-09511-RGK-MAA Document137 Filed 09/16/25 Page 130f19 Page
ID #:11232
. NO 586
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et al.
restating denials of liability or elements of claims, and should therefore be rejected as a matter of law.
The Court agrees.
Affirmative defenses absolve defendants of liability, even in cases where “plaintiffs have stated a
prima facie case for recovery.” Quintana v. Baca, 233 F.R.D. 562, 564 (C.D.Cal.2005). “An attack on a
plaintiff's case-in-chief is not an affirmative defense.” Vogel v. Huntington Oaks Delaware Partners,
LLC, 291 F. RD. 438, 442 (C.D. Cal. 2013) (citing Zivkovic v. S. Cai, Edison Co., 302 F.3d 1080, 1088
(9th Cir.2002)). Defenses concerning a plaintiff's “failure to state a claim is not an affirmative defense:
it is a defect in a plaintiff's claim.” Voge/, 291 F.R.D, at 442.
Indeed, Defendants’ first, second, third, fourth, sixth, seventh, thirteenth, nineteenth, and
twentieth defenses all argue how the FTC failed to allege facts sufficient to establish its claims and/or
the requested relief, However, asserting defects in the FTC’s prima facie case are not affirmative
defenses. See Barnes v. AT & T Pension Ben. Plan-Nonbargained Program, 718 F. Supp. 2d 1167, 1174
(N.D. Cal. 2010). Moreover, asserting factual disagreements with the merits of the FTC’s case, like how
the sixth affirmative defense argues that there were no misrepresentations, are not the proper subjects of
affirmative defenses. See Fed. Trade Comm'n v. N. Am. Mkig. & Assocs., LLC, 2012 WL 5034967, at *2
(D. Ariz. Oct. 18,2012) (holding a defendant’s “affirmative defense is a factual disagreement with the
mnerits of Plaintiff's case and not the proper subject of an affirmative defense”). Thus, these affirmative
defenses fail as a matter of law.
b. Entirely Unsupported
Next, the FTC asserts that Defendants admitted there are no facts supporting the following seven
affirmative defenses: Defendants’ eighth (laches), ninth (statute of limitations), tenth (mootness/res
judicata/collateral estoppel), eleventh (waiver/estoppel/consent), twelfth (due process, excessive fines,
and commerce clause: first amendment), fifteenth (third parties), and eighteenth (unclean hands)
defenses. The FTC argues that this is reason alone to reject the affirmative defenses,
The Court agrees that there is no genuine dispute of material fact that Defendants admitted that
there are no facts supporting the eighth, tenth, eleventh, twelfth, fifteenth, and eighteenth defenses, and
thus they fail to give sufficient notice concerning the bases for these defenses. See Desert European
Motorcars, LTD v. Desert European Motorcars, Inc., 2011 WL 3809933, at *2—4 (C.D.Cal. Aug.25,
2011) (granting a motion to strike affirmative defenses of estoppel, waiver, and laches for failure to state
any facts that provide fair notice); see also N. Am. Mktg. & Assocs., LLC, 2012 WL 5034967 at *3-5
(striking affirmative defenses of estoppel, waiver, laches, unclean hands, statute of limitations, and
damages were caused by third parties because defendants failed to reference supporting facts and thus
there was no notice concerning the bases of the defenses).
€V-90 (06/04) CIVIL MINUTES - GENERAL Page 13 of 19
Case 2:24-cv-09511-RGK-MAA Document137 Filed 09/16/25 Page 14of19 Page
ID #:11233
. NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
As for the ninth affirmative defense concemiung statute of limitations, Defendants admit that they
have no facts to support this affirmative defense as to the FTC’s claims limited to November 4, 2021
through present, but that there is a dispute regarding claims based on acts earlier than that time period.
Defendants argue that 15 U.S.C. § 57b(d) bars the FTC from bringing actions more than three years after
the rule was violated. However, Section 13(b) of the FTCA, which provides the FTC the authority fo
bring a suit to enjoin any person or entity violating any law enforced by the FTC, does not specify any
limitations period. See 15 U.S.C. § 53(b). Thus, Defendants have failed to identify any applicable
limitations period to support this affirmative defense. See F.T.C. v. Ivy Cap., Inc., 2011 WL 2470584, at
*2 (D. Ney. June 20, 2011) (“A defendant may not assert a statute of limitations defense agaist the
United States government unless the statute in question contains an express limitations period.”).
Accordingly, there is no genuime dispute of material fact that these affirmative defenses fail.
é. Entirely Unsupported
Finally, the FTC contends that the four remaining affirmative defenses are irrelevant and thus
fail. For their fifth affirmative defense, Defendants argue that the FTC is barred from recovering any
relief because Defendants had a reasonable basis for their actions and they acted in good faith. The FTC
argues this defense fails because good faith is not a defense to the relief sought. While the FTC is correct
that “good faith is not a defense to liability under the FTC Act,” this defense may be relevant in
determining the scope of injunctive relief “because permanent injunctions are only appropriate if ‘there
exists some cognizable danger of recurrent violation.” FTC v. LoanPointe, LLC, 2011 WL 4348304, at
*9 (D. Utah Sept. 16, 2011) (quoting United States v. W.T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894,
97 L.Ed. 1303 (1953)): see also Fed. Trade Comm'n v. Vemma Nutrition Co., 2016 WI, 3548762, at *2
(D. Ariz. June 30, 2016) (“Because the FTC seeks a permanent injunction in this case, good faith is to
that extent a valid affirmative defense.”). Because the FTC seeks a permanent injunction in this case,
good faith is a valid affirmative defense as to the scope of injunctive relief.
For the remaining affirmative defenses, the FTC asserts that the fourteenth (failure to mitigate).
sixteenth (voluntary exposure/appreciation of risk), and seventeenth (comparative negligence) are not
appropriate because the defenses reference consumers impacted by the conduct at issue and the FTC
brings this suit in its own name. The Court agrees that these are not valid affirmative defenses given that
“relief under the FTC Act is equitable and dependent on the amount of gain by Defendants, not loss by
consumers.” Fed. Trade Comin'n v. Vemma Nutrition Co., 2016 3548762, at *2 (D. Ariz. Jine 30,
2016).
In sum, the Court GRANTS the FTC’s Motion for Summary Judgment of all affirmative
defenses except for the fifth affirmative defense as it relates to damages. The Court DENIES the FTC’s
Motion as to the fifth affirmative defense relating to damages.
6, Injunictive and Monetary Relief
€V-90 (06/04) CIVIL MINUTES - GENERAL Page 14 of 19
Case 2:24-cv-09511-RGK-MAA Document137 Filed 09/16/25 Page 15o0f19 Page
ID #:11234
. NO 586
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et al.
The FTC moves for summary judgment on two aspects of its requested relief. First, the FTC
asserts that Ferman is individually liable for mjunctive and monetary relief. Second, the FTC contends
that the requested scope of relief is accurate and should be ordered. The Court considers each argument
in turn.
a. Ferman’s Individual Liability
Individual liability for injunctive relief exists where “(1) the corporation committed
misrepresentations of a kind usually relied on by a reasonably prudent person and resulted in consumer
injury, and (2) individuals participated directly m the violations or had authority to control the entities.”
FIC v. Grant Connect, LLC, 763 F.3d 1094, 1101 (9th Cir. 2014) (citing Publ'g Clearing House, Inc..
104 F.3d at 1170-71).
For monetary relief, individual liability exists where the individual “had knowledge that the
corporation or one of its agents engaged im dishonest or fraudulent conduct, that the misrepresentations
were the type upon which a reasonable and prudent person would rely, and that consumer injury
resulted.” Jd. at 1101 (quoting Pub/’g Clearing House, Inc., 104 F 3d at 1171). To satisfy the knowledge
requirement, the FTC must establish that defendants “had actual knowledge of material
mmisrepresentations, [were] recklessly indifferent to the truth or falsity of a misrepresentation, or had an
awareness of a high probability of fraud along with an intentional avoidance of the truth.” Jd. at 1101-02
(citing FTC v. Am. Standard Credit Sys., Inc., 874 F.Supp. 1080, 1089 (C.D.Cal.1994). The FTC does
not need to show that a defendant intended to defraud consumers, but rather that “the individual’s
involvement in a fraudulent scheme alone is sufficient to establish the requisite knowledge for personal
restitutionary liability.” Jd. at 1102 (quoting FTC v. Affordable Media, 179 F.3d 1228, 1235 (9th
Cir.1999)).
Here, the FTC asserts that Ferman is personally liable for both injunctive and monetary relief.
The Court agrees. First, for injunctive relief liability, the record is clear that Seek made misleading
inisrepresentations that resulted in consumer injury. See supra Section TV.A.1. Additionally, the FTC
contends Ferman participated directly m the violations and had authority to control the entities, As the
Court mentioned above, the undisputed record shows that Ferman made some of the misrepresentations
that violated the FTCA. (See, e.g¢., FTC RSF § 168.) Additionally, as founder and CEO, Ferman has
controlled Seek’s business, evident in that he was the signatory for significant business documents,
including the corporate formation documents, bank accounts, and third-party contracts. Ferman also
‘served as the primary contact for Seek’s lead generator and payment processors, which relate to some of
the business practices at issue. Defendants do not dispute these facts.
Second, for monetary relief, the FTC asserts that Ferman had the requisite knowledge of
wrongdoing, citing to Ferman arranging the operation, organizing the entities, and directing activities.
Indeed, it is undisputed that as owner and CEO of Seek, Ferman personally approved and drafted some
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Case 2:24-cv-09511-RGK-MAA Document137 Filed 09/16/25 Page 16o0f19 Page
ID #:11235
. NO 586
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et al.
of Seek’s representations, including within telemarketing scripts. (See, e.g, FTC RSF 99 32. 51, 168.)
Moreover, Ferman was aware that Seek’s representations concerning “loans” could potentially be
“misleading,” and he had received and responded to consumer complaints regarding Seek’s business
practices. 7d. 99 34, 35,97.) Additionally, in 2022, the First National Bank of Omaha personally
addressed Ferman in its letter requesting Seek cease-and-desist its “credit card stacking scheme.” Ud. 4
114.) Again, Defendants do not dispute these facts, which all illustrate Ferman’s knowledge, or at least
reckless indifference to the truth, of the material misrepresentations Seek has made.
In their opposition, Defendants make the blanket claim that there is a genuine dispute of material
fact as to whether Ferman should be individually liable, but they fail to cite any support facts or case
law. Regardless, there is no genuine dispute in the record that Ferman had the requisite involvement,
control, and knowledge to be individually lable for injunctive and monetary relief for Seek’s violations
at issue. Thus, the Court concludes that it is proper to hold Ferman individually liable for Seek’s
wrongdoings, and GRANTS the FTC’s Motion.
a. Scope of Injunctive and Monetary Relief
Pursuant to Section 19(b) of the FTCA, the Court can grant monetary relief for violations of the
rules, including the TSR. See 15 U.S.C. § 57b(b); United States v. MvLife.com, Inc., 567 F. Supp. 3d
1152, 1170 (C.D. Cal. 2021). Additionally, Section 13(b) authorizes the Court to grant a permanent
injunction against violations of any provisions of law enforced by the FTC. See 15 U.S.C. § 53(b).
The FTC asserts that the Court should order injunctive and monetary relief and that the scope of
its requested relief is proper because of the seriousness of the present violations and Defendants’ history
of prior violations. In its opposition, Defendants argue that the FTC’s proposed judgment exceeds the
seriousness of the violations at issue and that there is a genuine dispute of material fact as to the total
monetary amount Seek received from its business operations.
As addressed above, the Court finds that genuine issues of material fact exist as to the
Defendants’ full liability for the claims at issue. While the Court grants the FTC’s Motion for Summary
Judgment of some claims, others remain disputed and cannot be decided at this stage of the proceedings.
Since there are open questions of liability in this action, the Court finds that genuine disputes of fact
remain as to the scope of relief Defendants are liable for. See Lambert Corp, v. LBJC Inc., 2014 WL
2737913, at *5 (C.D. Cal. June 16, 2014) (declining to address what remedies are available to plaintitf
because genuine issues of material fact existed as to claim liability); DuffBrown v. City and County of
San Francisco, 2013 WL 163530, at *7 (N.D.Cal. Jan.15, 2013) (“Because the Court has denied
summary judgment as to liability, it need not rule on damages at this time.”); JL Midwest Mihvaukee,
LLC yv. It's Just Lunch Int'l, LLC, 2022 WL 744055, at *4 (D. Nev. Mar. 11,2022) (‘Because genuine
disputes remain on some claims, I deny summary judgment on whether injunctive relief is
appropriate.”).
€V-90 (06/04) CIVIL MINUTES - GENERAL Page 16 of 19
Case 2:24-cv-09511-RGK-MAA Document137 Filed 09/16/25 Page17of19 Page
ID #:11236
. NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
Accordingly, the Court DENIES the FTC’s Motion for Summary Judgment of the scope of
injunctive and monetary relief.
B. Conclusion
For the foregoing reasons, the Court GRANTS in part the FTC’s Motion for Summary
Judgment. Specifically, the Court holds as follows:
1. The FTC’s Motion for Summary Judgment of violations of the FTCA and TSR as to
misrepresentations about relationships with lenders, line of credit capabilities, financing
terms, no fees until funding, and credit score impact is GRANTED. The FTC’s Motion for
Summary Judgment of violations of the FTCA and TSR as to all other grounds for
musrepresentation are DENIED.
2. The FTC’s Motion for Summary Judgment of FTCA violations as to Defendants’ billing
practices related to its early termination fees and charging for certain services not provided is
GRANTED. The FTC’s Motion for Summary Judgment of FTCA violations as to all other
billing practices are DENIED.
3. The FTC’s Motion for Summary Judgment of the CRFA violation is GRANTED.
4. The FTC’s Motion for Summary Judement that Seek acted as a common enterprise is
GRANTED.
5. The FTC’s Motion for Summary Judgment of the failure of all affirmative defenses except
for the fifth affirmative defense as it relates to damages is GRANTED. The FTC’s Motion
for Summary Judgment of the failure of the fifth affirmative defense is DENIED as it relates
to damages.
6. The FTC’s Motion for Summary Judgment that Ferman is individually liable for injunctive
and monetary relief for Seek’s wrongdoings is GRANTED.
7. The FTC’s Motion for Summary Judgment for the scope of injunctive and monetary relief is
DENIED.
The Court now proceeds to consider Ferman’s Motion for Partial Summary Judgment.
V. DEFENDANT FERMAN’S MOTION FOR PARTIAL SUMMARY JUDGMENT
A. Discussion
Ferman moves for partial summary judgment on essentially two issues: (1) whether the Court
must defer to the FTC’s request for relief in this case; and (2) the scope of injunctive relief.
First, Ferman asserts that the Court is not required to defer to the FTC on the scope of injunctive
relief, citing to the Supreme Court’s recent ruling in Loper Bright Enters. v. Raimondo, 603 U.S. 369,
€V-90 (06/04) CIVIL MINUTES - GENERAL Page 17 of 19
Case 2:24-cv-09511-RGK-MAA Document137 Filed 09/16/25 Page 18o0f19 Page
ID #:11237
. NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
396 (2024) for support. In its Opposition, the FTC states that Loper Bright Enters. is inapplicable give
that it is requesting that the Court issue an injunction with an appropriate remedy pursuant to Section
13(b) of the FTCA. Additionally, the FTC confirms that it is requesting the Court to issue an injunction
with an appropriate remedy under Section 13(b). Thus, there isno dispute that Section 13(b) “gives the
federal courts broad authority to fashion appropriate remedies for violations of the’ FTCA. F.2-C. v.
Pantron I Corp., 33 F.3d 1088, 1102 (9th Cir. 1994).
Second, Ferman asserts that if myunctive relief is ordered against him, the scope should be
narrower than what the FTC has requested. As explained above, genuine issues of material fact exist as
to Defendants’ full labilities for the claims asserted in this action. As a result, there are genuine disputes
as to the appropriate scope of relief.
B. Conclusion
Accordingly, the Court DENIES Ferman’s Motion for Partial Summary Judgment.
VI. CONCLUSION
For the foregoing reasons, the Court GRANTS in part the FTC’s Motion for Summary
Judgment, and DENTES Ferman’s Motion for Partial Summary Judgment.
Specifically, the Court holds as follows:
1. The FTC’s Motion for Summary Judgment of violations of the FTCA and TSR as to
misrepresentations about relationships with lenders, line of credit capabilities, financing
terms, no fees until funding, and credit score impact is GRANTED. The FTC’s Motion for
Summary Judgment of violations of the FTCA and TSR as to all other grounds for
musrepresentation are DENIED.
2. The FTC’s Motion for Summary Judgment of FTCA violations as to Defendants’ billing
practices related to its early termination fees and charging for certain services not provided is
GRANTED. The FTC’s Motion for Summary Judgment of FTCA violations as to all other
billing practices are DENIED.
3. The FTC’s Motion for Summary Judgment of the CRFA violation is GRANTED.
4. The FTC’s Motion for Summary Judgment that Seek acted as a common enterprise is
GRANTED.
5. The FIC’s Motion for Summary Judgment of the failure of all affirmative defenses except
for the fifth affirmative defense as it relates to damages is GRANTED. The FTC’s Motion
for Summary Judgment of the failure of the fifth affirmative defense is DENIED as it relates
to damages.
€V-90 (06/04) CIVIL MINUTES - GENERAL Page 18 of 19
Case 2:24-cv-09511-RGK-MAA Document137 Filed 09/16/25 Page 19o0f19 Page
ID #:11238
NO IS6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:24-cv-09511-RGK Date September 16, 2025
Title Federal Trade Commission v. Seek Capital, LLC et ai.
6. The FTC’s Motion for Summary Judgment that Ferman is individually liable for injunctive
and monetary relief for Seek’s wrongdoings is GRANTED.
7. The FTC’s Motion for Summary Judgment for the scope of injunctive and monetary relief is
DENIED.
8. Ferman’s Motion for Partial Summary Judgment is DENIED.
IT IS SO ORDERED.
Initials of Preparer JRE/gz
CV-90 (06/04) CIVIL MINUTES - GENERAL Page 19 of 19
ATTACHMENT B
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content is from the eCFR and is authoritative but unofficial.
Title 16 —Commercial Practices
Chapter I —Federal Trade Commission
Subchapter C —Regulations Under Specific Acts of Congress
Part 310 Telemarketing Sales Rule
§ 310.1 Scope of regulations in this part.
§ 310.2 Definitions.
§ 310.3 Deceptive telemarketing acts or practices.
§ 310.4 Abusive telemarketing acts or practices.
Recordkeeping requirements.
§ 310.6 Exemptions.
§ 310.7 Actions by states and private persons.
§ 310.8 Fee for access to the National Do Not Call Registry.
§ 310.9 Severability.
PART 310—TELEMARKETING SALES RULE
Authority: 15 U.S.C. 6101-6108.
Source: 75 FR 48516, Aug. 10, 2010, unless otherwise noted.
§ 310.1 Scope of regulations in this part.
This part implements the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C, 6101-6108, as
amended.
§ 310.2 Definitions.
(a) Acquirer means a business organization, financial institution, or an agent of a business organization or
financial institution that has authority from an organization that operates or licenses a credit card system
to authorize merchants to accept, transmit, or process payment by credit card through the credit card
system for money, goods or services, or anything else of value.
(b) Attorney General means the chief legal officer of a state.
(c) Billing information means any data that enables any person to access a customer's or donor's account,
such as a credit card, checking, savings, share or similar account, utility bill, mortgage loan account, or
debit card.
CER .3(c) (enhanced dispvlav) □□□□
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(d) Caller identification service means a service that allows a telephone subscriber to have the telephone
number, and, where available, name of the calling party transmitted contemporaneously with the
telephone call, and displayed on a device in or connected to the subscriber's telephone.
(e) Cardholder means a person to whom a credit card is issued or who is authorized to use a credit card on
behalf of or in addition to the person to whom the credit card is issued.
(f) Cash-to-cash money transfer means the electronic (as defined in section 106(2) of the Electronic
Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) transfer of the value of cash
received from one person to another person in a different location that is sent by a money transfer
provider and received in the form of cash. For purposes of this definition, money transfer provider means
any person or financial institution that provides cash-to-cash money transfers for a person in the normal
course of its business, whether or not the person holds an account with such person or financial
institution. The term cash-to-cash money transfer includes a remittance transfer, as defined in section
919(g)(2) of the Electronic Fund Transfer Act (“EFTA’), 15 U.S.C. 1693a, that is a cash-to-cash transaction;
however it does not include any transaction that is:
(1) An electronic fund transfer as defined in section 903 of the EFTA;
(2) Covered by Regulation E, 12 CFR 1005.20, pertaining to gift cards; or
(3) Subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq.
(g) Cash reload mechanism is a device, authorization code, personal identification number, or other security
measure that makes it possible for a person to convert cash into an electronic (as defined in section
106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) form that
can be used to add funds to a general-use prepaid card, as defined in Regulation E, 12 CFR 1005.2, or an
account with a payment intermediary. For purposes of this definition, a cash reload mechanism is not
itself a general-use prepaid debit card or a swipe reload process or similar method in which funds are
added directly onto a person's own general-use prepaid card or account with a payment intermediary.
(h) Charitable contribution means any donation or gift of money or any other thing of value.
(i) Commission means the Federal Trade Commission.
(j) Credit means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer
its payment.
({k) Credit card means any card, plate, coupon book, or other credit device existing for the purpose of
obtaining money, property, labor, or services on credit.
(1) Credit card sales draft means any record or evidence of a credit card transaction.
(m) Credit card system means any method or procedure used to process credit card transactions involving
credit cards issued or licensed by the operator of that system.
(n) Customer means any person who is or may be required to pay for goods or services offered through
telemarketing.
(0) Debt relief service means any program or service represented, directly or by implication, to renegotiate,
settle, or in any way alter the terms of payment or other terms of the debt between a person and one or
more unsecured creditors or debt collectors, including, but not limited to, a reduction in the balance,
interest rate, or fees owed by a person to an unsecured creditor or debt collector.
(p) Donor means any person solicited to make a charitable contribution.
CER 310.3(n) (enhanced disnlav) nace 7 of 71
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(q) Established business relationship means a relationship between a seller and a person based on:
(1) The person's purchase, rental, or lease of the seller's goods or services or a financial transaction
between the person and seller, within the 540 days immediately preceding the date of a
telemarketing call; or
(2) The person's inquiry or application regarding a good or service offered by the seller, within the 90
days immediately preceding the date of a telemarketing call.
(r) Free-to-pay conversion means, in an offer or agreement to sell or provide any goods or services, a
provision under which a customer receives a product or service for free for an initial period and will incur
an obligation to pay for the product or service if he or she does not take affirmative action to cancel
before the end of that period.
(s) Investment opportunity means anything, tangible or intangible, that is offered, offered for sale, sold, or
traded based wholly or in part on representations, either express or implied, about past, present, or future
income, profit, or appreciation.
(t) Material means likely to affect a person's choice of, or conduct regarding, goods or services or a
charitable contribution.
(u) Merchant means a person who is authorized under a written contract with an acquirer to honor or accept
credit cards, or to transmit or process for payment credit card payments, for the purchase of goods or
services or a charitable contribution.
(v) Merchant agreement means a written contract between a merchant and an acquirer to honor or accept
credit cards, or to transmit or process for payment credit card payments, for the purchase of goods or
services or a charitable contribution.
(w) Negative option feature means, in an offer or agreement to sell or provide any goods or services, a
provision under which the customer's silence or failure to take an affirmative action to reject goods or
services or to cancel the agreement is interpreted by the seller as acceptance of the offer.
(x) Outbound telephone call means a telephone call initiated by a telemarketer to induce the purchase of
goods or services or to solicit a charitable contribution.
(y) Person means any individual, group, unincorporated association, limited or general partnership,
corporation, or other business entity.
(z) Preacquired account information means any information that enables a seller or telemarketer to cause a
charge to be placed against a customer's or donor's account without obtaining the account number
directly from the customer or donor during the telemarketing transaction pursuant to which the account
will be charged.
(aa) Previous donor means any person who has made a charitable contribution to a particular charitable
organization within the 2-year period immediately preceding the date of the telemarketing call soliciting
on behalf of that charitable organization.
(bb) Prize means anything offered, or purportedly offered, and given, or purportedly given, to a person by
chance. For purposes of this definition, chance exists if a person is guaranteed to receive an item and, at
the time of the offer or purported offer, the telemarketer does not identify the specific item that the person
will receive.
(cc) Prize promotion means:
CFR 310 2(cc) (enhanced display) nave 2o0f 71
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(1) Asweepstakes or other game of chance; or
(2) An oral or written express or implied representation that a person has won, has been selected to
receive, or may be eligible to receive a prize or purported prize.
(dd) Remotely created payment order means any payment instruction or order drawn on a person's account
that is created by the payee or the payee’s agent and deposited into or cleared through the check clearing
system. The term includes, without limitation, a “remotely created check,” as defined in Regulation CC,
Availability of Funds and Collection of Checks, 12 CFR 229.2(fff), but does not include a payment order
cleared through an Automated Clearinghouse (ACH) Network or subject to the Truth in Lending Act, 15
(ee) Seller means any person who, in connection with a telemarketing transaction, provides, offers to provide,
or arranges for others to provide goods or services to the customer in exchange for consideration.
(ff) State means any state of the United States, the District of Columbia, Puerto Rico, the Northern Mariana
Islands, and any territory or possession of the United States.
(gg) Technical support service means any plan, program, software, or service that is marketed to repair,
maintain, or improve the performance or security of any device on which code can be downloaded,
installed, run, or otherwise used, such as a computer, smartphone, tablet, or smart home product,
including any software or application run on such device. Technical support service does not include any
plan, program, software, or service in which the person providing the repair, maintenance, or improvement
obtains physical possession of the device being repaired.
(hh) Telemarketer means any person who, in connection with telemarketing, initiates or receives telephone
calls to or from a customer or donor.
(ii) Telemarketing means a plan, program, or campaign which is conducted to induce the purchase of goods
or services or a charitable contribution, by use of one or more telephones and which involves more than
one interstate telephone call. The term does not include the solicitation of sales through the mailing of a
catalog which: contains a written description or illustration of the goods or services offered for sale;
includes the business address of the seller; includes multiple pages of written material or illustrations;
and has been issued not less frequently than once a year, when the person making the solicitation does
not solicit customers by telephone but only receives calls initiated by customers in response to the
catalog and during those calls takes orders only without further solicitation. For purposes of the previous
sentence, the term “further solicitation” does not include providing the customer with information about,
or attempting to sell, any other item included in the same catalog which prompted the customer's call or
in a substantially similar catalog.
(jj) Upselling means soliciting the purchase of goods or services following an initial transaction during a
single telephone call. The upsell is a separate telemarketing transaction, not a continuation of the initial
transaction. An “external upsell” is a solicitation made by or on behalf of a seller different from the seller
in the initial transaction, regardless of whether the initial transaction and the subsequent solicitation are
made by the same telemarketer. An “internal upsell” is a solicitation made by or on behalf of the same
seller as in the initial transaction, regardless of whether the initial transaction and subsequent solicitation
are made by the same telemarketer.
FR 48516, Aug. 10, 2010, as amended at 80 FR 77557, Dec. 14, 2015; 89 FR 26783, Apr. 16, 2024; 89 FR 99075, Dec. 10, 2024]
CFR 310.2(ii) (enhanced disnlav) pace 4of 71
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§ 310.3 Deceptive telemarketing acts or practices.
(a) Prohibited deceptive telemarketing acts or practices. It is a deceptive telemarketing act or practice and a
violation of this part for any seller or telemarketer to engage in the following conduct:
(1) Before a customer consents to pay!!! for goods or services offered, failing to disclose truthfully, in a
clear and conspicuous manner, the following material information:
(i) The total costs to purchase, receive, or use, and the quantity of, any goods or services that are
the subject of the sales offer:2]
(ii) All material restrictions, limitations, or conditions to purchase, receive, or use the goods or
services that are the subject of the sales offer;
(ili) If the seller has a policy of not making refunds, cancellations, exchanges, or repurchases, a
statement informing the customer that this is the seller's policy; or, if the seller or telemarketer
makes a representation about a refund, cancellation, exchange, or repurchase policy, a
statement of all material terms and conditions of such policy;
(iv) In any prize promotion, the odds of being able to receive the prize, and, if the odds are not
calculable in advance, the factors used in calculating the odds; that no purchase or payment is
required to win a prize or to participate in a prize promotion and that any purchase or payment
will not increase the person's chances of winning; and the no-purchase/no-payment method of
participating in the prize promotion with either instructions on how to participate or an address
or local or toll-free telephone number to which customers may write or call for information on
how to participate;
(v) All material costs or conditions to receive or redeem a prize that is the subject of the prize
promotion;
(vi) In the sale of any goods or services represented to protect, insure, or otherwise limit a
customer's liability in the event of unauthorized use of the customer's credit card, the limits on
a cardholder's liability for unauthorized use of a credit card pursuant to 15 U.S.C. 1643;
(vii) If the offer includes a negative option feature, all material terms and conditions of the negative
option feature, including, but not limited to, the fact that the customer's account will be charged
unless the customer takes an affirmative action to avoid the charge(s), the date(s) the
charge(s) will be submitted for payment, and the specific steps the customer must take to
avoid the charge(s); and
(viii) In the sale of any debt relief service:
[1] When a seller or telemarketer uses, or directs a customer to use, a courier to transport payment, the seller or
telemarketer must make the disclosures required by § 310.3(a)(1) before sending a courier to pick up payment
or authorization for payment, or directing a customer to have a courier pick up payment or authorization for
payment. In the case of debt relief services, the seller or telemarketer must make the disclosures required by §
310.3(a)(1) before the consumer enrolls in an offered program.
For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and
Regulation Z, 12 CFR 226, compliance with the disclosure requirements under the Truth in Lending Act and
Regulation Z shall constitute compliance with § 310.3(a)(1)(i) of this part.
CER 310 3(a\(1\wiii) (enhanced display) nage Sof 71
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(A) the amount of time necessary to achieve the represented results, and to the extent that the
service may include a settlement offer to any of the customer's creditors or debt
collectors, the time by which the debt relief service provider will make a bona fide
settlement offer to each of them;
(B) to the extent that the service may include a settlement offer to any of the customer's
creditors or debt collectors, the amount of money or the percentage of each outstanding
debt that the customer must accumulate before the debt relief service provider will make
a bona fide settlement offer to each of them;
(C) to the extent that any aspect of the debt relief service relies upon or results in the
customer's failure to make timely payments to creditors or debt collectors, that the use of
the debt relief service will likely adversely affect the customer's creditworthiness, may
result in the customer being subject to collections or sued by creditors or debt collectors,
and may increase the amount of money the customer owes due to the accrual of fees and
interest; and
(D) to the extent that the debt relief service requests or requires the customer to place funds
in an account at an insured financial institution, that the customer owns the funds held in
the account, the customer may withdraw from the debt relief service at any time without
penalty, and, if the customer withdraws, the customer must receive all funds in the
account, other than funds earned by the debt relief service in compliance with §
310.4(a)(5)(i)(A) through (C).
(2) Misrepresenting, directly or by implication, in the sale of goods or services any of the following
material information:
(i) The total costs to purchase, receive, or use, and the quantity of, any goods or services that are
the subject of a sales offer;
(ii) Any material restriction, limitation, or condition to purchase, receive, or use goods or services
that are the subject of a sales offer;
(iii) Any material aspect of the performance, efficacy, nature, or central characteristics of goods or
services that are the subject of a sales offer;
(iv) Any material aspect of the nature or terms of the seller's refund, cancellation, exchange, or
repurchase policies;
(v) Any material aspect of a prize promotion including, but not limited to, the odds of being able to
receive a prize, the nature or value of a prize, or that a purchase or payment is required to win a
prize or to participate in a prize promotion;
(vi) Any material aspect of an investment opportunity including, but not limited to, risk, liquidity,
earnings potential, or profitability;
(vii) A seller's or telemarketer's affiliation with, or endorsement or sponsorship by, any person or
government entity;
(viii) That any customer needs offered goods or services to provide protections a customer already
has pursuant to 15 U.S.C. 1643;
CER 310 3(a\(?)(wiii) (enhanced disnlav) pave Gof 71
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(ix) Any material aspect of a negative option feature including, but not limited to, the fact that the
customer's account will be charged unless the customer takes an affirmative action to avoid
the charge(s), the date(s) the charge(s) will be submitted for payment, and the specific steps
the customer must take to avoid the charge(s); or
(x) Any material aspect of any debt relief service, including, but not limited to, the amount of money
or the percentage of the debt amount that a customer may save by using such service; the
amount of time necessary to achieve the represented results; the amount of money or the
percentage of each outstanding debt that the customer must accumulate before the provider of
the debt relief service will initiate attempts with the customer's creditors or debt collectors or
make a bona fide offer to negotiate, settle, or modify the terms of the customer's debt; the
effect of the service on a customer's creditworthiness; the effect of the service on collection
efforts of the customer's creditors or debt collectors; the percentage or number of customers
who attain the represented results; and whether a debt relief service is offered or provided by a
non-profit entity.
(3) Causing billing information to be submitted for payment, or collecting or attempting to collect
payment for goods or services or a charitable contribution, directly or indirectly, without the
customer's or donor's express verifiable authorization, except when the method of payment used is a
credit card subject to protections of the Truth in Lending Act and Regulation a debit card
subject to the protections of the Electronic Fund Transfer Act and Regulation E.!4! Such authorization
shall be deemed verifiable if any of the following means is employed:
(i) Express written authorization by the customer or donor, which includes the customer's or
donor's signature?*!
(ii) Express oral authorization which is audio-recorded and made available upon request to the
customer or donor, and the customer's or donor's bank or other billing entity, and which
evidences clearly both the customer's or donor's authorization of payment for the goods or
services or charitable contribution that are the subject of the telemarketing transaction and the
customer's or donor's receipt of all of the following information:
(A) An accurate description, clearly and conspicuously stated, of the goods or services or
charitable contribution for which payment authorization is sought;
(B) The number of debits, charges, or payments (if more than one);
(C) The date(s) the debit(s), charge(s), or payment(s) will be submitted for payment;
(D) The amount(s) of the debit(s), charge(s), or payment(s);
(E) The customer's or donor's name;
[41 Electronic Fund Transfer Act, 15 U.S.C. 1693 et seg., and Regulation E, 12 CFR part 205.
Truth in Lending Act, 15 U.S.C. 1601 et seq,, and Regulation Z, 12 CER part 226.
[5] For purposes of this part, the term “signature” shall include an electronic or digital form of signature, to the
extent that such form of signature is recognized as a valid signature under applicable federal law or state
contract law.
CFR 310 3(a(3)(ii)(E) (enhanced display) pave 7 of 71
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(F) The customer's or donor's billing information, identified with sufficient specificity such that
the customer or donor understands what account will be used to collect payment for the
goods or services or charitable contribution that are the subject of the telemarketing
transaction;
(G) Atelephone number for customer or donor inquiry that is answered during normal
business hours; and
(H) The date of the customer's or donor's oral authorization; or
(iii) Written confirmation of the transaction, identified in a clear and conspicuous manner as such
on the outside of the envelope, sent to the customer or donor via first class mail prior to the
submission for payment of the customer's or donor's billing information, and that includes all of
the information contained in §§ 310.3(a)(3)(ii)(A)-(G) and a clear and conspicuous statement
of the procedures by which the customer or donor can obtain a refund from the seller or
telemarketer or charitable organization in the event the confirmation is inaccurate; provided,
however, that this means of authorization shall not be deemed verifiable in instances in which
goods or services are offered in a transaction involving a free-to-pay conversion and
preacquired account information.
(4) Making a false or misleading statement to induce any person to pay for goods or services or to
induce a charitable contribution.
(b) Assisting and facilitating. It is a deceptive telemarketing act or practice and a violation of this part for a
person to provide substantial assistance or support to any seller or telemarketer when that person knows
or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that
violates §§ 310.3(a), (c) or (d), or § 310.4 of this part.
(c) Credit card laundering. Except as expressly permitted by the applicable credit card system, it is a deceptive
telemarketing act or practice and a violation of this part for:
(1) Amerchant to present to or deposit into, or cause another to present to or deposit into, the credit
card system for payment, a credit card sales draft generated by a telemarketing transaction that is
not the result of a telemarketing credit card transaction between the cardholder and the merchant;
(2) Any person to employ, solicit, or otherwise cause a merchant, or an employee, representative, or
agent of the merchant, to present to or deposit into the credit card system for payment, a credit card
sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit
card transaction between the cardholder and the merchant: or
(3) Any person to obtain access to the credit card system through the use of a business relationship or
an affiliation with a merchant, when such access is not authorized by the merchant agreement or the
applicable credit card system.
(d) Prohibited deceptive acts or practices in the solicitation of charitable contributions. \t is a fraudulent
charitable solicitation, a deceptive telemarketing act or practice, and a violation of this part for any
telemarketer soliciting charitable contributions to misrepresent, directly or by implication, any of the
following material information:
(1) The nature, purpose, or mission of any entity on behalf of which a charitable contribution is being
requested;
(2) That any charitable contribution is tax deductible in whole or in part;
CER 310 3(d\(2) (enhanced disnlav) pave 8 of 71
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(3) The purpose for which any charitable contribution will be used;
(4) The percentage or amount of any charitable contribution that will go to a charitable organization or
to any particular charitable program;
(5) Any material aspect of a prize promotion including, but not limited to: the odds of being able to
receive a prize; the nature or value of a prize; or that a charitable contribution is required to win a
prize or to participate in a prize promotion; or
(6) Acharitable organization's or telemarketer's affiliation with, or endorsement or sponsorship by, any
person or government entity.
FR 48516, Aug. 10, 2010, as amended at 80 FR 77558, Dec. 14, 2015; 89 FR 26784, 26785, Apr. 16, 2024]
§ 310.4 Abusive telemarketing acts or practices.
(a) Abusive conduct generally. \t is an abusive telemarketing act or practice and a violation of this part for any
seller or telemarketer to engage in the following conduct:
(1) Threats, intimidation, or the use of profane or obscene language;
(2) Requesting or receiving payment of any fee or consideration for goods or services represented to
remove derogatory information from, or improve, a person's credit history, credit record, or credit
rating until:
(i) The time frame in which the seller has represented all of the goods or services will be provided
to that person has expired; and
(ii) The seller has provided the person with documentation in the form of a consumer report from a
consumer reporting agency demonstrating that the promised results have been achieved, such
report having been issued more than six months after the results were achieved. Nothing in this
part should be construed to affect the requirement in the Fair Credit Reporting Act, 15 U.S.C.
1681, that a consumer report may only be obtained for a specified permissible purpose;
(3) Requesting or receiving payment of any fee or consideration from a person for goods or services
represented to recover or otherwise assist in the return of money or any other item of value paid for
by, or promised to, that person in a previous transaction, until seven (7) business days after such
money or other item is delivered to that person. This provision shall not apply to goods or services
provided to a person by a licensed attorney;
(4) Requesting or receiving payment of any fee or consideration in advance of obtaining a loan or other
extension of credit when the seller or telemarketer has guaranteed or represented a high likelihood
of success in obtaining or arranging a loan or other extension of credit for a person;
(5)
(i) Requesting or receiving payment of any fee or consideration for any debt relief service until and
unless:
(A) The seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the
terms of at least one debt pursuant to a settlement agreement, debt management plan, or
other such valid contractual agreement executed by the customer;
CER (enhanced disnlav) pave 9 of 71
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(B) The customer has made at least one payment pursuant to that settlement agreement, debt
management plan, or other valid contractual agreement between the customer and the
creditor or debt collector; and
(C) To the extent that debts enrolled in a service are renegotiated, settled, reduced, or
otherwise altered individually, the fee or consideration either:
(1) Bears the same proportional relationship to the total fee for renegotiating, settling,
reducing, or altering the terms of the entire debt balance as the individual debt
amount bears to the entire debt amount. The individual debt amount and the entire
debt amount are those owed at the time the debt was enrolled in the service; or
(2) Is a percentage of the amount saved as a result of the renegotiation, settlement,
reduction, or alteration. The percentage charged cannot change from one individual
debt to another. The amount saved is the difference between the amount owed at the
time the debt was enrolled in the service and the amount actually paid to satisfy the
debt.
(ii) Nothing in § 310.4(a)(5)(i) prohibits requesting or requiring the customer to place funds in an
account to be used for the debt relief provider's fees and for payments to creditors or debt
collectors in connection with the renegotiation, settlement, reduction, or other alteration of the
terms of payment or other terms of a debt, provided that:
(A) The funds are held in an account at an insured financial institution;
(B) The customer owns the funds held in the account and is paid accrued interest on the
account, if any;
(C) The entity administering the account is not owned or controlled by, or in any way affiliated
with, the debt relief service;
(D) The entity administering the account does not give or accept any money or other
compensation in exchange for referrals of business involving the debt relief service; and
(E) The customer may withdraw from the debt relief service at any time without penalty, and
must receive all funds in the account, other than funds earned by the debt relief service in
compliance with § 310.4(a)(5)(i)(A) through (C), within seven (7) business days of the
customer's request.
(6) Disclosing or receiving, for consideration, unencrypted consumer account numbers for use in
telemarketing; provided, however, that this paragraph shall not apply to the disclosure or receipt of a
customer's or donor's billing information to process a payment for goods or services or a charitable
contribution pursuant to a transaction;
(7) Causing billing information to be submitted for payment, directly or indirectly, without the express
informed consent of the customer or donor. In any telemarketing transaction, the seller or
telemarketer must obtain the express informed consent of the customer or donor to be charged for
the goods or services or charitable contribution and to be charged using the identified account. In
any telemarketing transaction involving preacquired account information, the requirements in
paragraphs (a)(7)(i) through (ii) of this section must be met to evidence express informed consent.
(i) In any telemarketing transaction involving preacquired account information and a free-to-pay
conversion feature, the seller or telemarketer must:
CER (enhanced disnlav) nace 10 of 71
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(A) Obtain from the customer, at a minimum, the last four (4) digits of the account number to
be charged;
(B) Obtain from the customer his or her express agreement to be charged for the goods or
services and to be charged using the account number pursuant to paragraph (a)(7)(i)(A)
of this section; and,
(C) Make and maintain an audio recording of the entire telemarketing transaction.
(ii) In any other telemarketing transaction involving preacquired account information not described
in paragraph (a)(7)(i) of this section, the seller or telemarketer must:
(A) At aminimum, identify the account to be charged with sufficient specificity for the
customer or donor to understand what account will be charged; and
(B) Obtain from the customer or donor his or her express agreement to be charged for the
goods or services and to be charged using the account number identified pursuant to
paragraph (a)(7)(ii)(A) of this section;
(8) Failing to transmit or cause to be transmitted the telephone number, and, when made available by the
telemarketer's carrier, the name of the telemarketer, to any caller identification service in use by a
recipient of a telemarketing call; provided that it shall not be a violation to substitute (for the name
and phone number used in, or billed for, making the call) the name of the seller or charitable
organization on behalf of which a telemarketing call is placed, and the seller's or charitable
organization's customer or donor service telephone number, which is answered during regular
business hours;
(9) Creating or causing to be created, directly or indirectly, a remotely created payment order as payment
for goods or services offered or sold through telemarketing or as a charitable contribution solicited
or sought through telemarketing; or
(10) Accepting from a customer or donor, directly or indirectly, a cash-to-cash money transfer or cash
reload mechanism as payment for goods or services offered or sold through telemarketing or as a
charitable contribution solicited or sought through telemarketing.
(b) Pattern of calls.
(1) Itis an abusive telemarketing act or practice and a violation of this part for a telemarketer to engage
in, or for a seller to cause a telemarketer to engage in, the following conduct:
(i) Causing any telephone to ring, or engaging any person in telephone conversation, repeatedly or
continuously with intent to annoy, abuse, or harass any person at the called number;
(ii) Denying or interfering in any way, directly or indirectly, with a person's right to be placed on any
registry of names and/or telephone numbers of persons who do not wish to receive outbound
telephone calls established to comply with paragraph (b)(1)(iii)(A) of this section, including, but
not limited to, harassing any person who makes such a request; hanging up on that person;
failing to honor the request; requiring the person to listen to a sales pitch before accepting the
request; assessing a charge or fee for honoring the request; requiring a person to calla
different number to submit the request; and requiring the person to identify the seller making
the call or on whose behalf the call is made;
(iii) Initiating any outbound telephone call to a person when:
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(A) That person previously has stated that he or she does not wish to receive an outbound
telephone call made by or on behalf of the seller whose goods or services are being
offered or made on behalf of the charitable organization for which a charitable
contribution is being solicited; or
(B) That person's telephone number is on the “do-not-call” registry, maintained by the
Commission, of persons who do not wish to receive outbound telephone calls to induce
the purchase of goods or services unless the seller or telemarketer:
(1) Can demonstrate that the seller has obtained the express agreement, in writing, of
such person to place calls to that person. Such written agreement shall clearly
evidence such person's authorization that calls made by or on behalf of a specific
party may be placed to that person, and shall include the telephone number to which
the calls may be placed and the signature!!! of that person; or
(2) Can demonstrate that the seller has an established business relationship with such
person, and that person has not stated that he or she does not wish to receive
outbound telephone calls under paragraph (b)(1)(iii)(A) of this section; or
(iv) Abandoning any outbound telephone call. An outbound telephone call is “abandoned” under this
section if a person answers it and the telemarketer does not connect the call to a sales
representative within two (2) seconds of the person's completed greeting.
(v) Initiating any outbound telephone call that delivers a prerecorded message, other than a
prerecorded message permitted for compliance with the call abandonment safe harbor in §
310.4(b)(4)(i), unless:
(A) In any such call to induce the purchase of any good or service, the seller has obtained
from the recipient of the call an express agreement, in writing, that:
(i) The seller obtained only after a clear and conspicuous disclosure that the purpose of the
agreement is to authorize the seller to place prerecorded calls to such person;
(ii) The seller obtained without requiring, directly or indirectly, that the agreement be executed as a
condition of purchasing any good or service;
(iii) Evidences the willingness of the recipient of the call to receive calls that deliver prerecorded
messages by or on behalf of a specific seller; and
(iv) Includes such person's telephone number and signature;! and
[1] For purposes of this part, the term “signature” shall include an electronic or digital form of signature, to the
extent that such form of signature is recognized as a valid signature under applicable federal law or state
contract law.
[2] For purposes of this part, the term “signature” shall include an electronic or digital form of signature, to the
extent that such form of signature is recognized as a valid signature under applicable federal law or state
contract law.
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(B) In any such call to induce the purchase of any good or service, or to induce a charitable
contribution from a member of, or previous donor to, a non-profit charitable organization
on whose behalf the call is made, the seller or telemarketer:
(i) Allows the telephone to ring for at least fifteen (15) seconds or four (4) rings before
disconnecting an unanswered call; and
(ii) Within two (2) seconds after the completed greeting of the person called, plays a prerecorded
message that promptly provides the disclosures required by § 310.4(d) or (e), followed
immediately by a disclosure of one or both of the following:
(A) Inthe case of a call that could be answered in person by a consumer, that the person
called can use an automated interactive voice and/or keypress-activated opt-out
mechanism to assert a Do Not Call request pursuant to § 310.4(b)(1)(iii)(A) at any time
during the message. The mechanism must:
(1) Automatically add the number called to the seller's entity-specific Do Not Call list;
(2) Once invoked, immediately disconnect the call; and
(3) Be available for use at any time during the message; and
(B) Inthe case of a call that could be answered by an answering machine or voicemail service,
that the person called can use a toll-free telephone number to assert a Do Not Call request
pursuant to § 310.4(b)(1)(iii)(A). The number provided must connect directly to an
automated interactive voice or keypress-activated opt-out mechanism that:
(1) Automatically adds the number called to the seller's entity-specific Do Not Call list;
(2) Immediately thereafter disconnects the call; and
(3) Is accessible at any time throughout the duration of the telemarketing campaign; and
(iii) Complies with all other requirements of this part and other applicable federal and state laws.
(C) Any call that complies with all applicable requirements of this paragraph (v) shall not be
deemed to violate § 310.4(b)(1)(iv) of this part.
(D) This paragraph (v) shall not apply to any outbound telephone call that delivers a
prerecorded healthcare message made by, or on behalf of, a covered entity or its business
associate, as those terms are defined in the HIPAA Privacy Rule, 45 CFR 160.103. P>(2) It
is an abusive telemarketing act or practice and a violation of this part for any person to
sell, rent, lease, purchase, or use any list established to comply with § 310.4(b)(1)(iii)(A) or
§ 310.5, or maintained by the Commission pursuant to § 310.4(b)(1)(iii)(B), for any
purpose except compliance with the provisions of this part or otherwise to prevent
telephone calls to telephone numbers on such lists.
(3) Aseller or telemarketer will not be liable for violating § 310.4(b)(1)(ii) and (iii) if it can demonstrate
that, as part of the seller's or telemarketer's routine business practice:
(i) It has established and implemented written procedures to comply with § 310.4(b)(1)(ii) and (iii);
(ii) It has trained its personnel, and any entity assisting in its compliance, in the procedures
established pursuant to § 310.4(b)(3)(i);
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(ili) The seller, or a telemarketer or another person acting on behalf of the seller or charitable
organization, has maintained and recorded a list of telephone numbers the seller or charitable
organization may not contact, in compliance with § 310.4(b)(1)(iii)(A);
(iv) The seller or a telemarketer uses a process to prevent telemarketing to any telephone number
on any list established pursuant to § 310.4(b)(3)(iii) or 310.4(b)(1)(iii)(B), employing a version
of the “do-not-call” registry obtained from the Commission no more than thirty-one (31) days
prior to the date any call is made, and maintains records documenting this process;
(v) The seller or a telemarketer or another person acting on behalf of the seller or charitable
organization, monitors and enforces compliance with the procedures established pursuant to §
310.4(b)(3)(i); and
(vi) Any subsequent call otherwise violating paragraph (b)(1)(ii) or (iii) of this section is the result of
error and not of failure to obtain any information necessary to comply with a request pursuant
to paragraph (b)(1)(iii)(A) of this section not to receive further calls by or on behalf of a seller or
charitable organization.
(4) Aseller or telemarketer will not be liable for violating § 310.4(b)(1)(iv) if:
(i) The seller or telemarketer employs technology that ensures abandonment of no more than
three (3) percent of all calls answered by a person, measured over the duration of a single
calling campaign, if less than 30 days, or separately over each successive 30-day period or
portion thereof that the campaign continues.
(ii) The seller or telemarketer, for each telemarketing call placed, allows the telephone to ring for at
least fifteen (15) seconds or four (4) rings before disconnecting an unanswered call;
(ili) Whenever a sales representative is not available to speak with the person answering the call
within two (2) seconds after the person's completed greeting, the seller or telemarketer
promptly plays a recorded message that states the name and telephone number of the seller
on whose behalf the call was placed!!! : and
(iv) The seller or telemarketer, in accordance with § 310.5(b)-(d), retains records establishing
compliance with § 310.4(b)(4)(i)-(iii).
(c) Calling time restrictions. Without the prior consent of a person, it is an abusive telemarketing act or
practice and a violation of this part for a telemarketer to engage in outbound telephone calls to a person's
residence at any time other than between 8:00 a.m. and 9:00 p.m. local time at the called person's
location.
(d) Required oral disclosures in the sale of goods or services. It is an abusive telemarketing act or practice and
a violation of this part for a telemarketer in an outbound telephone call or internal or external upsell to
induce the purchase of goods or services to fail to disclose truthfully, promptly, and in a clear and
conspicuous manner to the person receiving the call, the following information:
(1) The identity of the seller;
(2) That the purpose of the call is to sell goods or services;
[31 This provision does not affect any seller's or telemarketer's obligation to comply with relevant state and
federal laws, including but not limited to the TCPA, 47 U.S.C. 227, and 47 CFR part 64.1200.
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(3) The nature of the goods or services; and
(4) That no purchase or payment is necessary to be able to win a prize or participate in a prize
promotion if a prize promotion is offered and that any purchase or payment will not increase the
person's chances of winning. This disclosure must be made before or in conjunction with the
description of the prize to the person called. If requested by that person, the telemarketer must
disclose the no-purchase/no-payment entry method for the prize promotion; provided, however, that,
in any internal upsell for the sale of goods or services, the seller or telemarketer must provide the
disclosures listed in this section only to the extent that the information in the upsell differs from the
disclosures provided in the initial telemarketing transaction.
(e) Required oral disclosures in charitable solicitations. It is an abusive telemarketing act or practice and a
violation of this part for a telemarketer, in an outbound telephone call to induce a charitable contribution,
to fail to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the
call, the following information:
(1) The identity of the charitable organization on behalf of which the request is being made; and
(2) That the purpose of the call is to solicit a charitable contribution.
[75 FR 48516, Aug. 10, 2010, as amended at 76 FR 58716, Sept. 22, 2011; 80 FR 77559, Dec. 14, 2015; 89 FR 26784, 26785, Apr. 16,
2024]
§ 310.5 Recordkeeping requirements.
(a) Any seller or telemarketer must keep, for a period of 5 years from the date the record is produced unless
specified otherwise, the following records relating to its telemarketing activities:
(1) Acopy of each substantially different advertising, brochure, telemarketing script, and promotional
material, and a copy of each unique prerecorded message. Such records must be kept for a period of
5 years from the date that they are no longer used in telemarketing;
(2) Arecord of each telemarketing call, which must include:
(i) The telemarketer that placed or received the call;
(ii) The seller or person for which the telemarketing call is placed or received;
(ili) The good, service, or charitable purpose that is the subject of the telemarketing call;
(iv) Whether the telemarketing call is to an individual consumer or a business consumer;
(v) Whether the telemarketing call is an outbound telephone call;
(vi) Whether the telemarketing call utilizes a prerecorded message;
(vii) The calling number, called number, date, time, and duration of the telemarketing call;
(viii) The telemarketing script
This text is long and has been trimmed here. Open the source document for the complete record.