865 F. Supp. 2d 1052
C.D. Cal.2012Background
- FTC sues Defendants for deceptive wealth-creation infomercials selling three systems: John Beck System, John Alexander System, and Jeff Paul System.
- Defendants are corporate and individual actors controlling FP, MOA, JBAP, John Alexander, LLC, and Jeff Paul, LLC; Beck, Alexander, and Paul are the system developers and front‑men.
- FTC alleges false and unsubstantiated claims, including “buy free and clear” properties for pennies, quick profits, and little investment, plus misleading continuity plans and coaching programs.
- Continuity memberships ($39.95/mo) are promised as free trials at purchase but allegedly enroll consumers without adequate disclosure, violating the TSR when disclosures occur after payment information is obtained.
- FTC seeks injunctive relief and approximately $300 million in equitable monetary relief; court grants summary judgment for FTC on core deceptive practices and certain TSR claims; orders supplemental briefing on injunctive scope and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the Beck infomercial claims deceptive under FTCA §5? | Beck and affiliates misrepresented profits and ease of purchase. | Defendants contend representations were true or substantiated. | Yes; Beck infomercials deceptive. |
| Are the John Alexander infomercial claims deceptive under FTCA §5? | Alexander system promises rapid profits with little investment; unsubstantiated. | Claims were true or disclosed; profits possible. | Yes; Alexander infomercial deceptive. |
| Are the Jeff Paul infomercial claims deceptive under FTCA §5? | System promises quick, easy, large earnings; unsubstantiated by evidence. | Disclosures and testimonials negate liability; some customers succeed. | Yes; Paul infomercials deceptive. |
| Did Defendants violate the TSR regarding continuation plans and do-not-call practices? | Automatic enrollment and charges without clear disclosure violated TSR § 310.3(a)(1)(vii) and § 310.4. | Disclosures were provided; post-trial disclosures suffice. | Yes; TSR claims 8,10,12,14 supported. |
| Are injunctive relief and monetary remedies proper and properly scoped? | Need permanent injunction and restitution for consumer injury. | Relief should be narrowly tailored; lifetime bans contested. | Grant injunctive relief; order supplemental briefing on scope and damages. |
Key Cases Cited
- FTC v. Cyberspace.Com, LLC, 453 F.3d 1196 (9th Cir. 2006) (net impression can mislead even with some truthful disclosures)
- Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt., 618 F.3d 1025 (9th Cir. 2010) (survey admissibility hinges on acceptable principles; weight goes to flaws)
- Keith v. Volpe, 858 F.2d 467 (9th Cir. 1988) (survey admissibility hinges on objectivity and standard techniques)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard; genuine disputes of material fact must exist)
- Donaldson v. Read Magazine, Inc., 333 U.S. 178 (U.S. 1948) (advertising viewed as whole may mislead despite true sentences)