Federal Trade Commission v. Washington Data Resources
2012 U.S. Dist. LEXIS 56233
| M.D. Fla. | 2012Background
- FTC sues nine defendants for deceptive marketing of mortgage loan modification services under FTC Act §5 and the Telemarketing Sales Rule (TSR).
- Bench trial occurred Oct 3–11, 2011; pre-trial consent judgments entered against some entities; a TRO shut the operation in Nov 2009.
- Enterprise led by Richard Bishop and Brent McDaniel; affiliates include Jackson Crowder/Washington Data Resources, Nationwide Marketing, AFS, RABC, and TABC; Fresh Start served as intermediary, marketing via postcards and telemarketing to distressed homeowners.
- Postcards advertised a “New Start Program” with attorney signatures; initial calls collected financial data, offered a $2,000 retainer, and steered clients toward loan modification or bankruptcy—despite lender’s ultimate decision controlling whether modification occurs.
- Retainer agreements labeled the involved attorney as “Law Firm,” with paralegal/administrator staff handling primary client interactions; lenders controlled modification outcomes.
- Court analyzes whether the Enterprise’s conduct violated the FTC Act and TSR, whether the entities formed a common enterprise for liability, and how to compute disgorgement and civil monetary relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the net-impression of guarantees violate the FTC Act and TSR? | FTC contends the net impression promised a certain loan modification. | Fresh Start argues no guaranteed outcome; disclaimers exist. | Yes; net impression guaranteed a loan modification, violating FTC Act and TSR. |
| Did the postcards or calls misrepresent affiliation with the U.S. government? | FTC claims misrepresentation of government affiliation. | Postcard alone cannot prove government affiliation misrepresentation. | Counts 2 and 4 fail; no evidence policymakers or homeowners reasonably believed government affiliation. |
| Did Fresh Start misrepresent attorney involvement in the program? | FTC asserts substantial attorney involvement; retainer terms imply lawyer control. | Defendants argue attorney involvement was limited; scripts may be nonbinding. | Yes; substantial attorney involvement misrepresented; TSR violation. |
| Are Bishop, McDaniel, and Caldwell individually liable? | FTC must show individual participation or control over deceptive practices. | Defendants contest ongoing control post-separation; some argue no liability. | Yes; all three individually liable for deceptive practices through control or participation. |
| How should the Enterprise’s net revenue be calculated for disgorgement/relief? | FTC seeks disgorgement of unjust gains under §13(b). | Defendants argue profit vs. revenue, and contest calculation method. | Unjust gain measured by net revenue (gross receipts minus refunds/charge-backs), with limitations under §13(b) and §19(b); final numbers apportioned by defendant's responsibility. |
Key Cases Cited
- FTC v. Gem Merchandising Corp., 87 F.3d 466 (11th Cir.1996) (disgorgement under §13(b) may reflect unjust enrichment, not consumer losses)
- Wilshire Inv. Mgmt. Corp., 531 F.3d 1339 (11th Cir.2008) (full range of equitable remedies; cannot exceed consumer redress under §19(b))
- Bronson Partners, LLC v. Direct Marketing Concepts, Inc., 654 F.3d 359 (2d Cir.2011) (circuit rejects profit-based disgorgement in some contexts; revenue may control)