- Created on Tuesday, 03 July 2012 16:15
- Written by Lesley Fair - FTC
Washington, DC - Ask any golfer. How you address the ball matters, but don’t underestimate the importance of the follow-through. In law enforcement, too, follow-through can be key. A recent development in the FTC’s action involving Neil Wardle illustrates that point.
First, the back swing. In 2008 the FTC entered into a settlement with Ultralife Fitness, Inc., Mr. Wardle, and others. The FTC charged that the defendants had offered consumers a “free trial” of a purported weight loss product, but then enrolled them in an automatic shipment plan - and billed their credit cards as much as $50 per month - without their consent.
The final order assessed the consumer injury at $9.9 million and held each of the defendants responsible for the total — “jointly and severally liable” in legalese. However, based on his inability to pay, the order required Mr. Wardle to make two payments totaling $50,000 and turn over about $102,000 to the IRS by dates specified in the order. Under the terms of the settlement, if Mr. Wardle didn’t make those payments as promised, the full multi-million dollar amount (less what he and his co-defendants had already paid) would become “immediately due and payable” after a 14-day grace period.
Mr. Wardle made the first installment of $25,000, but didn’t make the additional payments required by the order. So the FTC asked the court to enter the full remaining judgment against him. After the FTC filed its motion, Mr. Wardle finally came forward with the overdue amount. But the court ruled that he had failed to satisfy the conditions of the suspended judgment and entered an order against him for the remaining $9.6 million total.
The message to marketers: Make no bones about it. The FTC will follow through to make sure defendants live up to the terms of orders, including orders in which the FTC has agreed to accept less than it normally would because of a defendant’s financial condition.