Facts

Pact Inc. sold software apps for mobile devices to U.S. consumers. One of their apps claimed to pay purchasers for activities they completed, while those purchasers who did not complete a health-related activity would be charged. The Federal Trade Commission sought a permanent injunction and equitable relief against Pact Inc.

PLAINTIFF'S CONTENTIONS: The FTC contended that the defendants violated the FTC Act as well as the Restore Online Shoppers' Confidence Act. It was also contended that the defendants failed to disclose material terms, and conducted unfair billing practices. The FTC sought injunctive relief, restitution, and other equitable relief. The FTC alleged that the defendants failed to pay people in connection with completing activities, as promised when using the app. It was further alleged that many consumers were still charged for the app, even after attempting to cancel the service. Thousands of consumers complained, according to the FTC.

DEFENDANT'S CONTENTIONS: Defendant denied the allegations.

Result

The parties stipulated to a judgment permanently enjoining the defendants from misrepresenting the way they will charge, or reward, consumers. The defendants were also permanently enjoined from conducting unfair business practices, and were ordered to make clear and conspicuous disclosures regarding recurring billing. Judgment as equitable relief was ordered in the total amount of $1.5 million. The defendants were ordered to pay $948,788 to injured consumers. Once payment was made to consumers as ordered, the remainder of the monetary judgment would be suspended. Other stipulations were required, including strict record keeping and compliance monitoring.