The parties have reached a $1,089,627 settlement in an administrative action filed against Mantra Films, Inc., and its sole shareholder, officer, and director, Joseph R. Francis (the seller of ‘Girls Gone Wild’ DVDs and videos), on behalf of all persons who bought the company's products between February 1, 2002, and June 1, 2003, and who canceled their enrollment by returning the first monthly shipment for a refund, but did not get a refund of any shipping costs. Persons eligible to take part in the settlement should contact the prosecuting attorneys for more information.

According to the FTC, beginning in December 2000, the defendants marketed ‘Girls Gone Wild’ DVDs and videos as part of continuity programs that resulted in monthly shipments of DVDs or videos to consumers who did not agree to receive them. Once consumers were enrolled in these programs, each month the defendants shipped additional, unordered videos and DVDs on a “negative-option” basis, charging consumers’ credit and debit cards for each shipment until consumers took action to stop the shipments. The defendants did not tell consumers clearly how the continuity programs operated, enrolled them without their consent, and automatically charged their debit or credit cards without their authorization for each of the unordered monthly shipments. The settlement prohibits the defendants from engaging in such conduct in the future.

The FTC’s complaint specifically charged Mantra and Francis with violating the FTC Act, the Electronic Fund Transfer Act (EFTA), and the Unordered Merchandise Statute. The complaint also charged them with violating previous Commission rulings that shipping unordered merchandise and sending communications that seek to obtain payment for, or return of, merchandise shipped without the express consent of the recipient are unfair and deceptive acts or practices. Specifically, the FTC charged that the defendants:

• failed to disclose adequately that the purchase of a video/DVD results in enrollment in a continuity program and the material terms and conditions of that program;
• misrepresented that consumers can cancel their continuity program membership at any time;
• caused charges to be submitted for payment for video/DVD shipments without the express informed consent of consumers;
• debited consumers’ checking accounts on a recurring basis without obtaining consumers’ written authorization for preauthorized electronic fund transfers from the accounts, as required by the EFTA;
• shipped unordered merchandise to consumers and sent communications seeking payment for the unordered merchandise; and
• continued to ship unordered merchandise and to seek payment for the merchandise, even after they had actual knowledge that the FTC had determined that these practices are deceptive, unfair, and unlawful based on prior cease and desist orders against other companies.

The settlement requires Mantra and Francis to obtain consumers’ informed consent before causing their billing information to be submitted for payment. They must disclose clearly and conspicuously all material terms and conditions of membership in continuity programs before enrolling consumers, and they are prohibited from misrepresenting any fact material to a consumer’s purchasing decision. The order also requires the defendants to obtain written authorization for recurring electronic withdrawals from a consumer’s checking account and to maintain procedures to avoid an unintentional failure to get such an authorization. Finally, the order prohibits the defendants from shipping unordered merchandise and attempting to obtain payment for it.

Only $548,392 of the total $1,089,627 monetary judgment will be paid to consumers who were enrolled in a continuity program with the defendants during the applicable period , and who canceled their enrollment by returning the first monthly shipment for a refund, but did not get a refund of any shipping costs. Mantra must refund the shipping costs to consumers within 60 days from the date the federal district court enters the order, and must complete the refund program within 180 days from that date. Mantra will administer the refund program and is supposed to contact eligible consumers directly.