On May 25, the Federal Trade Commission (FTC) entered a Stipulated Order for Monetary Judgment against Publishers Business Services, Inc. (PBS), and its officers, Brenda Dantuma Schang, Dries Dantuma, Dirk Dantuma, and Jeffrey Dantuma imposing a suspended judgment of $14.47 million.

In 2008, under “Operation Tele-PHONEY,” the FTC joined forces with more than 30 international, federal, state, and local law enforcement agencies, and targeted the largest telemarketing fraud sweep ever coordinated by the agency at the time. The FTC filed district court cases against 13 allegedly deceptive telemarketing operations.

Specific to PBS, the FTC alleged violations of the FTC Act and the Telemarketing Sales Rule (TSR), stating the scheme coerced individuals into paying for unwanted magazine subscriptions that cost some victims several hundred dollars a month. PBS allegedly disguised a telephone sales pitch as a survey, at the end of which they offer “free” or low-cost magazine subscriptions. When the consumers complained or attempted to cancel, PBS allegedly told consumers they were obligated to pay the bill because they entered into a “verbal contract.” PBS then attempted to collect payments by threatening collection actions and threatening reporting negative credit information.

This case is a prime example of the implications of a recent U.S. Supreme Court decision, AMG Capital Management, LLC v. FTC, that curtails the authority of the FTC to seek equitable monetary relief in federal court under Section 13(b) of the FTC Act, as we discussed here.

The most recent stipulated order follows a permanent injunction entered against PBS in 2010. It remained in place when the District Court of Nevada initially awarded the FTC nearly $24 million in equitable monetary relief, with the Ninth Circuit affirming the judgment in 2019. After its AMG Capital Management decision, the Supreme Court granted PBS’s petition for certiorari, vacated the judgment, and remanded the case to the Ninth Circuit for further consideration. In June 2021, the Ninth Circuit affirmed the District Court’s order of permanent injunction and remanded the case for further proceedings to determine whether any other relief was available. The District Court then issued an “Order on Mandate,” directing the parties to “confer about a stipulated judgment resolving this case.” The $9.35 million reduction in equitable relief demonstrates the challenges the FTC now faces in seeking monetary judgments on behalf of consumers.

Despite the challenges presented by the AMG Capital Management decision prohibiting the FTC from obtaining equitable monetary relief (e.g., restitution or disgorgement) under Section 13(b), FTC Bureau of Consumer Protection Director Samuel Levine stated, “The FTC shut down this subscription scam years ago, and today we are holding its ringleaders accountable. We won’t back down from challenging firms that use tricks, traps, or threats when selling subscriptions or anything else.”

Photo of Ethan G. Ostroff Ethan G. Ostroff

Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their

Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their business cycle.

Photo of Kalama Lui-Kwan Kalama Lui-Kwan

Kalama represents parties in complex commercial disputes arising out of M&A deals. He also has a national litigation practice representing consumer-facing companies in class actions and regulatory investigations.

Photo of Carlin McCrory Carlin McCrory

A seasoned regulatory and compliance attorney, Carlin brings extensive experience representing financial institutions, fintechs, lenders, payment processors, neobanks, virtual currency companies, and mortgage servicers.

Photo of Keith J. Barnett Keith J. Barnett

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts…

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts, state courts, and before arbitration and administrative law panels in the financial services industry.