In the latest showdown between the FTC and Online Training Academy ("OTA"), the FTC was again victorious as the Central District Court of California granted the FTC's request for a preliminary injunction against OTA. For those keeping score at home, we previously wrote about the FTC obtaining a TRO against the OTA in the same court after the FTC filed a complaint alleging OTA used false or unfounded earnings and related claims to sell investment training programs to consumers for as much as $50,000!
The preliminary injunction appoints a monitor to oversee OTA's marketing materials and practices and provide the court with periodic reports, and it prohibits OTA from conducting several activities. In particular, OTA is prohibited from making any earnings claim or any claim about the time or capital expenditure required for consumers to achieve substantial income unless (i) OTA has a reasonable basis for the claim, (ii) it can provide written substantiation that the claim is typical for consumers similarly situated to those to whom the claim is made, and (iii) upon request, the written substantiation should be made available to potential customers, consumers, the monitor, and the FTC. OTA is also prohibited from misrepresenting (i) that its instructors are active traders who have amassed substantial wealth from trading in financial markets and (ii) any material fact to consumers about any of its goods or services.
The court also addressed OTA's prior attempts at restricting consumer speech by ordering that OTA not make or enforce contracts which limit consumers' ability to speak to law enforcement agencies or leave reviews online.
In addition, OTA is prohibited from imposing penalties or additional interest if consumers withhold payment on loans OTA made to customers, prior to April 2, 2020, to finance purchases from OTA, and OTA is not to assign such loans to others, use collection agencies to attempt to collect past due loan payments, and OTA is not to report negative information to a consumer reporting agency for non-payment of a loan.
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