Full opinion text
ORDER RE: (1) PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND (2) DEFENDANT MAURICE O’BANNON’S MOTION FOR SUMMARY JUDGMENT COLLINS, District Judge. Plaintiff Federal Trade Commission’s (“FTC”) Motion for Summary Judgment (the “Motion”) and Defendant Maurice O’Bannon’s (“O’Bannon”) Motion for Summary Judgment (the “O’Bannon Motion”) came on regularly for hearing before this Court on April 3, 2000. After considering the materials submitted by the parties, argument of counsel, and the case file, it is hereby ORDERED that: (1) the FTC’s Motion is GRANTED, in part, on the issue of liability as to defendants J.K. Publications, Inc. (“JKP”), Herbal Care, Inc. (“Herbal Care”), MJD Services Corp. (“MJD”), Kenneth H. Taves (“Ken Taves”), and Teresa Callei Taves (“Teresa Taves”); (2) the FTC’s Motion is DENIED, in part, on the issue of damages with respect to JKP, Herbal Care, MJD, Ken Taves and Teresa Taves; (3) the FTC’s Motion against O’Bannon is DENIED; and (4) the O’Bannon Motion is GRANTED. I. Procedural Background On January 6, 1999, the FTC filed a complaint for a permanent injunction and other equitable relief, and an ex parte motion for a temporary restraining order (“TRO”) without prior notice to the defendants. The complaint alleges that the defendants had committed unfair and deceptive business practices in violation of section 5(a) of the FTC Act, 15 U.S.C. § 45(a). The Court issued a TRO on the same day against the following defendants: JKP; Ken Taves and Teresa Taves, individually and as officers of JKP, also dba 'Netfill, netfill.com, N-Bill, Web-tel- and Online Billing; Net Options, Inc.; Gary Neal Mittman, individually and as an officer of Net Options, Inc.; and MJD. The TRO froze the defendants’ assets and required, inter alia, that the defendants be temporarily enjoined from conducting certain business practices and the defendants disclose all assets held by them, for their benefit or under their direct or indirect control. The Court also appointed a receiver, Robb Evans and Robb Evans & Associates (“Receiver”) to administer the defendants’ businesses. On January 7, 1999, the FTC served the complaint and TRO on the defendants. On January 20, 1999, the FTC filed an amended complaint naming the-'following additional defendants: Herbal Care; TAL Services, Inc. (“TAL”); Adult Banc, Inc. (“Adult Banc”); Discreet Bill, Inc. (“Discreet Bill”); Dennis Rappaport (“Rappa-port”), individually and as an officer of TAL, Adult Banc, Inc. .and Discreet Bill; O’Bannon, individually and as an officer of TAL and MJD. The amended complaint also added an allegation that the defendants engaged in a common enterprise while violating the FTC Act. On March 5, 1999, the Court issued- a preliminary injunction order against Gary Mittman and Adult Banc. On March 15, 1999, the Court issued a preliminary injunction order against JKP, MJD, Ken Taves and Teresa Taves. On May 4, 1999, the Court issued Findings of Fact and Conclusions of Law holding Ken Taves in contempt of the Court’s TRO by failing to disclose the property located at 6837 Zumi-rez Drive in Malibu, California (“Zumirez Property”) and causing the transfer of the Zumirez Property to an entity called Trans Global on or about February 12, 1999. The Court ordered Ken Taves to pay $2,050,000, the estimated sale price of the property, into the receivership estate within seven days to purge himself of the contempt. The Court also ordered that Ken Taves shall be imprisoned until he complies with the order if he fails to pay the $2,050,000 within the prescribed time. To this date, Ken Taves has not purged himself of this contempt. He remains imprisoned at the Metropolitan Detention Center (“MDC”) in Los Angeles. On May 5, 1999, the Court issued a separate Findings of Fact and Conclusions of Law holding Ken and Teresa Taves in contempt of the Court’s preliminary injunction order by, inter alia, failing to disclose an account at Euro Bank in the Cayman Islands with an estimated $6.2 million in assets and failing to prevent dissipation of the Euro Bank account. Ken and Teresa Taves were ordered to take all steps possible and necessary to ensure the repatriation of the $6.2 million or else face imprisonment. Although the couple have signed various documents to repatriate the monies, the Receiver has not recovered the monies to this date. On June 10, 1999, the Court entered a stipulated final judgment and preliminary injunction order against Gary Mittman and Adult Banc. On July 29, 1999, the Clerk entered a default against Discreet Bill and TAL. On August 11, 1999, the Clerk entered a default against Rappaport. On February 8, 2000, the Court entered default judgment and permanent injunction against Rappaport. On November 29, 1999, the FTC filed the motion for summary judgment against JKP, MJD, Herbal Care, Ken Taves, Teresa Taves and O’Bannon. On December 6, 1999, O’Bannon filed an opposition to the Motion. On December 13, 1999, JKP, Herbal Care and Ken Taves filed their opposition to the Motion. On the same day, Teresa Taves filed her opposition to the Motion. On December 20, 1999, the FTC filed its reply. On December 20, 1999, O’Bannon filed his own motion for summary judgment. On December 22, 1999, the FTC filed its opposition to the O’Bannon Motion. On February 24, 2000, O’Bannon filed a reply. II. Factual Background Defendants JKP, MJD and TAL. JKP and MJD were Nevada corporations engaged in operating 14 adult-content Internet web sites. JKP was incorporated on September 14, 1995. From at least June 1997 through October 1998, JKP conducted business under the names Netfill and N-Bill. MJD was incorporated on May 5, 1998. At some point in 1998, MJD supposedly purchased JKP’s book of business. From May 1998 through December 1998, MJD conducted business under the name Webtel. In 1998, JKP and/or MJD also conducted business under the names Online Billing and Assist Online. On October 16,1998, TAL was incorporated in Nevada. A month or two later, MJD transferred its book of business to TAL. JKP, MJD and TAL operated out of the same Malibu, California offices. The same employees worked for these companies. Herbal Care & Discreet Bill. Herbal Care was a California corporation co-founded in the mid-1980s by Ken and Teresa Taves. During times relevant to this action, Herbal Care sold no products. Instead, in 1997 and 1998, its sole “business” consisted of paying the employees of JKP, purportedly after JKP provided the funds to Herbal Care. Discreet Bill, a Nevada corporation, took over Herbal Care’s role of paying JKP employees in the fall of 1998.. Ken and Teresa Taves. Ken Taves and Teresa Taves, husband and wife, are the owners, officers and directors of JKP and Herbal Care. In 1998 alone, Ken and Theresa Taves were each paid a salary of at least $1.7 million for their services to JKP. Ken Taves was actively involved in the daily operations of his companies. He also held himself out to employees and third parties as the final decision maker for all key matters. With respect to MJD, Ken Taves is not identified as an officer or director on corporate documents. Also, Ken Taves had informed a third party that he was a mere “consultant” for the company. However, the evidence shows that he had ownership in and/or control over MJD. According to his employees, Ken Taves held himself out as a final decision maker for matters involving MJD. Additionally, Ken Taves was the only person responsible for making payments to Automated Transaction Services, Inc. (“ATS”), the company which processed the defendant companies’ credit and debit card transactions, on behalf of both JKP and MJD. As discussed below, Ken Taves was also the only person who submitted JKP and MJD’s e-mail charge requests to ATS for processing. Moreover, according to Randall Ball, all of the “entities” — Netfill, N-Bill, Online Billing, Webtel, TAL and MJD — were part and parcel of the same company over which Ken Taves had “control.” (Ball Depo. at 12-14.) “The names [merely] changed periodically.” (Id.) Further, in December 1998, when one of MJD’s merchant accounts was terminated, Ken Taves contacted the agent who assisted MJD in obtaining the account to inquire about the reason for the termination. At the very least, the record shows that Ken Taves was actively involved in MJD and the two companies — JKP and MJD — and their principals were cohorts in the same scheme. Teresa Taves has been married to Ken Taves since 1982. (T. Taves Depo. at 800.) Before her marriage, in the 1970s, she worked for five years at Security Pacific Bank. (Id. at 683.) She started as a bank teller, advanced to the position of chief teller and later transferred to the bank’s loan department. (Id.) After leaving the bank, she worked for six months for a real estate company and two years in sales for a garment company. (Id. at 684.) Around 1985, a few years into her marriage, Teresa Taves worked for Herbal Care, the company she and her husband co-founded. She handled customer service and the shipping of products for approximately three years. (Id. at 684-85.) Then, the company “kind of dissolved” because “it just wasn’t a strong company.” (Id. at 686-87.) During the next five years, with the exception of time-off for maternity leave, Teresa Taves worked part-time at another company formed by Ken Taves, handling shipping and answering calls. (Id. at 687.) The company sold or distributed computer toner supplies. (Id.) Around 1994 or 1995, before JKP was formed, this computer toner supplies company dissolved. (Id. at 688.) Teresa Taves assisted her husband with JKP’s operations. She visited the Malibu offices occasionally, ran errands for the companies, entertained customers and held parties for the employees. (Id. at 690.) The record does not show that she was involved in the daily operations of JKP’s business. However, as an officer of JKP, she signed checks, letters and corporate documents on behalf of JKP. The documents include federal corporate tax returns, bank account applications and signature cards, and statements concerning JKP/NetfiU’s business history. During her deposition, Teresa Taves repeatedly testified that she did not read the documents that she signed or did not recall reading the documents, even when those documents contain her initials next to statements such as “Merchant Initial When Read.” (See, e.g.,. id. at 748 [“I was just told to sign them and I signed them. I didn’t really read the fine print”], 750 [“I don’t remember reading it”], 752 [“I didn’t read these documents”], 763 [“I didn’t read [them], I just signed them”].) She also denied having any knowledge of fraud by any of the defendants. (See, e.g., id. at 752-53, 765-66, 769-71, 789-F-789-I.) But the evidence shows that she had a general understanding of JKP’s business operations. For example, she knew that JKP’s business operated adult-content web sites. (Id. at 711, 789-P.) She knew that merchant bank accounts were necessary for JKP to charge and process credit card payments. (Id. at 736-37.) She was aware that ATS processed all of JKP’s credit card transactions. (Id. at 782-83.) She also knew that customer service employees at the Malibu offices handled calls from disgruntled consumers seeking credits or “chargebacks” from the companies. (Id. at 730, 771.) She talked to employees, observed their activities and overheard telephone conversations during her visits to the Malibu offices. (Id. at 789-S-791.) In addition, Teresa Taves played a key role — she was instrumental in JKP’s ability to obtain merchant bank accounts. As discussed below, Teresa Taves ultimately acted on behalf of JKP in its efforts to obtain merchant accounts after Ken Taves’ application was rejected because of his bad credit record. Teresa Taves recalls submitting merchant bank account applications on behalf of JKP. (Id. at 737.) On at least one occasion, she went to the premises of Charter Pacific Bank (“Charter Pacific”), met with bank personnel, including Richard Cornejo, the Executive Vice President/Bank Card Manager, and signed documents on site. (Id. at 746-749, 758-59.) On another occasion, Teresa Taves, unaccompanied by her husband, met with an agent to sign documents related to a merchant bank application with Heartland Card Services (or Heartland Bank) (“Heartland”). (Id. at 773-76 [“I know my husband wasn’t there”].) Finally, Teresa Taves was aware that JKP (and/or the Taveses’ other related businesses) made an extraordinary amount of money in 1997 and 1998. As mentioned earlier, Teresa Taves ahd her husband were each paid around $1.7 million in 1998 by Herbal Care for their work and involvement with JKP. She knew that her 15 or 16 year old son was paid a salary, which amounted to approximately $48,000, even though he only “spen[t] a little time” in the offices and she did not know what his duties were other than “cleaning up.” (Id. at 731-33.) She also testified that the family earned close to $4 million from JKP’s operations in 1997. (Id. at 804.) Before 1997, she and her husband had never made so much money from any of their business endeavors. (M) Rappoport. Dennis Rappaport has been a friend of the Taveses for approximately twenty yeárs. Discreet Bill was Rappa-port’s company. In 1998, he worked full-time at the Malibu offices acting as Ken Taves’ office manager. In addition, Rap-paport held himself out to employees and third parties as a contact for both MJD and TAL. O’Bannon. Maurice O’Bannon had an informal agreement with Nevada Corporate Headquarters, Inc. (“Nevada Corp.”), an incorporator, to act as a nominee for their client-corporations and sign whatever documents Nevada Corp. wanted him to sign. He visited the office once or twice a week to sign documents. (O’Bannon Depo. at 283.) O’Bannon claims that he has never received a salary from Nevada Corp. (Id. at 282.) He has received “a few little benefits” in exchange of his work, such as “a hand-me down ... used computer or something on that order” and the use of a Cadillac car. (Id. at 282-83.) Corporate documents show that O’Ban-non was an officer and director of MJD, Discreet Bill and TAL in 1998. A merchant bank agreement between Charter Pacific and TAL indicates that O’Bannon signed the agreement on behalf of TAL in December 1998, even though the corporate documents show that he had tendered his resignation as an officer and director of TAL on October 29, 1998. (See id. at 305 [Resolution of the Board of Directors of TAL]; 311-322 [merchant agreement].) However, O’Bannon testified that he was not aware that he had held those roles (prior to his telephone deposition), he was not familiar with those companies, and he has never received any money from those companies. (Id. at 285-286, 289, 291-92, 299-300.) He either does not recall signing the documents or claims that the signatures on the documents appear to be impressions from his signature stamp (and placed on the documents by someone else). (Id.) O’Bannon acknowledged that he, on behalf of Discreet Bill, signed the fictitious business name certificates that indicate Discreet Bill (and not JKP or MJD) did business as N-Bill, Webtel, Online Billing and Assist Online. (Id. at 293-98; see id. at 307-10.) However, he has no specific recollection of signing these statements. Apparently, it was his practice to go to Nevada Corp.’s offices, sit at a table and sign whatever documents the company gave him to sign without actually reviewing the documents. (See id. at 293 [“I signed things that they give me to sign, and I don’t really know too much about everything I sign”], 298 [“I just would, you know, sit at a table and sign them”], 301-02 [“I possibly would [sign a lengthy document without reading it first] because I don’t look at it that carefully when I sign those papers”].) He is “not sure” whether anyone at Nevada Corp. had authority to sign his signature in 1998. {Id. at 301.) O’Bannon claims that he does not know any person named Ken Taves, Teresa Taves, or Lee Sacks, former counsel for Ken Taves and his companies. {Id. at 302.) He also does not know anyone associated with MJD or Discreet Bill and does not have any knowledge about these companies’ businesses. {Id. at 303.) JKP dba Netñll’s High Volume “Business” and Trouble with the Banks To become a member and utilize the adult-content Internet web sites, customers must submit a credit or debit card number. Defendants’ web sites charged a $19.95 monthly fee. ATS processed credit and debit card transactions for JKP, MJD and TAL. ATS was responsible for submitting these defendants’ charge requests to the authorizing networks and collecting the payments. In late 1996 or early 1997, Ken Taves applied for a merchant account with Charter Pacific. Charter Pacific turned down his application because he had a terrible credit record. Unlike her husband, Teresa Taves was creditworthy. Therefore, on or about June 2, 1997, Teresa Taves, acting as President of JKP dba Netfill, signed a merchant account application with Charter Pacific. On or about June 4, 1997, Ken Taves, acting on behalf of JKP, forwarded to Charter Pacific a copy of the notarized fictitious business name filing that confirms JKP can do business as Netfill. (K. Taves Depo. at 94 & Depo. Ex. 4.) JKP/Netfill’s application was approved on or about June 5, 1997. Charter Pacific’s files list Ken and Theresa Taves as contacts for the JKP/Netfill merchant account. In November 1997, on a form filled out by Ken Taves, Teresa Taves signed (on behalf of JKP/Netfill) an agreement to purchase access to various historical credit card number databases from Charter Pacific. JKP/Netfill ordered, among others, “Positive Database File #2,” which contained the date of sale, card number and dollar amount of every Visa and Master-card transaction processed through any merchant of Charter Pacific during the previous 11 months for which there had been no chargebacks or credits issued (“Charter Pacific Positive Database”). This database contained no information about the card holder. JKP/Netfill could download the Charter Pacific databases electronically. Coinciding with JKP/Netfill’s access to the Charter Pacific historical databases, JKP/Netfill began transmitting thousands of credit card charge requests to ATS by e-mail. In late 1997 or early 1998, Ken Taves, on behalf of JKP, began submitting customer charge information to ATS by emails with attached text files. The text files, transmitted once or twice a month, contained up to thousands of credit and debit card numbers. At times these files omitted customer names, customer e-mail addresses and card expiration dates. From those e-mail transmissions, it was impossible for ATS to determine whether a cardholder had visited the defendants’ web sites. Nevertheless, ATS accepted the numbers and processed the charge requests. Ken Taves transmitted credit card charge requests by e-mail to ATS on behalf of JKP, and subsequently on behalf of MJD, through the end of 1998. Also near the time that Ken Taves began transmitting large volumes of charge requests to ATS by e-mail, the JKP/Netfill merchant account at Charter Pacific came to the attention of Visa USA’s chargeback monitoring program because its charge-back rate exceeded the maximum monthly norm permitted for merchants. At the time, the chargeback rate which triggered Visa USA monitoring was an overall rate of 2.50% or more per month or a consumer dispute chargeback rate of 1% or more. By January 1998, the JKP/Netfill account had a 5.54% overall chargeback rate (2,556 chargebacks out of 46,127 transactions) and by February 1998, the JKP/Netfill account had a 6.11% overall chargeback rate (2,656 chargebacks out of 43,480 transactions). On March 30, 1998, Visa USA notified Ken Taves and Charter Pacific that the Netfill account had an excessive number of chargebacks four months in a row — November 1997, December 1997, January 1998 and February 1998. (See Cornejo Depo. at 1570-71.) Therefore, JKP/Netfill was required to submit a chargeback reduction plan within 15 days. (Id.) In addition, Visa USA warned Netfill that failure to reduce the chargeback ratios may result in the revocation of Net-fill’s Visa card acceptance privileges. (Id.) On April 3, 1998, Charter Pacific notified Netfill that a total of $71,250 in fees would be assessed to NetfiU’s account for the February 1998 chargebacks. (Id. at 1572.) JKP/Netfill never submitted the requisite chargeback reduction plan. Instead, presumably to avoid “active monitoring” by Visa USA, JKP decided to switch merchant banks. On March 19, 1998, less than two weeks before the arrival of the Visa USA warning letter concerning the Charter Pacific account, Teresa Taves, as President of JKP dba Netfill, signed an application for a merchant account with Heartland Bank (via Heartland Card Services) (“Heartland”). Heartland approved the account on or about April 17, 1998. Instead of “Netfill,” the billing-descriptor for this account (as it would appear on the cardholder’s statements) was “N-Bill.” On May 22, 1998, Netfill informed Charter Pacific that it would cease processing payments with Charter Pacific. Teresa Taves signed the letter on behalf of Netfill. On May 31, 1998, Charter Pacific closed the Netfill account. However, JKP/Netfill continued to pay for access (and had access) to the Charter Pacific Positive Database until at least December 31,1998. The Charter Pacific Positive Database files that JKP/Netfill could have accessed from November 1997 through January 7, 1999 (the date the Receiver took over) contained at least 3,622,418 valid Visa/MasterCard credit card numbers. (See Card Alert Services (“CAS”) Report at 2163, 2165; see also discussion, infra, at 1193-94 & note 54.) The N-Bill account with Heartland was approved at an opportune time. JKP/Net-fill was able to avoid submitting a charge-back reduction plan and continue processing its credit/debit card requests without interruption. But almost immediately, in July 1998, the N-Bill account was flagged by the Visa USA chargeback monitoring program because, of excessive chargebacks. In August 1998, according to Heartland’s records, cardholders charged back 21,431 transactions worth $427,129 that had been billed through the N-Bill account. Heartland assessed $321,465 in fees against JKP for the August chargebacks. (Carr Depo. at 975-76, 1347-49.) On or about September 16, 1998, Mr. Carr (Heartland) informed either Ken Taves or Mr. Goldfarb (ATS) that chargebacks on the N-Bill account were “way out of line.” (Id. at 923-24.) Indeed, for September 1998, Visa USA registered a 9.67% charge-back rate for the N-Bill account. More.over, September 1998 was the third consecutive month that N-Bill’s chargebacks exceeded Visa USA’s guidelines. Realizing that it would soon go on Visa USA’s “active monitoring” list, JKP/Netfill decided to close the Heartland account. On September 29, 1998, Netfill sent a letter to Heartland requesting the closure of the N-Bill account effective October 1, 1998. Teresa Taves, as President of Net-fill, signed the letter to Heartland. On October 1, 1998, Heartland closed the N-Bill account. Transfer of JKP/Netfill’s Business to MJD and the Opening of New Merchant Accounts As mentioned earlier, MJD was incorporated on May 5, 1998. It shared the same employees and the same suite of offices in Malibu used by JKP/Netfill. In addition to Ken Taves, Rappaport held himself out as a contact for MJD. Sometime after its formation, Ken Taves advised ATS that JKP’s customers would become MJD’s customers because MJD bought JKP’s book of business. The evidence indicates that the transfer of JKP’s book of business to MJD, to the extent that it occurred, was part of the scheme to avoid the detection of fraud. In May 1998, around the time that JKP closed its Netfill account at Charter Pacific, MJD applied for a merchant account with Charter Pacific. The MJD account, underwritten for an account where the merchant only processed charges for its own web site(s), was approved in May or June 1998. Amost immediately, the MJD account had excessive Visa card charge-backs. Visa USA records show that MJD had the following chargeback rates from August through November 1998: 3.11% (August); 6.63% (September); 9.62% (October); and 6.86% (November). (Elliott Decl. at 2154.) Thus, by the end of November 1998, the MJD account had exceeded Visa USA’s acceptable chargeback ratios for four months. In October 1998, when its merchant account at Charter Pacific was entering its third month of excessive chargebacks, MJD opened a merchant account with Heartland using “Webtel” instead of MJD as the merchant descriptor. On its application, MJD identified “www.pures-kin.com” as its adult-content web site. On December 3, 1998, following a four-day period in late November when the MJD/Webtel account processed approximately $4.7 million in Internet “sales,” MasterCard contacted Heartland to report that it had received calls from three issuing banks regarding possible fraud by Webtel. On December 7, 1998, Heartland terminated the Webtel account. On January 5, 1999, Charter Pacific advised MJD that a total of $48,200 in fees would be assessed to MJD’s account for the November 1998 chargebacks. (Corne-jo Depo, at 1614.) In addition, Charter Pacific required MJD to submit its charge-back reduction plan by January 7, 1999. (Id.) On January 11, 1999, four days after the Receiver took over the defendant companies, Charter Pacific closed the MJD account. Beginning Anew With TAL In October 1998, as the MJD account was placed under the scrutiny of Visa USA’s monitoring program, a new entity appeared. Like JKP, MJD and other defendant companies, TAL operated out of the offices at 22761 Pacific Coast Highway and shared the same employees. In December 1998, a merchant account for TAL was opened at Charter Pacific. The merchant account agreement between TAL and Charter Pacific indicates that O’Ban-non signed the agreement on behalf of TAL. (O’Bannon Depo. at 822.) Rappaport held himself out as a contact for TAL. Around the middle of December 1998, Rappaport told ATS that MJD’s existing book of business, the portion that was then processed through the Charter Pacific merchant account, would be turned over to TAL. TAL was only in operation for a few weeks when the FTC filed this action. Problems With Consumers In 1998 alone, over $49.4 million in “income” were deposited into JKP and MJD’s merchant accounts at Charter Pacific and Heartland. Of this total, over $10.7 million were deposited at Charter Pacific ($6,145,431 in the JKP/Netfill account and $4,562,914 in the MJD account) and over $38.7 million were deposited at Heartland ($26,284,514 in the JKP/N-Bill account and $12,424,284 in the Webtel account). From bank records of the total monthly deposits into JKP and MJD’s merchant accounts, the following monthly “sales” pattern for 1998 emerges: _January February March_April_May_June_ JKP $830.400 962,200 1.870.400 3.119.500 2.224.700 4.991.600 MJD_185.300 Total $ $830.400 962,200 1.870,400 3.119.500 2.224.700 5.176.900 _July_August_September October November December JKP $5,510.500 5,865.500 6.060.200 991,500_3,600_80_ MJD $ 757.800 664.900 887.400 3.563,300 10,129.200 799.300 Total $6.268.300 6,530.400 6.947.600 4.554.800 10.132,800 799.380 Such sales figures, if legitimate, are impressive indeed, given that the monthly web site membership fees were only $19.95. But JKP and MJD did not legitimately obtain the spectacular “sales.” It is clear from the undisputed evidence that these defendants billed the credit and debit card accounts of individuals from all over the United States without authorization. Typically, the purported consumers had never heard of or seen the defendants’ business names before receiving their bank or charge card statements. Many victims called the toll-free telephone numbers listed next to the descriptor names on their statements to find out why they were charged $19.95. To add to the confusion, when calls were answered, JKP, MJD or TAL customer service representatives used two additional fictitious names to greet customers — “Online Billing” or “Assist Online.” Unfortunately, many unhappy cardholders were unable to reach a live customer service representative to respond to their inquiries. Oftentimes the toll-free telephone lines were busy for long periods of time or rang without an answer. Some calls were answered by an automated voice mail system that did not identify the name of any company. Instead, the voice mail recording would ask callers to input their credit card numbers and press telephone keys to satisfy inquiries. Understandably, many people refused to give their credit card numbers to an anonymous or unknown entity. Other people were unable to leave messages because the voice mail system indicated that the voice mailbox was “full.” Frustrated and fearful that their cards may have been stolen, many cardholders contacted their issuing banks and canceled their debit or charge cards. JKP, MJD and TAL’s customer service department was overwhelmed with complaints. In February 1998, the customer service department had two employees. The complaints increased steadily during the year. Around April 1998, in response to the increased number of calls, more customer service representatives were hired. Towards the end of 1998, when the volume of complaint calls was at its highest, the customer service department had 12 or 13 representatives. At that time, thousands of calls were answered each day. Every customer service agent received 200 to 300 calls per day. According to employees’ estimates, more than 50% of the calls were from people who said they did not order the defendants’ services and had no idea why they were billed. In addition, an astonishing 40% to 50% of the calls were from people who said they did not have a computer and had not given their card numbers to anyone. Not surprisingly in the scheme of things, the customer service agents’ computer screens generally did not display consumers’ street or e-mail addresses because such information was not available. Thus, the customer service representatives were unable to verify whether the complaining callers had actually signed up for any of the companies’ Internet web sites. In the summer of 1998, Ken Taves and Rappaport established a bank support department (and a separate telephone line) to respond to calls from card issuing banks and credit unions. The goal was to get the issuing banks to contact JKP, Netfill, N-Bill, MJD, Webtel or TAL directly (instead of going through the charge authorization networks) so that the defendants could issue credits. By issuing credits, these defendants could avoid the penalties and fees associated with chargebacks and reduce their exposure to the Visa USA chargeback monitoring program. Rudy Pena, the employee that Ken Taves and Rappaport picked to head the bank support department, had no knowledge of the Truth in Lending Act, Electronic Fund Transfer Act or the credit card processing rules for Visa, MasterCard or Discover. By August 31, 1999, the Charter Pacific and Heartland merchant accounts had processed over $6.8 million worth of charge-backs and credits (or 13.8% of the $49.4 million in “sales” proceeds deposited into the accounts). Visa USA’s records show that JKP and MJD’s merchant accounts’ average chargeback rate for Visa cards in 1998, taken as a whole, is approximately 7.3%. (Elliot Decl. ¶¶ 14-15.) This rate is based on the following data: 120,425 chargebacks (totaling in excess of $2.6 million) processed out of 1,647,578 total Visa card transactions. (Id) This is “exceedingly high” when compared to the average Visa card chargeback rate of 0.80% for electronic commerce merchants, those classified as primarily Internet-based merchants. (Elliott Decl. ¶¶ 12-16.) To date, there remain cardholders from all over the United States who complain that they have never been credited for unauthorized charges posted to their credit or debit card accounts by N-Bill, MJD and Webtel. Some cardholders discovered the unauthorized charges too late; they were no longer able to obtain a credit through their card issuing banks. Undoubtedly, there are also cardholders who do not pay much attention to them statements and therefore never noticed the unauthorized charges. Amount of Damages The FTC contends that the damages caused by the defendants’ unauthorized billing practices in 1998 amount to $40.5 million. The FTC’s calculation of damages relies in large part on information derived from historical databases maintained and produced by ATS. JKP, Herbal Care, Ken Taves and Teresa Taves challenge the authenticity and reliability of information obtained from ATS. ATS maintained a historical database that purportedly recorded the transactions processed for JKP, MJD and TAL from January 1998 to the date the Receiver took over the defendant businesses (the “ATS Historical Database”). The database produced to the FTC contains the following information: transaction number, card number, transaction amount, transaction time and date, and associated merchant identification. It does not identify the names or addresses of any card holders whose accounts were being billed. Nor does the database identify the authorization numbers for any of the transactions. ATS turned over this database to former defense counsel, Fried, Frank, Harris, Shriver, and Jacobson (“Fried, Frank”), on February 19, 1999. Four days later, the ATS Historical Database was turned over to the Receiver. Apart from the ATS Historical Database, ATS maintained a customer database for TAL (the “TAL Customer Database”). This database contains customers’ names and addresses in addition to the information contained in the ATS Historical Database. Until January 4, 1999, three days before service of the complaint (and TRO) in this case, ATS allegedly also maintained a customer database for JKP and MJD which contained the names and addresses of the customers. During his deposition, Mr. Goldfarb testified that ATS turned over this database (on a CD-ROM) to former defense attorney Lee Sacks on January 4,1999. Mr. Sacks testified in his deposition that he returned the CD-ROM to the defendants by leaving it on Ms. Ball’s desk. However, Ms. Ball did not receive the CD-ROM and never had a conversation with Mr. Sacks concerning the delivery of the CD-ROM prior to this action. When the Receiver entered the defendants’ business premises on January 7, 1999, it did not find the CD-ROM or any other documents/files that contain a listing of the JKP and MJD customers. Therefore, based on what the FTC was able to ascertain, the ATS Historical Database and the TAL Customer Database are the only existing records of the defendant companies’ charge transactions maintained by or on behalf of the defendants. The ATS Historical Database purportedly contains records of 2,584,919 transactions (not card numbers) for the January 1998 to December 1998 period, totaling $47,512,530. (CAS Report at 2162-63.) Card Alert Services, the FTC’s expert, found 912,125 credit and debit card numbers associated with the 2,584,919 transactions. (Id. at 2163.) Comparing the card numbers in the ATS Historical Database with the card numbers in the Charter Pacific Positive Database processed from August 1997 through June 1998, Card Alert Services found that 752,602 cards that appear in the Charter Pacific Positive Database were used in ATS processed transactions .after the card numbers first appeared in the Charter Pacific Positive Database. (Id. at 2165.) Based on this data, Card Alert Services concludes that 82.5% of the ATS processed cards (752,-602 out of 912,125) matched cards processed previously from a Charter Pacific merchant other than the defendant businesses. (Id.) When Card Alert Services compared the card numbers in the ATS Historical Database with the card numbers in the Charter Pacific Positive Database processed from August 1997 through October 1998, it found that 86% of the ATS processed cards (783,947 out of 912,-125) matched. (Id. at 2165-66.) Again, this figure involves cards that were first processed in the Charter Pacific Positive Database and then processed in the ATS Database. Card Alert Services opines that it is extremely unlikely that 783,947 cards out of 912,125 cards' would coincidentally match a single database of 3.6' million cards processed through one merchant bank. (Id. at 2166.) The FTC’s statistical expert, Dr. Martin Lee, agrees. Dr. Lee opines that the probability of this occurring is “roughly equivalent to winning the grand prize in the California lottery every week for about 109,000 consecutive years.” (Lee Report at 2194.) Such matches, along with other improbable correlations discussed in its report, led Card Alert Services to conclude that: [V]irtually all credit card numbers that the defendants billed as [their] own sales were, in fact, credit card numbers that [first] appeared in the [Charter Pacific] [Positive [D]atabase and which defendants appropriated for their own use. Rather than obtaining authorization for billing credit card numbers from cardholders who provided their card number[s] and authorized such charges, it appears that defendants accessed another source for valid credit card numbers, the [Charter Pacific] [Positive [Database, and simply billed these credit card numbers without regard to authorization. (CAS Report at 2166.) Using the $47.5 million “sales” figure from the ATS Historical Database, the FTC concludes that a total of $3,357,552 can be linked to merchant identification numbers (“merchant IDs”) associated with the defendant companies’ web sites and $1,026,407 can be linked to merchant IDs associated with web sites that these defendants shared with third parties. Thus, $4,383,849 (or 9.2% of the $47,512,530 processed through ATS) possibly represent legitimate sales; and $43,128,681 ($47,512,-530-4,383,849) represent illegitimate gains. Using Charter Pacific and Heartland Bank records as well as sample issuing bank data, Card Alert Services concludes that approximately $2.3 million of the $4,383,849 in “legitimate” sales resulted in chargebacks and credits to customers. (Id. at 2172.) The FTC contends that the most reasonable calculation of damages caused by the defendants’ unlawful business practices is $40.5 million. Defendants’ Assets & Transfers of Assets The details of the defendants’ assets and transfers of assets (both prior to the commencement of this case and after the TRO was issued) are well documented in the FTC’s Statement, Fact Nos. 104 to 127. Because these facts are not controverted by the defendants and are supported by the evidence, the Court incorporates them by reference as though stated herein. A brief summary of the transfers, however, is warranted. The defendants transferred much of the ill-gotten gains from their activities to offshore accounts. Between July 24, 1997 and November 11, 1998, a total of $25.3 million was transferred from the defendants through accounts held in the names of JKP, Discreet Bill and MJD to two entities — Media Buying Service (“MBS”) and Phaeton Corporation (“Phaeton”)— over which Ken Taves had control. Both MBS and Phaeton held accounts at Euro Bank in the Cayman Islands that were directly or indirectly controlled by Ken Taves. The transfers to MBS and Phaeton occurred either directly from the defendants to these accounts or through an intermediary known as MultiMedia West. Since January 7, 1999, the date the FTC served the defendants with the complaint and TRO, the defendants have transferred or caused to be transferred at least $21.6 million from accounts in their names or under their control to (1) other accounts in their name or in the name of third parties which are affiliated with the defendants or under their control; or (2) their former lawyers — Sacks & Zweig and Fried, Frank. Currently, the total known assets of the defendants covered by the TRO and preliminary injunction order are worth approximately $23.8 million. Of this total, around $17.4 million is located in overseas accounts which are currently frozen pursuant to legal actions taken by the Receiver. In addition, around $1.71 million is in frozen domestic accounts and assets, which include a Cessna aircraft worth $140,000. The Receiver has also identified over $4.5 million in assets that appear to be covered by the TRO and Preliminary Injunction but have not yet been frozen. These assets include the Zumirez Drive property that was the subject of the May 1999 contempt hearings, a Cayman Island property, and $1.25 million in overseas accounts held in the names of third parties. III. Discussion A. Stay or Continuance of this Proceeding 1. Fifth Amendment Right Against Self-Incrimination Ken Taves asks the Court to stay these proceedings until his “pending criminal case” has been resolved or until “threat of any potential criminal prosecution no longer exists.” (Opp. at 8, 12.) Ken Taves claims that he has asserted his Fifth Amendment right against self-incrimination because he is the “target of an active criminal prosecution arising from the same series of events that are at issue” in this case. (Id. at 12.) He argues that he cannot or should not be compelled to respond to the FTC’s Statement because doing so would deprive him of his privilege against self-incrimination. At the same time, the corporate defendants contend that Ken Taves’ inability to respond prevents them from opposing the Motion on the merits because Ken Taves is the only person with information that can assist their defense. Similarly, Teresa Taves argues that her husband’s refusal to testify prevents her from properly opposing the Motion because he is her most important witness. In general, the Constitution does not require a stay of civil proceedings pending the outcome of criminal proceedings. Keating v. Office of Thrift Supervision, 45 F.3d 822, 824 (9th Cir.1995). “ ‘In the absence of substantial prejudice to the rights of the parties involved, [simultaneous] parallel [civil and criminal] proceedings are unobjectionable under our jurisprudence.’” Id. (quoting Securities & Exchange Comm’n v. Dresser Indus. (“Dresser”), 628 F.2d 1368, 1374 (D.C.Cir.1980)) (original brackets). The decision whether to stay civil proceedings while a parallel criminal case is pending “is left to the sound discretion of the district court.” IBM Corp. v. Brown, 857 F.Supp. 1384, 1387 (C.D.Cal.1994) (citing Dresser, 628 F.2d at 1375). The court’s determination turns upon the “ ‘particular circumstances and competing interests involved in the case.’ ” Keating, 45 F.3d at 324 (quoting Federal Sav. & Loan Ins. Corp. v. Molinaro, 889 F.2d 899, 902 (9th Cir.1989)). Specifically, the court should consider the following factors: 1) the interest of the plaintiff in proceeding expeditiously with this litigation and the potential prejudice to the plaintiff caused by a delay; 2) the burden which any particular aspect of the proceedings may impose on the defendant; 3) the convenience of the court in the management of its cases and the efficient use of judicial resources; 4) the interests of persons or entities not parties to the civil litigation; and 5) the interest of the public in the pending civil and criminal litigation. Id. (citing Molinaro, 889 F.2d at 903). First, the Court considers the FTC’s interest in proceeding expeditiously with this litigation, along with the interests of third parties whose activities or lives would be affected by the outcome of this litigation. As the record in this case shows, Ken Taves has a history of hiding and attempting to dispose of his assets. (See, e.g., 5/4/99 & 5/5/99 Orders Re Contempt.) Indeed, since the date the defendants were served with the complaint and TRO, Ken and Teresa Taves have transferred at least $21 million from accounts in their names or under their control to other accounts in their names or in the names of third parties who are affiliated with them or under their control. (FTC Statement, Fact No. 115.) Therefore, the FTC would be prejudiced by further delay. See Molinaro, 889 F.2d at 902. In addition, the cardholder-victims’ interests in recovering the money defrauded by the defendants weigh against a stay. See id. This is particularly true when the case has been pending for over a year. Moreover, third-party card-issuing banks, merchant banks, and card associations are also prejudiced by the delay to the extent that they have had to make payments to cardholders on the defendants’ behalf and yet cannot pursue claims against the defendants during the pendency of the receivership. Second, the Court considers its interest in clearing its docket and the efficient use of resources. This case is now over fifteen months old. Moreover, as another court observed, “[a] stay would disrupt the court’s calendar by indefinitely postponing trial” as the parties and the Court wait for the outcome of the government’s case against Ken Taves. IBM Corp., 857 F.Supp. at 1392. The Court finds that these factors weigh against a stay. Finally, the Court considers the burden on Ken Taves. In May 1999, five months after the commencement of this action, the United States Attorney’s Office issued a criminal complaint against Ken Taves. However, the Court learned from the FTC’s Reply that the government never indicted Ken Taves. Reply at 5. At the January 7, 2000 hearing on former defense counsel’s motion to withdraw, defense counsel advised the Court that Ken Taves has been incarcerated at the MDC, since June or July 1999, solely on the Court’s civil contempt orders. Because the Court did not hear otherwise from the parties, it proceeded to resolve this Motion with the understanding and belief that to date, there has been no operative criminal complaint, information or indictment filed against Ken Taves. The Court was dismayed, to put it mildly, when its court staff discovered well after the close of business on March 31, 2000, the Friday before the hearing on the Motion, that the criminal dockets reveal: (1) an indictment was filed against Ken Taves on February 29, 2000, charging Ken Taves with one count of criminal contempt under 18 U.S.C. § 401, and one count of false statement under 18 U.S.C. § 1001; and (2) Ken Taves entered a plea of not guilty on both counts on March 6, 2000. See Criminal Docket for United States v. Kenneth H. Taves, Case No. CR 00-187. Nevertheless, the Court concludes that this factor — the burden on Ken Taves— does not require the Court to stay this civil action. As stated by the district court in IBM Corp. v. Brown: [T]he contention that being forced to choose between the compulsion to testify in a civil suit in order to avoid an adverse result on the merits undermines the right to remain silent in a criminal matter, while having surface appeal, will not stand analysis. While the choice between testifying or invoking the Fifth Amendment may be difficult, ... it does not create the basis for a stay. 857 F.Supp. at 1389 (quotations omitted). Here, the fact that Ken Taves has invoked his Fifth Amendment privilege does not, by itself, create a basis for stay. The Ninth Circuit recognizes that “[a] defendant has no absolute right not to be forced to choose between testifying in a civil matter and asserting his Fifth Amendment privilege.” Keating, 45 F.3d at 326. Indeed, “[n]ot only is it permissible to conduct a civil proceeding at the same time as a related criminal proceeding, even if that necessitates invocation of the Fifth Amendment privilege, but it is even permissible for the trier of fact to draw adverse inferences from the invocation of the Fifth Amendment in a civil proceeding.” Id. (citing Baxter v. Palmigiano, 425 U.S. 308, 318, 96 S.Ct. 1551, 47 L.Ed.2d 810 (1976)). In addition, the burden on Ken Taves’ Fifth Amendment privilege is minimal here. The criminal charges relate to acts that occurred after the commencement of this civil case. Count One of the indictment alleges that “[o]n or about April 26, 1999,” Ken Taves “knowingly and willfully” violated the Court’s TRO and preliminary injunction order “by maintaining with Euro Bank Corporation, George Town, Grand Cayman, accounts in his own name, and accounts which he controlled in the names of [others], and failing to transfer the funds on deposit in such accounts to an account in the United States .... ” Indictment, United States v. Kenneth H. Taves, at ¶ 4. Count Two alleges that “[o]n or about January 9, 1999,” Ken Taves “knowingly and willfully” made a false representation to the FTC by submitting “a financial statement under penalty of perjury that was materially false, in that it failed to disclose that [Ken Taves] held or controlled accounts at Euro Bank Corporation ... which had on deposit approximately $25.3 million.” Id. at ¶ 6. The central issues-in the criminal case (e.g., whether Ken Taves violated the Court’s orders or made a false statement to the FTC after this action was filed) appear unrelated to the central issues in the underlying civil case (e.g., whether Ken Taves and the other defendants’ actions prior to the commencement of this case constitute unfair and deceptive business practices). Therefore, there is little, if any, need for Ken Taves to invoke his Fifth Amendment privilege with respect to questions concerning his actions prior to January 6,1999. Even if there remains some overlap between the present criminal and civil proceedings (i.e., the government decides to bring additional criminal charges against Ken Taves that arise from the activities at issue here), the Court still finds that the burden on Ken Taves’ Fifth Amendment privilege, if forced to testify in this case, is minimal. As the record shows, Ken Taves has testified at a deposition and submitted sworn statements in prior proceedings in this case. Where a defendant already has provided deposition testimony on substantive issues of the civil case, any burden on that defendant’s Fifth Amendment privilege is “negligible.” Molinaro, 889 F.2d at 908; see IBM Corp., 857 F.Supp. at 1390. Moreover, nothing prevents Ken Taves (and the other defendants purportedly dependant on him) from responding with information that does not tend to incriminate him, e.g., business records that show his companies were legitimate operations. Further, Ken Taves and the other defendants “have made no effort to demonstrate to the court how truthful testimony [possibly] subject to [Ken Taves’ Fifth Amendment] privilege in this case could be helpful to [them] in their defense on the merits.” IBM Corp., 857 F.Supp. at 1390. Under the circumstances, any difficulty that Ken Taves may encounter from testifying and any difficulty that the other defendants may encounter from Ken Taves’ decision to remain silent do not outweigh the other interests favoring denial of the stay request. After considering all the factors, the Court denies the defendants’ request for a stay. 2. Continuance Pursuant to Rule 56(f). Ken Taves and the corporate defendants also request, in the alternative, that the Court continue or deny the Motion (presumably without prejudice) pursuant to Federal Rule of Civil Procedure 56(f). The defendants’ request is without merit. Rule 56(f) provides that: Should it appear from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party’s opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just. Fed.R.Civ.P. 56(f). The party seeking additional time for discovery under Rule 56(f) must, among other things, articulate a plausible basis fon believing that specific discoverable facts exist which, if adduced, will give rise to genuine issues of material fact. See, e.g., C.B. Trucking, Inc. v. Waste Management, Inc., 137 F.3d 41, 44 (1st Cir.1998); Committee for the First Amendment v. Campbell, 962 F.2d 1517, 1522 (10th Cir.1992); International Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1266-67 (5th Cir.1991); Airs Int’l Inc. v. Perfect Scents Distributions, Ltd., 902 F.Supp. 1141, 1145 (N.D.Cal.1995). Ken Taves and the corporate defendants do not even attempt to make such showing. See Opp. at 12-13. They simply contend that they need a continuance until Ken Taves’ pending criminal investigation is resolved so that he “may then be able to respond on his own behalf and on behalf of the corporate defendants.” Id. In other words, this Rule 56(f) request is based solely on Ken Taves’ continued assertion of the Fifth Amendment privilege. This is improper. Moreover, as stated by another court in a similar situation: “ ‘There is no reason to grant a continuance to a litigant who has personal and intimate knowledge of the underlying facts for the purported purpose of conducting discovery to ascertain those identical facts.’ ” United States v. Private Sanitation Indus. Ass’n of Nassau/Suffolk, Inc., 899 F.Supp. 974, 984 (E.D.N.Y.1994) (civil RICO action involving a defendant who invoked the Fifth Amendment privilege with respect to the underlying facts). The Court denies the request for a Rule 56(f) continuance. B. Summary Judgment Standard The party who moves for summary judgment has the burden of establishing that there is “no genuine issue of material fact, and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); British Airways Bd. v. Boeing Co., 585 F.2d 946, 951 (9th Cir.1978). If the moving party has the burden of proof at trial — the plaintiff on a claim for relief, or the defendant on an affirmative defense — the moving party must make a showing sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party. Calderone v. United States, 799 F.2d 254, 259 (6th Cir.1986) (citing W. Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 487-88 (1984)). This means that if the moving party has the burden of proof at trial, that party “must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in [that party’s] favor.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.1986) (original emphasis). Furthermore, the court must view the evidence presented to establish these elements “through the prism of the substantive evidentiary burden.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the opponent has the burden of proof at trial, then the moving party has no burden to negate the opponent’s claim. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In other words, the moving party does not have the burden to produce any evidence showing the absence of a genuine issue of material fact. Id. at 325, 106 S.Ct. 2548. “Instead, ... the burden on the moving party may be discharged by ‘showing’— that is, pointing out to the district court— that there is an absence of evidence to support the nonmoving party’s case.” Id. Once the moving party satisfies this initial burden, “an adverse party may not rest upon the mere allegations or denials of the adverse party’s pleadings ... [T]he adverse party’s response ... must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e) (emphasis added). A “genuine issue” of material fact exists only when the non-moving party makes a sufficient showing to establish an essential element to that party’s case, and on which that party would bear the burden of proof at trial. Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548. “The mere existence of a scintilla of evidence in support of the plaintiffs position will be insufficient; there must be evidence on which a reasonable jury could reasonably find for plaintiff.” Anderson, 477 U.S. at 252, 106 S.Ct. 2505. The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor. Id. at 248, 106 S.Ct. 2505; Griffeth v. Utah Power & Light Co., 226 F.2d 661, 669 (9th Cir.1955). C. Unfair Practices Section 13(b) of the FTC Act provides that the FTC may obtain a permanent injunction against practices that violate the FTC Act. FTC v. Pantron I Corp., 33 F.3d 1088, 1102 (9th Cir.1994). In addition, section 13(b) gives the courts the “ ‘authority to grant any ancillary relief necessary to accomplish complete justice.’ ” Id. Such ancillary relief includes an order for restitution. Id. 1. Liability for Unfair Practices Section 5 of the FTC Act prohibits “unfair or deceptive practices in or affecting commerce[.]” 15 U.S.C. § 45(a). An act or practice is unfair if it “causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.” 15 U.S.C. § 45(n); accord Orkin Exterminating Co., Inc. v. FTC, 849 F.2d 1354, 1363-66 (11th Cir.1988); FTC v. Windward Marketing, Ltd., 1997 U.S. Dist. LEXIS 17114, *29-30 (N.D.Ga. Sept. 30, 1997). Thus, to find unfairness, the injury must satisfy three tests: (1) it must be substantial; (2) it must not be outweighed by countervailing benefits to consumers or competition; and (3) it must be one that consumers themselves could not reasonably have avoided. Orkin Exterminating Co., 849 F.2d at 1364 (citing FTC’s 1980 Policy Statement); Windward Marketing, 1997 U.S. Dist. LEXIS 17114, *30-31. One district court has found that debiting consumers’ bank accounts without the consumers’ authorization constitutes an unfair practice under the FTC Act. Windward Marketing, 1997 U.S. Dist. LEXIS 17114, *37-38. The substantial injury prong can' be satisfied if the FTC establishes that consumers were injured by a practice for which they did not bargain. Id. at *31; cf. Orkin Exterminating Co., 849 F.2d at 1364-65. Injury may be sufficiently substantial if it causes a small harm to a large class of people. Windward Marketing, 1997 U.S. Dist. LEXIS 17114, *31-32 (citing American Fin. Services v. FTC, 767 F.2d 957, 972 (D.C.Cir.1985)). The second prong of the test is easily satisfied “when a practice produces clear adverse consequences for consumers that are not accompanied by an increase in sendees or benefits to consumers or by benefits to competition.” Id. at *32; cf. Orkin Exterminating Co., 849 F.2d at 1365. With regard to the third prong of the test, the focus is on “whether consumers had a free and informed choice that would have enabled them to avoid the unfair practice.” Windward Marketing, 1997 U.S. Dist. LEXIS 17114, *32 (citing American Fin. Services, 767 F.2d at 976); accord Orkin Exterminating Co., 849 F.2d at 1365. “ ‘Consumers may act to avoid injury before it occurs if they have reason to anticipate the impending harm and the means to avoid it, or they may seek to mitigate the damage afterward if they are aware of potential avenues toward that end.’ ” Or-kin Exterminating Co., 849 F.2d at 1365 (quoting FTC v. Orkin Exterminating Co., 108 F.T.C. 341, 366 (1986)). a. Corporate Defendants JKP, Herbal Care and MJD (1) Common Enterprise Preliminarily, the Court addresses whether the corporate defendants operated a common enterprise. In the arguments portidn of the Motion, the FTC does not make a distinction between Herbal Care, on the one hand, and JKP and MJD, on the other. The FTC contends that the defendants should be held liable as a common enterprise because no distinction exists among these entities. (Motion at 47.) See, e.g., Delaware Watch Co. v. FTC, 332 F.2d 745, 746 (2d Cir.1964) (where “the same individuals were transacting an integrated business through a maze of interrelated companies[,] ... ‘the pattern and frame-work of the whole enterprise must be taken into consideration’ ” and t