Federal Trade Commission v. Johnson (96 F. Supp. 3d 1110, 2015)

ORDER

MIRANDA M. DU, District Judge.

I. SUMMARY

Before the Court are Plaintiff Federal Trade Commission’s (“FTC”) Motion for Summary Judgment Against All Corporate Liability Defendants (“Motion”) (dkt. nos. 1235, 1280) and Motion For Summary Judgment Against All Individual and Relief Defendants (“Individual Liability Motion”) (dkt. nos. 1278, 1279). Also before the Court is Relief Defendants’ Motion for Partial Summary Judgment (“MPSJ”) (dkt. no. 1284). For the reasons set out below, the Motion is granted in part and denied in part. The Individual Liability Motion and the MPSJ are denied without prejudice to renew. The Court will set a status conference to address the effect of this Order on the remaining issues raised in the parties’ motions and the process for the Court’s consideration of these issues.

II. BACKGROUND

A. Relevant Facts

Plaintiff FTC brought this suit on December 21, 2010, against Defendants Jeremy Johnson, Loyd Johnston, Ryan Riddle, numerous other individuals, and numerous corporate entities, including I Works, Inc. (“IWorks”), alleging that Defendants engaged in deceptive and unfair business activities on the Internet. The Amended Complaint alleges that Defendants, in essence, made misrepresentations and deceptively enrolled consumers into memberships for their products, and then charged consumers’ credit cards or debit accounts for said memberships without authorization. (See dkt. no. 880.)

The Amended Complaint alleges the following facts. Defendants used websites to offer “free or risk-free” information about Defendants’ products or programs, including government grants to pay personal expenses and Internet-based money-making opportunities with Google “Adwords.” The government grant sites contained testimonials that gave the false impression that consumers would likely get the same results from the products or programs as the people in the testimonials. The websites asked consumers to fill out a form and provide their credit card or bank account information to pay for the shipping and handling of a CD with information on Defendants’ products or programs. The websites’ disclosures often stated that consumers were actually being enrolled in negative option membership plans and up-sells bundled with the core product. The negative option plans would charge an initiation fee and recurring monthly fees for a membership. The upsells would also contain separate and recurring monthly fees.

The following counts are asserted in the Amended Complaint pursuant to Section 5(a) of the FTC Act, 15 U.S.C. § 45(a): (Count I) misrepresenting the availability of government grants to pay personal expenses; (Count II) misrepresenting that consumers using Defendants’ grant product are likely to find government grants to pay personal expenses; (Count III) misrepresenting the amount of income the consumers are likely to earn using Defendants’ products; (Count IV) misrepresenting the free or risk-free nature of Defendants’ offers; (Count V) failing to disclose that consumers will be entered into negative option continuity plans; (Count VI) misrepresenting that consumers using Defendants’ grant product are likely to obtain grants such as those obtained by consumers in the testimonials; (Count VII) misrepresenting that positive articles are from unbiased consumers who used the products offered by Defendants; (Count VIII) failing to disclose that Defendants created the positive articles and other web pages about the products they market; and (Count IX) engaging in unfair billing practices.

The Amended Complaint also asserts a count pursuant to Section 907(a) of Electronic Fund Transfer Act (“EFTA”), 15 U.S.C. § 1693e(a), and Section 205.10(b) of Regulation E, 12 C.F.R. § 205.10(b): (Count X) Defendants debited consumers’ bank accounts on a recurring basis without obtaining written authorization.

Finally, the FTC asks for disgorgement of funds or value of benefits received in Count XI.

B. Dispositive Motions

The FTC moves for summary judgment as to the corporate defendants in the Motion (dkt. nos. 1235, 1280) and the individual defendants in the Individual Liability Motion (dkt. nos. 1278,1279).

An opposition to the Motion was filed collectively by the majority of corporate defendants (dkt. no. 1343). Oppositions to the Motion were also filed separately by Loyd Johnston (dkt. no. 1346), Andy Johnson (dkt. no. 1347), Ryan Riddle (dkt. no. 1352), and Jeremy Johnson (dkt. no. 1351). The FTC filed a reply. (Dkt. no. 1387.) As to the Individual Liability Motion, oppositions were filed by the relief defendants (dkt. no. 1344), Loyd Johnston (dkt. no. 1346), Andy Johnson (dkt. no. 1347), and Scott Leavitt and Employee Plus, Inc. (dkt. no. 1358). The FTC filed a reply. (Dkt. no. 1386.)

The filings by Loyd Johnston and Andy Johnson consist of two paragraphs each and are merely brief statements of opposition. (Dkt. nos. 1346, 1347.) There are also non-substantive joinders to the various oppositions filed by other defendants. (Dkt. nos. 1348,1349,1350.)

The Relief Defendants also filed a Motion for Partial Summary Judgment as to the disgorgement claim in Count XI. (Dkt. no. 1284.) In their motion, the Relief Defendants argue that the FTC has failed to demonstrate that they did not have legitimate claims to the challenged assets. (Id.) The FTC filed an opposition (dkt. no. 1335) and the Relief Defendants filed a reply (dkt. no. 1384). The FTC presents its affirmative argument as to Relief Defendants’ disgorgement of assets in its Individual Liability Motion. (Dkt. no. 1279.) The Relief Defendants thus challenge disgorgement in both their opposition to the Individual Liability Motion and their MPSJ. (Dkt. no. 1284 at 3.)

In order to reach the issues of individual liability and disgorgement raised in the Individual Liability Motion and the MPSJ, the Court must first determine whether any violation of the FTC Act and EFTA actually occurred. The FTC’s Motion (dkt. no. 1280) presents the FTC’s arguments as to why there are no genuine issues of material fact as to the Amended Complaint’s alleged violations of the FTC Act and EFTA. Therefore, in determining whether the websites at issue violated the FTC Act and EFTA, the relevant filings are the Motion (dkt. no. 1280), the Corporate Defendants’ opposition (dkt. no. 1343), Ryan Riddle’s opposition (dkt. no. 1352), Jeremy Johnson’s opposition (dkt. no. 1351), and the FTC’s reply (dkt. no. 1386.)

The Court held a hearing on the Motion, the Individual Liability Motion, and the MPSJ on October 16, 2014. (Dkt. no. 1536.)

III. SCOPE OF THIS ORDER

The FTC has provided over one-hundred exhibits of grant websites. For the most part, each exhibit consists of several pages of images. The images are captured through various methods, including images received from the Better Business Bureau, from Defendants’ brokers, from Defendants themselves and the FTC’s own undercover investigations. The FTC also provides an expert report from Dr. Nathaniel Good, who analyzed 125 websites provided to him by the FTC and gave his opinion as to the consumer experience. (Dkt. no. 1261-9, Good Report, Exh. 1418.) It is not clear from the record, however, which sites were reviewed by Dr. Good and the source of those sites. The FTC states that it filed the sites that Dr. Good relied upon as “GR” exhibits, but the “GR” designation was only for exhibits that had not already been presented to the Court. (Dkt. no. 1280 at 4 n. 8.) It is therefore not apparent which of the many exhibits already presented to the Court were reviewed by Dr. Good before making his report.

Defendants’ counsel stated at the October 16, 2014, hearing that the sites presented by the FTC are a drop in the bucket compared to the full extent of website variations employed. Defendants provide a report from their expert Dr. Robert Vigil, which states that the sample provided by the FTC is not statistically significant because IWorks, its affiliates, and its brokers “used hundreds (or possibly thousands)” of different pages to sell their products. (Dkt. no. 1262-1, Vigil Report, Exh. 1426.) Dr. Vigil states that his understanding of the reason for the large amount of different pages is that Defendants’ individual affiliates engaged in “multivariate testing,” in which live websites were repeatedly changed to determine. which changes increased purchases. (Id) Defendants argue that they are not liable for the websites of these affiliates. (Dkt. no. 1343 at 47.)

The FTC argues that the sites presented to the Court are all that are available and asks the Court to draw conclusions as to all of Defendants’ sites, presented to the Court or not, based on the exhibits presented and Dr. Good’s report.

Given the breadth of this case, its complexity, the unique way in which Defendants’ affiliates marketed and tested their websites, and various other reasons further explored below, the Court determines that it is appropriate to address summary judgment in a series of stages. This Order will examine a group of website examples presented to the Court and determine whether they are deceptive or unfair under the FTC Act and the EFTA. The Court will then determine the effect of this Order on the remaining claims.

IV. LEGAL STANDARD

The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. Nw. Motorcycle Ass’n v. U.S. Dep’t of Agric., 18 F.3d 1468, 1471 (9th Cir.1994) (citation omitted). Summary judgment is appropriate pursuant to Fed. R.Civ.P. 56 when the pleadings, the discovery and disclosure materials on file, and any affidavits “show there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (citation omitted). An issue is “genuine” if there is a sufficient evidentiary basis on which a reasonable fact-finder could find for the nonmoving party and a dispute is “material” if it could affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “The amount of evidence necessary to raise a genuine issue of material fact is enough ‘to require a jury or judge to resolve the parties’ differing versions of the truth at trial.’ ” Aydin Corp. v. Loral Corp., 718 F.2d 897, 902 (9th Cir.1983) (citations omitted). In evaluating a summary judgment motion, a court views all facts and draws all inferences in the light most favorable to the nonmoving party. Kaiser Cement Corp. v. Fischbach and Moore, Inc., 793 F.2d 1100, 1103 (9th Cir.1986) (citations omitted).

The moving party bears the burden of showing that there are no genuine issues of material fact. Zoslaw v. MCA Distrib. Corp., 693 F.2d 870, 883 (9th Cir.1982) (citation omitted). “In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party’s claim or defense or show that the nonmov-ing party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., Inc., 210 F.3d 1099, 1102 (9th Cir.2000) (citation omitted). Once the moving party satisfies Rule 56’s requirements, the burden shifts to the party resisting the motion to “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256, 106 S.Ct. 2505. The nonmoving party “may not rely on denials in the pleadings but must produce specific evidence, through affidavits or admissible discovery material, to show that the dispute exists,” Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir.1991), and “must do more than simply show that there is some metaphysical doubt as to the material facts.” Orr v. Bank of Am., NT & SA 285 F.3d 764, 783 (9th Cir.2002) (internal citations omitted). “The mere existence of a scintilla of evidence in support of the plaintiffs position will be insufficient.” Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

Y. FTC ACT DECEPTION CLAIMS

A. Deceptive Acts or Practices

Counts I through VIII of the Amended Complaint allege deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

An act or practice is deceptive if: (1) there is a representation, omission, or practice; (2) that is likely to mislead consumers acting reasonably under the circumstances; and (3) the representation, omission, or practice is material. FTC v. Stefanchik, 559 F.3d 924, 928 (9th Cir.2009) (citation omitted). Deception may be found based on the “net impression” created by a representation. FTC v. Cyberspace.com LLC, 453 F.3d 1196, 1200 (9th Cir.2006). The FTC is not required to show that all consumers were deceived, and the existence of satisfied consumers does not constitute a defense. See Stefanchik, 559 F.3d at 929 (citing FTC v. Figgie Int'l, Inc., 994 F.2d 595, 605-06 (9th Cir.1993); FTC v. Amy Travel Serv., Inc., 875 F.2d 564, 572 (7th Cir.1989)).

An advertisement can make both express claims and implied claims. Express claims “are ones that directly state the representation at issue.” In re Thompson Med. Co., Inc., 104 F.T.C. 648 (1984), affd, Thompson Med. Co. v. FTC, 791 F.2d 189 (D.C.Cir.1986), cert. denied, Thompson Med. Co. v. FTC, 479 U.S. 1086, 107 S.Ct. 1289, 94 L.Ed.2d 146 (1987). Implied claims “are any claims that are not express. They range from claims that would be virtually synonymous with an express claim through language that literally says one thing but strongly suggests another, to language which relatively few consumers would interpret as making a particular representation.” Id. The law does not recognize any distinction between express and implied misleading claims. Figgie Int’l, 994 F.2d at 604.

A solicitation may be likely to mislead by virtue of the net impression it creates even though the solicitation also contains truthful disclosures. Cyberspace.com, 453 F.3d at 1200; see also Donaldson v. Read Magazine, Inc., 333 U.S. 178, 188, 68 S.Ct. 591, 92 L.Ed. 628 (1948) (“Advertisements as a whole may be completely misleading although every sentence separately considered is. literally true.”) In Cyberspace.com, defendants “mailed approximately 4.4 million solicitations offering internet access to individuals and small businesses.” 453 F.3d at 1198. These solicitations “included a check, usually for $3.50, attached to a form resembling an invoice designed to be detached from the check by tearing at the perforated line” and the check “was addressed to the recipient and the recipient’s phone number appeared on the ‘re’ line.” Id. The portion of the mailing resembling an invoice included columns labeled “invoice number,” “account number,” and “discount taken.” Id. “The back of the check and invoice contained small-print disclosures revealing that cashing or depositing the check would constitute agreement to pay a monthly fee for internet access, but the front of the check and the invoice contained no such disclosures.” Id. The Ninth Circuit affirmed the district court’s granting of summary judgment for the FTC, finding that the “mailing created the deceptive impression that the $3.50 check was simply a refund or rebate rather than an offer for services.” Id. at 1200. The Ninth Circuit agreed with the district court that “no reasonable factfinder could conclude that the solicitation was not likely to deceive consumers acting reasonably under the circumstances.” Id. at 1201.

The FTC can prove that a representation is likely to mislead consumers by establishing either: 1) actual falsity of express or implied claims (“falsity” theory); or 2) that the advertiser lacked a reasonable basis for asserting that the message was true (“reasonable basis” theory). FTC v. Pantron I Corp., 33 F.3d 1088, 1096 (9th Cir.1994) (citing Thompson Med., 104 F.T.C. 648); FTC v. John Beck Amazing Profits, LLC, 865 F.Supp.2d 1052, 1067 (C.D.Cal.2012). “For an advertiser to have had a ‘reasonable basis’ for a representation, it must have had some recognizable substantiation for the representation prior to making it in an advertisement.” John Beck Amazing Profits, 865 F.Supp.2d at 1067 (citing FTC v. Direct Mktg. Concepts, Inc., 569 F.Supp.2d 285, 298 (D.Mass.2008)). “Defendants have the burden of establishing what substantiation they relied on for their product claims” and the FTC has the burden of establishing that the purported substantiation is inadequate. John Beck Amazing Profits, 865 F.Supp.2d at 1067 (citing FTC v. QT, Inc., 448 F.Supp.2d 908, 959 (N.D.Ill.2006)). “Where the advertisers lack adequate substantiation evidence, they necessarily lack any reasonable basis for their claims” and those claims are deceptive as a matter of law. FTC v. Direct Mktg. Concepts, Inc., 624 F.3d 1, 8 (1st Cir.2010) (internal citation omitted).

As to the final factor, “[a] misleading impression created by a solicitation is material if it ‘involves information that is important to consumers and, hence, likely to affect their choice of, or conduct regarding, a product.’” Cyberspace.com, 453 F.3d at 1201 (citation omitted). For instance, the Ninth Circuit in Cyberspace, com found that “the misleading impression the solicitation created — that the check was merely a refund or rebate— clearly made it more likely that consumers would deposit the check and thereby obligate themselves to pay a monthly charge for internet service.” Cyberspace.com, 453 F.3d at 1201. Express representations about a product are presumed to be material. Pantron I, 33 F.3d at 1096-96 (9th Cir.1994) (citation omitted). Implied representations are material “when they pertain to the central characteristics of the products or services being marketed.” John Beck Amazing Profits, 865 F.Supp.2d at 1076 (internal quotation marks and citation omitted); see also In re Cliffdale Associates, 103 F.T.C. 110 (1984) (reprinting FTC Policy Statement on Deception, Oct. 14, 1983). Generally speaking, information is material where it “concerns the purpose, safety, efficacy, or cost, of the product or service.” Direct Mktg., 569 F.Supp.2d at 299 (citing Novartis Corp. v. FTC, 223 F.3d 783, 786 (D.C.Cir.2000) (quoting FTC Policy Statement on Deception); In re J.B. Williams Co., 68 F.T.C. 481, 546 (1965), aff'd, 381 F.2d 884 (6th Cir.1967)).

B. The Grant Websites

To determine whether Defendants made certain representations or omissions, this Court must first review the websites. This is the first step in the Court’s inquiry. Once the Court determines that the representations alleged in Counts I through VIII are present on IWorks’ grant websites, the Court will then consider whether they were likely to mislead consumers acting reasonably under the circumstances, and whether the representations are material. See Stefanchik, 559 F.3d at 928.

Immediately the Court is confronted with a problem. As previously mentioned, the FTC has provided over one-hundred exhibits of grant websites and the expert report from Dr. Good. However, for the purposes of summary judgment, the Court cannot rely solely on the representations of the FTC and their expert as to what the websites represent. The Court must review the websites, in a light most favorable to Defendants and draw all inferences in Defendants’ favor, in order to understand the representations made and whether the sites create a net impression that is deceptive. The summary judgment standard thus compels the Court to limit the body of website captures that it can review. In its briefing, the FTC picks examples of claims from across its grant website exhibits to suit their arguments. It is not clear to the Court, however, whether the FTC’s examples are representative of the grant website experience as a whole. In their exhibit list, the FTC organizes the website images only by source. The Court cannot adopt the FTC’s approach of using selected examples of claims picked from across the entire universe of the FTC’s exhibits, seemingly without a clear methodology, and draw conclusions as to every one of Defendants’ sites. Indeed, the exhibits presented to the Court indicate that the websites were not identical, perhaps due to the “multivariate testing” explained by Dr. Vigil. The parties have not stipulated to a collection of representative sites for the Court to analyze.

Therefore, in analyzing the claims and disclosures made on Defendants’ websites in a light most favorable to Defendants, the Court focuses its inquiry on those website images that Defendants provided to the FTC and those that they ask the Court to review. This body of website images includes the undercover purchases made by FTC investigators Samuel Jacobson and Roberto Menjivar. It also includes website images provided by IWorks in response to FTC’s civil investigative demand (“CID”), and in opposition to FTC’s motion for preliminary injunction. The Court will examine this body of sites first, then proceed to analyze whether the necessary elements of a deceptive act or practice are satisfied pursuant to Section 5(a) of the FTC Act. The Court finds that this body of sites is fair to both parties as the FTC’s position is that all of IWorks’ grant websites were deceptive, and Defendants have either produced these exhibits or directed the Court’s attention to them. The Court’s decision is therefore limited to this collection of websites, not the larger universe of websites offered by the FTC.

In attempting to describe these sites, the Court’s task is difficult. The websites contain significant amounts of text in large and small fonts in different varieties of boldness and .capitalization. They also contain a large amount of images, testimonials, and interactive boxes that prompt the user to enter personal information. The sites’ claims appear in images of notepads or post-it notes, or are tucked into boxes of text with different headings. However, in order to fairly present the “net impression” of the IWorks’ sites, and to understand their effect on a consumer, the Court must endeavor to describe the information delivered to the consumer, and how it is delivered, as they make their way from the landing page to the order page and place their order. Selected images from these sites are also attached to the Order to better illustrate the Court’s description. {See attached App. 1-5.)

1. Jacobson Sites

On April 6, 2009, FTC investigator Jacobson visited a website called “Government Money Secrets” and purchased the Government Money Secrets program. (Dkt. no. 1254-5 ¶ 28.) The “Government Money Secrets” page has questions at the top of the page that ask, “ARE YOU WORRIED about making ends meet? Disappointed with your last pay check? Did you even get a paycheck?” (Dkt. no. 31-3, Exh. 116 at 1.) Beneath those questions it states that “Hope can be had in a Government or Private Grant. Millions are available to those who qualify and claim their portion.” Moving down the page, it states that the “Grant Program will show you the grants that are available and HOW AND WHERE TO APPLY.” Under “You can use grants to” it lists uses such as “stop foreclosures,” “pay down debt,” and “gain peace of mind.” Further down the page it asks, “Have you heard about the success others are having with the grant program?” Under that question, the site offers two testimonials with photos. One is titled “Money To Fix Up Your Car!” by “Sharon E” and states, “I would like to thank you for accepting my grant for funding through the grant program. I am enclosing two different pictures of my 1997 Ford Ranger truck, which I spent most of the funding for breaks and to have the motors repaired.” Another testimonial is titled “Money To Pay Your Business Expenses!” by “Tamara S,” which states, “Thank you so much for awarding me a $500 Grant from the Grant Program. I never thought I would get awarded and then there it came in the mail. I will be putting the grant money to good use to pay some debt I have incurred in start up of my Home-Based Business.” Under the testimonials, the site directs users to “Enter your details below to see if you qualify.” The details requested include name, marital status, household income, employment status, time at current residence, and year of birth. There is a button that says “CLICK HERE to see if you qualify!” (Dkt. no. 31-3, Exh. 116 at 2.)

The next page captured by Jacobson then boldly proclaims “CONGRATULATIONS! You’re on your way to becoming one of the countless people who have already claimed their share of Government Grant Money!” in large letters at the top of the page. (Dkt. no. 31-3, Exh. 116 at 3.) Further down it states in smaller text that “Each day we send out a certain number of our Private and Federal Grant CDs, and You qualify for one! Not only that, but when you learn how to claim Government Grant Money now and ...” “Instantly access the # 1 Rated Grant Member Site,” “Follow the advice in the Express Business Funding Guide,” and “Demand your fair share of the Millions of Dollars in Government Grant Money” “... you can be well on your way to receiving literally thousands of dollars in unclaimed Government Grant Money[.]” Underneath that is another testimonial titled “Money to Pay Your Business Expenses!” by “Jennifer B” that says “[t]he money went to pay overdue bills. Mainly electric, gas and telephone. I used the left over money for groceries and much needed household supplies. I can’t thank you enough for what you did in sending that check. It really came just in the nick of time. I was sitting in my apartment thinking I was going to have to break my lease and further ruin my credit. I received your check in the mail today!” The testimonial is next to a photo of a woman holding a child. Under the testimonial, the site directs users to “Please tell us where to ship your grant program and information.” The details requested include name, email, phone, address, city, state, and zip. There is a button that says “CLICK HERE TO GET YOUR CD NOW!!”

The next page captured by Jacobson is the order page itself, which says “Sit back and relax! You can stop worrying about the recession, our Grant Program Software is waiting for you!” (Dkt. no. 31-3, Exh. 116 at 4.) Beneath that heading it says “You can literally breathe a sigh of relief.” In smaller text it states, ‘Tour Grant Program will help you seek out funding that can get you the money you need to do the things you want. Upon covering the shipping costs, your Grant Program CD will be processed and sent to you directly. In as little as two weeks from today, you could have a check in your hand.” Moving down the page, it says “It’s as easy as 1, 2, 3!” and has three steps: “1 Receive your Grant Program 2 Choose from thousands of available grants 3 Get your check!” Beneath that is another testimonial and photo, this time from “Delroy S” who says “With your generous grant I was able to bring my payment up to date, and stop the foreclosure.” In small print the site then says ‘We GUARANTEE you will get money within the next six months” and “Our FREE SOFTWARE contains everything you need to know about how and where to access your free money and can be shipped directly to your home or office within a matter of days.” Along the right side of the page it says ‘We’re holding a Grant Program Kit that has been reserved for you. Please complete the information below within the allotted time” and has a timer counting down. This section says “Priority Shipping — Only $2.99” and has areas to put in details such as the name on the credit card, the credit card type, the card number, expiration, and CW number. Beneath that is a button that says “Ship my KIT!” Beneath the button is small, narrowly-spaced print that informs the consumer they are ordering “the Private and Federal Grant CD” and trial membership for $2.99 S & H” but that after a seven day trial, the consumer is charged $39.95 a month if they don’t cancel as well as $7.95 a month and $9.95 a month for “Search Market” and “Network Agenda” respectively. At the bottom of the page it says “Special Bonus!” and mentions two products, “Search Market” and “Network Agenda” and under the titles of those products it says “14 day unlimited TRIAL!” and “21 day unlimited TRIAL!” respectively.

The other website images captured by Jacobson include the “Grant Doctor” site visited on June 8, 2009 (dkt. no. 1254-5 ¶ 32; dkt. no. 31-4, Exh. 117), the “Fast Grants” site visited on October 7, 2009 (dkt. no. 1254-5 ¶ 36; dkt. no. 31-5, Exh. 118), the “Federal Grant Connection” site visited on October 28, 2009 (dkt. no. 1254-5 ¶ 43; dkt. no. 31-6, Exh. 119), and the “Grant Seeker Secrets” site visited on November 18, 2009 (dkt. no. 1254-5 ¶ 50; dkt. no. 31-7, Exh. 120). These sites all follow a three-stage structure similar to the “Government Money Secrets” site in that the consumer proceeds through three stages to place an order.

The first stage is the landing page and, as in the first page of the “Government Money Secrets” site, consumers are informed that they may be entitled to grant money if they qualify. These initial pages tell the consumer “You May Qualify for FREE Government Funding” (dkt. no. 31-4, Exh. 117 at 1), “Hope may be had in a Government or Private Grant. Money may already be available for you!” (dkt. no. 31-5, Exh. 118 at 1), “Claim Your Share of the Millions of Dollars in Grant Money Given Away Every Year! You May Have Money Waiting To Be Claimed! ” (dkt. no. 31-6, Exh. 119 at 1), “Claim Your Grant Money Today” (id.), “Are You Entitled? Find out today!” (id.), and “Congratulations, You May Qualify for FREE Government Funding (dkt. no. 31-7, Exh. 120 at 1). These pages also inform the consumer that this grant money can be spent on personal expenses, stating “Up to 75% of your rent paid by Uncle Sam” (dkt. no. 31-4, Exh. 117 at 2) “$4,000 cash to pay your mortgage” (id.), “$5,000 free money to fix up your home” (id.) “Money to fix up your car!” (dkt. no. 31-5, Exh. 118 at 1), “$9,500 to pay medical bills” (dkt. no. 31-6, Exh. 119 at 1), and “Purchase Real Estate” (dkt. no. 31-7, Exh. 120). These pages all contain various testimonials, like the ones from “Sharon E” and “Tamara S” from the “Government Money Secrets” site, which indicate that consumers can receive checks in the mail to pay personal expenses. For example, the Grant Doctor site has an image of a check and says “Act fast and you could be holding a check like this one in the palm of your hand within just 7 days!” next to testimonials and photos from “D Stewart” who says he avoided foreclosure thanks to “your generous grant,” and “N. Lee”, a “single mother,” who used the money to buy clothes and a bed for her children. (Dkt. no. 31 — 4, Exh. 117 at 1-2.) The “Grant Doctor” site contains a statement from Dr. John Porter, “Professional Grant Writer,” that says “Dear Taxpayer, If you’re tired of the government taking thousands of dollars off you every year ... if you’re tired of working so hard for your money and then each year giving Uncle Sam a bigger and bigger share of it ... I’d like to send you a FREE CD which shows you at least 147 perfectly legal ways to get a check out of Uncle Sam.” (Dkt. no. 31-4, Exh. 117 at 1.) The “Federal Grant Connection” site’s initial page contains a list of people and the money they received under the title “These People Already Got Theirs!” including “$40,500” for “A. Bailey,” “$5,637” for “A. Bakian,” and “$101,020” for “A. Betts.” (Dkt. no. 31-6, Exh. 119 at 1.) The “Grant Seeker Secrets” site has a testimonial from “Lisa W” that says, “I couldn’t believe it!!! I filled out the paper work and two weeks later I received a check in the mail” and a list of other testimonials under the heading, “Read About REAL PEOPLE Who Have Received REAL MONEY!” (Dkt. no. 31-7, Exh. 120 at 1-2.) As with the “Government Money Secrets” site, these sites contain boxes that ask for information such as name, marital status, income, employment status, time at current residence, and year of birth. The “Government Money Secrets” site prompts the consumer to enter this information to “see if you qualify.” (Dkt. no. 31-3, Exh. 116.) Similarly, the “Grant Doctor” site prompts the consumer to “CLICK HERE to see if you qualify for one of our remaining FREE Grant Doctor CDs!” (Dkt. no. 31-4, Exh. 117.) The “Fast Grant” site merely states “CLICK HERE to continue.” (Dkt. no. 31-5, Exh. 118), “Federal Grant Connection” asks, “Do You Qualify?” (Dkt. no. 31-6, Exh. 119), and “Grant Seeker Secrets” says, “Click Here To See If You Qualify for the Grant Member Site” (dkt. no. 31-7, Exh. 120).

In the second stage or the intermediary page, as in the second page of the “Government Money Secrets” site, consumers are congratulated, reminded that they may be entitled to grant money, and provided more testimonials. These pages start with “Congratulations! You Are Well On Your Way To Becoming One Of The Countless People Who Have Already Claimed Their Rightful Government Grant Money!” (dkt. no. 31-4, Exh. 117 at 4), “CONGRATULATIONS! You may be on your way to becoming one of the countless people who have already had success with our proven system” (dkt. no. 31-5, Exh. 118 at 3), “Congratulations! You Qualify for a FREE CD!” (dkt. no. 31-6, Exh. 119 at 5) and “Congratulations! You Could Be Well On Your Way To Becoming One Of The Countless People Who Have Already Claimed Their Rightful Government Grant Money” (dkt. no. 31-7, Exh. 120 at 5). The “Grant Doctor,” “Fast Grants,” and “Grant Seeker Secrets” sites also inform the consumer that they will be able to “Instantly access the # 1 Rated [or “Independently Rated”] Grant Resource Center” in order to receive their grant money. (Dkt. no. 31-4, Exh. 117 at 4; dkt. no. 31-5, Exh. 118 at 3; dkt. no. 31-7, Exh. 120 at 5.) The “Federal Grant Connection” site encourages consumers to use the CD to “Get YOUR Cash” including “$192.3 Billion for Personal Grants!” (Dkt. no. 31-6, Exh. 119 at 5.) Under a box titled “Easy. Free Software” the “Federal Grant Connection” site lists seven items that are presumably benefits of the software, including “Updated downloadable federal grant listings,” “Updated searchable database, “Application wizard,” and “Unlimited email access to the Specialists at the Grant Help Center for only $39.95/month.” (Id.) The intermediary pages contain more testimonials, such as from “J. Bareness” aka “Jennifer B” who states that “the money went to pay overdue [utilities] bills” as well as groceries and household supplies. (Dkt. no. 31-4, Exh. 117 at 4; dkt. no. 31-5, Exh. 118; dkt. no. 31-6, Exh. 119 at 5; dkt. no. 31-7, Exh. 120 at 5.) She says, “I can’t thank you enough for what you did in sending me that check.” (Id.) These pages also contain boxes for the consumer to enter their name and address in order to receive a CD. These boxes prompt consumers to “Please Tell Us Where You’d Like Your Free Copy Of The Grant Doctor Program Rushed!” (dkt. no. 31-4, Exh. 117 at 4), “Please Tell Us Where You’d Like Your Private and Federal Grant CD Shipped” (dkt. no. 31-5, Exh. 118 at 3; dkt. no. 31-7, Exh. 120 at 5), and “Get Your FREE Software!” (dkt. no. 31-6, Exh. 119). Beneath the shipping information, consumers are asked to “CLICK HERE TO GET YOUR FREE TRIAL NOW” (dkt. no. 31-4, Exh. 117 at 4; dkt. no. 31-7, Exh. 120 at 5), “CLICK HERE to continue” (dkt. no. 31-5, Exh. 118 at 3), “Yes, rush me my FREE copy. Get It Now!” (dkt. no. 31-6, Exh. 119 at 5).

The third and final stage is the order page. As in the order page of the “Government Money Secrets” site, consumers are again told that they may qualify for grant money, provided with more testimonials, and asked for their credit card information. These pages tell consumers ‘You qualify for one of our remaining FREE Grant Doctor Software CDs!” “1 Get our FREE Grant Network Software Kit,” “2 Choose from thousands of available grants,” and “3 Apply for your FREE MONEY!!” (dkt. no. 314; Exh. 117 at 5), “Only One More Step!” (dkt. no. 31-5, Exh. 118 at 5), “There are over 90,000 Private & Federal Grants Listed! There Was Over 80 Billion Dollars Given Out Last Year!” (id.), “You’re Almost Done! Enter your info to get your FREE CD Rushed” (dkt. no. 31-6, Exh. 119 at 7), and ‘You qualify for one of our remaining Private and Federal Grant CDs!” “1 Get our Free Grant Network Software Kit 2 Choose from and apply for thousands of available grants 3 Upon funding approval, Receive your MONEY!!” (dkt. no. 31-7, Exh. 120 at 7). These pages indicate, in the box to enter credit card information, that consumers will be charged for shipping and handling, stating “Priority Shipping-Only $2.99” (dkt. no. 31-4, Exh. 117 at 5; dkt. no. 31-7, Exh. 120 at 7), listing the cost of all of the programs and products as “$0.00” save for the shipping and handling at “$2.29” (dkt. no. 31-5, Exh. 118 at 5), and prompting “Get Your FREE Software! Shipping $2.29” (dkt. no. 31-6, Exh. 119 at 7). The “Grant Seeker Secrets”- order page has a big arrow pointing to the order box that says “START HERE” and other testimonial from “Carol K” that says, “... In about 2 weeks I received a check in my hand.” (Dkt. no. 31-7, Exh. 120 at 7.) These pages all contain disclosures, either beneath the buttons to submit credit card information or at the top of the page, which state that the consumer is paying for the shipping and handling and also agreeing to enroll in three trial memberships with costs and fees that will be automatically charged if the trial memberships are not cancelled. The order pages contain information about the trial memberships (or “upsells”), referring to them as “FREE BONUS GIFTS!” (dkt. no. 31-4, Exh. 117 at 6), “Free [14-day or 21-day] trial!” (dkt. no. 31-5, Exh. 118 at 4), and “Special Bonus!” (dkt. no. 31-6, Exh. 119 at 7) always at the bottom of the page, but do not refer to the associated monthly fees. These pages' further contain testimonials from people claiming they received money in the mail to pay personal expenses.

2. Menjivar Sites

FTC Investigator Roberto Menjivar visited and printed pages from IWorks websites in October 2008, approximately one year before Jacobson captured the images described above. (Dkt. no. 26 ¶¶4-7.) These images include the initial landing pages that ask for basic personal information, such as income and marital status, and order pages that prompt the user to provide their shipping information.

One website Menjivar visited called “Grant Funding Solutions” asks “Will A New President Change The Federal Grant System? Get A Grant Now Before Any Changes Take Place” and beneath CNN ad CNBC logos it says “Congratulations, You May Qualify for FREE Government Funding. CNN and other sources report that the U.S. Government must find recipients in order to distribute financial aid money to organizations and private individuals who qualify and need it!” (Dkt. no. 32-6, Exh. 124.) The site further states that “Millions of Dollars are available now!” and contains testimonials identical to those in the Jacobson sites in which recipients claim that they received money and were able to pay for personal expenses. There are also brief testimonials including statements such as “I received a check in my hand for $100,000” by “Carol K,” “I got the cheek in my hand for $150,000” by “William Rivas,” and “I just had $300,000 dollars deposited into my bank account” from “Edwin Hurd.” (Id.) Further down the page, it says “Our FREE SOFTWARE contains everything you need to know about how and where to access your grant money and can be shipped directly to your home or office within a matter of days” and “Information worth thousands of dollars! It’s yours now for FREE!” (Id.) Beneath those statements the site prompts users to “Please Enter Your Details Below To See If You Qualify For One of Our Free Trials” indicating that the shipping and handling for the CD is $2.29 and asking for personal information followed by a button that says “Click Here To See If You Qualify For One Of Our Remaining FREE Grant Master CDs!” (Id.)

The next page in the “Grant Funding Solutions” site opens with “Congratulations! You Are Well On Your Way To Becoming One Of The Countless People Who Have Already Claimed Their Rightful Government Grant Money!” (Id. at 11.) Following the testimonial by “Jennifer Bareness” also seen in the Jacobson sites, the page says “You qualify for one of our remaining FREE Grant Master Software CD’s!” and further mentions that the consumer can “instantly access the # 1 Rated Grant Resource Center” and “follow the advice in the Express Business Funding Guide” in order to “demand your fair share of the $1.5 Trillion in FREE Government Grant Money.” (Id.) The site then prompts users to “Please Tell Us Where You’d Like Your Free Copy Of The Grant Master Program Rushed!” and asks for the user’s shipping information, followed by “CLICK HERE TO GET YOUR FREE TRIAL NOW” (Id. at 11-12.)

The image of the “Grant Master CD” site captured by Menjivar is formatted in a strange way, perhaps as a result of the way it was captured, but it clearly contains similar elements to the sites already described, including prompts for personal information to “see if you qualify,” testimonials about receiving money to pay personal expenses from “D. Stewart” and “N. Lee,” the letter to the taxpayers from Dr. Porter, an image of a check that consumers are told they can hold “within just 7 days!” and examples of personal expenses paid with money from “Federal and Private sources.” (Dkt. no. 32-7, Exh. 125 at 1-2.)

The third site captured by Menjivar in October 2008 is the “Grant Funding Sue-cess” site. This one begins with “WARNING ... The Grant Master Software Was Not Created For Those People Who Just Want To Know Which Grants Are Available to Claim. The Grant Master Software Was Created to Help YOU Claim The Grants That You May Qualify For. Have Uncle Sam Lend You a Financial ‘Leg-Up’ Where You Need It Most. USE WITH CAUTION!” (Dkt. no. 82-8, Exh. 126 at 1.) As with the “Grant Funding Solution” site, the “Grant Funding Success” site features CNN and CNBC logos, congratulates the user because they “may qualify” for government funding, and states that “CNN and other sources report” that the “U.S. Government” must distribute money to “private individuals who qualify and need it!” (Id.) The site also contains Dr. Porter’s letter to the taxpayers, a Dr. Porter bio, an image of a check that consumers are told they can hold “within just 7 days!” and a box asking for name and address. (Id.) The box says “Get Your Risk-Free Grant CD! If you don’t take advantage of these benefits, you are only cheating yourself. You could have a check in your hands within 7 days if you start looking for grants today! It’s easy, fast and guaranteed. So why wait? Secure your copy before they’re all snapped up!” followed by a button that says “Get Your RISK-FREE CD!” (Id.)

3. CID Sites

In response to an FTC CID Interrogatory seeking details regarding IWorks’ sales sites, IWorks provided screenshots of certain websites, including four images from “Grant Writer Pro” websites. (See dkt. no. 1268-1 ¶¶ 11-15.) The images from the “Grant Writer Pro” websites appear to be identical. (See dkt. no. 31-8, Exh. 121A; dkt. no. 31-9, Exh. 121B; dkt. no. 32, Exh. 121C; dkt. no. 32-1, Exh. 121D.) The “Grant Writer Pro” sites appear to proceed in two stages.

First, their initial pages state that “The Government gives away BILLIONS each year! The SECRET Behind Government Cash! Our FREE software reveals how you can get your share of Federal money!” Beneath that is an image of an envelope that prompts the user to put in their address and click “Ship My Kit.” An image of a check pokes out from behind the envelope that is from “The Grants For Better Living.” There is a testimonial from “Diane O’Leary” that says “I received a check within a week. Literally all I did was use the software to complete an application.” In big letters in the middle of the page it says “FREE!” and under a CBSNews.com logo it states “ ‘CBS News and other sources report that the U.S. Government must find recipients, and then distribute over $360 billion dollars to groups, organizations and private individuals just like you!” There are testimonials from people who claim to have received checks and were able to pay for personal expenses. These testimonials appear bellow boasts such as “Thousands of CDs ordered! Millions of dollars awarded! OVER HALF A MILLION MEMBERS HAVE FOUNDS GRANTS.” Testimonials include “I couldn’t believe it when I opened the letter with a $5,000 check inside! It took less than two weeks! I never thought it could be so easy to get a Grant!” from “Alexis Pierce” and “I replaced my kitchen and bathroom faucets, bought a new vanity, fixed the pipes under my house, and paid my power bill” by “Shauna Donaldson.”

Second, the “Grant Writer Pro” site tells users “Just One More Step!” and asks for credit card information to “Get your software.” Users have the option of a download for $0.99 or a CD for “$1.97 S & H.” Under the “CONTINUE” button there are disclosures regarding the three trial memberships and charges that will be applied if they are not cancelled. Beneath that, the site describes “Special Bonus # 1 14 Days Unlimited Access to the Express Business Funding membership site!” and “Special Bonus # 2! 21 days of unlimited access to the Network Agenda membership site!” but these descriptions do not mention price.

4. PI Opposition Sites

Defendants provided eight exhibits in support of their opposition to the FTC’s motion for preliminary injunction. (See dkt. no. 97, Bryce Payne Deck; dkt. no. 99, Exhs. 1 and 2; dkt. no. 100, Exhs. 3 and 4; dkt. no. 101, Exhs. 5, 6, 7 and 8.) According to Bryce Payne, Operations Manager for IWorks, Exhs. 1, 2, 4, and 8 in particular “were among the most popular landing and order pages for the Grant Program.” (Dkt. no. 97 ¶ 7.)

Exhibit 1 begins with “NOTICE! There are literally thousands of Private and Federal Grants out there, providing BILLIONS OF DOLLARS in Grant money. Finding your way through them can be difficult and time consuming! We can help you find your way through the maze of red tape!” (Dkt. no. 99, Exh. 1.) The page proceeds with the claim that “There are over 1,000 Federal and 50,000 Private Grants, providing BILLIONS OF DOLLARS in Grants! Congratulations! You can be one of thousands of people who have applied for Grant Money ONLINE!” Moving down the page there is a testimonial from “Tiffany S” who is thankful for funding through the Grant-A-Day program. The site claims “There are literally THOUSANDS of Federal and Private Grants Available!” and “The annual amount of Grants given every year amounts to BILLIONS OF DOLLARS world-wide!” As to the types of grant money available, the site states “Everyone knows about Scholarship and various types of small business assistance that is available, but there [are] people getting Grants that they’ve used for everything from mortgage assistance to medical bills. Let us introduce you to a few of them! Continue reading below to see the real stories behind real people who’ve had real results with Grants!” The site then lists five (5) testimonials under the heading “Read About REAL PEOPLE Who Have Received REAL MONEY!” These testimonials include many that are also featured on other sites described above, including “Delroy S” who used the money to stop foreclosure, “Tamara S” who got a check in the mail and used it to pay off debt associated with her home business, and “Sharon E” who used the money to fix up her truck. Although these are the same testimonials that appeared in the Jacobson and Menjivar sites, here they explicitly state that money was provided through the “Granh-A-Day” program, as opposed to the more generic “grant program” or “grant doctor program” that these same people credit as the source of their funding in the otherwise identical testimonials printed on the Jacobson and Menjivar sites. ■ There is also a testimonial from “Joyce S” — under the title “Money To Buy Christmas Presents!” — who received a check in the mail and used the money to pay off bills so that she could buy Christmas presents for her kids. The site then asks for the typical landing page information such as marital status and income “To See If Our Unique One Of A Kind CD Is Right For You.”

The next page says “Congratulations! You Could Be Well On Your Way To Locating And Applying For A Grant!” The page features a testimonial from “Jennifer B” who says in big lettering “I just can’t thank you enough!” and explains that she received a check in the mail and paid her utility bills. Moving down the page it says “Great News! We’d like to send you one of our Private and Federal Grant CD’s! Not only that, but we’d like to give you access to our FULL RANGE of services, including our Live Chat Representatives and our cutting-edge Grant Search technology.” Before asking for the user’s shipping address the page states, “This could be the day that you take charge of your life, and start making a difference! We want you to be one of the many people whose lives we’ve improved through Grants. Sign up now, and see for yourself if you can benefit from the BILLIONS of dollars in Grant money that are out there.”

Exhibit 2 (dkt. no. 99, Exh. 2) is an order page substantially similar to the “Fast Grants” order page captured by Jacobson (dkt. no. 31-5, Exh. 118 at 5). Like that page, it boldly states, “Only One More Step!” and features a big arrow directing users to a box where they can enter their credit card information. (Dkt. no. 99, Exh. 2.) This box contains a tally with items such as the “Fast Grants CD” and the “Trial” and “Trial Memberships” all listed with a price of “$0.00” and “Shipping & Handling” listed at “$2.29” with a sum total of “$2.29” as “TODAY’S TOTAL.” This order page also features the familiar testimonials, disclosures in small print at the top of the page, and the large print claim that “There Are Over 90,000 Private & Federal Grants Listed! There Was Over 80 Billion Dollars Given Out Last Year!”

Exhibit 4 is a landing page for “Grant Search Assistant.” (Dkt. no. 100, Exh. 4.) Next to an image of a smiling woman, it states in large print “How a Desperate Housewife Got a Check In Her Hand To Help Her Family!” and has a testimonial from “Samantha Hall” who says that she received a check and used the money to pay for her utility and cell phone bills. (Id.) The page states, “If You’ve Ever Paid The Government Taxes ... you might qualify for federal or private grant money!” (M).Huge letters say “NOW!” and point the user towards a box to enter their shipping information, which says “Hurry! Claim Your CD By Filling Out This Form! [only ${ SH.PRICE} S & H].” (Id.) This page also features an image of a check for $1500 from the “Grant Trust Foundation” and states, “You could have a check like this one within a week!” (Id.) The page also has a statement from Dr. Porter similar to those featured on other sites described above.

Lastly, Exhibit 8 appears to be a landing page for a “Grant Master” site. (Dkt. no. 101, Exh. 8.) It says, “Let Us Help You Locate Grants!” and has “Now!” in big letters with an arrow directing users to fill in their shipping information to “Claim Your FREE CD TODAY (only $2.99 S & H).” (Id.) It touts “The Grant Master Software!” and says “There are literally thousands of Private and Federal Grants providing billions of dollars in Grant money. Finding your way through them can be difficult and time-consuming! We can help you through the maze of red tape!” (Id.)

The remaining PI Opposition Sites appear to be duplicative of past exhibits or illegible. Exhibit 3 appears to be identical to Exhibit 1. (Dkt. no. 100, Exh. 3.) Exhibits 6 and 7 (id.) are identical to the “Fast Grants” landing page captured by Jacobson (dkt. no. 31-5, Exh. 118 at 1). Exhibit 5 is illegible and therefore cannot be analyzed in this Order. (Dkt. no. 101.)

Because many of these sites, including Exhibit 8, refer to the “FREE CD” that appears to contain software related to the advertised grant products and programs or a database of available grants, it is important to discuss what is not contained in the CD. Jeremy Johnson stated at the hearing that consumers could only find relevant grant programs on IWorks’ website. (Dkt. no. 1553 at 117.) Indeed, he stated that the grant database could not be made available on the CD because it was always changing, so the goal was to get consumers online. (Id.) He further stated that the entire product could have been online, but that “people like to get something tangible in the mail” and that IWorks wanted to be able to say they were giving something away for free. (Id.)

C. Count I — Misrepresenting the availability of government grants to pay personal expenses; Count II — Misrepresenting that consumers using Defendants’ grant product are likely to find government grants to pay personal expenses; and Count VI — Misrepresenting that consumers using Defendants’ grant product are likely to obtain grants such as those obtained by consumers in the testimonials

The parties group Counts I, II and VI together. With regard to these counts, the FTC asserts that “IWorks’ claims misrepresented the purpose and efficacy of its grant product, promising consumers that they were likely to obtain grants for personal expenses, while such grants were generally unavailable, and deceptively using ‘testimonials’ that were fake, unsubstantiated, and were not from people who actually received a government grant.” (Dkt. no. 1280 at 50.)

1. Claims

A particular advertising claim will be deemed to have been made if consumers, acting reasonably under the circumstances, would interpret the statements to contain that message. In re Kraft, Inc., 114 F.T.C. 40 (1991), aff'd, 970 F.2d 311 (7th Cir.1992) (citing Thompson Med., 104 F.T.C. 648). Advertisements that are “capable of being interpreted in a misleading way should be construed against the advertiser.” FTC v. Gill, 71 F.Supp.2d, 1030, 1045-46 (C.D.Cal.1999) (quoting Resort Car Rental Sys., Inc. v. FTC, 518 F.2d 962, 964 (9th Cir.1975)).

A consumer using the grant sites described above and acting reasonably under the circumstances is likely to believe there are government grants available for personal expenses, that they are likely to receive money from said grants, and that the result of using Defendants’ programs and products will be similar to those indicated in the testimonials. The sites create this impression by repeatedly emphasizing the huge amount of government grant money available and providing numerous testimonials from people who claim to have paid for a wide variety of personal expenses after receiving checks through grant programs. Over and over, the sites claim that there are millions or billions of dollars given away each year in the form of grants and that there are thousands of grants available. The sites present testimonial after testimonial where people claim they received money, sometimes checks in the mail in a matter of weeks, to do everything from buy household goods to pay overdue bills or stop foreclosure. The sites and testimonials claim grants were given out in amounts ranging up to six figures.

2. Misleading

The FTC argues that the representations were actually false because government grants were not available for personal expenses. In support of their argument that grants for personal expenses are unavailable, the FTC offers up the fact that the “Grants.gov” website, which is the federal government’s official grant site, says that few grants are available for individuals and “none of them are available for personal assistance.” (Id. at 11; see also dkt. no. 26-3, David Bauer deck, Exh. D ¶26.) The “Grants.gov” site states that “[a] federal grant is an award of financial assistance from a federal agency to a recipient to carry out a public purpose of support or stimulation authorized by a law of the United States. Federal grants are not federal assistance or loans to individuals.” (Dkt. no. 26-3 ¶ 26.) The FTC also provides a declaration from Donna Davis, Program Manager of the Catalog of Federal Domestic Assistance (“CFDA”), who states that “only a very limited number of federal assistance programs offer grants directly to individuals” and they are typically for a public purpose. (Id. at 12; dkt. no. 27-5.) The FTC also presents the declaration of Dr. Porter, IWorks’ grant consultant, who states that government grants to individuals were almost non-existent. A declaration .from FTC’s expert David Bauer, who has worked in the grant-seeking business for 30 years, echoes Dr. Porter’s declaration. (Dkt. no. 26-3 ¶ 27 (“[Government grants] are rarely, if ever, available to provide personal financial assistance, such as preventing foreclosure or paying a mortgage or other household expenses, and I have never come across any such grants during my 30 years in this field.”))

As to the testimonials, the FTC issued a CID request for Defendants to identify every individual in its grant site testimoni-ais and provide substantiation. (Dkt. no. 20-10 at 4-5.) In response, Defendants provided a list of 15 names. (Id.) This list does not include some of the people who gave testimonials that repeatedly appear in the sites described above, including “C. Robb Ross,” who gave a testimonial about using the money to pay for her son’s textbooks, and “Jennifer B,” who used the money to pay utility bills and buy household supplies. Nor does the list include any of the nine individuals listed on the landing page of the “Federal Grant Connections” site who received grant money in the range of approximately $5,000 to over $140,000 (dkt. no. 31-6, Exh. 119 at 1), or “Carol K,” “William Rivas,” and “Edwin Hurd” who received $100,000, $150,000 and $300,000, respectively, according to the “Grant Funding Solutions” site (dkt. no. 32-6, Exh. 124 at 1-2). Defendants also provided a list of their “Granh-A-Day” recipients and amounts received. (Dkt. no. 1263-1, Reeve Tyndall Deck, Exh. 1725 ¶ 17.) FTC investigator Tyndall compared the list of “GranN-A-Day” recipients to the list of people who gave testimonials, and discovered that 14 of the 15 people who gave testimonials also received money from the “Grant-A-Day” program. (Id. ¶ 18.) The “Grant-A-Day” program was not a government grant program but was developed by IWorks in partnership with a non-profit organization called Frontiers For Families. (Dkt. no. 20-4 at 3.) The program provided users with an online application and a new winner was selected each day. (Id.) A check was sent directly to the winner. (Id.) In his review of the winners, Tyndall identified that the largest award was $5,000 and most were $500 or $1000. (Dkt. no. 1263-1, Reeve Tyndall Deck, Exh. 1725 ¶ 18.)

3. Material

The FTC argues that in addition to being misleading, the asserted misrepresentations are material because they were “used to induce the purchase of a particular product” pursuant to Pantron I and they “pertain to the central characteristics of the product” pursuant to FTC Policy Statement on Deception. (Dkt. no. 1280 at 50.)

4. Rebuttal

Defendants argue in opposition that: (1) the FTC does not challenge sites promoting both government and private grants; (2) consumers did not care about the source of a grant — whether it was government or private; (3) government grants are in fact available for personal expenses; (4) IWorks’ websites never represented the likelihood of a consumer qualifying for a grant; and (5) website testimonials are substantiated as to IWorks’ “Grant-A-Day” program. (See dkt. no. 1343 at 7-18.)

Defendants’ assertion that the FTC does not challenge sites promoting both government and private grants is a mis-characterization of the Amended Complaint and Motion. There is no indication in the Amended Complaint or the Motion that the FTC limits its arguments to those sites