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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

FEDERAL TRADE COMMISSION,

Plaintiff,

v.

AGE OF LEARNING, INC., a 

corporation, also d/b/a ABCmouse and 

ABCmouse.com,

Defendant.

Case No. ____________

STIPULATED ORDER FOR 

PERMANENT INJUNCTION 

AND MONETARY 

JUDGMENT

Plaintiff, the Federal Trade Commission (“Commission”), filed its 

Complaint for Permanent Injunction and Other Equitable Relief (“Complaint”) for 

a permanent injunction and other equitable relief in this matter, pursuant to 

Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 

U.S.C. §§ 53(b), 57b, and the Restore Online Shoppers’ Confidence Act 

2:20-cv-7996

Case 2:20-cv-07996 Document 4-1 Filed 09/01/20 Page 1 of 16 Page ID #:50
STIPULATED FINAL ORDER

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(“ROSCA”), 15 U.S.C. § 8404. The Commission and Defendant stipulate to the 

entry of this Stipulated Order for Permanent Injunction and Monetary Judgment 

(“Order”) to resolve all matters in dispute in this action between them.

THEREFORE, IT IS ORDERED as follows: 

FINDINGS

A. This Court has jurisdiction over this matter. 

B. The Complaint alleges that Defendant participated in deceptive and 

unfair acts or practices in violation of Sections 13(b) and 19 of the FTC Act, 15 

U.S.C. §§ 53(b), 57b, and ROSCA, 15 U.S.C. § 8404, in the advertisement, 

marketing, distribution, and sale of online educational programs to consumers 

throughout the United States. 

C. Defendant neither admits nor denies any of the allegations in the 

Complaint, except as specifically stated in this Order. Only for purposes of this 

action, Defendant admits the facts necessary to establish jurisdiction.

D. Defendant waives any claim that it may have under the Equal Access 

to Justice Act, 29 U.S.C. § 2412, concerning the prosecution of this action through 

the date of this Order, and agrees to bear its own costs and attorney fees. 

E. Defendant waives all rights to appeal or otherwise challenge or 

contest the validity of this Order. 

DEFINITIONS

For the purpose of this Order, the following definitions apply: 

A. “Billing Information” means any data that enables any person to 

access a customer’s account, such as a credit card, checking, savings, share or 

similar account, utility bill, mortgage loan account, or debit card.

B. “Charge,” “Charged,” or “Charging” means any attempt to collect 

money or other consideration from a consumer, including causing Billing 

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Information to be submitted for payment, including against the consumer’s credit 

card, debit card, bank account, telephone bill, or other account.

C. “Clear(ly) and Conspicuous(ly)” means that a required disclosure is 

difficult to miss (i.e., easily noticeable) and easily understandable by ordinary 

consumers, including in all of the following ways:

1. In any communication that is solely visual or solely audible, the 

disclosure must be made through the same means through which the 

communication is presented. In any communication made through both visual and 

audible means, such as a television advertisement, the disclosure must be presented 

simultaneously in both the visual and audible portions of the communication even 

if the representation requiring the disclosure is made in only one means.

2. A visual disclosure, by its size, contrast, location, the length of 

time it appears, and other characteristics, must stand out from any accompanying 

text or other visual elements so that it is easily noticed, read, and understood.

3. An audible disclosure, including by telephone or streaming 

video, must be delivered in a volume, speed, and cadence sufficient for ordinary 

consumers to easily hear and understand it.

4. In any communication using an interactive electronic medium, 

such as the Internet or software, the disclosure must be unavoidable.

5. The disclosure must use diction and syntax understandable to 

ordinary consumers and must appear in each language in which the representation 

that requires the disclosure appears.

6. The disclosure must comply with these requirements in each 

medium through which it is received, including all electronic devices and face-toface communications.

7. The disclosure must not be contradicted or mitigated by, or 

inconsistent with, anything else in the communication.

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8. When the representation or sales practice targets a specific 

audience, such as children, the elderly, or the terminally ill, “ordinary consumers” 

includes reasonable members of that group.

D. “Defendant” means Age Of Learning, Inc., a corporation, which also 

does business as ABCmouse and ABCmouse.com, as well as any successors and 

assigns.

E. “Negative Option Feature” means, in an offer or agreement to sell or 

provide any good or service, a provision under which the consumer’s silence or 

failure to take affirmative action to reject a good or service or to cancel the 

agreement is interpreted by the seller or provider as acceptance or continuing 

acceptance of the offer.

F. “Telemarketing” means any plan, program, or campaign which is 

conducted to induce the purchase of goods or services by use of one or more 

telephones, and which involves a telephone call, whether or not covered by the 

Telemarketing Sales Rule.

ORDER

I. PROHIBITION AGAINST MISREPRESENTATIONS

RELATED TO NEGATIVE OPTIONS

IT IS ORDERED that Defendant, Defendant’s officers, agents, employees, 

and attorneys, and all other persons in active concert or participation with any of 

them, who receive actual notice of this Order, whether acting directly or indirectly, 

in connection with promoting or offering for sale any good or service with a 

Negative Option Feature, are permanently restrained and enjoined from 

misrepresenting, expressly or by implication:

A. Any cost to the consumer to purchase, receive, use, or return the 

initial good or service;

B. That the consumer will not be Charged for any good or service;

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C. That a good or service is offered on a “free,” “trial,” “sample,” 

“bonus,” “gift,” “no obligation,” “discounted,” “upgraded” basis, or words of 

similar import, denoting or implying the absence of an obligation on the part of the 

recipient of the offer to affirmatively act in order to avoid Charges, including 

where a Charge will be assessed pursuant to the offer unless the consumer takes 

affirmative steps to prevent or stop such a Charge;

D. That the consumer can obtain a good or service for a processing, 

service, shipping, handling, or administrative fee with no further obligation;

E. Any purpose for which the consumer’s Billing Information will be 

used; 

F. The date by which the consumer will incur any obligation or be 

Charged unless the consumer takes an affirmative action on the Negative Option 

Feature;

G. That a transaction has been authorized by the consumer;

H. Any material aspect of the nature or terms of a refund, cancellation, 

exchange, or repurchase policy for the good or service, including whether it is easy 

for consumers to cancel Defendant’s good or service; or

I. Any other material fact.

II. REQUIRED DISCLOSURES RELATING TO NEGATIVE 

OPTION FEATURES

IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, 

employees, and attorneys, and all other persons in active concert or participation 

with any of them, who receive actual notice of this Order, whether acting directly 

or indirectly, in connection with promoting or offering for sale any good or service 

with a Negative Option Feature, are permanently restrained and enjoined from:

A. Representing directly or indirectly, expressly or by implication, that 

any good or service that includes a Negative Option Feature is being offered on a 

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free, trial, no obligation, reduced, upgraded, or discounted basis, or for a specific 

term, without disclosing Clearly and Conspicuously, and immediately adjacent to, 

any such representation:

1. The extent to which the consumer must take any affirmative 

action to avoid any Charges: a) for the offered good or service, b) of an increased 

amount after the trial or promotional period ends, and c) on a recurring basis;

2. The total cost (or range of costs) the consumer will be Charged 

and, if applicable, the frequency of such Charges unless the consumer timely takes 

steps to prevent or stop such Charges; and

3. The deadline(s) (by date or frequency) by which the consumer 

must affirmatively act in order to stop all recurring Charges.

B. Obtaining Billing Information from a consumer for any transaction 

involving a good or service that includes a Negative Option Feature, without first 

disclosing Clearly and Conspicuously, and immediately adjacent to where a 

consumer provides Billing Information:

1. The extent to which the consumer must take affirmative action 

to avoid any Charges: a) for the offered good or service, b) of an increased amount 

after the trial or promotional period ends, and c) on a recurring basis;

2. The total cost (or range of costs) the consumer will be Charged, 

the date the initial Charge will be submitted for payment, and, if applicable, the 

frequency of such Charges unless the consumer timely takes affirmative steps to 

prevent or stop such Charges;

3. The deadline(s) (by date or frequency) by which the consumer 

must affirmatively act in order to stop all recurring Charges;

4. The name of the seller or provider of the good or service and, if 

the name of the seller or provider will not appear on billing statements, the billing 

descriptor that will appear on such statements;

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5. A description of the good or service; 

6. Any Charge or cost for which the consumer is responsible in 

connection with the cancellation of an order, any service or the return of any good; 

and

7. The simple cancellation mechanism to stop any recurring 

Charges, as required by Section IV of this Order.

C. Failing to send the consumer: 

1. Immediately after the consumer’s submission of an online 

order, written confirmation of the transaction by email. The email must Clearly 

and Conspicuously disclose all the information required by Subsection B, and 

contain a subject line reading “Order Confirmation” along with the name of the 

good or service, which may read, “Welcome to ABCmouse! Order confirmation,” 

and no additional information; or

2. Within 2 days after receipt of the consumer’s order by mail or 

telephone, a written confirmation of the transaction, either by email or first class 

mail. The email or letter must Clearly and Conspicuously disclose all the 

information required by Subsection B. The subject line of the email must Clearly 

and Conspicuously state “Order Confirmation” along with the name of the good or 

service, and nothing else. The outside of the envelope must Clearly and 

Conspicuously state “Order Confirmation” along with the name of the product or 

service, and no additional information other than the consumer’s address, the 

Defendant’s return address, and postage.

III. OBTAINING EXPRESS INFORMED CONSENT 

FOR A NEGATIVE OPTION

IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, 

employees, and attorneys, and all other persons in active concert or participation 

with any of them, who receive actual notice of this Order, whether acting directly 

Case 2:20-cv-07996 Document 4-1 Filed 09/01/20 Page 7 of 16 Page ID #:56
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or indirectly, in connection with promoting or offering for sale any good or service 

with a Negative Option Feature, are permanently restrained and enjoined from 

using Billing Information to obtain payment from a consumer, unless Defendant 

first obtains the express informed consent of the consumer to do so. To obtain 

express informed consent, Defendant must:

A. For all written offers (including over the Internet, such as through a 

web-based application), obtain consent through a check box, signature, or other 

substantially similar method, which the consumer must affirmatively select or sign 

to accept the Negative Option Feature, and no other portion of the offer. 

Defendant shall disclose Clearly and Conspicuously, and immediately adjacent to 

such check box, signature, or substantially similar method of affirmative consent, 

only the following, with no additional information:

1. The extent to which the consumer must take affirmative action 

to avoid any Charges: a) for the offered good or service, b) of an increased amount 

after the trial or promotional period ends, and c) on a recurring basis;

2. The total cost (or range of costs) the consumer will be Charged 

and, if applicable, the frequency of such Charges unless the consumer timely takes 

affirmative steps to prevent or stop such Charges; and

3. The deadline(s) (by date or frequency) by which the consumer 

must affirmatively act in order to stop all recurring Charges.

B. For all oral offers, prior to obtaining any Billing Information from the 

consumer:

1. Clearly and Conspicuously disclose the information contained 

in Subsection B of the Section titled Required Disclosures Relating To Negative 

Option Features; and

2. Obtain affirmative unambiguous express oral confirmation that 

the consumer: a) consents to being Charged for any good or service, including 

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providing, at a minimum, the last 4 digits of the consumer’s account number to be 

Charged, b) understands that the transaction includes a Negative Option Feature, 

and c) understands the specific affirmative steps the consumer must take to prevent 

or stop further Charges.

C. For transactions conducted through Telemarketing, Defendant shall 

maintain for 3 years from the date of each transaction an unedited voice recording 

of the entire transaction, including the prescribed statements set out in Subsection 

B of this Section. Each recording must be retrievable by date and by the 

consumer’s name, telephone number, or Billing Information, and must be provided 

upon request to the consumer, the consumer’s bank, or any law enforcement entity.

IV. SIMPLE MECHANISM TO CANCEL NEGATIVE 

OPTION FEATURE

IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, 

employees, attorneys, and all other persons in active concert or participation with 

any of them, who receive actual notice of this Order, whether acting directly or 

indirectly, in connection with promoting or offering for sale any good or service 

with a Negative Option Feature, are permanently restrained and enjoined from:

A. Failing to provide a simple mechanism for the consumer to: (1) avoid 

being Charged, or Charged an increased amount, for the good or service and 

(2) immediately stop any recurring Charges. Such mechanism must not be 

difficult, costly, confusing, or time consuming, and must be at least as simple as 

the mechanism the consumer used to initiate the Charge(s). 

B. For consumers who entered into the agreement to purchase a good or 

service including a Negative Option Feature over the Internet, such as through a 

web-based application, Defendant must provide a mechanism, accessible on the 

same Internet website or through the same web-based application that consumers 

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can easily use to cancel the product or service and to immediately stop all further 

Charges.

C. For consumers who entered into the agreement to purchase a good or 

service including a Negative Option Feature through an oral offer and acceptance, 

Defendant must maintain a telephone number and a postal address that consumers 

can easily use to cancel the product or service and to immediately stop all further 

Charges. Defendant must assure that all calls to this telephone number are 

answered during normal business hours and that mail to the postal address is read 

regularly. 

V. MONETARY JUDGMENT 

A. Judgment in the amount of Ten Million Dollars ($10,000,000) is 

entered in favor of the Commission against Defendant, as equitable monetary 

relief.

 B. Defendant is ordered to pay the Commission Ten Million Dollars 

($10,000,000), which as Defendant stipulates, its undersigned counsel holds in 

escrow for no purpose other than payment to the Commission. Such payment must 

be made within 7 days of entry of this Order by electronic fund transfer in 

accordance with instructions previously provided by a representative of the 

Commission. 

 C. Defendant relinquishes dominion and all legal and equitable right, 

title, and interest in all assets transferred pursuant to this Order and may not seek 

the return of any assets.

D. The facts alleged in the Complaint will be taken as true, without 

further proof, in any subsequent civil litigation by or on behalf of the Commission, 

including in a proceeding to enforce its rights to any payment or monetary 

judgment pursuant to this Order, such as a nondischargeability complaint in any 

bankruptcy case.

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E. The facts alleged in the Complaint establish all elements necessary to

sustain an action by the Commission pursuant to Section 523(a)(2)(A) of the 

Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and this Order will have collateral 

estoppel effect for such purposes.

F. Defendant acknowledges that its Taxpayer Identification Number

(Employer Identification Number), which Defendant previously submitted to the 

Commission, may be used for collecting and reporting on any delinquent amount 

arising out of this Order, in accordance with 31 U.S.C. §7701. 

G. All money paid to the Commission pursuant to this Order may be

deposited into a fund administered by the Commission or its designee to be used 

for equitable relief, including consumer redress and any attendant expenses for the 

administration of any redress fund. If a representative of the Commission decides 

that direct redress to consumers is wholly or partially impracticable or money 

remains after redress is completed, the Commission may apply any remaining 

money for such other equitable relief (including consumer information remedies) 

as it determines to be reasonably related to Defendant’s practices alleged in the 

Complaint. Any money not used for such equitable relief is to be deposited to the 

U.S. Treasury as disgorgement. Defendant has no right to challenge any actions 

the Commission or its representatives may take pursuant to this Subsection.

VI. CUSTOMER INFORMATION

IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, 

employees, attorneys, and all other persons in active concert or participation with 

any of them, who receive actual notice of this Order, whether acting directly or 

indirectly are permanently restrained and enjoined from directly or indirectly 

failing to provide sufficient customer information to enable the Commission to 

efficiently administer consumer redress. If a representative of the Commission 

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requests in writing any information related to redress, Defendant must provide it, 

in the form prescribed by the Commission, within 14 days.

VII. ORDER ACKNOWLEDGMENTS

IT IS FURTHER ORDERED that Defendant obtains acknowledgments of 

receipt of this Order:

A. Defendant, within 7 days of entry of this Order, must submit to the

Commission an acknowledgment of receipt of this Order sworn under penalty of 

perjury. 

B. For 5 years after entry of this Order, Defendant must deliver a copy of

this Order to: (1) all principals, officers, directors, and LLC managers and 

members; (2) all employees, agents, and representatives having managerial 

responsibilities for conduct related to the subject matter of the Order; and (3) any 

business entity resulting from any change in structure as set forth in the Section 

titled Compliance Reporting. Delivery must occur within 7 days of entry of this 

Order for current personnel. For all others, delivery must occur before they 

assume their responsibilities.

C. From each individual or entity to which Defendant delivered a copy of

this Order, Defendant must obtain, within 30 days, a signed and dated 

acknowledgment of receipt of this Order.

VIII. COMPLIANCE REPORTING

IT IS FURTHER ORDERED that Defendant make timely submissions to 

the Commission:

A. One year after entry of this Order, Defendant must submit a

compliance report, sworn under penalty of perjury. Defendant must: 

1. identify the primary physical, postal, and email address and

telephone number, as designated points of contact, which representatives of the 

Commission may use to communicate with Defendant; 

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2. identify all of Defendant’s businesses by all of their names,

telephone numbers, and physical, postal, email, and Internet addresses;

3. describe the activities of each business, including the goods and

services offered, the means of advertising, marketing, and sales; 

4. describe in detail whether and how Defendant is in compliance

with each Section of this Order; and 

5. provide a copy of each Order Acknowledgment obtained

pursuant to this Order, unless previously submitted to the Commission. 

B. For 20 years after entry of this Order, Defendant must submit a

compliance notice, sworn under penalty of perjury, within 14 days of any change 

in the following: 

1. any designated point of contact; or

2. the structure of Defendant or any entity that Defendant has any

ownership interest in or controls directly or indirectly that may affect compliance 

obligations arising under this Order, including: creation, merger, sale, or 

dissolution of the entity or any subsidiary, parent, or affiliate that engages in any 

acts or practices subject to this Order.

C. Defendant must submit to the Commission notice of the filing of any

bankruptcy petition, insolvency proceeding, or similar proceeding by or against 

Defendant within 14 days of its filing.

D. Any submission to the Commission required by this Order to be

sworn under penalty of perjury must be true and accurate and comply with 28 

U.S.C. § 1746, such as by concluding: “I declare under penalty of perjury under 

the laws of the United States of America that the foregoing is true and correct. 

Executed on: _____” and supplying the date, signatory’s full name, title (if 

applicable), and signature.

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E. Unless otherwise directed by a Commission representative in writing,

all submissions to the Commission pursuant to this Order must be emailed to 

DEbrief@ftc.gov or sent by overnight courier (not the U.S. Postal Service) to: 

Associate Director for Enforcement, Bureau of Consumer Protection, Federal 

Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580. The 

subject line must begin: FTC v. Age Of Learning, Inc., FTC Matter No. 1723186.

IX. RECORDKEEPING

IT IS FURTHER ORDERED that Defendant must create certain records 

for 20 years after entry of the Order, and retain each such record for 5 years. 

Specifically, Defendant must create and retain the following records:

A. Accounting records showing the revenues from all goods or services

sold;

B. Personnel records showing, for each person providing services,

whether as an employee or otherwise, that person’s: name; addresses; telephone 

numbers; job title or position; dates of service; and (if applicable) the reason for 

termination;

C. Records of all consumer complaints and refund requests, whether

received directly or indirectly, such as through a third party, and any response;

D. All records necessary to demonstrate full compliance with each

provision of this Order, including all submissions to the Commission; and

E. A copy of all websites, advertisements and other marketing materials

that Defendant has reviewed to ensure compliance with this Order. 

X. COMPLIANCE MONITORING

IT IS FURTHER ORDERED that, for the purpose of monitoring 

Defendant’s compliance with this Order: 

A. Within 14 days of receipt of a written request from a representative of

the Commission, Defendant must: submit additional compliance reports or other 

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requested information, which must be sworn under penalty of perjury; appear for 

depositions; and produce documents for inspection and copying. The Commission 

is also authorized to obtain discovery, without further leave of court, using any of 

the procedures prescribed by Federal Rules of Civil Procedure 29, 30 (including 

telephonic depositions), 31, 33, 34, 36, 45, and 69.

B. For matters concerning this Order, the Commission is authorized to

communicate directly with Defendant. Defendant must permit representatives of 

the Commission to interview any employee or other person affiliated with 

Defendant who has agreed to such an interview. The person interviewed may have 

counsel present.

C. The Commission may use all other lawful means, including posing,

through its representatives as consumers, suppliers, or other individuals or entities, 

to Defendant or any individual or entity affiliated with Defendant, without the 

necessity of identification or prior notice. Nothing in this Order limits the 

Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20 of 

the FTC Act, 15 U.S.C. §§ 49, 57b-1.

XI. RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that this Court retains jurisdiction of this 

matter for purposes of construction, modification, and enforcement of this Order.

SO ORDERED this _____ day of ________________, 20___.

______________________________________

UNITED STATES DISTRICT JUDGE

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SO STIPULATED AND AGREED: 

FEDERAL TRADE COMMISSION

______________________________________ Date: __________

Matthew H. Wernz 

Joannie T. Wei

Federal Trade Commission, Midwest Region

230 South Dearborn Street, Suite 3030

Chicago, IL 60604

Phone: 312-960-5596 (Wernz) 

Phone: 312-960-5607 (Wei)

Fax: 312-960-5600

mwernz@ftc.gov

jwei@ftc.gov

Attorneys for Plaintiff Federal Trade Commission

FOR DEFENDANT:

Date: __________

Shannon Castellani

General Counsel and Senior Vice President of Compliance, Age of Learning, Inc.

______________________________________

Jacob S. Kreilkamp

Munger Tolles & OlsRn LLP

6RXWK*UDQG$YHQXH

Los Angeles, CA 90071

Phone: 213-683-9260

Fax: 213-593-2960

Jacob.Kreilkamp@mto.com

Attorney for Defendant Age of Learning, Inc.

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______________________________________

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Date: _A______ ugust 10, 2 ___020

August 10, 2020

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Case 2:20-cv-07996 Document 4-1 Filed 09/01/20 Page 16 of 16 Page ID #:65