UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

FEDERAL TRADE COMMISSION, 

Plaintiff, 

v. 

CREDIT BUREAU CENTER, LLC, 

a limited liability company, formerly known as 

MYSCORE LLC, also doing business as 

EFREESCORE.COM, CREDITUPDATES.COM, 

and FREECREDITNATION.COM, 

MICHAEL BROWN, 

individually and as owner and manager of 

CREDIT BUREAU CENTER, LLC, 

DANNY PIERCE, individually, and 

ANDREW LLOYD, individually, 

Defendants. 

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17-cv-00194 

Judge Matthew F. Kennelly 

Magistrate Judge Maria Valdez 

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PLAINTIFF'S MEMORANDUM IN SUPPORT OF ITS 

EX PARTE MOTION FOR A TEMPORARY RESTRAINING ORDER 

WITH ASSET FREEZE, APPOINTMENT OF A RECEIVER, 

OTHER EQUITABLE RELIEF, AND ORDER TO SHOW CAUSE 

WHY A PRELIMINARY INJUNCTION SHOULD NOT ISSUE 
TABLE OF CONTENTS 

I. Introduction .......................................................................................................................... l 

IL Defendants' Unlawful Business Practices ........................................................................... 3 

A. Defendants' Fake Craigslist Ads ............................................................................ .4 

B. Defendants' Fake Landlord Emails ......................................................................... 6 

C. Credit Bureau Center's Deceptive Websites ............................................................ 8 

D. Consumer Injury .................................................................................................... 12 

III. Defendants ......................................................................................................................... 14 

IV. Argument ........................................................................................................................... 15 

A. This Court Has the Authority to Grant the Requested Relief.. .............................. 15 

B. The FTC Meets the Standard for Issuance of a Temporary 

Restraining Order ................................................................................................... 15 

I. The FTC is Likely to Succeed on the Merits ............................................. 16 

a. Defendants' Practices Violate Section 5(a) 

of the FTC Act ............................................................................... 16 

1. Defendants' False Advertising of Rental 

Properties on Craigslist and by Email Violates 

Section 5(a) of the FTC Act. .................................................. 17 

ii. Credit Bureau Center's Websites Violate 

Section 5(a) of the FTC Act.. .................................................. 17 

b. Credit Bureau Center's Websites Violate ROSCA ........................ 19 

c. Credit Bureau Center's Websites Violate the FCRA 

and the Free Report Rule ............................................................... 20 

d. Credit Bureau Center is Liable for the Deceptive 

Practices of its Affiliate Marketers ................................................ 21 

e. Defendant Brown is Individually Liable ........................................ 22 
f. Defendants Pierce and Lloyd are Individually 

Liable ............................................................................................. 24 

2. The Equities Tip Decidedly in the FTC's Favor. ....................................... 25 

C. The Scope of the Proposed TRO is Necessary and Appropriate ........................... 25 

1. The Conduct Relief is Necessary and Appropriate .................................... 26 

2. An Asset Freeze and the Appointment of a Receiver 

are Necessary and Appropriate .................................................................. 26 

D. The Temporary Restraining Order Should Be Issued Ex Parle 

To Preserve the Court's Ability to Fashion Meaningful Relief.. ........................... 28 

V. Conclusion ......................................................................................................................... 29 

II 
TABLE OF AUTHORITIES 

Cases 

Opinions 

D.U. v. Rhoades, 825 F.3d 331 (7th Cir. 2016) ............................................................................. 16 

FTC v. Am)! Travel Serv., Inc., 875 F.2d 564 (7th Cir. 1989) .................................................. 15, 22 

FTC v. Bay Area Bus. Council, 423 F.3d 627 (7th Cir. 2005) ........................................... 16, 22, 23 

FTC v. Cyberspace.com LLC, 453 F.3d 1196 (9th Cir. 2006) ....................................................... 19 

FTC v. Datacom Mktg. Inc., 2006 WL 1472644 (N.D. Ill. 2006) ................................................. 27 

FTC v. Febre, 128 F.3d 530 (7th Cir. 1997) .................................................................................. 15 

FTC v. Lifewatch Inc., 176 F. Supp. 3d. 757 (N.D. 111. 2016) ........................................................ 22 

FTC v. Q1'. Inc., 448 F. Supp. 2d 908 (N.D. Ill. 2006) .................................................................. 16 

FTC v. Sabal, 32 F. Supp. 2d 1004 (N.D. Ill. 1998) ...................................................................... 25 

FTC v. SkyBiz.com, Inc., No. Ol-CV-396-K(E), 2001 WL 1673645 

(N.D. Okla. Aug. 31, 2001) ........................................................................................................... 22 

FTC v. Stefanchik, 559 F.3d 924, 930 (9th Cir. 2009) ................................................................... 22 

FTCv. Think Achievement Corp., 144 F. Supp. 2d 993 (N.D. Ind. 2000), 

atf'd, 312 F.3d 259 (7th Cir. 2002) ................................................................................................ 27 

FTCv. U.S. Oil & Gas Corp., 748 F.2d 1431 (I Ith Cir. 1984) ..................................................... 15 

FTC v. US Sales Corp., 785 F. Supp. 737 (N.D. 111. 1992) ..................................................... 17, 18 

FTC v. World Media Brokers, 415 F.3d 758 (7th Cir. 2005) .................................................. 16, 22 

FTC v. World Travel Vacation Brokers, Inc., 861 F.2d I 020 (7th Cir. 1988) ............................... 15 

FTC v. World Wide Factors, Ltd., 882 F.2d 344 (9th Cir. 1989) .................................................. 25 

Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local 

No. 70 of Alameda Cty., 415 U.S. 423 (1974) ............................................................................... 28 

Int'/ Art Co. v. FTC, I 09 F.2d 393 (7th Cir. 1940) ........................................................................ 22 

iii 
Krqfi, Inc. v. FTC, 970 F.2d 311 (7th Cir. 1992) ..................................................................... 16-17 

Opp v. Wheaton Van Lines, Inc., 231 F.3d 1060 (7th Cir. 2000) .................................................. 21 

Porter & Dietsch v. FTC, 605 F.2d 294 (7th Cir. 1979) ................................................................ 18 

SEC v. Keller Corp., 323 F.2d 397 (7th Cir. l 963) ....................................................................... 27 

Orders and Filed Cases 

FTC v. Apogee One Ente1prises LLC et al., No. 12-cv-588 (N.D. Ill. Jan. 30, 2012) ....... 26, 27, 29 

FTC v. Big Dog Sols. LLC, No. l 6-cv-6607 (N.D. Ill. June 28, 2016) ................................... 26, 28 

FTC v. Caprice Marketing LLC et al., No. l 3-cv-6072 (N.D. Ill. Aug. 29, 2013) .................. 27, 28 

FTC v. Stark Law, LLC et al., No. 16-cv-3463 (N.D. []l. Mar. 22, 2016) .............................. .26, 28 

Statutes, Regulations, and Restatements 

Fair Credit Reporting Act, 15 U.S.C. § l 68 lj(g)(l) ............................................................ 3, 15, 20 

Fair Credit Reporting Act, l 5 U.S.C. § 1681 s(a)( l) ..................................................................... .20 

Federal Trade Commission Act, 15 U.S.C. § 45(a) ............................................................. 2, 15, 17 

Federal Trade Commission Act, 15 U.S.C. § 53(b) ....................................................................... 15 

Restatement (Third) of Agency § l .O l .......................................................................................... 21 

Restore Online Shoppers' Confidence Act, 15 U.S.C. § 8403 ...................................... 2, 15, 19, 20 

Rules 

Fed. R. Civ. P. 65(b) ...................................................................................................................... 28 

Free Annual File Disclosures Rule, 12 C.F.R. § l 022.138 ................................................. .3, l 5, 20 

Telemarketing Sales Rule, 16 C.F.R. § 310.2(w) ......................................................................... .20 

iv 
I. INTRODUCTION 

The Federal Trade Commission ("FTC") asks this Court to halt a fraudulent operation 

that falsely advertises rental properties nationwide in order to lure consumers to websites where 

they are deceptively enrolled in credit monitoring services. Defendants prey on consumers 

seeking housing by posting ads for desirable rental properties on Craigslist or similar sites. The 

ads are fake. Either the properties do not exist, or Defendants have no authority to offer them for 

rent. When consumers respond to the ads, Defendants reply by email, impersonating the owner 

or manager of the property, and offering to schedule a "walk-through" on one condition-that 

consumers first click on a link in the email to get their credit report and bring it to the tour. The 

link is a trap. It takes consumers to specially-designed versions of websites operated by 

Defendant Credit Bureau Center, LLC ("CBC"), including eFreeScore.com and 

CreditUpdates.com. The websites deceptively offer "free" credit reports and scores, just what 

consumers think they need, and require consumers to enter detailed personal information, 

including their Social Security numbers, birthdates, and credit or debit card numbers. 

U,nbeknownst to many consumers, entering this information means that after seven days, they 

will be charged $29.94 monthly for separate, unauthorized credit monitoring services. These 

charges recur unless and until consumers take affirmative steps to cancel the service. Defendants 

have billed consumers more than $6 million for these services. 

Defendants' predatory conduct victimizes consumers in multiple ways. To begin with, 

the rental opportunities do not exist. The purpose for which consumers are getting their credit 

reports and scores-to qualify as prospective tenants-is a sham. When consumers, with credit 

reports and scores in hand, email the phony landlord to schedule the tour of the property, they get 

no response. They never get the promised tours. To make matters worse, many consumers incur 
one or more monthly charges of$29.94 for the credit monitoring service before they notice the 

unexpected charges and attempt to stop them. When they request refunds from CBC, the 

company refuses, informing them that they may only cancel future charges. Only the most 

persistent consumers have been able to get their money back by filing chargebacks with their 

banks or complaining to the Better Business Bureau ("BBB") or their state attorney general. 

Some consumers, upon realizing that their Social Security numbers, birthdates, card numbers, 

and other personal details are now in the hands of scammers, spend time contacting banks and 

government agencies in an attempt to protect themselves from identity theft. To date, 

Defendants' scheme has generated more than 500 consumer complaints and has caused millions 

of dollars of consumer loss. 

The FTC brings this motion ex parte to seek an immediate halt to this operation, to freeze 

its assets and the assets of those involved, and to have a temporary receiver appointed over the 

business. The relief sought by the FTC is supported by overwhelming evidence, including 

consumer complaints; screenshots of Defendants' deceptive advertisements, emails, and 

websites; and sworn statements from eight consumers, an FTC Investigator, and the BBB branch 

that has received hundreds of complaints against the business and rejected its bid for 

accreditation. 

The evidence filed herewith shows that Defendants are violating multiple federal 

consumer protection laws: 

• Section 5(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 

§ 45(a), which prohibits unfair or deceptive acts or practices in or affecting 

commerce; 

• Section 4(1) and (2) of the Restore Online Shoppers' Confidence Act 

("ROSCA"), 15 U.S.C. § 8403(1) & (2), prohibiting online sales effected through 

negative options unless the seller (1) clearly and conspicuously discloses all 

material terms of the transaction before obtaining the consumer's billing 

2 
information, and (2) obtains the consumer's express informed consent before 

making the charge; and 

• Section 612(g)(l) of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. 

§ 168lj(g)(l), and the Free Annual File Disclosures Rule ("Free Reports Rule"), 

12 C.F.R. § I 022.138, requiring that all websites advertising free credit reports 

disclose prominently, as specified in the rule, that free credit reports arc available 

through AnnualCreditReport.com and 877-322-8228. 

Defendants have continued these violations for nearly three years despite a flood ofconsumer 

complaints and repeated cancellations of their merchant accounts for excessive chargebacks. 

During this time, CBC has generated over $6 million in sales while paying its affiliate marketers 

more than $2.1 million in connection with the bogus rental ads. 

Defendants' widespread pattern of fraud, unauthorized charges to consumers' accounts, 

and efforts to evade responsibility for their conduct all strongly suggest that they would hide or 

dissipate assets if they received notice of this action. The requested relief is necessary and 

appropriate to preserve the Court's ability to provide effective final relief, including eventual 

restitution to the victims. 

II. DEFENDANTS' UNLAWFUL BUSINESS PRACTICES 

Defendant' scheme involves three steps: First, Defendants post Craigslist ads for 

attractive rental properties in order to lure consumers to send emails expressing interest. Next, 

when consumers respond to the ads, Defendants reply by impersonating the owner or manager of 

the properties and inviting consumers to take a tour-but only if they first obtain a credit report 

and score by clicking on a link in the email. Finally, when consumers click on the link in the 

email, they arrive at a website that leads them to believe they are signing up for a free credit 

report and score, when in fact they are unwittingly being enrolled in an expensive credit 

monitoring service. Each step of this scheme will be discussed in turn. 

3 
A. Defendants' Fake Craigslist Ads 

CBC promotes its websites through affiliate marketers. Defendants Danny Pierce and 

Andrew Lloyd. In affiliate marketing, a seller of goods or services (typically called the 

"merchant" or "advertiser") uses other firms or individuals (the "affiliates" or "publishers") to 

market the merchant's goods or services by attracting potential customers to the merchant's 

websites. The merchant pays an affiliate for each consumer who, as a result of that affiliate's 

marketing efforts, visits the merchant's website or purchases the merchant's products. Here, as 

CBC's affiliate marketers, Pierce and Lloyd place ads on Craigslist in local areas throughout the 

country, offering desirable rental properties, pictured in the ads, at attractive prices. 1 These ads 

typically do not include the physical address of the property or provide a telephone number for 

inquiries.2 Consumers find that the only way to contact the persons offering the properties for 

rent is by email.3 

The Craigslist ads are designed to catch the attention of consumers looking for rental 

properties. One such consumer, Alexandra Heller, was looking for a home in the greater 

Philadelphia area when she came across one of Defendants' ads. "It was in my price range, was 

1 See, e.g., Plaintiffs Exhibit ("PX") 10, McKenney Dec. irif 7, 10-11, 15, 19-20, 22-24, 

26-27, 37-38 & Alts. A at 1, D at 1-2, Fat 1-2, Hat 1-2, J at 1-2; PX 2, Berney Dec. iii! 2-3 

(consumer found listing on Craigslist "for a cute apartment with a good price in a neighborhood 1 

liked"); PX 3, Chapple Dec. iii! 2-3 (house advertised for rent on Craigslist "seemed perfect for 

my family"); PX 4, Falzarano Dec. iii! 2-4 (apartment was reasonably priced and in building 

where consumer had lived before); PX 7 Spellman Dec. ii 3 (reasonably priced unit in secure 

building); PX 8, Tucker Dec. ii 3 (apartment listed at good price). 

2 See, e.g., PX 10, McKenney Dec. iii! 7, 10-11, 15, 19-20, 22-24, 26-27, 37-38 & Atts. A 

at 1, D at 1-2, F at 1-2, H at 1-2, J at 1-2; PX 1, Allen Dec. ,,f 3-4; PX 2, Berney Dec. iii! 3-4; PX 

3, Chapple Dec., 3; PX 4, Falzarano Dec. ii 4; PX 5, Heller Dec.,, 3-4; PX 6, Leonard Dec. iii! 

2-3; PX 7, Spellman Dec. iii! 3-4; PX 8, Tucker Dec. ii 4. 

3 See id. 

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located in a good area, and looked appealing in the photos," Ms. Heller later explained.4 After 

seeing the ad, she emailed the Defendants to express her interest:5 

-----Original Message----- From: Alexandra Heller To: @iiseog@yahoo.com 

Sent: Mon, Jun 27, 2016 12:32:34 PM Subject: Interested in your apartment 

listing on Craigslist Hello, I came across your listing on Craigslist for the 

apartment in Queen Village and am very interested to learn more.A I would love 

to set up a walk-through sometime this week if ossible.A Please don't hesitate to 

reply back to this email or call/text me attel .A Looking forward to 

hearing from you, and thanks so much! --Alexan ra Heller 

Unbeknownst to Ms. Heller, the ad was fake, as are all of Defendants' rental ads. 6 

Defendants' advertised properties either do not exist, or are properties that Defendants have no 

authority to offer for rent. In some instances, the ads are assembled from generic captions, text 

and photographs.7 In other instances, the contents are copied from legitimate rental ads or 

websites and are republished by the Defendants without authorization. 8 The sole purpose of the 

ads is to generate responses from consumers, who are then driven to CBC's websites by the fake 

landlord emails described below. 

Based on the high number of consumer complaints that reference Defendants' Craigslist 

rental ads, these ads appear to be highly effective.9 Many consumers looking for housing take 

the ads at face value, assuming that the advertised properties exist and are currently available for 

4 PX 5, Heller Dec.~~ 2-3. 

5 Id. ~ 4 & Att. A at 2. 

6 Id. n 4-12; McCool Dee.~~ 6-8 & Att. A (consumer complaints). 

7 PX IO, McKenney Dec. ir~ 37-38 & Att. N (describing and attaching an online 

repository of generic ads). 

8 PX 9, McCool Dec. Att. A at 10, 34; PX 3, Chapple Dec. ~ 12. 

9 See, e.g., PX 10, McKenney Dee.~~ 74-76 (referencing 297 consumer complaints); PX 

9, McCool Dec. ~~ 4-7, 17 & Att. A at 1-8, 10-17, 20, 22-23, 25-27, 30-31, 34-44, 46-53, 55-61, 

64-78, 80-81 & Att. I at 4-10 (consumer complaints). 

5 
rent through Defendants. Deceived by the ads, consumers respond by email seeking more 

information and/or to schedule a tour of the property. 10 

B. Defendants' Fake Landlord Emails 

When consumers respond to the Craigslist ads with emails inquiring about the properties, 

they receive responses that purport to be from the property owner or manager but in fact are 

designed to lure consumers to CBC's websites. Addressing the consumers personally, the emails 

typically state that the unit is still available and tout its amenities, such as new appliances and 

garage parking. The emails explain that the consumers will need to obtain a credit report and 

credit score in order to rent the unit, and instruct the consumers to obtain that information by 

clicking on a link in the email. 11 The emails frequently reassure consumers that "all of our 

tenants" have used the credit report website and "haven't had any problems." 12 As an extra 

incentive, many emails have stated that, if the consumer's credit score exceeds a certain level, 

such as 600, the security deposit on the rental property will be waived. 13 The emails direct 

consumers to bring the credit report with them when they come to tour the rental property. 

10 See, e.g., PX I, Allen Dec. ii 4; PX 2, Berney Dec. ii 4; PX 3, Chapple Dec. ii 4; PX 4, 

Falzarano Dec. '1f 4; PX 5, Heller Dec. '1f 4; PX 6, Leonard Dec. ii 3; PX 7, Spellman Dec. '1f 4; PX 

8, Tucker Dec. 1f 4. 

11 See, e.g., PX I 0, McKenney Dec. Alts. A at 2, D at 3, Fat 3, Hat 3, J at 3; PX I, Allen 

Dec. '1f'1f 6-7 & Att. A; PX 2, Berney Dec. '1f'1f 5-7 & Alt. A; PX 3, Chapple Dec. '1f'1f 5-6; PX 4, 

Falzarano Dec. irir s-8 & Alt. A; PX 5, Heller Dec. 11'1! 5-7 & Alt. A; PX 6, Leonard Dec. '1!'114-5 

& Att. A; PX 7, Spellman Dec. '1f 4 & Att. A; PX 8, Tucker Dec. '1f'1f 5-7; PX 9, McCool Dec. Att. 

I at4-5. 

12 See, e.g., PX 2, Berney Dec. Alt. A; PX 9, McCool Dec. Alt. I at 4-5. 

13 See, e.g., PX 1, Allen Dec. Att. A; PX 3, Chapple Dec. '1f 5; PX 7, Spellman Dec. Alt. 

A. 

6 
A representative response email 14 from the purported property owner or manager is set 

out below-these emails reinforce consumers' impression from the Craigslist ads that the 

advertised property is real and that Defendants are authorized to lease it: 

From: "Olivia Gentilen <leasi::d(qlsbowtQJire site> 

Date: June 28, 2016 at 5 :09:41 PM EDT 

To:-

Subject: RE: Interested in your apartment listing on Craigslist 

Hello Alexandra, 

Thank you for your interest in the property listed for rent. You were the second to 

e~n1ail ftom the ad. The first prospective tenant no longer had to move because of 

his home situation. So we give the opportunity to you. We are now ready to lease 

with flexible terms and just completed all new renovations. We will work together 

with you on move in date, lease security deposit and length. 

I understand that you want the precise address of the property but my husband 

does not want me disclose due to security reasons. We have had a string of break~ 

ins, squatters and thefts at our other properties. We want to prevent that with this 

property because of the renovations that have cost lots of money. You1

ll be the 

first to 1nove in with the renovations. That is why we want to confirm you have 

your latest report before we arrange a walk through. 

All utilities are priced into the lease along with garage parking spaces. The 

appliances in the kitchen as well as laundry room were just installed. You have 

the option to pick your paint color and flooring prior to your arrival 

When you want to come look at the place, then please visit the link below and 

grab your report. We recommend this site because all of our tenants used it and 

haven't had any problems. Just fill out the fOrm and indicate that you want the 

report. We are not concerned with any negative report items, it's more of a 

formality to ensure you have rental history. Simply get your report by CLICKING 

HERE 

Keep in mind that you only have to bring your report to the tour. Please let n1e 

know when you grab your report. I can then schedule you for a walk through of 

the place. 

Thanks, 

Olivia 

Following the "CLICKING HERE" hyperlink takes consumers to one ofCBC's websites. 

Defendants lure thousands of consumers across the United States to CBC's websites 

based on these false pretenses. 15 Defendants' Craigslist ads and fake landlord emails are 

14 PX 5, Heller Dec. Att. A. 

7 
designed to give consumers the impression that they are following the necessary steps to rent an 

attractive and inexpensive place to live. By representing to consumers that getting their credit 

report and credit score is a prerequisite to viewing and renting an actual physical property, the 

Defendants successfully deceive consumers into clicking on the links in the emails. 

C. Credit Bureau Center's Deceptive Websites 16 

Consumers arriving at CBC's websites via the fake landlord email have just been assured 

that they can obtain their credit report through a simple and trustworthy process: 

When you want to coine look at the place, then please visit the link below and 

grab your report. We recommend this site because all of our tenants used it and 

haven't had any problems. Just fill out the form and indicate that you want the 

report. We are not concen1ed with any negative report items, it's more of a 

formality to ensure you have rental history. Simply get your report by CLICKING 

1iERE 

Keep in mind that you only have to bring your report to the tour. Please let me 

know when you grab your report. I can then schedule you for a walk through of 

the place. 

See PX 5, Heller Dec. Att. A. CBC designs its websites to offer consumers just what the fake 

landlord said they needed in order to tour the rental property-a credit report and score, 

containing their current information, for "free." This offer is express and unambiguous. On May 

19, 2016, for example, the banner headline on the landing page of both the eFreeScore.com and 

CreditUpdates.com websites stated: 

Get Your 

and Report as of May 19, 2016 

15 PX 10, McKenney Dec.~· 33 (referencing 146,000 sales); PX 9, McCool Dec.~ 6 

(referencing 227 complaints). 

16 As eFreeScore.com and CreditUpdates.com are materially similar, the description and 

analysis that follow would apply to the consumer experience on either site. 

8 
See PX I 0, McKenney Dec. Att. E at 1, 2. Having promised consumers what they came for, the 

websites then guide them through a series of four webpages: a landing page followed by three 

webpages marked as (I) Complete, (2) Confirm, and (3) Verify. 17 

Consumers find that each of these webpages contains a few spaces where they must enter 

personal information. They advance through the webpages by clicking on large orange buttons 

labeled "YOUR SCORE - NOW!" and "Submit & Continue." By the end of the process, 

consumers have entered their name, address, telephone number, email address, credit or debit 

card number, birthdate, and Social Security number.18 Unfortunately for consumers, they have 

divulged all of this highly personal information to get a credit report and score in order to qualify 

for a rental opportunity that does not exist. 

CBC rakes in millions of dollars through this scheme 19 because every consumer who 

enters his or her information on the website is automatically enrolled in a negative option sevenday trial of its credit monitoring service. After seven days, CBC charges $29.94 monthly to the 

card the consumer entered on the website, unless and until the consumer cancels the service. 

There is no way consumers can obtain the promised free credit score and report without being 

automatically signed up for the negative option trial. 

By designing its websites to appeal to consumers looking to obtain a "free" credit report 

that will enable them to tour an attractive apartment, CBC is routinely able to charge consumers 

for its credit monitoring service without their knowledge or consent.20 This is no accident. The 

17 See PX 10, McKenney Dec. 'lf'lf 13-14, 17-18, 21, 25, 28 & Atts. B, E, G, I, K (website 

printouts). 

18 Id. 

19 Id. 163. 

20 See, e.g., PX IO, McKenney Dec. 'lfil 74-76 (noting that many consumers complain of 

unauthorized charges); PX I, Allen Dec. 113; PX 2, Berney Dec. 1'1! 13-14; PX 3, Chapple Dec. 

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nature of CBC's scheme is apparent from the company's maintenance of two versions of its 

websites: one cleaned-up version for public display, accessible through any browser at 

eFreeScore.com or CreditUpdates.com, and the other for consumers who have arrived there via 

the link in the fake landlord emails. 21 On its publicly accessible websites, CBC does not hide the 

fact that the service being offered is not a free credit report and score but rather a paid 

subscription for credit monitoring.22 On the deceptive version of its websites shown to 

apartment-hunting consumers, however, CBC prominently advertises a "free" credit report and 

score without prominently advertising its credit monitoring service. 23 Indeed, the sole reference 

to credit monitoring on these deceptive websites during the sign-up process appears at the bottom 

of the landing page, in a block of fine print that consumers would have to scroll down to see.24 

Elsewhere on the deceptive versions ofCBC's websites, there are fine-print references to 

a trial period and monthly membership, but these references are confusing, inconspicuous, and 

do not mention the credit monitoring service for which consumers are to be charged. For 

~ 22; PX 4, Falzarano Dec.~~ 11-13; PX 5, Heller Dec.~~ 13-14; PX 6, Leonard Dec.~ 10; PX 

8, Tucker Dec. ~~112-15. 21 PX 10, McKenney Dec.~~ 13-14, 17-18, 21, 25, 28, 30-32. 

22 PX 10, McKenney Dec.~~ 30-32 & Atts. L-M. 

23 In addition to the bold heading on the landing page, "Get Your Free Credit Score and 

Report as of[date]," each of the three webpages that follow include headings and text addressing 

"What is a good Credit Score?" and "Will I find errors on my credit report?" See, e.g., PX 10, 

McKenney Dec. Att. Eat 3, 5-6. Nowhere in the sign-up process are the benefits of the credit 

monitoring service advertised. 

24 The fine print at the bottom of the landing page states: 

Monitoring services may take up to 3 days to become active so this service within your 

membership may not be available during the whole 7-day trial period. The credit scores 

we offer may not be the same scoring model used by a lender or other credit score sites so 

view this score only for educational purposes. Experian, Equifax, and Transunion 

trademarks remain property of their respective holders, and are only used to directly 

describe the products and the source of the credit data being provided. 

See PX 10, McKenney Dec. Alts. B at 2, E at 2, G at 2, K at 2. 

10 
example, the desktop version of the landing page includes fine print merely stating, "7-day trial 

ends [date]," and, separately, "Monthly membership of$29.94 automatically charged after 

trial. "

25 These fine-print statements are much smaller and fainter than the banner headline above 

them advertising the "free" credit report and score. On the mobile version of that same page, the 

statements do not appear at all. 26 Even if consumers visiting the desktop version of the landing 

page were to see these statements, they do not explain why consumers would be charged for 

something already promised to them for "free," nor do they provide any basis for the charges. 

The same is true of fine print on the webpage where consumers enter their credit or debit 

card information. The stated purpose of this webpage27 (step 2 of 3) is to confirm the 

consumer's identity. Large, bold print across the top of the page states, "Your credit score is 

ready once we confirm your identity!" The webpage then requests "Verification and Payment 

Information," stating, 'Tell us which card you would like to use for your $1.00 refundable 

processing fee and membership." Below that are spaces for the consumer to enter their credit or 

debit card information. Near the bottom of the page, there is a block of fine print referencing the 

7-day trial and the monthly charges commencing after the trial. 28 Once again, however, this fine 

print fails to explain why consumers would be charged for their "free" credit report and score, 

and fails to identify anything else for which consumers would be charged. Even if seen by 

consumers, this language is confusing at best, and wholly inadequate to correct the wall-to-wall 

deception aimed at consumers in this case.

29 

25 See PX 10, McKenney Dec. Atts. Bat 1, Eat I, G at I, I at 1, Kat I. 

26 See PX 10, McKenney Dec. Atts. C, l. 

27 See PX 10, McKenney Dec. Atts. Bat 21, Eat 5, G at 20, Kat 5. 

2s Id. 

29 The terms and conditions on CBC's websites, which are accessible only through a 

hyperlink, contain additional statements referencing credit monitoring buried in numerous pages 

of dense text. These statements discuss the "Credit Monitoring Membership With Trial," and 

11 
After completing the required steps on the website and obtaining their credit rep01t and 

score, consumers attempt to schedule the walk-through of the rental property. 30 They are never 

able to do so. There is no rental property to see. Emails to the fake landlord receive no response 

or bounce back as undeliverable. 31 Consumers have paid to obtain a purportedly "free" credit 

report and score for no reason. 

D. Consumer Injury 

After having been promised "free" credit reports and scores, many consumers are 

surprised to find on their debit or credit card statements unauthorized charges for CBC's credit 

monitoring service.32 Many of these consumers do not realize they have been scammed until 

they notice these charges, sometimes after several billing cycles.33 Moreover, CBC routinely 

denies consumers' requests for refunds, despite being informed the charges were unauthorized, 

and agrees only to cancel future charges. 34 When consumers complain about the fake Craigslist 

ads and landlord emails, the company's representatives deny responsibility, or dismiss these 

also point out that consumers may obtain a free credit report from AnnualCreditReport.com or 

(877) 322-8228. See, e.g. PX I 0, McKenney Dec. Att. Bat 9-15. However, the sign-up process 

does not require consumers to click on the terms and conditions or to acknowledge that they 

understand and expressly agree to the negative option trial. Given the large number of 

consumers who complain about having been unwittingly enrolled in CBC's credit monitoring 

services, CBC's terms and conditions are plainly insufficient to cure CBC's false promise of a 

"Free Credit Score and Report." 

30 See, e.g., PX 2, Berney Dec.'\[ 12; PX 3, Chapple Dec.'\[ 11; PX 4, Falzarano Dec.'\[ 15 

& Att. A; PX 5, Heller Dec.'\[ 12; PX 6, Leonard Dec. ii 8 & Att. A; PX 7, Spellman Dec.'\[ 7. 

31 See id. 

32 See, e.g., PX 10, McKenney Dec. 'll'll 74-76; PX I, Allen Dec.~ 13; PX 2, Berney Dec. 

11~ 13-14; PX 3, Chapple Dec. 'II 22; PX 4, Falzarano Dec. 'll'll 11-13; PX 5, Heller Dec. 'II'\! 13-14; 

PX 6, Leonard Dec. 'II 10; PX 8, Tucker Dec. 11~ 12-15. Some consumers have incurred 

unauthorized charges even after cancelling the service. See, e.g., PX 7, Spellman Dec. 'II'\! 13-14 

& Atts. C, D. 

33 See, e.g., PX 9, McCool Dec. Att. A at 77 (consumer was charged for three months of 

credit monitoring without her knowledge or consent). 

34 See, e.g., PX 9, McCool Dec. 'I! 8 (describing CBC's typical response to consumer 

complaints) and Att. A at 9, 15, 20, 21, 24, 25, 32, 37, 43, 50, 55, 59, 63, 79; PX 6, Leonard Dec. 

~ 11. 

12 
tactics as harmless "phishing."35 Only very persistent consumers get their money back by 

initiating chargebacks with their banks or credit card companies or by filing complaints with law 

enforcement or the BBB.36 

Apart from the financial losses, consumers are deeply concerned that a company like 

CBC still has their Social Security numbers, birthdates, card numbers and other personal 

information. Consumers understandably do not trust CBC to safeguard this information, given 

that it obtained the information by deceiving them. Seeking to protect themselves, consumers 

have closed their accounts and reported the misappropriation of their personal identifiers to the 

Social Security Administration, Internal Revenue Service, and credit bureaus.37 Meanwhile, 

CBC continues to extract the same information from more consumers through its scheme. 

Since 2014, when CBC retained Pierce and Lloyd to drive traffic to its websites, more 

than 146,000 consumers have been driven to CBC's websites by the fake landlord emails, and 

more than 500 consumers have complained about this scheme to the FTC, other law 

enforcement, or the BBB, with a majority of those complaints referencing Defendants' Craigslist 

35 See, e.g., PX 3, Chapple Dec. ii 21; PX 9, McCool Dec. Att. A at 18, 64, 73. 

36 See, e.g., PX 9, McCool Dec. ii 8 (discussing large number of consumer complaints to 

BBB and their disposition); PX I, Allen Dec. iii! 14-17 (denied refund initially until informing 

CBC it was a "scam"); PX 2, Berney Dec. ir~· 14-16 (told customer service representative that the 

charge was unauthorized and then complained to BBB); PX 3, Chapple Dec. ii, 19-22 

(demanded that CBC not charge her and delete her personal information); PX 6, Leonard Dec. n 

11-12 (denied a refund until complaining to the BBB); PX 7, Spellman Dec. iii! 9-15 (attempted 

but was unable to cancel service until complaining to BBB); PX 8, Tucker Dec. iii! 15-23 

(obtained a refund only after complaining to BBB). 

37 See, e.g., PX l 0, McKenney Dec. iii! 74-76 (summarizing typical consumer 

complaints); PX 3, Chapple Dec. iii! 15, 18, 21, 23-24 (contacted IRS and Social Security 

Administration); PX 4, Falzarano Dec. n 22-23 (contacted Social Security Administration and 

credit bureaus); PX 5, Heller Dec. iii! 16-17 (contacted Social Security Administration and credit 

bureaus); PX 6, Leonard Dec. ii 13 (concerned by CBC's possession of her personal 

information). 

13 
ads. 38 During the same time period, CBC has taken in at least $6 million in sales, while paying 

Pierce and Lloyd more than $2.1 million in affiliate commissions. 39 

III. DEFENDANTS 

The four Defendants are a limited liability company, its owner, and two affiliate 

marketers. Defendant Credit Bureau Center, LLC, formerly known as MyScore LLC, is a 

Delaware LLC and does business as eFreeScore.com, CreditUpdates.com, and 

FreeCreditNation.com. The company was organized in California as MyScore LLC on August 

8, 2011, and converted to a Delaware LLC on October 20, 2016.40 Defendant Michael Brown is 

the owner and manager of CBC. Brown controls and actively participates in its activities, 

including the operation of its websites and the hiring of its affiliate marketers. 41 Brown was a 

resident of Los Angeles until 2016, when he moved to the U.S. Virgin lslands.42 

Defendants Danny Pierce and Andrew Lloyd are affiliate marketers for CBC and aTe 

responsible for the fake Craigslist ads and fake landlord emails luring consumers to the 

company's websites. 43 Pierce is a resident of New Jersey.44 Lloyd is a resident of 

Pennsylvania.45 They have received more than $2.1 million in commissions on over 146,000 

sales ofCBC's credit monitoring service.46 

38 PX 10, McKenney Dec. jf~ 33 (tabulating sales), 74-76 (referencing 297 consumer 

complaints); PX 9, McCool Dec.~ 6 (referencing 227 consumer complaints). 

39 PX 10, McKenney Dec.~~ 33, 63. 

40 PX 10, McKenney Dec. n 32, 53-54, 56-59 and Atts. 0-P (corporate records). 

41 PX 10, McKenney Dec.~~ 33, 56-60, 62, 66, 68-73. 

42 PX IO, McKenney Dec.~ 70. 

43 PX 10, McKenney Dec. ir~ 33-52, 69. 

44 PX 10, McKenney Dec.~~ 35-36. 

45 PX I 0, McKenney Dec.~~ 40, 52. 

46 CBC pays these commissions to Pierce. See PX 10, McKenney Dec.~~ 33, 69. The 

affiliate marketers' respective roles in the overall scheme are discussed in section IV.B.l .f. 

14 
IV. ARGUMENT 

Defendants• deceptive scheme violates Section 5(a) of the FTC Act. 15 U.S.C. § 45(a). 

Section 4 of ROSCA, 15 U.S.C. § 8403, Section 612(g)(I) of the FCRA, 15 U.S.C. 

§ 168 lj(g)(I ), and the Free Reports Rule, 12 C.F.R. § 1022.138. To prevent any further injury to 

consumers, the FTC asks that the Court issue ex parte the proposed Temporary Restraining 

Order ("TRO"). This order would enjoin Defendants' ongoing law violations and would provide 

for other equitable relief designed to preserve the Court's ability to provide restitution to victims 

at the conclusion of the case. 

A. This Court Has the Authority to Grant the Requested Relief. 

The FTC Act provides that "in proper cases the Commission may seek, and after proper 

proof, the court may issue, a permanent injunction." 15 U.S.C. § 53(b). Once the FTC invokes 

the federal court's equitable powers, the full breadth of the court's authority is available, 

including the power to grant such ancillary final relief as rescission of contracts and restitution. 

FTC v. Febre, 128 F.3d 530, 534 (7th Cir. 1997); FTC v. Amy Travel Serv., Inc., 875 F.2d 564, 

571-72 (7th Cir. 1989). The court also may enter a temporary restraining order, a preliminary 

injunction, and whatever additional preliminary relief is necessary to preserve the possibility of 

providing effective final relief. FTC v. World Travel Vacation Brokers, Inc., 861 F.2d I 020, 

I 026 (7th Cir. 1988). Such ancillary relief may include an asset freeze to preserve assets for 

eventual restitution to victimized consumers. World Travel, 861 F.2d at I 031. Appropriate 

ancillary relief also includes the appointment of a receiver. See, e.g., FTC v. US. Oil & Gas 

Corp., 748 F.2d 1431, 1432 (I Ith Cir. 1984). 

B. The FTC Meets the Standard for Issuance of a Temporary Restraining 

Order. 

To grant preliminary injunctive relief in an FTC Act case, the district court must: 

15 
(I) determine the likelihood that the FTC will ultimately succeed on the merits, and (2) balance 

the equities. World Travel, 861 F.2d at 1029. Unlike private litigants, "it is not necessary for the 

FTC to demonstrate irreparable injury." Id. When the court balances the equities, the public 

interest "must receive far greater weight" than any private concerns. Id. As detailed below, the 

FTC has demonstrated that it will succeed on the merits of its claims and that the balance of 

equities favors injunctive relief. 

1. The FTC is Likely to Succeed on the Merits. 

Finding that the FTC is likely to prevail on the merits requires only a'\howing that its 

chances of success are "better than negligible." DJ!. v. Rhoades, 825 F .3d 3 3 1, 3 3 8 (7th Cir. 

2016). The FTC clears this hurdle easily. Extensive evidence shows that all four DefcndantsCBC, Brown, Pierce and Lloyd-are liable for falsely advertising rental opportunities to drive 

traffic to CBC's websites, as alleged in Count I of the FTC's Complaint. The evidence also 

shows that two of the Defendants, CBC and Brown, are liable for the deceptive and unlawfol 

practices on the websites, as alleged in Counts II through V of the FTC's Complaint. 

a. Defendants' Practices Violate Section S(a) of the FTC Act. 

Section 5 of the FTC Act prohibits "unfair or deceptive acts or practices in or affecting 

commerce." 15 U.S.C. § 45. An act or practice is deceptive if it involves a material 

misrepresentation or omission that is likely to mislead consumers acting reasonably under the 

circumstances. See FTC v. Bay Area Bus. Council, 423 F.3d 627, 635 (7th Cir. 2005); FTC v. 

World Media Brokers, 415 F.3d 758, 763 (7th Cir. 2005); FTC v. QT, Inc., 448 F. Supp. 2d 908, 

957 (N.D. Ill. 2006). The materiality requirement is satisfied if the misrepresentation or 

omission involves information that is likely to affect a consumer's choice of, or conduct 

regarding, a product or service. See Kraft, Inc. v. FTC, 970 F.2d 311, 322 (7th Cir. 1992), cert. 

16 
denied, 507 U.S. 909 (1993). Reliance on express claims is presumptively reasonable. See 

World Travel, 861 F.2d at l 029. In deciding whether particular statements arc deceptive, courts 

must look to the overall net impression of consumers. See FTC v. US Sales Corp., 785 F. Supp. 

737, 745 (N.D. Ill. 1992). Defendants' false advertising of rental properties and CBC's offer of 

free credit reports on its websites are deceptive. 

i. Defendants' False Advertising of Rental Properties on 

Craigslist and by Email Violates Section S(a) of the FTC 

Act. 

Defendants' fake Craigslist ads for rental properties and fake landlord emails driving 

consumers to CBC's websites are deceptive acts or practices under Section S(a) of the FTC Act, 

15 U.S.C. § 45(a). As discussed above, Defendants lure consumers to CBC's websites by 

posting fake ads for rental properties on Craigslist and impersonating landlords when consumers 

respond to the ads. Defendants claim to be currently offering the properties for rent, and promise 

consumers tours of the properties if they will first go on CBC's websites and get their credit 

reports. Defendants' representations are utterly false. The advertised rental properties either do 

not exist or are properties Defendants have no authority to offer for rent. Consumers who obtain 

their credit reports as instructed and attempt to arrange tours of the properties receive no 

response, and never get the promised tours. 

ii. Credit Bureau Center's Websites Violate Section S(a) of 

the FTC Act. 

CBC's websites violate Section 5(a) of the FTC Act by deceptively offering consumers 

"free" credit reports and scores without adequately disclosing that consumers will he 

automatically enrolled in the negative option trial of a credit monitoring service, and other 

material terms and conditions. 

17 
CBC' s websites build on the deception in the fake Craigslist ads and fake landlord 

emails. Having responded to the fake rental ads, consumers are steered to the websites believing 

they need their credit reports and scores to tour attractive rental properties and possibly get their 

security deposits waived. The websites, on cue, expressly offer consumers "free" credit reports 

and scores. The offer is conveyed in a large, bolded heading on the landing page: "Get Your 

Free Credit Score and Report as of [Date]."47 When consumers enter their personal 

information to get these items, however, they automatically are enrolled in a costly separate 

service mentioned only cryptically in fine print. 

The fine print on CBC's websites cannot and does not cure the deceptive net impression 

ofconsumers lured to the websites by false rental opportunities and the promise of free credit 

reports and scores. It is well established that deceptive practices cannot be cured by fine print 

disclosures that consumers may not read or understand. See Porter & Dietsch v. FTC, 605 F.2d 

294, 301 (7th Cir. 1979). As explained in FTC v. US Sales Corp., 785 F. Supp. 737, 751 (N.D. 

Ill. 1992) (quoting Removatron International Corp. v. FTC, 884 F.2d 1489, 1497 (1st Cir.1989)), 

modified, No. 91C3893, 1992 WL 104819 (N.D. lll. May 6, 1992): 

Disclaimers or qualifications in any particular ad are not adequate to avoid liability unless 

they are sufficiently prominent and unambiguous to change the apparent meaning of the 

claims and to leave an accurate impression. Anything less is only likely to cause 

confusion by creating contradictory meanings. 

See also FTC v. Cyberspace.com LLC, 453 F.3d 1196, 1200 (9th Cir. 2006) ("A solicitation may 

be likely to mislead by virtue of the net impression it creates even though the solicitation also 

contains truthful disclosures."). 

47 PX 10, McKenney Dec. '11'1113-14, 17-18, 21, 25, 28 & Atts. Bat I, Cat I, Eat 1, G at 

1,latl,Katl. 

18 
Here, the only information about the charges for CBC's credit monitoring service is 

incomplete, inconspicuous, and inconsistent with the express representations on CBC's websites. 

In certain places, and only in fine print, CBC mentions a "trial" or a "membership" without any 

reference to a credit monitoring service or a $29.94 monthly chargc.48 In other places, also in 

fine print, CBC mentions the $29.94 monthly charge but fails to connect that charge to the credit 

monitoring service.49 In only one instance does CBC mention the monitoring service, and there 

it is only to state-again, in fine print-that it may take three days to become active. 50 Tellingly, 

nowhere does CBC reveal the full story: that obtaining a "free credit score and report"-the 

explicit promise made on the landing page-requires consumers to sign up for a trial 

membership in a $29.94/month credit monitoring service. CBC's acontextual and inconspicuous 

disclosures are therefore wholly inadequate to "change the apparent meaning of the claims and to 

leave an accurate impression." US Sales Corp., 785 F. Supp. at 751. 

The inadequacy of the fine print is further evidenced by the hundreds of consumers 

deceived by Defendants' scheme. 51 Although it is not necessary to prove actual deception to 

establish a violation of the FTC Act, "such proof is highly probative to show that a practice is 

likely to mislead consmners acting reasonably under the circumstances." Cyber.1pace.com, 453 

F Jd at 120 l (citation omitted). 

b. Credit Bureau Center's Websites Violate ROSCA. 

CBC's websites also violate Sections 4(1) and (2) of ROSCA, 15 U.S.C. § 8403(1) & (2), 

which prohibit charging consumers for goods or services sold in transactions effected on the 

Internet through a negative option feature unless the seller (1) clearly and conspicuously 

48 PX I 0, McKenney Dec. 'll'lf I 7-18 & Att. Eat 1, 2. 

49 PX 10, McKenney Dec. 'll'\l 17-18 & Att. E. at 1, 2, 5. 

50 PX 10, McKenney Dec. 'lf'lf 17-18 & Att. Eat 2. 

51 PX IO, McKenney Dec. 'lf'lf 74-76; PX 9 McCool Dec. 'lf'lf 6-7 & Att. A. 

19 
discloses all material terms of the transaction before obtaining the consumer's billing 

information, and (2) obtains the consumer's express informed consent before making the charge. 

CBC's credit monitoring service includes a "negative option feature" as defined by 

ROSCA because the "silence or failure to take affirmative action to reject goods or services or to 

cancel the agreement" subjects consumers to recurring $29.94 charges for credit monitoring. 52 

But, as discussed in section IV.B.1.a.ii above, CBC obtains consumers' billing information on its 

websites without clearly and conspicuously disclosing that the consumers are being enrolled in 

that negative option feature. CBC also routinely charges consumers for its credit monitoring 

service without obtaining their express informed consent. 

c. Credit Bureau Center's Websites Violate the FCRA and the 

Free Reports Rule. 

CBC's websites also violate Section 612(g) of the FCRA, 15 U.S.C. § 168lj(g)(l),53 and 

the Free Reports Rule, 12 C.F.R. § 1022.138. Section 612(g) of the FCRA requires all 

advertisements for free credit reports to prominently disclose that such reports are available from 

AnnualCreditReport.com. The Free Reports Rule sets forth specific requirements for such 

disclosures, including that any website offering free credit reports54 in connection with the sale 

of a product or service must display a prominent disclosure across the top of each page that 

52 ROSCA, 15 U.S.C. § 8403, defines "negative option feature" by incorporating the 

definition in the FTC's Telemarketing Sales Rule: "in an offer or agreement to sell or provide 

any goods or services, a provision under which the customer's silence or failure to take an 

affirmative action to reject goods or services or to cancel the agreement is interpreted by the 

seller as acceptance of the offer." 16 C.F.R. § 310.2(w). 

53 Pursuant to Section 62 l(a)(l) ofFCRA, "a violation of any requirement or prohibition 

imposed under [the FCRA] shall constitute an unfair or deceptive act or practice in commerce, in 

violation of Section 5(a) of the [FTC] Act." 15 U.S.C. § 168ls(a)(l). 

54 Under the Free Reports Rule, 12 C.F.R. § 1022.138, "free credit report" means "a file 

disclosure prepared by or obtained from, directly or indirectly, a nationwide consumer reporting 

agency (as defined in Section 603(p) of the FCRA), that is represented, either expressly or 

impliedly, to be available to the consumer at no cost ifthe consumer purchases a product or 

service, or agrees to purchase a product or service subject to cancellation." 

20 
mentions free credit reports, and across the top of each page of the ordering process, which 

states: 

THIS NOTICE IS REQUIRED BYLAW. Read more at consumerfinance.gov/learnmore. 

You have the right to a free credit report from AnnualCreditReport.com or 877-322-8228, 

the ONLY authorized source under federal law. 

CBC's websites advertise free credit reports but contain none of the required disclosures. This 

case presents a perfect example of why those disclosures are required-because they could help 

to steer consumers away from deceptive websites like CBC' s. 

d. Credit Bureau Center is Liable for the Deceptive Practices of 

its Affiliate Marketers. 

Defendant CBC is liable for the deceptive representations in the fake rental property ads 

and fake landlord emails disseminated by its agents, Defendants Pierce and Lloyd.55 CBC pays 

millions of d~llars in commissions for Pierce and Lloyd to drive consumers to CBC's websites 

using the fake ads and emails. 56 CBC and its owner and manager Brown are fully aware of the 

deceptive practices of Pierce and Lloyd, as shown by hundreds of consumer complaints to the 

BBB describing the fake ads and emails, and Brown's communications with the BBB about 

those complaints.57 Rather than end this conduct, however, CBC has embraced it'. To date, 

Pierce's and Lloyd's conduct on CBC's behalf has resulted in more than 146,000 consumers 

enrolling in CBC's credit monitoring service, netting Pierce and Lloyd more than $2. l million in 

commissions. 1t is well established that "[p]rincipals are liable for the misrepresentations of their 

55 Under the Restatement, agency is a "fiduciary relationship that arises when one person 

(a 'principal') manifests assent to another person (an 'agent') that the agent shall act on the 

principal' s behalf and subject to the principal' s control, and the agent manifests assent or 

otherwise consents so to act." Restatement (Third) of Agency § 1.0 I (2006). See also Opp v. 

Wheaton Van Lines, Inc., 231 F.3d 1060, 1064 (7th Cir. 2000) (recognizing that the federal 

common law of agency accords with the Restatement). 

56 PX 10, McKenney Dec. ~Ii! 33, 69. 

57 PX 9, McCool Dec. iJ~ 3, 6-7, 11-23 & Atts. A, C-1. McCool Att. I shows Brown being 

forwarded consumer complaints that include reprints of fake landlord emails (pp. 4-5, 6-7). 

21 
agents under the FTC Act" FTC v. Lifewatch Inc., 176 F. Supp. 3d 757, 779 (N.D. Ill. 2016) 

(collecting authorities). See also FTC v. Stefanchik, 559 F.3d 924, 930 (9th Cir. 2009) 

(defendant liable for misrepresentations of agent it hired to market wealth-building program).58 

CBC is therefore liable for the misrepresentations in the ads and emails disseminated by Pierce 

and Lloyd, as described in sections 11.A-B and lV.B. l .a.i above. 

e. Defendant Brown is Individually Liable. 

Defendant Michael Brown is responsible for CBC's deceptive and unlawful practices and 

should thus be subject to the temporary restraining order and asset freeze. Under the FTC Act, 

ail individual defendant is liable for corporate misconduct if he (I) participated directly in, or had 

some control over, a corporation's deceptive practices, and (2) had actual or constructive 

knowledge of the practices. World Media Brokers, 415 F.3d at 764; Bay Area Bus. Council, 423 

F.3d at 636.59 The FTC does not need to show intent to defraud. Amy Travel, 875 F.2d at 573-

74. Defendant Brown both controls and is aware of CBC's practices. 

As an officer and manager of CBC, Brown plainly has authority to control the company. 

See id at 573 ("Authority to control the company can be evidenced by active involvement in 

business affairs and the making of corporate policy, including assuming the duties of a corporate 

58 "For purposes ofliability under the FTC Act, it is of no consequence" whether CBC's 

affiliate marketers "would be considered at law as employees of the company or independent 

contractors." FTCv. SkyBiz.com, Inc., No. Ol-CV-396-K(E), 2001WL1673645, at *9 (N.D. 

Okla. Aug. 31, 2001) (citing Goodman v. FTC, 244 F.2d 548, 591-92 (9th Cir. 1957)); see also 

Int'/ Art Co. v. FTC, 109 F.2d 393, 396 (7th Cir. 1940) ("We know of no theory oflaw by which 

the company could hold out to the public these salesmen as its representatives, reap the fruits 

from their acts and doings without incurring such liabilities as attach thereto."). 

59 The knowledge requirement is satisfied by a showing that the defendant (I) had actual 

knowledge of the deceptive acts or practices, (2) was recklessly indifferent to the truth or falsity 

of the representations, or (3) had an awareness of a high probability of fraud coupled with an 

intentional avoidance of the truth. World Media Brokers, 415 F.3d at 764; Bay Area Bus. 

Council, 423 F .3d at 636; Amy Travel, 875 F.2d at 574. 

22 
officer"). He is the sole signatory on CBC's corporate bank accounts and pays for its websites. 

He signs the company's merchant processing agreements and directs the routing of the proceeds 

to accounts under his control. He pays the affiliate marketers who drive consumer traffic to the 

websites. And he tracks the volume of that traffic through an online platform that he set up and 

controls.60 

Moreover, Brown is well aware of the consumer complaints and high chargebacks 

dogging the enterprise because of its deceptive practices. See Bay Area Bus. Council, Inc., 423 

F.3d at 637 (finding, for purposes of establishing individual liability, that consumer complaints 

placed the defendant on notice). Since 2014, the BBB's Los Angeles office alone has sent CBC 

hundreds of consumer complaints.61 In many of these complaints, consumers detail not only 

their unwitting enrollment in a credit monitoring service but also their experiences with fake 

Craigslist ads and landlord emails.62 In June of2016, Brown personally contacted the BBB63 to 

contest its statement ale1iing consumers about CreditUpdates.com's "pattern of complaints 

concerning consumers alleging being misled into signing up for a credit reporting service when 

they thought they were applying for housing."64 In response, the BBB emailed several 

. 1 . d' 1 B 65 representative comp amts 1rect y to rown. 

In addition to consumers and the BBB, merchant processors have placed Brown on notice 

of the widespread fraud being perpetrated by CBC. Since 2014, CBC has lost at least five 

merchant accounts due to excessive chargebacks, meaning the payment processors will no longer 

60 PX I 0, McKenney Dec. ifif 33, 53-73 & Alts. D-S. 

61 PX 9, McCool Dec. ifi! 3, 6-7 & Alt. A. 

62 Id. 

63 Id. i! 16 & Att. Hat 4-5. 

64 Id. if 12 & Att. F. 

65 Id. ifif 11-23 & Atts. C-1. McCool Att. I shows Brown being forwarded consumer 

complaints that include reprints of fake landlord emails (pp. 6-7). 

23 
do business with CBC due to the large number of consumers claiming fraud.66 This has forced 

Brown to cycle through multiple merchant processors to avoid any disruption to his fraudulent 

operation.67 

In sum, there is no doubt that Brown not only controls CBC's deceptive practices but also 

has actual knowledge that consumers routinely are being deceived by both the CBC websites and 

the fake Craigslist ads and landlord emails driving consumers to the websites. 

f. Defendants Pierce and Lloyd are Individually Liable. 

As discussed above, Defendants Pierce and Lloyd are the affiliate marketers responsible 

for the fake Craigslist ads and landlord emails luring consumers to CBC's websites. Their 

coordination of the fake rental ad scheme renders them individually liable under Section 5(a). 68 

Pierce is registered on CBC's online platform as the affiliate marketer responsible for 

sending consumers from the fake landlord emails to the deceptive eFreeScore.com and 

CreditUpdates.com landing pages.69 He has retained Lloyd to help drive this traffic, and both 

individuals earn revenue each time consumers click on the link in the fake landlord emails and 

are enrolled in CBC's credit monitoring service.70 Since 2014, Pierce has received from CBC 

more than $2.1 million in commissions on over 146,000 sales. 71 

Lloyd controls the website used to assemble the fake Craigslist ads. 72 He also registers 

the domains used to send consumers the fake landlord replies containing links to CBC's 

66 PX 10, McKenney Dec. '\[if 59, 62. 

67 d I. . '\['\[ 55-64. 

68 Unlike Brown, who engaged in unlawful conduct through his company CBC, Lloyd 

and Pierce did not operate through corporate entities but rather engaged personally in deceptive 

conduct declared unlawful by Section 5(a) of the FTC Act. 

69 PX 10, McKenney Dec. ~1133-36, 69. 

10 Id. 

11 Id. 

72 Id. ifif 37-38 & Att. N. 

24 
websites. 73 The domains featured in these links are also registered by Lloyd. 74 Lloyd has 

attempted to hide his involvement in the scheme by using several aliases in registering domains 

and Pay Pal accounts to fund his operations. 75 By coordinating the creation of fake Craigslist ads 

and fake landlord emails, Lloyd is engaged in deceptive conduct in violation of Section 5(a) of 

the FTC Act. 

2. The Equities Tip Decidedly in the FTC's Favor. 

Once the FTC has shown a likelihood of success on the merits, preliminary injunctive 

relief is warranted as long as the Court, balancing the equities and giving greater weight to the 

public interest than to Defendants' private concerns, finds that relief is in the public interest. 

World Travel, 861 F.2d at 1029. The public equities here are compelling, as the public has a 

strong interest in halting the deceptive scheme, and in preserving the assets necessary to provide 

effective final relief to victims. See FTC v. Sabal, 32 F. Supp. 2d I 004, !009 (N.D. Ill. 1998). 

Defendants, by contrast, have no legitimate interest in continuing to deceive consumers and 

persisting with conduct that violates federal law. See id.; FTC v. World Wide Factors, Ltd., 882 

F .2d 344, 347 (9th Cir. 1989) (upholding district court finding of '"no oppressive hardship to 

defendants in requiring them to comply with the FTC Act, refrain from fraudulent representation 

or preserve their assets from dissipation or concealment."'). An injunction is necessary to ensure 

that Defendants do not continue their scheme while the case is pending. 

C. The Scope of the Proposed TRO is Necessary and Appropriate. 

The evidence shows that the FTC is likely to succeed in proving that Defendants have 

engaged in deceptive and unlawful conduct, and the balance of equities strongly favors 

73 Id. 'lf1f 39-52. 

74 d. 1' . irir 44-45. 

75 Id. 'lf'lf 39-52. 

25 
protecting the public. Temporary injunctive relief preventing Defendants from continuing to 

engage in such misconduct, freezing Defendants' assets, and appointing a receiver is justified. 

1. The Conduct Relief is Necessary and Appropriate. 

The FTC is asking this Court to halt Defendants' scheme by (i) prohibiting Defendants 

from making further misrepresentations on Craigslist, in fake landlord emails, and on CBC's 

websites; (ii) enjoining Defendants from charging or continuing to charge consumers without 

having obtained their express informed consent; and (iii) ordering Defendants to protect 

consumers' personal information. This relief is consistent with that ordered in previous FTC 

actions in this District. See, e.g., FTC v. Big Dog Sols. LLC, No. 16-cv-6607 (N.D. lll. June 28, 

2016) (Blakey, J.) (ex parte TRO prohibiting deceptive conduct and further charging of 

consumers); FTC v. Stark Law, LLC et al., No. 16-cv-3463 (N.D. Ill. Mar. 22, 2016) (Pallmeyer, 

J.) (ex parte TRO prohibiting deceptive conduct); FTC v. Apogee One Enterprises LLC et al., 

No. 12-cv-588 (N.D. lll. Jan. 30, 2012) (Kennelly, J.) (ex parte TRO prohibiting deceptive 

conduct and the sale or transfer of consumers' personal information). 

2. An Asset Freeze and the Appointment of a Receiver are Necessary 

and Appropriate. 

The relief sought by the FTC includes restitution for the victims of Defendants' fraud. 

To preserve the possibility of such relief, the FTC seeks a freeze of Defendants' assets and an 

immediate accounting to prevent concealment or dissipation of assets. The FTC also seeks 

appointment of a temporary receiver. These provisions are well within this Court's authority and 

are similar to provisions that other courts in this District have granted in prior FTC cases. See, 

e.g., FTC v. Big Dog Sols. LLC, No. 16-cv-6607 (N.D. Ill. June 28, 2016)(Blakey, .J.) (ex parte 

TRO with asset freeze and appointment of a receiver); FTC v. Stark Law, LLC et al., No. 16-cv3463 (N.D.111. Mar. 22, 2016) (Pallmeyer, J.) (exparte TRO with asset freeze and appointment 

26 
of a receiver); FTC v. Caprice Marketing LLC et al., No. l 3-cv-6072 (N.D. Ill. Aug. 29, 2013) 

(Lee, J.) (ex parte TRO with asset freeze); FTC v. Apogee One Enterprises LLC et al., No. 12-

cv-588 (N.D.111. Jan. 30, 2012) (Kennelly, J.) (exparte TRO with asset freeze and appointment 

of a receiver). 

An asset freeze is appropriate once the Court determines that the FTC is likely to prevail 

on the merits. See World Travel, 86 l F.2d at I 031 & n.9. The district court at that juncture has 

"a duty to ensure that the assets of the corporate defendants [are] available to make restitution to 

the injured consumers." Id. at I 03 l. Here, a freeze would reduce the very tangible risk that 

Defendants would quickly conceal or dissipate funds. An asset freeze also is needed to prevent 

Defendants from moving their cash and other assets outside the United States. In a case such as 

this, in which the FTC is likely to succeed in showing that Brown, Pierce, and Lloyd are 

individually liable for the payment of restitution, the freeze should extend to individual assets as 

well. See id. (affirming freeze on individual assets); see also FTC v. Datacom Mktg. Inc., 2006 

WL 1472644, at *5 (N.D.111. 2006) (freezing assets of individual and corporate defendants). 

Appointing a temporary receiver to manage CBC also is necessary and appropriate. "[A] 

federal court's authority to grant ancillary relief includes the authority to appoint a receiver." 

FTCv. Think Achievement Corp., 144 F. Supp. 2d 1013, 1021 (N.D. Ind. 2000). The 

appointment of a receiver is appropriate upon a "prima facie showing of fraud and 

mismanagement." SEC v. Keller Cmp., 323 F.2d 397, 403 (7th Cir. 1963). Here, where there is 

overwhelming evidence that CBC is engaged in widespread fraud, a receiver could help assess 

the extent of the fraud, trace the proceeds of that fraud, prepare an accounting, and make an 

independent report of Defendants' activities to the Court. Additionally, a receiver could prevent 

the destruction of documents and the dissipation of assets while the case is pending. Appointing 

27 
a receiver is particularly appropriate given the highly sensitive personal information concerning 

thousands of consumers that is collected by CBC, information including names, birthdates, 

addresses. and Social Security numbers. A receiver could ensure that consumers' highly 

sensitive personal information is safeguarded. 

D. The Temporary Restraining Order Should Be Issued Ex Parte to Preserve 

the Court's Ability to Fashion Meaningful Relief. 

To prevent Defendants from dissipating or concealing their assets, the requested TRO 

should be issued ex parte. An ex parte TRO is warranted when the facts show that immediate 

and irreparable injury, loss, or damage will occur before the defendants can be heard in 

opposition. See Fed. R. Civ. P. 65(b); Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto 

Truck Drivers Local No. 70 of Alameda Cty., 415 U.S. 423, 439 (1974) (ex parte TROs are 

available in order to "preserv[e] the status quo and prevent[] irreparable harm."). Here, assets 

and evidence stemming from the illegal activity are seriously at risk of disappearing if 

Defendants receive prior notice. In this case, the blatantly deceptive nature of Defendants' 

scheme, their efforts to hide their involvement, and their continued operation despite hundreds of 

complaints and cancellation of merchant accounts all indicate a high risk that Defendants will 

destroy documents and dissipate assets if given advance notice of the FTC's motion. 76 Courts 

routinely grant the FTC's requests for ex parte temporary restraining orders under such 

circumstances. See, e.g., FTC v. Big Dog Sols. LLC, No. 16-cv-6607 (N .D. Ill. June 28, 2016) 

(Blakey, J.) (ex parte TRO with asset freeze and appointment of a receiver); FTC v. Stark Law, 

LLC et al., No. l 6-cv-3463 (N.D. Ill. Mar. 22, 2016) (Pallmeyer, J.) (ex parte TRO with asset 

freeze and appointment of a receiver); FTC v. Caprice Marketing LLC et al., No. 13-cv-6072 

76 See Declaration and Certification of Plaintiff's Counsel pursuant to Fed. R. Civ. P. 

65(b) and Local Rule 5.5(d), filed herewith. 

28 
(N.D. Ill. Aug. 29, 2013) (Lee, J.) (ex parte TRO with asset freeze); FTC v. Apogee One 

Enterprises LLC et al., No. 12-cv-588 (N.D. Ill. Jan. 30, 2012) (Kennelly, J.) (ex parte TRO with 

asset freeze and appointment of a receiver). 

V. CONCLUSION 

For the reasons set forth above, the FTC respectfully requests that the Court enter the 

proposed ex parte TRO to halt Defendants' violations of the FTC Act, ROSCA, the FCRA, and 

the Free Reports Rule and to help ensure the possibility of effective final relief for consumers, 

and require Defendants to show cause why a preliminary injunction should not issue.77 

Dated: January 10, 2017 

Respectfully submitted, 

~~ '-<... 

GuyG. Ward 

Samuel A.A. Levine 

Federal Trade Commission 

5 5 West Monroe Street, Suite 1825 

Chicago, Illinois 60603 

(312) 960-5634 [telephone] 

(312) 960-5600 [facsimile] 

gward@ftc.gov 

slevine!@fie.gov 

Attorneys for Plaintiff 

FEDERAL TRADE COMMISSION 

77 Along with this Memorandum, the FTC has submitted a proposed Ex Parle Temporary 

Restraining Order with Asset Freeze, Appointment of a Receiver, Other Equitable Relief, and 

Order to Show Cause Why a Preliminary Injunction Should not Issue. 

29