Last Wednesday, a federal court found Robert Douglas Krotzer in civil contempt for violating a court order stemming from an earlier deceptive marketing lawsuit filed by the Federal Trade Commission (“FTC”) and Florida Attorney General’s Office.
How can the marketer get out of this mess?
FTC and AG’s Deceptive Marketing Lawsuit and Court Order
In April 2010, the FTC and Florida AG’s Office sued Krotzer (also known as “Dr. Doug”) and his business, the Alcoholism Cure Corporation (“ACC”), in the federal district court in Jacksonville, Florida. The deceptive marketing action alleged that Krotzer and ACC used websites, search engine advertisements and email marketing lists to advertise an online monthly subscription program named the “Permanent Cure,” which purportedly offered consumers customized cures for alcoholism.
The FTC and attorney general’s deceptive marketing lawsuit alleged that the defendants, in marketing the Permanent Cure program, used false advertisements, made unsubstantiated claims and engaged in a number of other unfair and deceptive acts and practices. According to court records, Krotzer and ACC raised over $693,000 from consumers between 2005 and 2009 before the Better Business Bureau’s (“BBB”) National Advertising Division tipped off the FTC.
In July 2012, the Court issued its Final Judgment and Order in the action. Among other things, the Order required Krotzer and his company:
- to pay $732,480 as a reasonable approximation of consumer injury resulting from their alleged violations of Florida State and federal laws; and
- to deliver: (i) a report to the FTC and Florida Attorney General’s Office listing all persons who registered for or purchased the Permanent Cure program; and (ii) a notice to each such consumer regarding the deceptive marketing lawsuit.
Dr. Doug Held in Contempt
On October 7, 2015, the court held Krotzer in contempt for failing to abide by the July 2012 Order. The Court observed that Krotzer had failed to pay any portion of the $732,480 judgment, and that “Krotzer’s compliance reports have been untimely, inadequate, and misleading.”
Krotzer was given 60 days to:
- return $8,099 that was purportedly collected from consumers after the July 2012 Order;
- deliver the required customer list and notices, or surrender his computer hardware to the FTC and Florida AG’s Office and provide proof of his inability to deliver the list and notices;
- divulge all of his current income, assets and liabilities, including bank accounts and household expenses, the structure of his family trust and any assets that he may have transferred to a third party;
- prove his alleged inability to pay the monetary judgment against him; and
- prepare and produce a detailed compliance report.
In the event that Krotzer does not comply with this contempt order within 60 days of its issuance, he will be remanded to the custody of the U.S. Marshals and incarcerated.
Deceptive Marketing Lawsuits Are No Joke
The legal battle described above demonstrates the importance of abiding by applicable state and federal regulations when operating in the marketing space. Marketers that do not comply with the terms of a court order risk being held in contempt and facing stiff financial penalties and/or jail time.