`
`
`
`REILLY DOLAN
`Acting General Counsel
`
`GREGORY J. MADDEN
`DANIEL O. HANKS
`Federal Trade Commission
`600 Pennsylvania Ave NW, CC-10232
`Washington, DC 20580
`(202) 326-2426 / gmadden@ftc.gov
`(202) 326-2472 / dhanks@ftc.gov
`(202) 326-3768 (fax)
`
`Attorneys for Plaintiff
`FEDERAL TRADE COMMISSION
`
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN FRANCISCO DIVISION
`
`
`Plaintiff,
`
`v.
`
`FEDERAL TRADE COMMISSION,
`
`
`
`
`
`BEAM FINANCIAL INC., and
`
`YINAN DU,
`
`
`
`
`
`
`
`
`Case Number: 3:20-cv-08119-AGT
`
`[PROPOSED] STIPULATED
`ORDER FOR PERMANENT
`INJUNCTION AND MONETARY
`JUDGMENT
`
`
`Defendants.
`
`Plaintiff, the Federal Trade Commission (“Commission” or “FTC”), filed its
`Complaint for Permanent Injunction and Other Equitable Relief (“Complaint”), for
`a permanent injunction and other equitable relief in this matter, pursuant to
`Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C.
`§ 53(b). The Commission and Defendants stipulate to the entry of this Stipulated
`
`STIPULATED ORDER
`
`Page 1 of 15
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`CASE NO. 3:20-CV-08119-AGT
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`Case 3:20-cv-08119-AGT Document 21-1 Filed 03/29/21 Page 2 of 15
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`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
`1.
`This Court has jurisdiction over this matter.
`2.
`The Complaint charges that Defendants participated in deceptive acts
`or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, by
`advertising a mobile banking application (the “Beam app”) with representations
`that consumers will have “24/7” access to their money, will have access to their
`money with “NO LOCKUP,” will have their withdrawn money returned to them in
`five or fewer business days, and will receive substantial interest rates, including
`base interest rates on their deposits of at least 0.2% or 1.0%.
`3.
`Defendants neither admit nor deny any of the allegations in the
`Complaint, except as specifically stated in this Order. Only for purposes of this
`action, Defendants admit the facts necessary to establish jurisdiction.
`4.
`Defendants waive any claim that they may have under the Equal
`Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action
`through the date of this Order, and agree to bear their own costs and attorney fees.
`Defendants waive and release any claims that they may have against the
`Commission that relate to this action.
`5.
`Defendants and the Commission waive all rights to appeal or
`otherwise challenge or contest the validity of this Order.
`
`
`
`STIPULATED ORDER
`
`Page 2 of 15
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`CASE NO. 3:20-CV-08119-AGT
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`DEFINITIONS
`For the purpose of this Order, the following definitions apply:
`“Defendants” means the Individual Defendant and the Corporate
`A.
`Defendant, individually, collectively, or in any combination.
`“Corporate Defendant” means Beam Financial Inc. and its
`B.
`successors and assigns.
`“Covered Consumers” means all consumers with Beam mobile
`C.
`banking application accounts, whether such accounts are open or closed.
`“Individual Defendant” means Yinan Du, a/k/a Aaron Du.
`D.
`ORDER
`I. BAN
`IT IS ORDERED that Defendants are permanently restrained and enjoined
`from advertising, marketing, promoting, offering, or distributing, or assisting in the
`advertising, marketing, promoting, offering, or distributing of any product or
`service that can be used to deposit, store, or withdraw funds.
`II. PROHIBITION AGAINST MISREPRESENTATIONS
`IT IS FURTHER ORDERED that Defendants, Defendants’ 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 advertising, marketing, promoting, offering, or
`distributing any financial product or service are permanently restrained and
`enjoined from:
`A. making any misrepresentation, expressly or by implication, about
`1.
`consumers’ access to funds, including that:
`Page 3 of 15
`STIPULATED ORDER
`
`CASE NO. 3:20-CV-08119-AGT
`
`
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`Case 3:20-cv-08119-AGT Document 21-1 Filed 03/29/21 Page 4 of 15
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`consumers will have access to, or be able to withdraw, their
`i.
`funds “24/7” or “any time”;
`ii.
`consumers will have access to their funds with “no lockup”;
`ii.
`consumers will be able to “easily” have funds returned to them;
`and
`funds that consumers request for withdrawal will be or are
`iv.
`likely to be returned to the consumer within a specified time period.
`
`any interest rate, rate or return, or compensation, including any
`2.
`minimum interest rate, rate of return, or compensation; or
`3.
`any fact material to consumers concerning such financial product or
`service, such as: the total costs; any material restrictions, limitations, or
`conditions; or any material aspect of its performance, efficacy, nature, or
`central characteristics.
`
`
`B. making any representation, expressly or by implication, about the
`performance, efficacy, nature, or central characteristics of such financial product or
`service, unless the representation is non-misleading, and, at the time such
`representation is made, Defendants possess and rely upon competent and reliable
`evidence that is sufficient in quality and quantity to substantiate that the
`representation is true.
`
`III. MONETARY PROVISIONS
`IT IS FURTHER ORDERED that:
`
`A. Defendants relinquish 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.
`STIPULATED ORDER
`
`CASE NO. 3:20-CV-08119-AGT
`
`Page 4 of 15
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`Case 3:20-cv-08119-AGT Document 21-1 Filed 03/29/21 Page 5 of 15
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`
`
`The facts alleged in the Complaint will be taken as true, without further
`B.
`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.
`C.
`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.
`D. Defendants acknowledge that their Taxpayer Identification Numbers (Social
`Security Numbers or Employer Identification Numbers), which Defendants must
`submit 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.
`IV. MONETARY RELIEF
`IT IS FURTHER ORDERED that Defendants must provide full refunds of
`
`the amounts held by or on behalf of Defendants for Covered Consumers (the “Full
`Refund Amount”), which consisted of at least $2.6 million on November 15, 2020,
`as follows:
`A. Defendants must, within 20 days after the date of this Order, identify and
`fully refund, by transfer of funds or by check, all amounts due to Covered
`Consumers not fully refunded prior to the date of this Order.
`B. Defendants must report on all refunds to Covered Consumers, whether made
`prior to or subsequent to the date of entry of this Order, under penalty of perjury:
`
`STIPULATED ORDER
`
`Page 5 of 15
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`Case 3:20-cv-08119-AGT Document 21-1 Filed 03/29/21 Page 6 of 15
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`Defendants must submit a report after 30 days, after 90 days, and after
`1.
`180 days of the entry of this Order summarizing their compliance to date,
`including, for each Covered Consumer, the amount held by or on behalf of
`Defendants for the Covered Consumer on November 15, 2020, the amount
`and date of all refunds, and contact information. If Defendants were unable
`to refund the full amount to any Covered Consumer, Defendants must state
`the refund amount outstanding and the reason or reasons they were unable to
`refund fully each such Covered Consumer. The report must also include any
`complaints from Covered Consumers, including regarding refunds or
`amounts owed.
`2.
`Defendants’ report must include refunds to Covered Consumers made
`prior to the entry of this Order, including the approximately $2.49 million of
`the Full Refund Amount represented by a third-party financial services
`partner of Defendants to have been returned directly to Covered Consumers
`by that third party, pursuant to a settlement in Huntington National Bank, et
`al., v. Beam Financial Inc., Case No. 20-cv-007172 (Court of Common
`Pleas, Franklin County), and any refunds to Covered Consumers made
`directly by Defendants.
`3.
`If a representative of the Commission requests any information
`regarding refunds, including any of the underlying customer data,
`Defendants must submit it within 14 days of the request.
`If Defendants refund less than the Full Refund Amount, they shall, two
`C.
`hundred days after entry of this Order, remit the balance to the Commission. Such
`
`STIPULATED ORDER
`
`Page 6 of 15
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`payment to the Commission must be by electronic fund transfer in accordance with
`instructions previously provided by a representative of the Commission.
`D. 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 Defendants’ practices alleged in the
`Complaint. Any money not used for such equitable relief is to be deposited to the
`U.S. Treasury as disgorgement. Defendants have no right to challenge any actions
`the Commission or its representatives may take pursuant to this Subsection.
`V. CUSTOMER INFORMATION
`IT IS FURTHER ORDERED that Defendants, Defendants’ 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, are permanently
`restrained and enjoined from directly or indirectly disclosing, using, or benefitting
`from customer information, including the name, address, telephone number, email
`address, social security number, other identifying information, or any data that
`enables access to a customer’s account (including a credit card, bank account, or
`other financial account), that any Defendant obtained prior to entry of this Order in
`connection with the advertising, marketing, promotion, offering, or distribution of
`a mobile banking application.
`STIPULATED ORDER
`
`CASE NO. 3:20-CV-08119-AGT
`
`Page 7 of 15
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`VI. ORDER ACKNOWLEDGMENTS
`IT IS FURTHER ORDERED that Defendants obtain acknowledgments of
`receipt of this Order:
`A.
`Each 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 10 years after entry of this Order, each Individual Defendant for any
`business that such Defendant, individually or collectively with any other
`Defendants, is the majority owner or controls directly or indirectly, and each
`Corporate 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 with managerial responsibilities for the conduct specified in
`Section II; 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 a Defendant delivered a copy of this
`Order, that Defendant must obtain, within 30 days, a signed and dated
`acknowledgment of receipt of this Order.
`VII. COMPLIANCE REPORTING
`IT IS FURTHER ORDERED that Defendants make timely submissions to
`the Commission:
`A. One year after entry of this Order, each Defendant must submit a compliance
`report, sworn under penalty of perjury:
`Page 8 of 15
`STIPULATED ORDER
`
`CASE NO. 3:20-CV-08119-AGT
`
`
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`Case 3:20-cv-08119-AGT Document 21-1 Filed 03/29/21 Page 9 of 15
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`Each Defendant must: (a) identify the primary physical, postal, and
`1.
`email address and telephone number, as designated points of contact, which
`representatives of the Commission may use to communicate with Defendant;
`(b) identify all of that Defendant’s businesses by all of their names,
`telephone numbers, and physical, postal, email, and Internet addresses;
`(c) describe the activities of each business, including the goods and services
`offered, the means of advertising, marketing, and sales, and the involvement
`of any other Defendant (which Individual Defendants must describe if they
`know or should know due to their own involvement); (d) describe in detail
`whether and how that Defendant is in compliance with each Section of this
`Order; and (e) provide a copy of each Order Acknowledgment obtained
`pursuant to this Order, unless previously submitted to the Commission.
`2.
`Additionally, each Individual Defendant must: (a) identify all
`telephone numbers and all physical, postal, email, and Internet addresses,
`including all residences; (b) identify all business activities, including any
`business for which such Defendant performs services whether as an
`employee or otherwise and any entity in which such Defendant has any
`ownership interest; and (c) describe in detail such Defendant’s involvement
`in each such business, including title, role, responsibilities, participation,
`authority, control, and any ownership.
`
`For 10 years after entry of this Order, each Defendant must submit a
`B.
`compliance notice, sworn under penalty of perjury, within 14 days of any change
`in the following:
`
`STIPULATED ORDER
`
`Page 9 of 15
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`Case 3:20-cv-08119-AGT Document 21-1 Filed 03/29/21 Page 10 of 15
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`Each Defendant must report any change in: (a) any designated point
`1.
`of contact; or (b) the structure of any Corporate 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.
`2.
`Additionally, each Individual Defendant must report any change in:
`(a) name, including aliases or fictitious name, or residence address; or
`(b) title or role in any business activity, including any business for which
`such Defendant performs services whether as an employee or otherwise and
`any entity of which such Defendant has direct or indirect control, and
`identify the name, physical address, and any Internet address of the business
`or entity.
`
`Each Defendant must submit to the Commission notice of the filing of any
`C.
`bankruptcy petition, insolvency proceeding, or similar proceeding by or against
`such 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.
`E.
`Unless otherwise directed by a Commission representative in writing, all
`submissions to the Commission pursuant to this Order must be emailed to
`Page 10 of 15
`STIPULATED ORDER
`CASE NO. 3:20-CV-08119-AGT
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`Case 3:20-cv-08119-AGT Document 21-1 Filed 03/29/21 Page 11 of 15
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`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. Beam Financial Inc.
`VIII. RECORDKEEPING
`IT IS FURTHER ORDERED that Defendants must create certain records for
`10 years after entry of the Order, and retain each such record for 5 years.
`Specifically, Corporate Defendant and each Individual Defendant for any business
`that such Defendant, individually or collectively with any other Defendants, is a
`majority owner or controls directly or indirectly, must create and retain the
`following records:
`A.
`accounting records showing all revenues, the costs incurred in generating
`those revenues, and resulting net profit or loss;
`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.
`a copy of each unique advertisement or other marketing material making a
`representation subject to this Order;
`E.
`for 5 years from the date of the last dissemination of any representation
`covered by this Order:
`
`1.
`
`all materials that were relied upon in making the representation; and
`
`STIPULATED ORDER
`
`Page 11 of 15
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`all evidence in Defendants’ possession, custody, or control that
`2.
`contradicts, qualifies, or otherwise calls into question the representation, or
`the basis relied upon for the representation, including complaints and other
`communications with consumers or with governmental or consumer
`protection organizations;
`
`for 5 years from the date received, copies of all subpoenas and other
`F.
`communications with law enforcement, if such communication relate to
`Defendants’ compliance with this Order; and
`G.
`all records necessary to demonstrate full compliance with each provision of
`this Order, including all submissions to the Commission.
`IX. COMPLIANCE MONITORING
`IT IS FURTHER ORDERED that, for the purpose of monitoring
`Defendants’ compliance with this Order:
`A. Within 14 days of receipt of a written request from a representative of the
`Commission, each Defendant must: submit additional compliance reports or other
`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 each Defendant. Defendant must permit
`representatives of the Commission to interview any employee or other person
`
`STIPULATED ORDER
`
`Page 12 of 15
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`affiliated with any 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
`Defendants or any individual or entity affiliated with Defendants, 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.
`D. Upon written request from a representative of the Commission, any
`consumer reporting agency must furnish consumer reports concerning Individual
`Defendants, pursuant to Section 604(1) of the Fair Credit Reporting Act, 15 U.S.C.
`§1681b(a)(1).
`
`X. 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 , 2021.
`
`
`
`_______________________________
`UNITED STATES JUDGE
`
`
`
`
`
`STIPULATED ORDER
`
`Page 13 of 15
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`Case 3:20-cv-08119—AGT Document 21-1 Filed 03/29/21 Page 14 of 15
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`SO STIPULATED AND AGREED:
`
`FOR PLAINTIFF:
`
`FEDERAL TRADE COMMISSION
`
`9g (,9. w.
`
`Gregory J. Madden, Attorney
`Daniel 0. Hanks, Attorney
`Federal Trade Commission
`
`Washington, DC 20580
`Phone: 202-326-2426, Hanks - 2472
`Fax: 202—326-3768
`
`gmadden@ftc.gov, dhanks@ftc.gov
`
`1
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`[\J
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`STIPULATED ORDER
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`Page 14 of15
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`CASE No. 3:20—CV-081 l9-AGT
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`Case 3:20-cv-08119-AGT Document 21-1 Filed 03/29/21 Page 15 of 15
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`Date:
`
`ewman, Attorney
`Hinch Newman LLP
`600 W . Broadway, Ste. 700
`San Diego, CA 92101
`Phone: 619-233-5200
`RNewman@HinchNewman.com
`
`Counsel for Beam Financial Inc. and Yinan Du
`
`DEFENDANTS:
`
`Yinan Du, individually,
`and as an officer of Beam Financial Inc.
`
`Date: 2/ I / '2-02..--\
`
`STIPULATED O RDER
`
`Page 15 of 15
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`CASE No. 3 :20-CV-081 19-AGT
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