In the late 1990s, Ian Eisenberg and Chris Hebard formed
In the late 1990s, Ian Eisenberg and Chris Hebard formed Electronic Publishing Ventures, LLC (EPV) and its four subsidiaries: Cyberspace.com, LLC, Essex Enterprises, LLC, Surfnet Services, LLC, and Splashnet.net, LLC. Two offshore entities, French Dreams Investments, N.V. (collectively EFO and owned by Eisenberg) and Coto Settlement (controlled by Hebard) owned EPV in equal parts. Between January 1999 and mid-2000, EPV's four subsidiaries mailed approximately 4.4 million solicitations offering Internet access to individuals and small businesses. The solicitations included a check, usually for $3.50, attached to a form resembling an invoice designed to be detached from the check by tearing at the perforated line. The check was addressed to the recipient and the recipient's phone number appeared on the "re" line. The back of the check and invoice contained small-print disclosures revealing that cashing or depositing the check would constitute agreement to pay a monthly fee for Internet access, but the front of the check and the invoice contained no such disclosures. The mailing explained in small print that a monthly fee would be billed to the customer's local phone bill after the check was cashed or deposited. At least 225,000 small businesses and individuals cashed or deposited the solicitation checks. The EPV subsidiaries used a billing aggregation service to place charges for $19.95 or $29.95 a month on the small businesses' and individuals' ordinary telephone bills. Internet usage records show, however, that less than 1 percent of the 225,000 individuals and businesses billed for Internet service actually logged on to the service.
Eisenberg and Hebard were aware that the solicitation had misled some consumers. The companies received complaints from recipients of the solicitations, which indicated that some customers had deposited the solicitation check without realizing that they had contracted for Internet services. The Federal Trade Commission alleges that the solicitations were deceptive in violation of Section 5 of the Federal Trade Commission Act. Explain whether or not the FTC is correct.