Internet Wholesale Operator Settles FTC Charges

Media Advisory

An Internet operator who advertised designer-name bargains but delivered cut rate products, or no products at all, has agreed to settle Federal Trade Commission charges that his practices violated federal laws. The settlement bars the defendant and his company from misrepresentations in the sale of any product or service and orders the defendants to provide $15,000 for consumer redress.

In October 2001, the FTC charged that Bargains & Deals, LLC (B&D), doing business as Keith's Wholesale and Bargains and Deals Wholesale, and its principal Michael P. Casey, used their Web sites to advertise merchandise such as Foster Grant, Oakley, and Ray Ban sunglasses, Seiko watches, and famous maker blue jeans and clothing. The advertisements and merchandise targeted consumers who buy in bulk for resale at flea markets, through Internet auction sites, or by other means. The agency alleged that, contrary to the defendants' advertising claims, customers received merchandise that was either in unusable condition or did not contain the brand names that had been advertised. In some cases, customers received no merchandise at all. The FTC alleged that the practices violated the FTC Act and the Mail or Telephone Order Merchandise Rule. At the FTC's request, the court froze the defendants' assets and ordered a temporary halt to the business practices, pending trial. The settlement announced today ends that legal action.

The settlement bars the defendants from making misrepresentations in the sale of any goods or services. It specifically bars the defendants from misrepresenting that:

  • the defendants have certain goods or services available to be purchased;
  • they will ship goods or provide services within a reasonable time period or within a specified time period after they receive payment;
  • they will ship goods on receipt of payment;
  • the goods offered for sale are new; and
  • the goods have designer or famous brand names.

The settlement also bars future violations of the Mail or Telephone Order Merchandise Rule. It specifically bars the defendants from soliciting orders without a reasonable basis to believe they can ship the goods within the time stated or, if no time is stated, within 30 days; failing to give consumers the option to accept a delay in their order or cancel and get their money back if defendants can't ship the merchandise in the specified time; and failing to deem an order cancelled and make a prompt refund when the defendants have not shipped merchandise in a timely way and have failed to give a delay or cancellation option.

Based on the defendants' representations concerning their financial condition, they will pay $15,000 in consumer redress. Should the defendants' financial disclosure forms be found to contain inaccurate data, $68,000, the full amount of consumer injury, will become immediately due. The settlement also contains record keeping provisions to allow the FTC to monitor the defendants' compliance with the order.

The Commission vote to approve the settlement was 5-0.

The matter was filed in U. S. District Court for the Western District of Washington, in Seattle, and entered by the court on June 7, 2002.

NOTE: This Stipulated Final Judgment and Order for Permanent Injunction is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the Stipulated Final Judgment and Order for Permanent Injunction are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(Civil Action No. CV: C01-1610P )

Contact Information

Media Contact:
Claudia Bourne Farrell
Office of Public Affairs
202-326-2181
Staff Contact:
Nadine Samter
Northwest Regional Office
206-220-4479