The Federal Trade Commission today announced it has filed a complaint in federal district court and received a temporary restraining order and asset freeze against Bargains & Deals Magazine, LLC (B&D), doing business as Keith's Wholesale and Bargains & Deals Wholesale, and its principal, Michael P. Casey, alleging that the defendants made misrepresentations over the Internet to induce consumers to purchase merchandise and then either failed to deliver the merchandise promised or, in some cases, did not send any merchandise at all. The complaint charges that the defendants violated both the FTC Act and the Commission's Mail or Telephone Order Merchandise Rule (Mail Order Rule).
According to the complaint, since at least 1999 B&D has purported to sell high-quality, famous-name new and used merchandise on the company's Web sites, first at
www.bestdealsontheweb.com, and then at www.bargains-deals.com. The advertised merchandise included famous-maker and Mickey Mouse watches, designer-name sunglasses, famous-maker blue jeans, sweaters and winter jackets, and children's clothing.
Typical statements made on the defendants' Web site included:
"MICKEY MOUSE Watch Special! These are brand new perfect condition #1 Mickey Mouse Watches! These are not fakes or look a likes! These are brand new first quality closeouts and overstocks [text accompanied by photos of Mickey Mouse watches in manufacturer packaging and boxes, one made by Seiko]";
"200,000 Pair of quality sun glasses at below importers cost ... High End Sunglasses! Famous names like, Foster Grant, Oakley, Ray Ban etc. 300 piece case for $699 with FREE Delivery in the US! ... These are the latest styles that everyone is looking for!"
Consumers shopping at the sites were given a telephone number and e-mail address if they wanted to buy the merchandise.
Besides selling such merchandise, according to the complaint, B&D offered consumers a subscription to the Bargains & Deals magazine, a free classified advertising section, and a "closeout source directory" that purported to include a complete list of sources in the United States for merchandise at below-wholesale prices. Both the advertisements and the merchandise were aimed at consumers who buy in bulk for resale at flea markets, through Internet auction sites, or by other means.
The Commission's complaint alleges that B&D violated the FTC Act and the Mail Order Rule by deceiving customers and shipping merchandise that was either in unusable condition or did not contain the brand names advertised. In addition, according to the complaint, B&D accepted money from consumers for merchandise, and, in some cases, sent them nothing at all.
Specifically, the complaint charges B&D and Casey with violating the FTC Act by:
1) falsely representing that consumers who purchase merchandise from them will receive the merchandise; and 2) falsely representing that the merchandise purchased will be in new condition and will have designer or famous brand names as advertised. The complaint also charges B&D and Casey with violating the Mail Order Rule by: 1) soliciting orders to sell merchandise indirectly through the telephone (i.e., via the Internet through telephone connections) without a reasonable basis to expect that they will be able to ship ordered merchandise in a timely manner; 2) failing to offer consumers an option to either agree to a shipping delay or to cancel their order and receive a prompt refund; and 3) failing to provide consumers with a prompt refund when such a refund was requested.
The Commission filed its complaint on October 11, 2001 in the U.S. District Court for the Western District of Washington in Seattle, seeking to permanently enjoin B&D and Casey from violating the FTC Act and the Mail Order Rule and obtain redress for consumers for injury resulting from the companies' alleged violations including rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten gains.
The Commission vote to file the complaint was 5-0
NOTE: The Commission files a complaint when it has "reason to believe" that the law has or is being violated, and it appears to the Commission that a proceeding is in the public interest. A complaint is not a finding or ruling that the defendant has actually violated the law.
Copies of the complaint 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 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.