FTC Clamps down on File-sharing Service Site

A U.S. District Court judge has halted the deceptive ads of a Web operation that claimed that membership in MP3DownloadCity.com would allow users of peer-to-peer (P2P) file-sharing programs to transfer copyrighted materials without violating the law. The FTC will seek a permanent bar on the deceptive claims, redress for consumers, and a requirement that the defendant notify consumers who signed up for membership that the programs he promotes to share copyrighted files may subject them to civil or criminal liability.

According to the FTC, the defendant markets and sells a tutorial and referral service that promotes the use of P2P file-sharing software programs to download digital music, movies, and computer games. Unlike a licensed subscription service, the defendant’s service does not provide its paying customers with a license to download and share copyrighted music, movies, or games. Instead, for $24.95, the defendant instructs consumers on the use of free P2P file-sharing software provided by others, such as Kazaa. According to the FTC’s complaint, consumers are lured to become members by deceptive claims that subscribing to the defendant’s service makes P2P file sharing legal. Internet ads for the service make claims such as:

• AND BEST OF ALL PEOPLE ARE NOT GETTING SUED FOR USING OUR SOFTWARE. YES! IT IS 100% LEGAL;
• Why Are We The #1 Free MP3 Music Download Site? . . .
• Download and Watch DVDs and Movies Still in Theaters; and
• Rest assured that File-Sharing is 100% legal.

But, according to the FTC complaint, the defendant’s customers who use P2P file-sharing programs to download copyrighted material, or who make it available to others, without the copyright owner’s permission, are engaged in copyright infringement and could face civil and criminal liability.

The FTC charged that the defendant violated the FTC Act by falsely claiming that membership in its service made P2P file sharing legal. The FTC has asked the court to order a permanent halt to the deceptive claims, order the defendant to pay consumer redress or to give up his ill-gotten gains, and notify customers that they could face civil and criminal liability. A hearing to extend the court’s temporary ban on defendants’ deceptive claims is scheduled for October 21, 2005.

The defendant in the case is Cashier Myricks Jr., doing business as MP3downloadcity.com, based in Los Angeles, California.

The Commission vote to authorize staff to file the complaint was 3-0, with Commissioner Jon Leibowitz not participating. The complaint was filed in the U.S. District Court for the Central District of California.

The FTC has published a consumer alert, “P2P File Sharing: Evaluating the Risks,” that is available at: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt128.shtm"

The Commission wishes to acknowledge the assistance of The Center for Democracy and Technology in this matter.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

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 in English or Spanish (bilingual counselors are available to take complaints), 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-05-7013 CAS (FMOx))