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UNITED STATES DISTRICT COURT
Plaintiff, the Federal Trade Commission, ("FTC" or "the Commission"), for its complaint alleges: 1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, to secure preliminary and permanent injunctive relief, rescission of contracts, restitution, disgorgement, and other equitable relief for defendants' violations of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the FTC's "Mail or Telephone Order Merchandise Rule" ("the Rule"), 16 C.F.R. Part 435, as amended. JURISDICTION AND VENUE 2. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331, 1337(a) and 1345, and 15 U.S.C. §§ 53(b) and 57b. 3. Venue in the United States District Court for the Western District of Washington is proper under 28 U.S.C. § 1391(b), and 15 U.S.C. § 53(b). PLAINTIFF 4. Plaintiff, FTC, is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41 et seq. The FTC is charged, inter alia, with enforcement of Section 5 (a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce, as well as enforcement of the Mail or Telephone Order Merchandise Rule, 16 C.F.R. Part 435. The FTC is authorized to initiate federal district court proceedings to enjoin violations of the FTC Act in order to secure such equitable relief as may be appropriate in each case, and to obtain consumer redress. 15 U.S.C. §§ 53(b) and 57b. DEFENDANTS 5. Defendant BARGAINS & DEALS MAGAZINE, LLC ("B&D"), also doing business as Keith's Wholesale and as Bargains & Deals Wholesale, is a Washington limited liability company with its office and principal place of business listed in corporate records at 23837 108th Avenue, #312, Kent, Washington. B&D transacts or has transacted business in the Western District of Washington through the marketing and purported sale over the Internet of high quality, new and used name brand merchandise throughout the United States. 6. Defendant MICHAEL P. CASEY ("Casey"), the owner of B&D, conducts business from Kent, Washington. At all times material to this complaint, acting alone or in concert with others, defendant Casey has formulated, directed, controlled or participated in the deceptive acts and practices of B&D as set forth in this complaint. Casey resides and transacts or has transacted business in the Western District of Washington. COMMERCE 7. At all times material to this complaint, defendants have maintained a substantial course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. DEFENDANTS' BUSINESS ACTIVITIES 8. Since at least 1999, defendants have purported to sell high quality, famous name brand new and used merchandise over the Internet on their web sites, first www.bestdealsontheweb.com. , and then www.bargains-deals.com. The merchandise advertised on defendants' web site includes, but is not limited to, famous maker and Mickey Mouse watches, designer name sunglasses, famous maker blue jeans, sweaters and winter jackets, and children's clothing. Defendants provide a telephone number and email address for consumers to contact if they wish to purchase defendants' merchandise. 9. Defendants represent on their web site and in conversations with consumers over the telephone and through email exchanges that the merchandise that defendants offer for sale has designer or famous brand names and/or is in brand new condition. 10. Typical statements defendants make regarding the merchandise they offer for sale on their web site include, but are not limited to, the following:
11. In numerous instances, defendants have accepted payment from consumers who place orders for merchandise and have failed to provide any merchandise to those consumers. Consumers who do receive merchandise from defendants, contrary to defendants' representations, do not receive merchandise that has designer or famous brand names and/or is in new condition. In fact, in numerous instances, consumers who receive merchandise from defendants receive merchandise that does not have any designer or famous name brands and/or is so old, used, and broken that it cannot be resold or used. 12. In numerous instances, once defendants have accepted payment from consumers who have placed orders for merchandise, defendants fail to communicate with consumers regarding the status and shipment of consumers orders. Furthermore, in numerous instances, defendants have failed to provide refunds to such consumers. VIOLATIONS OF SECTION 5 OF THE FTC ACT 13. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), provides that "unfair or deceptive acts or practices in or affecting commerce are hereby declared unlawful." COUNT I 14. In the course of offering merchandise for sale over the Internet on their web site, through the use of statements referred to in Paragraph 10 and others not specifically set forth herein, defendants have represented, expressly or by implication, that consumers who purchase merchandise from them will receive the merchandise. 15. In truth and in fact, in numerous instances, consumers who purchase merchandise from defendants do not receive the merchandise. 16. Therefore, the representations set forth in Paragraph 14 are false and misleading and constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). COUNT II 17. In the course of offering merchandise for sale over the Internet on their web site, through the use of statements referred to in Paragraph 10 and others not specifically set forth herein, defendants have represented, expressly or by implication, that consumers who purchase merchandise from them will receive merchandise that has designer or famous name brands and/or is in new condition. 18. In truth and in fact, in numerous instances, consumers who purchase merchandise from defendants do not receive merchandise that has designer or famous name brands and/or is in new condition. 19. Therefore, the representations set forth in Paragraph 17 are false and misleading and constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). THE MAIL OR TELEPHONE ORDER MERCHANDISE RULE 20. The FTC promulgated the Mail or Telephone Order Merchandise Rule, 16 C.F.R. Part 435, on October 22, 1975, and revised the Rule on September 21, 1993. The revised Rule became effective on March 1, 1994, and has remained in full force and effect since that time. 21. The Rule applies to sales in which the buyer has ordered merchandise from the seller by mail or directly or indirectly by telephone, such as by fax machines and via the Internet on computers. 16 C.F.R. §§ 435.1 and 435.2 (a) and (b). 22. The Rule prohibits a seller from soliciting any order for the sale of merchandise to be ordered by the buyer through the mail or by telephone, unless, at the time of the solicitation, the seller has a reasonable basis to expect that it will be able to ship any ordered merchandise to the buyer within the time stated on the solicitation, or, if no time is stated, within thirty days of the completion of the order. 16 C.F.R. § 435.1(a)(1). 23. The Rule requires that the seller follow certain procedures if merchandise ordered through the mail or by telephone will not be shipped within the applicable time limit. Specifically, the Rule requires that, when there is a shipping delay, the seller must, prior to the expiration of the applicable time, offer the buyer an option either to agree to the delay or to cancel the order and receive a prompt refund (as defined in 16 C.F.R. § 435.2(f)). 16 C.F.R. § 435.1(b)(1). 24. The Rule also requires that a seller deem an order canceled and make a prompt refund to the buyer whenever the seller has failed to ship within the specified time period and has failed to offer the consumer the option to consent to further delay or to cancel the order. 16 C.F.R. § 435.1(c). 25. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), and 16 C.F.R. § 435.1, violations of the Rule constitute unfair or deceptive acts or practices in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). DEFENDANTS' VIOLATIONS OF THE MAIL OR TELEPHONE ORDER| COUNT III 26. In numerous instances, defendants have solicited orders for the sale of merchandise to be ordered by the buyer indirectly through the telephone without a reasonable basis to expect that they will be able to ship any ordered merchandise to the buyer within the time stated in the solicitation, or, if no time was clearly and conspicuously stated, within thirty days of receipt of a properly completed order, thereby violating 16 C.F.R. § 435.1(a)(1). COUNT IV 27. In numerous instances, after soliciting orders for the sale of merchandise ordered by the buyer indirectly through the telephone and being unable to ship merchandise within the applicable time as set out in Section 435.1(a)(1) of the Rule, defendants have failed to offer to the buyer, clearly and conspicuously and without prior demand, an option either to consent to a delay in shipping or to cancel the order and receive a prompt refund, thereby violating 16 C.F.R. § 435.1(b)(1). COUNT V 28. In numerous instances, defendants have failed to make a "prompt refund," as that term is defined in 16 C.F.R. § 435.2(f), to buyers when such refunds were required by Section 435.1(c) of the Rule, thereby violating 16 C.F.R. § 435.1(c).
CONSUMER INJURY 29. Consumers in many areas of the United States have suffered substantial monetary loss as a result of defendants' unlawful acts or practices. These consumers have each paid hundreds of dollars to defendants for merchandise that they have never received or for items not of the type and quality that they ordered. Absent injunctive relief by this Court, the defendants are likely to continue to injure consumers and harm the public interest. THIS COURT'S POWER TO GRANT RELIEF 30. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and other ancillary relief, including redress, disgorgement and restitution, to prevent and remedy any violations of any provision of law enforced by the FTC. 31. Section 19 of the FTC Act, 15 U.S.C. § 57b, authorizes the Court to grant such relief as the Court finds necessary to redress injury to consumers or other persons resulting from defendants' violations of the Mail or Telephone Order Merchandise Rule. 32. This Court, in the exercise of its equitable jurisdiction, may award other ancillary relief to remedy injury caused by the defendants' law violations. PRAYER FOR RELIEF WHEREFORE, plaintiff requests that this Court, as authorized by Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and pursuant to its own equitable powers: 1. Award plaintiff such temporary and preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action and to preserve the possibility of effective final relief, including, but not limited to, temporary and preliminary injunctions and an order freezing defendants' assets; 2. Permanently enjoin defendants from violating the FTC Act and the Mail or Telephone Order Merchandise Rule as alleged herein; 3. Award such relief as the Court finds necessary to redress injury to consumers resulting from defendants' violations of the FTC Act and the Mail or Telephone Order Merchandise Rule, including, but not limited to, rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten monies; and 4. Award the plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper. Respectfully submitted, WILLIAM KOVACIC CHARLES A. HARWOOD NADINE S. SAMTER WSBA # 23881 ERTIFICATE OF SERVICE I hereby certify that I caused the foregoing document to be served on all defendants on the date set forth below by the following indicated methods: __ by personal service at . __ by mailing a full, true, and correct copy thereof in a sealed, first-class postage-prepaid envelope, addressed to counsel for defendants, , and deposited with the United States Postal Service at Seattle, Washington, on the date set forth below. __ by sending a full, true, and correct copy thereof via overnight courier in a sealed, prepaid envelope, addressed to counsel for defendants, , on the date set forth below. __ by faxing a full, true, and correct copy thereof to counsel for defendants, , at the fax number . The receiving fax machine was operating at the time of service and the transmission was properly completed, according to the confirmation report. Dated , 2001. ____________________________ |