UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In the Matter of

BEYLEN TELECOM, LTD. and NITELINE MEDIA, INC., corporations, and RON TAN, individually and as an officer of NITELINE MEDIA, INC.

File No. 972-3128

AGREEMENT
CONTAINING

CONSENT ORDER

The Federal Trade Commission has conducted an investigation of certain acts and practices of Beylen Telecom, Ltd., NiteLine Media, Inc., corporations, and Ron Tan, individually and as an officer of NiteLine Media, Inc. (“proposed respondents”). Proposed respondents, having been represented by counsel, are willing to enter into an agreement containing an order resolving the allegations contained in the attached draft complaint. Therefore,

IT IS HEREBY AGREED by and between Beylen Telecom, Ltd. and NiteLine Media, Inc., by their duly authorized officers, and Ron Tan, individually and as an officer of NiteLine Media, Inc., and counsel for the Federal Trade Commission that:

1a. Proposed respondent Beylen Telecom, Ltd., is a corporation organized, existing and doing business under and by virtue of the laws of the Cayman Islands with its principal office or place of business at Genesis Building, PS Box 2097, Grand Cayman, Cayman Islands, British West Indies.
1b. Proposed respondent NiteLine Media, Inc. is a New York corporation with its principal office or place of business at 7302 19th Avenue, Brooklyn, New York 11204.
1c. Proposed respondent Ron Tan is an individual residing within the State of New York and is an officer and shareholder of NiteLine Media, Inc. Individually or in concert with others he formulates, direct, or controls the policies, acts, or practices of NiteLine Media. His principal office or place of business is the same as that of NiteLine Media, Inc.
 
2. For the purpose of this Order, proposed respondents admit all the jurisdictional facts set forth in the draft complaint.
 
3. The proposed respondents waive:
(a) Any further procedural steps;
(b) The requirement that the Commission’s decision contain a statement of findings of fact and conclusion of law;
(c) All rights to seek judicial review or otherwise to challenge or contest the validity of the Order entered pursuant to this agreement; and
(d) Any claim under the Equal Access To Justice Act.
 
4. This agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this agreement is accepted by the Commission, it, together with the draft complaint, will be placed on the public record for a period of sixty (60) days and information about it publicly released. The Commission thereafter may either withdraw its acceptance of this agreement and so notify proposed respondents, in which event it will take such action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances may require) and decision in disposition of the proceeding.
 
5. This agreement is for settlement purposes only and does not constitute an admission by any of the proposed respondents that the law has been violated as alleged in the draft complaint, or of any wrongdoing whatsoever, or that the facts as alleged in the draft complaint, other than the jurisdictional facts, are true.
 
6. This agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Section 2.34 of the Commission's Rules, the Commission may, without further notice to proposed respondents, (1) issue its complaint corresponding in form and substance with the attached draft complaint and its decision containing the following Order in disposition of the proceeding, and (2) make information about it public. When so entered, the Order shall have the same force and effect and may be altered, modified, or set aside in the same manner and within the same time provided by statute for other orders. The Order shall become final upon service. Delivery of the complaint and the decision and Order to proposed respondents’ attorneys as stated in this agreement by any means specified in Section 4.4(a) of the Commission's Rules shall constitute service. Proposed respondents waive any right they may have to any other manner of service. The complaint may be used in construing the terms of the Order. No agreement, understanding, representation, or interpretation not contained in the Order or in the agreement may be used to vary or contradict the terms of the Order.
 
7. Proposed respondents have read the draft complaint and the following Order. They understand that they may be liable for civil penalties in the amount provided by law and other appropriate relief for each violation of the Order that occurs after it becomes final.

ORDER

DEFINITIONS

For purposes of this Order, the following definitions shall apply:

 

1. "Beylen" means Beylen Telecom, Ltd. and its successors, assigns, shareholders, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting through any corporation, subsidiary, division, or other device.
2. "NiteLine" means NiteLine Media, Inc. and its successors, assigns, shareholders, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting through any corporation, subsidiary, division, or other device.
3. "Ron Tan" means Ron Tan a/k/a Roeun Tan, individually, and in his capacity as an officer and shareholder of NiteLine Media, Inc., and his successors, assigns, officers, agents, servants, employees, and those persons in active concert or participation with them who receive actual notice of this Order by personal service or otherwise, whether acting through any corporation, subsidiary, division, or other device.
 
4. Unless otherwise specified, “respondents” shall mean Beylen and NiteLine, corporations, their successors and their officers; Ron Tan, individually and as an officer of NiteLine; and each of the above’s agents, representatives and employees. Unless otherwise specified, “respondent” shall mean NiteLine, Ron Tan or Beylen.
5. "Commerce" shall mean "commerce" as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. 44.
6. "Clearly and Conspicuously" shall mean as follows:
 
In an advertisement communicated through an electronic medium (such as television, video, radio, and interactive media such as the Internet and online services), the disclosure shall be presented simultaneously in both the audio and video portions of the advertisement. Provided, however, that in any advertisement presented solely through video or audio means, the disclosure may be made through the same means in which the ad is presented. The audio disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. The video disclosure shall be of a size and shade, and shall appear on the screen for a duration, sufficient for an ordinary consumer to read and comprehend it. In addition to the foregoing, in interactive media the disclosure shall also be unavoidable and shall be presented prior to the consumer incurring any financial obligation. The disclosure shall be in understandable language and syntax. Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement.
7. “Document” is synonymous in meaning and equal in scope to the usage of the term in Federal Rule of Civil Procedure 34(a), and includes writings, drawings, graphs, charts, photographs, audio and video recordings, computer records, and other data compilations from which information can be obtained. A draft or non-identical copy is a separate document within the meaning of the term.
 
8. “David.exe” means a software program that, as alleged in the Commission’s draft complaint, a respondent has promoted, offered, distributed, or provided on web sites as a “viewer,” which consumers may download, install, and execute, and which dials an international long-distance telephone number for which a fee is charged.
 
9. “Eligible Consumer” means a telephone subscriber that was billed for international long distance calls to Moldova from December, 1996 through February, 1997 to one of the telephone numbers listed in Schedule A, annexed hereto.
 
10. “Relevant Charges” means the dollar amount billed by AT&T, MCI, Sprint or another long distance carrier to an Eligible Consumer for international long distance calls to Moldova from December 1996 through February 1997, to one of the telephone numbers listed in Schedule A, annexed hereto.

I.

IT IS THEREFORE ORDERED that, in connection with using the Internet to place international long distance telephone calls, each respondent shall not violate Section 5(a) of the FTC Act, 15 U.S.C. 45(a) by:

A. Representing, either directly or by implication, that consumers may download, install, activate or use a computer software program to view computer-stored images without cost, unless there are no costs to consumers arising from such activity.

B. Representing, either directly or by implication, that a consumer may view computer- stored images by downloading, installing and activating a software program known as “David.exe” or any other substantially similar software, unless such respondent clearly and conspicuously discloses, in close proximity to the representation, any material facts concerning costs and consequences to a consumer that result from downloading, installing, and activating such software, including, but not limited to, the following:

  1. That the consumer’s computer will terminate its modem connection to the consumer’s usual Internet service provider;
  2. That the consumer’s modem will dial an international long-distance telephone number and establish a long-distance telephone connection with some remote location outside the United States;
  3. (a) A statement that “International long distance telephone charges to [insert country of call termination] apply”; and
(b) Either:
 
(i) a statement that “This call may cost you as much as [insert the maximum estimate of possible per-minute tariffed charge available through one of the three largest U.S. long-distance carriers (e.g. MCI, Sprint or AT&T; hereafter "a major U.S. carrier”)] per minute”; or

(ii) a stated range of possible costs per-minute for the call, where the maximum possible per-minute charge available through a major U.S. carrier is disclosed at least as prominently as any lower estimate of possible charges, and the lower estimate is based on a non-promotional standard tariffed charge available through a major carrier, and there is a clear and conspicuous disclosure of the following statement: “To determine your exact per-minute charges, contact your long distance carrier.”; and,

4. That, once connected, the consumer’s computer modem will not terminate the international long-distance telephone connection to the remote service provider unless and until: (a) the consumer terminates the connection by using a “disconnect” feature that is displayed on the screen throughout the connection; OR (b) the call is terminated automatically after some specific, stated period of time (e.g. after 5 minutes); OR (c) the consumer turns off the power switch to his computer or modem, or takes other drastic and unusual action to terminate the telephone connection, if neither (a) nor (b) above are applicable.

II.

IT IS FURTHER ORDERED that:

A. Each respondent shall not violate Section 5(a) of the FTC Act, 15 U.S.C. 45(a) by directly causing international long-distance charges to appear on the telephone billing statement of any consumer when such call does not, in fact, go to the international destination for which charges are assessed; and

B. Each respondent, when contracting with any entity for international call charges to appear on any consumer’s telephone bill, shall include written terms in such contract requiring calls to go to the destination for which charges are assessed on a consumer’s telephone bill. If, at the time of the entry of this Order, a respondent has an existing contract with another entity that arranges call charges to appear on any consumer’s telephone bill, the respondent may satisfy the requirements of this Section by obtaining from that entity a letter or other written assurance that calls go to the destination for which charges are assessed on a consumer’s telephone bill.

III.

IT IS FURTHER ORDERED that:

A. Pursuant to the Consent Decree and Order proposed in FTC v. Audiotex Connection, Inc., CV-97 0726 (DRH) (EDNY) (“the Consent Decree”), and after the entry of such Consent Decree, Eligible Consumers charged by AT&T or MCI for telephone calls involving David.exe shall, to the extent possible, receive a credit on their monthly telephone bill equal to the amount of the Relevant Charges. To the extent an Eligible Consumer has already been credited such an amount in full, no additional credit shall be extended. To the extent an Eligible Consumer has received a partial credit, only the remaining balance of the original Relevant Charge shall be credited. The process for issuing the credits to Eligible Consumers will be administered by AT&T and MCI, respectively, and monitored and/or audited by the FTC. The reasonable costs of the two carriers arising from the issuance of credits for the Relevant Charges and from such administration of credits shall be reimbursed by the escrow agent by deducting and paying to AT&T and MCI, respectively, the amounts stated below.

B. Pursuant to the Consent Decree and Order proposed in FTC v. Audiotex Connection, Inc., CV-97 0726 (DRH) (EDNY), and after the entry of such Consent Decree, a Redress Escrow Account shall be established at a bank with a branch located in the State of New York, and Joel Dichter, Esq., shall be designated as the sole escrow agent and signatory to this Redress Escrow Account. In addition to the funds deposited by the defendants in FTC v. Audiotex Connection, Inc., the respondents shall deposit sufficient funds into the Redress Escrow Account as are necessary to enable the escrow agent to distribute the funds, consisting of a total deposit of all sums provided by Section IIIB(1) and (2), below, contemporaneously with a deposit of the $60,000 provided by Section IIIB(3), in the following manner:

  1. AT&T shall be distributed the sum of $660,000 toward the cost of administering the credit to consumers provided by Section IIIA, above, and toward reimbursement of out-of-pocket expenses associated with calls to the Moldova telephone numbers;
  2. MCI shall be distributed the sum of $99,302.57 toward the cost of administering the credit to consumers provided by Section IIIA above and toward reimbursement of out-of-pocket expenses associated with calls to the Moldova telephone numbers;
  3. Forty Thousand Dollars ($40,000) shall be distributed to the Federal Trade Commission and shall be used, where practicable, to provide redress to Eligible Consumers charged by an international long-distance carrier other than AT&T or MCI (hereinafter referred to as “Eligible Non-AT&T/MCI Consumers”). The Commission, in its sole discretion, may use a designated agent to administer redress for Eligible Non-AT&T/MCI Consumers. If the Commission, in its sole discretion, determines that redress to consumers is wholly or partially impractical, any funds up to Forty Thousand Dollars ($40,000.00) not so used shall be paid to the United States Treasury. The respondents shall be notified as to how such funds are disbursed, but shall have no right to contest the manner of distribution. Eligible Non-AT&T/MCI Consumers shall have 90 days from the Court’s entry of the Consent Decree to request a refund. If the Commission or its designated agent determine within 120 days from the entry of the Consent Decree that the cost of issuing and administering refunds to Eligible Non-AT&T/MCI Consumers exceeds Forty Thousand Dollars ($40,000.00), the Commission or its designated agent shall so notify the escrow agent, and an additional sum of money not to exceed Twenty Thousand Dollars ($20,000.00) shall be distributed by the escrow agent to the Commission for redress to Eligible Non-AT&T/MCI Consumers. To the extent that the escrow agent is not notified in writing by the Commission within such 120 day period that all or a portion of the additional Twenty Thousand Dollars ($20,000.00) is required by the Commission for redress purposes, the $20,000.00 or remaining portion thereof not required by the Commission for redress purposes shall be released from the Redress Escrow Account and distributed promptly by the escrow agent to any contributing defendant in FTC v. Audiotex Connection, Inc. and/or any contributing respondent.

C. The respondents unilaterally agree to comply with this administrative Order after the Commission votes to accept it and during the 60-day comment period before the Order becomes final. Should the respondents distribute funds during that period to the Redress Escrow Account, in amounts sufficient to commence the redress program under the Consent Decree in FTC v. Audiotex Connection, Inc., such payment shall fulfill the respondents’ redress obligations under Section IIIB above.

IV.

IT IS FURTHER ORDERED that for a period of three years after the date of entry of this Order, each respondent shall maintain, and make available to the FTC upon reasonable notice, documents that, in reasonable detail, accurately, fairly, and completely reflect such respondent’s activities related to using the Internet to place international long distance telephone calls including:

A. 1. Representative written and, if distributed in audio format, audiotaped copies of all solicitations, advertisements, or other marketing materials actually used;

2. The number, frequency, and average duration of calls to any international, tolled telephone numbers advertised or promoted directly or indirectly by such respondent, as well as the payments received and payments made for such calls;

3. The portion of the contract or the other written assurance referenced in Section IIB of this Order; and,

B. Records that reflect, for every consumer complaint or refund request received from any consumer to whom such respondent has sold, billed or sent any goods or services, or from whom such respondent accepted money for such goods or services, whether received directly or indirectly or through any third party:

  1. the consumer’s name, address, telephone number and the dollar amount paid by the consumer;
  2. the written complaint or refund request, if any, and the date of the complaint or refund request;
  3. the basis of the complaint and the nature and result of any investigation conducted concerning the validity of the complaint;
  4. each response from the respondent(s) and the date of the response;
  5. any final resolution and the date of the resolution; and
  6. in the event of a denial of a refund request, the reason for such denial.

V.

IT IS FURTHER ORDERED that, to enable the Commission to monitor compliance with the provisions of this Order, for a period of three years after the date of entry of this Order:

A. Each corporate respondent shall notify the FTC in writing, within thirty (30) days of: (1) any reorganization, name change, dissolution, change in majority ownership, or any corporate change that may affect compliance obligations arising under this Order; and (2) any affiliation with any new business entity (including but not limited to, any partnership, limited partnership, joint venture, sole proprietorship or corporation) in connection with using the Internet to place international long distance telephone calls, such notification to include: (a) the name of the business entity; (b) the address and telephone number of the business entity; (c) the names of the business entity’s officers, directors, principals and managers; and (d) a summary description of the business entity’s intended activities; and

B. Each individual respondent shall notify the FTC in writing, within thirty (30) days of the discontinuance of his current business affiliation or employment with a corporate respondent, or of his affiliation or employment with any new business entity (including but not limited to, any partnership, limited partnership, joint venture, sole proprietorship or corporation) in connection with using the Internet to place international long distance telephone calls, in the latter case such notification to include: (a) the name of the business entity; (b) the address and telephone number of the business entity; (c) the names of the business entity’s officers, directors, principals and managers; and (d) a summary description of the business entity’s intended activities; and

C. Each respondent shall designate its counsel as authorized to accept service of all documents related to this Order.

VI.

IT IS FURTHER ORDERED that each respondent shall not provide or distribute to any person, except for a court, counsel for the respondents, counsel’s consultants, agents of the Commission or other law enforcement authorities, or others as ordered by a court of competent jurisdiction, copies of “David.exe” or “david7.exe” or any substantially similar software.

VII.

IT IS FURTHER ORDERED that for a period of three years after the date of entry of this Order, each respondent shall in connection with any business using the Internet to place international long distance telephone calls:

A. Provide a copy of this Order once to, and obtain a signed and dated acknowledgment of receipt of the same from, each affiliate, subsidiary, division, sales entity, successor, officer, director, shareholder, employee, agent or representative of such respondent; and

B. Maintain, and upon reasonable notice make available to representatives of the Commission, the original and dated acknowledgments of the receipts of copies of this Order required by Section VIIA above.

VIII.

IT IS FURTHER ORDERED that where required by this Order, written notice to:

A. The Commission shall be effected by serving papers, by personal delivery or certified mail, addressed to: Associate Director, Federal Trade Commission, Division of Marketing Practices, Sixth Street and Pennsylvania Avenue, N.W., Room 238, Washington, DC 20580; and

B. The respondents shall be effected by serving papers, by personal delivery or certified mail, addressed to: Joel R. Dichter, Klein, Zelman, Rothermel & Dichter, L.L.P., 485 Madison Avenue, New York, NY 10022.

IX.

IT IS FURTHER ORDERED that each respondent shall, within 180 days after the date of entry to this Order, file with the Commission a report, in writing, setting forth the manner and form of compliance with this Order.

X.

IT IS FURTHER ORDERED that, to the extent that this Order may conflict with any federal law or regulation which is later enacted or amended, such law and not this Order shall apply where such a conflict exists. For the purposes of this Order, a conflict exists if the

conduct prohibited by this Order is required by such federal law or if conduct required by this Order is prohibited by such federal law.

Signed this _________ day of October, 1997

BEYLEN TELECOM, LTD.

By:________________________________
Peter Noble, President
 
Address:
Genesis Building
P.O. Box 2097
Grand Cayman, Cayman Islands
British West Indies

NITELINE MEDIA, INC./RON TAN

By:________________________________
Ron Tan, individually and in his
capacity as an officer of NiteLine Media, Inc.
 
Address:
1355 East 92nd Street
Brooklyn, NY 11236
 
By: ___________________________________
Joel R. Dichter, Esq.
Attorney for Beylen Telecom, Ltd.,
NiteLine Media, Inc. and Ron Tan
 
Address:
Klein, Zelman, Rothermel,
& Dichter, L.L.P.
485 Madison Avenue
New York, NY 10022
 
By: ___________________________________
Paul H. Luehr, Esq.
Attorney for the Federal Trade Commission
 
Address:
Federal Trade Commission
6th & Pennsylvania Ave., NW
Washington, DC 20580

Approved:

By: _________________________________
Eileen Harrington, Esq.
Associate Director
Division of Marketing Practices
 
By: _________________________________
Joan Z. Bernstein, Director
Bureau of Consumer Protection

Attachment A

List of Moldova Phone Numbers

373-955-1100
373-955-1111
373-955-1200
373-955-1300
373-955-1400
373-955-1500
373-955-1600
373-955-2000
373-955-2010
373-955-2020
373-955-2030
373-955-2222
373-955-2400
373-955-2401
373-955-2402
373-955-2403
373-955-2404
373-955-2405
373-955-2406
373-955-2407
373-955-2408
373-955-2409
373-955-2410
373-955-2411
373-955-2419