9723128 UNITED STATES OF AMERICA COMMISSIONERS: In the Matter of BEYLEN TELECOM, LTD. and NITELINE MEDIA, INC., corporations, and RON TAN, individually and as an officer of NITELINE MEDIA, INC. Docket No. C-3782 DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondents with violation of the Federal Trade Commission Act; and The respondents, their attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents for purposes of the order of all the jurisdictional facts set forth in the aforesaid draft complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondents that the law has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission’s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the said Act, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, now in further conformity with the procedure prescribed in § 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:
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:
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:
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:
C. If, during the 60-day comment period before the issuance of this Order, the respondents distributed funds 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 fulfills 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:
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. By the Commission, Commissioner Thompson and Commissioner Swindle not participating. Donald S. Clark ISSUED: January 23, 1998 Attachment A List of Moldova Phone Numbers 373-955-1100 |