UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
EASTERN DIVISION

UNITED STATES OF AMERICA,
Plaintiff,

v.

DESIGNER CHECKS, INC., an Alabama corporation,
Defendant.

JUDGE

DOCKET NO.

COMPLAINT FOR CIVIL PENALTIES,
INJUNCTIVE AND OTHER RELIEF

Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission (“Commission”), for its Complaint alleges the following:

1. Plaintiff brings this action under Sections 5(a)(1), 5(m)(1)(A), 9, 13(b), and 16(a) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. 45(a)(1), 45(m)(1)(A), 49, 53(b), and 56(a), to obtain monetary civil penalties and injunctive and other relief for defendant's violations of the Commission's trade regulation rule concerning Mail or Telephone Order Merchandise, 16 C.F.R. Part 435 (the “Rule”).

JURISDICTION AND VENUE

2. This Court has jurisdiction over this matter under 28 U.S.C. 1331, 1337(a), 1345, and 1355, and under 15 U.S.C. 45(m)(1)(A), 49, 53(b), and 56(a). This action arises under 15 U.S.C. 45(a)(1).

3. Venue in the Northern District of Alabama is proper under 15 U.S.C. 53(b) and under 28 U.S.C. 1391(b-c) and 1395(a).

DEFENDANT

4. Defendant Designer Checks, Inc. (“Designer Checks”), is an Alabama corporation with an office and its principal place of business located at 128 West 7th Street, Anniston, Alabama 36201. Designer Checks transacts or has transacted business in the Northern District of Alabama.

THE RULE

5. The Rule, originally titled “Mail Order Merchandise,” was promulgated by the Commission on October 22, 1975, under the FTC Act, 15 U.S.C. 41, et seq. The Rule became effective February 2, 1976. On September 21, 1993, the Rule was amended under the FTC Act, 15 U.S.C. 57a, to include telephone orders, among other changes, and retitled “Mail or Telephone Order Merchandise.” The amendments took effect March 1, 1994. Since then, the Rule has not been changed and has remained in full force and effect.

VIOLATIONS OF THE RULE

6. At all times material herein, defendant has engaged in mail or telephone order sales of bank checks and accessories (such as checkbook covers, pens and folios) in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. 44.

7. Beginning on or around March 1, 1994, in numerous instances, after having received through the mails or by telephone “properly completed orders” for checks, as the term “properly completed order” is defined in Section 435.2(d) of the Rule, 16 C.F.R. 435.2(d), and having been unable to ship the ordered merchandise to the buyer within the Rule's applicable time, as set out in Section 435.1(a)(1) of the Rule, 16 C.F.R. 435.1(a)(1) (the “applicable time”), defendant has violated the Rule by:

a. Failing 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); and

b. Having failed to offer the buyer the option to consent to the delay or cancel the buyer's order and receive a prompt refund, as required by 16 C.F.R. 435.1(b)(1), failing to make a prompt refund, thereby violating 16 C.F.R. 435.1(c)(5).

8. Beginning on or around January 1, 1994, in numerous instances, after having received through the mails or by telephone “properly completed orders” for accessory items other than bank checks, as the term “properly completed order” is defined in Section 435.2(d) of the Rule, 16 C.F.R. 435.2(d), and having been unable to ship the ordered merchandise to the buyer within the Rule's applicable time, as set out in Section 435.1(a)(1) of the Rule, 16 C.F.R. 435.1(a)(1) (the “applicable time”), defendant has violated the Rule by failing to furnish the buyer with adequate means, at the defendant’s expense, to either consent to the delay or cancel the buyer's order and receive a prompt refund, thereby violating 16 C.F.R. 435.1(b)(3).

VIOLATIONS OF SECTION 5(a)(1) OF THE FTC ACT

9. Section 5(a)(1) of the FTC Act, 15 U.S.C. 45(a)(1), provides that unfair or deceptive acts or practices in or affecting commerce are unlawful.

10. Under Section 18(d)(3) of the FTC Act, 15 U.S.C. 57a(d)(3), a violation of the Rule constitutes an unfair or deceptive act or practice in violation of Section 5(a)(1) of the FTC Act, 15 U.S.C. 45(a)(1).

MONETARY CIVIL PENALTIES AND INJUNCTION

11. Defendant has violated the Rule as described above with knowledge as set forth in Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. 45(m)(1)(A).

12. Each sale or attempted sale, during the five (5) years preceding the filing of this Complaint, in which defendant has violated the Rule in one or more of the ways described above constitutes a separate violation for which plaintiff seeks civil penalties.

13. Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. 45(m)(1)(A), and Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461, as amended, authorize the Court to award monetary civil penalties of not more than $10,000 [$11,000 after November 20, 1996] for each such violation of the Rule.

14. Under Section 13(b) of the FTC Act, 15 U.S.C. 53(b), this Court is authorized to issue a permanent injunction for violations of the FTC Act.

PRAYER

WHEREFORE, plaintiff requests that this Court, pursuant to 15 U.S.C. 45(a)(1), 45(m)(1)(A), 49, and 53(b), and the Court's own equity powers to:

(1) Enter judgment against defendant and in favor of plaintiff for each violation alleged in this Complaint;

(2) Award plaintiff monetary civil penalties from defendant for each violation of the Rule set forth herein;

(3) Enjoin defendant from violating the Rule; and

(4) Award plaintiff such additional relief as the Court may deem just and proper.

Dated:

OF COUNSEL:

ANTHONY E. DIRESTA
Regional Director
Atlanta Regional Office
U.S. Department of Justice

FOR THE UNITED STATES OF AMERICA:

FRANK W. HUNGER
Assistant Attorney General
Civil Division

KATHARINE B. ALPHIN
Attorney United States Attorney
Atlanta Regional Office Northern District of Alabama
Federal Trade Commission
60 Forsyth St. S.W.
Atlanta, GA 30303
(404) 656-1350

By:

Assistant U.S. Attorney
Northern District of Alabama

EUGENE M. THIROLF
Director
Office of Consumer Litigation
Civil Division

By:

Attorney
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
Washington, D.C. 20530
(202) 307-0061