Assistant United States Attorney
450 Golden Gate Ave., Box 36055
San Francisco, CA. 94102
(415) 436-7200

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, Plaintiff,

v.

FRANKLIN W. BISHOP, an individual doing business as Minidiscnow.com, Defendant.

CASE 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 that:

1. Plaintiff brings this action under Sections 5(a)(1), 5(m)(1)(A), 13(b), 16(a) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 53(b), 56(a) and 57b, to obtain monetary civil penalties and injunctive and other relief for defendant's violations of the Commission's Trade Regulation Rule Concerning the Sale of Mail or Telephone Order Merchandise (the "Mail Order Rule" or "Rule"), 16 C.F.R. Part 435.

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), 53(b), 56(a) and 57b. This action arises under 15 U.S.C. § 45(a)(1).

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

DEFENDANT

4. Defendant Franklin W. Bishop is sole proprietor and owner of Minidiscnow.com, located at 1000 W. Texas Street, Suite H, Fairfield, CA 94533. Individually or in concert with others, he has formulated, directed, controlled, supervised, and/or participated in the acts and practices of Minidiscnow.com, including the acts or practices set forth in this Complaint. He resides and transacts business in this district.

DEFENDANT'S COURSE OF CONDUCT

5. Defendant sells minidisc audio equipment and accessories over the Internet, representing that orders will be shipped in two to three weeks.

6. Defendant accepts only checks, money orders, or wire transfers as payment for his products. Defendant deposits these payments upon receipt of the orders.

7. Defendant accumulates a group of orders, and then submits them to a supplier in Japan for fulfillment and delivery. Defendant has little or no knowledge of when the supplier in Japan will actually ship the ordered products to his customers. Many customers must wait two or three months for products that were promised in two to three weeks.

8. Defendant has never instituted procedures to comply with the Mail Order Rule. Indeed, in direct opposition to the requirements of the Rule, defendant never initiates contact with customers to inform them of delay, and maintains a written policy never to issue refunds due to delay. When customers contact defendant to inquire about the status of a late order, defendant typically denies any request to cancel the order and receive a refund.

THE MAIL ORDER RULE

9. The Mail Order Rule was promulgated by the Commission on October 22, 1975, under the FTC Act, 15 U.S.C. § 41 et seq., and became effective February 2, 1976. The Commission amended the Rule on September 21, 1993, under Section 18 of the FTC Act, 15 U.S.C. § 57a, and these amendments became effective on March 1, 1994.

VIOLATIONS OF THE MAIL ORDER RULE

10. At all times material herein, defendant has engaged in the mail order sale and telephone order sale of minidisc audio equipment and accessories in commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

1. In numerous instances, after having solicited mail orders and telephone orders for merchandise and received "properly completed orders," as that term is defined in Section 435.2(d) of the Mail Order Rule, 16 C.F.R. § 435.2(d), and having been unable to ship some or all of the ordered merchandise to the buyer within the Mail Order Rule's applicable time, as set out in Section 435.1(a)(1) of the Mail Order Rule, 16 C.F.R. § 435.1(a)(1) (the "applicable time"), defendant has:

a. Violated Section 435.1(a)(1) of the Rule by soliciting orders for the sale of telephone or mail order merchandise when he had no reasonable basis to expect that he would be able to ship some or all of such merchandise within the time stated in the solicitation or, if no time was stated clearly and conspicuously in the solicitation, within thirty (30) days after receipt of a properly completed order;

 

b. Violated Section 435.1(a)(2) of the Rule by providing to the buyer a revised shipping date when he had no reasonable basis for making such representation;

 

c. Violated Section 435.1(b)(1) of the Rule by 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; and

 

d. Violated Section 435.1(c) of the Rule by failing to deem an order canceled and make a prompt refund to buyers who are entitled to such refunds under the Rule.

12. 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."

13. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of the Mail Order 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).

CIVIL PENALTIES, CONSUMER REDRESS AND INJUNCTION

14. Defendant has violated the Mail Order 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).

15. Each sale or attempted sale, during the five years preceding the filing of this complaint, in which defendant has violated the Mail Order Rule in one or more of the ways described above constitutes a separate violation for which plaintiff seeks monetary civil penalties.

16. Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. §  45(m)(1)(A), as modified by Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. § 2461, and Section 1.98(d) of the FTC's Rules of Practice, 16 C.F.R. § 1.98(d), authorizes this Court to award monetary civil penalties of not more than $11,000 for each such violation of the Mail Order Rule.

17. Section 19 of the FTC Act, 15 U.S.C. § 57b, authorizes the Court to award such relief as is necessary to redress the injury to consumers or others resulting from defendant's violation of the Mail Order Rule.

18. Under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), this Court is authorized to issue a permanent injunction against defendant's violating the FTC Act.

PRAYER

WHEREFORE, plaintiff requests this Court, pursuant to 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 53(b) and 57b, and to 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 Mail Order Rule;

 

(3) Enjoin defendant from violating the Mail Order Rule;

 

(4) Enjoin defendant from failing to provide all outstanding refunds, promptly and in full, to each consumer who is entitled to such refund under the Mail Order Rule; and

 

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

DATED: