ROBERT J. CLEARY
United States Attorney

By:
Assistant United States Attorney
970 Broad Street, Suite 700
Newark, New Jersey 07102
(973) 645-2700

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA,
Plaintiff
v.
TOYSRUS.COM, LLC, AND
TOYSRUS.COM, INC.,
Defendants.

Civil Action No.

CONSENT DECREE AND ORDER FOR CIVIL PENALTIES, INJUNCTIVE AND OTHER RELIEF

WHEREAS plaintiff, the United States of America, has commenced this action by filing the Complaint herein; defendants have waived service of the Summons and Complaint; the parties have been represented by the attorneys whose names appear hereafter; and the parties have agreed to settlement of this action upon the following terms and conditions, without adjudication of any issue of fact or law and without defendants admitting liability for any of the matters alleged in the Complaint;

THEREFORE, upon stipulation of plaintiff and defendants, it is hereby ORDERED, ADJUDGED, and DECREED as follows:

1. This Court has jurisdiction of the subject matter and of the parties.

2. The Complaint states a claim upon which relief may be granted against the defendants under Sections 5(a)(1), 5(m)(1)(A), 13(b), and 16(a) of the Federal Trade Commission Act, 15 U.S.C. 45(a)(1), 45(m)(1)(A), 53(b), and 56(a).

DEFINITION

3. For the purposes of this Consent Decree, the term "Mail Order Rule" means the Federal Trade Commission's Trade Regulation Rule Concerning Mail or Telephone Order Merchandise, 16 C.F.R. Part 435. A copy of the Mail Order Rule is attached hereto as "Appendix A" and incorporated herein as if fully set forth verbatim.

CIVIL PENALTY

4. Defendants Toysrus.com, Inc., and Toysrus.com, LLC, their successors and assigns, shall pay to plaintiff a civil penalty, pursuant to section 5(m)(1)(A) of the Federal Trade Commission Act, 15 U.S.C.  45(m)(1)(A), in the amount of $350,000. Defendants are jointly and severally liable for payment of the civil penalty.

5. Defendants shall make the payment required by Paragraph 4 within five (5) days of the date of entry of this Consent Decree by electronic fund transfer in accordance with the instructions provided by the Office of Consumer Litigation, Civil Division, U.S. Department of Justice, Washington, D.C. 20530, for appropriate disposition.

6. In the event of any default in payment, which default continues for ten days beyond the due date of payment, the entire unpaid penalty, together with interest, as computed pursuant to 28 U.S.C. 1961, from the date of default to the date of payment, shall immediately become due and payable.

INJUNCTION

7. Defendants, their successors and assigns, and their officers, agents, servants, employees, and attorneys, and all other persons in active concert or participation with any one or more of them who receive actual notice of this Consent Decree by personal service or otherwise, are hereby enjoined from violating, directly or through any corporation, subsidiary, division or other device, any provision of the Mail Order Rule, including, but not limited to:

a. Soliciting orders for the sale of telephone or mail order merchandise unless they have a reasonable basis to expect that they can ship such merchandise within the time stated in the solicitation or, if no time is stated clearly and conspicuously in the solicitation, within thirty (30) days after receipt of a properly completed order, as required by 16 C.F.R.  435.1(a)(1);
b. Failing to timely 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, as required by 16 C.F.R.  435.1(b)(1);
c. Failing to provide to the buyer a definite revised shipping date, as required by 16 C.F.R.  435.1(b)(1);
d. Failing to deem an order canceled and to make a prompt refund, either through a) a credit to the buyer's account if charged to the buyer's account, b) notice to the buyer that the buyer's account will not be charged, or c) a refund in the amount tendered, as applicable, as required by 16 C.F.R.  435.1(c).

8. In the event the Mail Order Rule is hereafter amended or modified, defendants' compliance with that Rule as so amended or modified shall not be deemed a violation of this injunction.

COMPLIANCE

9. Defendants shall, within thirty (30) days of the entry of this Consent Decree, provide a copy of this Consent Decree and the Business Guide to the Federal Trade Commission's Mail or Telephone Order Merchandise Rule (Jan. 1995) ("Business Guide") to each of their supervisory or managerial agents, servants, employees and attorneys who are engaged in defendants' mail, telephone, facsimile or Internet order sales business, secure from each such person a signed statement acknowledging receipt of a copy of this Consent Decree and Business Guide, and shall, within ten (10) days of complying with this paragraph, file an affidavit with the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave., N.W.,Washington, D.C. 20580, setting forth the fact and manner of their compliance, including the name and title of each person to whom a copy of the Consent Decree and Business Guide has been provided.

10. For a period of five (5) years from the date of entry of this Consent Decree, defendants, their successors and assigns, shall maintain and make available to the Federal Trade Commission, within thirty (30) days of the date of receipt of a written request, business records demonstrating compliance with the terms and provisions of this Consent Decree.

11. For a period of twenty (20) years from the date of entry of this Consent Decree, defendants, their successors and assigns, shall notify the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580, at least thirty (30) days prior to any material change in defendants' corporate status that may affect compliance obligations arising under this order, including, but not limited to, merger, incorporation, dissolution, assignment, sale resulting in the emergence of successor corporations, the creation or dissolution of a subsidiary or parent, or any other changes in corporate status which may affect defendants' obligations under this Consent Decree. Provided, however, that with respect to any proposed change in the corporation about which defendants learn less than 30 days prior to the date such action is to take place, defendants shall notify the Commission's Associate Director for Enforcement as soon as practicable after obtaining such knowledge.

12. One hundred twenty (120) days after entry of this Consent Decree, defendants shall provide a written report to the Federal Trade Commission, signed by an officer of defendants, setting forth in detail the manner and form in which the defendants have complied and are complying with this Consent Decree. This report shall include but not be limited to:

a. a specimen copy of each delay option notice used for purposes of complying with any provision of the Mail Order Rule, and a statement setting forth in detail the procedures in place for providing such notices;
b. a specimen copy of each advertisement containing a shipping representation that is in effect sixty (60) days after the date of entry of this Consent Decree through the date ten (10) business days before such submission;
c. a statement setting forth in detail defendants' procedures for providing prompt refunds pursuant to the Mail Order Rule; and
d. a statement setting forth in detail the basis for claiming that defendants will be able to ship merchandise:
i. within the time stated in any advertisement;
ii. within thirty (30) days, where no time is stated in any advertisement.

Defendants shall mail this written notification to: the Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Ave., N.W.,Washington, D.C. 20580.

13. Defendants are hereby required, in accordance with 31 U.S.C.  7701, to furnish to the Federal Trade Commission their taxpayer identifying number (social security number or employer identification number), which shall be used for purposes of collecting and reporting on any delinquent amount arising out of their relationship with the government.

CONTINUING JURISDICTION

14. This Court shall retain jurisdiction of this matter for the purposes of enabling any of the parties to this Consent Decree to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Consent Decree, for the enforcement of compliance therewith, or for the punishment of violations thereof.

JUDGMENT IS THEREFORE ENTERED in favor of plaintiff and against defendants, pursuant to all the terms and conditions recited above.

Dated this day of , 20 .

UNITED STATES DISTRICT JUDGE

The parties, by their respective counsel, hereby consent to the terms and conditions of the Consent Decree as set forth above and consent to the entry thereof. Defendants waive any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. 2412, concerning the investigation and prosecution of this action.

FOR THE UNITED STATES OF AMERICA:

DAVID W. OGDEN
Acting Assistant Attorney General
Civil Division
U.S. Department of Justice

ROBERT J. CLEARY
United States Attorney
District of New Jersey

By:
Assistant United States Attorney
970 Broad Street, Suite 700
Newark, New Jersey 07102
(973) 645-2700

EUGENE THIROLF
Director
Office of Consumer Litigation

By: _________________________________
Attorney
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
P.O. Box 386
Washington, D.C. 20044

FOR THE FEDERAL TRADE COMMISSION:

_________________________________
ELAINE D. KOLISH
Associate Director
Division of Enforcement
Bureau of Consumer Protection
Federal Trade Commission

_________________________________
HEATHER A. HIPPSLEY
Assistant Director
Division of Enforcement
Bureau of Consumer Protection

CONNIE WAGNER
Attorney
Division of Enforcement
Bureau of Consumer Protection
Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, D.C. 20580
(202) 326-3309

FOR THE DEFENDANTS:

TOYSRUS.COM, INC.

By:
President
Toysrus.com, Inc.
225 Summit Avenue
Montvale, New Jersey 07645

TOYSRUS.COM, LLC

By:
President
Toysrus.com, LLC
155 Tice Boulevard
Woodcliff Lake, New Jersey 07675

HALL DICKLER KENT FRIEDMAN & WOOD LLC
Attorneys for Defendants
909 Third Avenue
New York, New York 10022-4731
(212) 339-5400

By:
LINDA A. GOLDSTEIN
Attorney