David R. Spiegel, NY Bar No. 1592724
Tracey L. Brown
Craig Tregillus
Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, DC 20580
(202) 326-3281, fax (202)326-3395
Attorneys for Plaintiff

UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA, PHOENIX DIVISION

Federal Trade Commission, Plaintiff,

v.

RJB Telcom, Inc., a corporation; Robert J. Botto, Jr. individually, and as an officer of RJB Telcom, Inc., and Robert J. Botto, Jr. and Suzette Botto, as Husband and Wife; Richard D. Botto, individually, and as an officer of RJB Telcom, Inc., and Richard D. Botto and Anne Botto, as Husband and Wife, Defendants.

CV- No.

COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF

RJB Telcom, Inc., a corporation; Robert J. Botto, Jr. individually, and as an officer of RJB Telcom, Inc., and Robert J. Botto, Jr. and Suzette Botto, as Husband and Wife; Richard D. Botto, individually, and as an officer of RJB Telcom, Inc., and Richard D. Botto and Anne Botto, as Husband and Wife, Defendants.

Plaintiff Federal Trade Commission ("Commission"), by its undersigned attorneys, alleges:

1. This is an action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  53(b), to secure injunctive and other equitable relief, including restitution and disgorgement of ill-gotten gains, for defendants' deceptive and unfair acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C.  45(a), in connection with unauthorized billing for Internet services.

JURISDICTION AND VENUE

2. This Court has jurisdiction over this matter pursuant to 15 U.S.C.  45(a) and 53(b), and 28 U.S.C.  1331, 1337(a) and 1345.

3. Venue in this District is proper under 15 U.S.C.  53(b), and 28 U.S.C.  1391(b) and (c).

PLAINTIFF

4. Plaintiff Federal Trade Commission is an independent agency of the United States Government created by statute. 15 U.S.C.  41-58. The Commission enforces Section 5(a) of the FTC Act, 15 U.S.C.  45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission may initiate federal district court proceedings to enjoin violations of the FTC Act and to secure such equitable relief as may be appropriate in each case, including restitution for injured consumers. 15 U.S.C.  53(b).

DEFENDANTS

5. Defendant RJB Telecom, Inc. ("RJB") is an Arizona corporation that does or has done business at one or more of the following addresses: (a) 7702 East Doubletree Ranch RD, #305, Scottsdale, AZ 85258; (b) 8601 N. Scottsdale RD, Ste. 330, Scottsdale, AZ 85253; (c) 10785 E. Salt Bush Dr., Scottsdale, AZ 85259-8843; and (d) 13771 Fountain Hills Blvd., Ste. 247, Fountain Hills, AZ 85268. RJB was incorporated in May 1999, and transacts or has transacted business in the District of Arizona.

6. Defendant Robert J. Botto, Jr. is the President and Secretary of corporate defendant RJB. He resides and transacts or has transacted business in the District of Arizona. At all times material to this complaint, acting alone or in concert with others, Mr. Botto has formulated, directed, controlled or participated in the acts and practices of RJB, including the acts and practices set forth in the complaint.

7. Relief defendant Suzette Botto is named as wife of defendant Robert Botto. At all times Robert Botto has acted on behalf of the marital community and Suzette Botto is being named for community liability purposes.

8. Defendant Richard D. Botto is the Vice President and Treasurer of corporate defendant RJB. He resides and transacts or has transacted business in the District of Arizona. At all times material to this complaint, acting alone or in concert with others, Mr. Botto has formulated, directed, controlled or participated in the acts and practices of RJB, including the acts and practices set forth in the complaint.

9. Relief defendant Anne Botto is named as wife of defendant Richard Botto. At all times Richard Botto has acted on behalf of the marital community and Anne Botto is being named for community liability purposes.

COMMERCE

10. At all times material hereto, defendants (sometimes hereinafter referred to collectively as "RJB") have been engaged in the business of offering for sale and selling Internet-related services to the public, including access to sexually explicit Web sites, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C.  44.

DEFINITIONS

11. For purposes of this complaint, "Local Exchange Carrier" or "LEC" means the local telephone company from which a line subscriber receives his or her telephone bill.

12. For purposes of this complaint, "line subscriber" means an individual or entity who has arranged with a LEC to obtain local telephone service provided through an assigned telephone number, and to be billed for such service on a monthly (or other periodic) basis.

13. For purposes of this complaint, the term "Defendants" refers to individual defendants Robert J. Botto, and Richard D. Botto, as well as corporate defendant RJB Telecom, Inc. The term "Relief Defendants" refers to Suzette Botto, and Anne Botto.

DEFENDANTS' BUSINESS ACTIVITIES

14. Since May 1999, defendants have engaged in a plan, program or campaign to bill consumers throughout the United States on their charge cards or debit cards, and more recently, on their telephone bills, purportedly for access to sexually explicit web pages and web sites.

15. A "web page" is a single electronic file or document displayed on the World Wide Web ("WWW"). Web pages include at least the following elements: copy, graphics, layout, and internal technical design. Web pages are housed within a "web site," which is a home or location on the WWW. Web sites are usually comprised of a home page and subordinate pages.

16. Defendants have registered and own and/or operate sexually explicit web sites with descriptors including "AsianHeat.com," "Teensteam.com," "Clubcock.com," and "KarasXXX.com." The sites are configured so that after an initial "teaser" layout, viewers are shifted to a screen which offers them either a trial membership (e.g., $2.95 for five days) or a longer membership (e.g., $29.95 for a month). Viewers are offered the option of paying by either credit or debit card or by check. Viewers who sign up are then provided with additional sexually explicit images.

17. In numerous instances, consumers have complained that they have been billed by defendants on their credit or debit cards, purportedly for access to defendants' web sites, without their authorization or knowledge. Many such consumers have never accessed defendants' web sites, yet defendants have obtained and continue to obtain these consumers' credit and debit card account numbers and have caused and continued to cause charges to be posted on, or monies to be withdrawn from those accounts, without consumers' authorization.

18. Viewers who close the credit card membership screen or attempt to exit the web site are shifted to a new screen which indicates that there is "NO CREDIT CARD NEEDED!" Instead, the viewer is offered the opportunity to "PAY BY PHONE!" Whether the viewer clicks on the phone option or simply attempts to exit the web site, he or she is referred to a new set of screens which advertise a phone dialer option. This option installs a dialer program on the viewer's computer which disconnects the viewer's computer modem from the viewer's usual Internet service provider, dials an international telephone number and reconnects the viewer's computer modem, via an international call, to the Internet, opening at defendants' sexually explicit web site.

19. As a result of the action of defendants' dialer program, telephone line subscribers are billed for defendants' "adult" Internet-based entertainment via their monthly telephone bills, or are invoiced directly for the charges by a billing company. These bills describe the charge for defendants' adult entertainment as a toll charge for telephone transmission -- i.e., the charge looks like a charge for an ordinary international long distance call.

20. Defendants do not take any steps to verify or confirm that the telephone line subscriber that they ultimately bill for access to sexually explicit material is in fact the person who downloaded and used the dialer software. Defendants do not know if the line subscriber's minor children, house guests or others with access to the phone line used the dialer software, or whether any such usage was authorized by the line subscriber.

21. In numerous instances, line subscribers have complained that they have been billed on their telephone bills for access to defendants' web sites without their authorization or knowledge. Many such line subscribers have never accessed defendants' web sites, have never placed calls to the phone numbers used by the dialer software on defendants' web sites, and have never authorized anyone else to do so.

22. In many cases, consumers have had to cancel their existing credit or debit card accounts, or line subscribers have had to change or disconnect their telephone numbers in order to stop incurring continuing additional charges from defendants.

VIOLATIONS OF SECTION 5 OF THE FTC ACT

23. As set forth below, defendants, individually and in concert with others, have violated Section 5(a) of the FTC Act in connection with the marketing, promotion, offer and sale of access to their sexually explicit Internet-based entertainment services.

COUNT I

24. In numerous instances, in the course of billing, attempting to collect, and collecting money from consumers, defendants represent to consumers, expressly or by implication, that consumers purchased or agreed to purchase goods or services from defendants, and therefore owe money to defendants.

25. In truth and in fact, in numerous instances, consumers did not purchase or agree to purchase goods or services from defendants, and therefore do not owe money to defendants.

26. Therefore, defendants' representations, as set forth above, are deceptive, and violates Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

COUNT II

27. In numerous instances, defendants charge or debit the accounts of consumers, purportedly for access to their web sites.

28. In truth and in fact, in numerous instances, consumers have not accessed, contacted, been contacted by, purchased, or agreed to purchase or pay for any goods or services from defendants or from anyone for whom defendants purport to bill. Large numbers of consumers have never heard of RJB Telcom, Inc. prior to receiving their account statements, and therefore cannot reasonably avoid defendants' billing for services that they did not purchase.

29. Defendants' practice of charging and debiting consumers' credit or debit card accounts without authorization causes substantial injury that consumers cannot reasonably avoid and that is not outweighed by countervailing benefits to consumers or competition.

30. Therefore, defendants' practice, as outlined above, is unfair and violates Section 5(a) of the FTC Act, 15 U.S.C.  45(a).

COUNT III

31. In numerous instances, defendants represent, expressly or by implication, that because a line-subscriber's telephone was used to access Internet web sites through the line-subscriber's computer modem using the Defendant's dialing program, the line subscriber is legally obligated to pay defendants for that access, whether or not the line subscriber actually accessed such web sites.

32. In truth and in fact, in numerous instances, the line subscriber is not legally obligated to pay defendants for accessing Internet web sites through defendants' dialing program.

33. Therefore, the representation set forth in Paragraph 31 is deceptive, and violates Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

COUNT IV

34. In numerous instances, defendants bill or cause to be billed, and attempt to collect or arrange for the collection of payment from, a line subscriber whose telephone may have been used to call an international telephone number through the line- subscriber's modem, using the defendants' dialing program in order to access an Internet web site, but who did not himself or herself access such site or use the defendants' dialing program, or authorize anyone else to do so.

35. Line subscribers cannot reasonably block telephone calls to international numbers. Therefore, line subscribers cannot reasonably avoid defendants' billing and collection efforts for international telephone calls made through the defendants' dialing program by others while using those line subscribers' computer modems and telephone lines.

36. Defendants' practice of billing and attempting to collect from line subscribers whose computer modems and telephone lines may have been used to access Internet web sites using the defendants' dialing program, but who themselves have not accessed such web sites or used the defendants' dialing program, causes substantial injury to the line subscribers that is not outweighed by countervailing benefits to consumers or competition.

37. Therefore, Defendants' acts and practices, as alleged in Paragraphs 34 through 36, are unfair, and violate Section 5(a) of the FTC Act, 15 U.S.C. 45(a).

CONSUMER INJURY

38. Consumers in many areas of the United States have suffered substantial monetary loss as a result of defendants' unlawful acts or practices. In addition, defendants have been unjustly enriched as a result of their unlawful practices. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers and harm the public interest.

THIS COURT'S POWER TO GRANT RELIEF

39. Section 13(b) of the FTC Act, 15 U.S.C.  53(b), empowers the Court to grant injunctive and other equitable ancillary relief, including consumer redress, disgorgement, and restitution, to prevent and remedy violations of any provision of law enforced by the Commission.

PRAYER FOR RELIEF

Wherefore, plaintiff requests that this Court:

1. Award plaintiff such preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action, and to preserve the possibility of effective final relief;
 
2. Permanently enjoin the defendants from violating the FTC Act, as alleged herein;
 
3. Award such relief as the Court finds necessary to redress injury to consumers resulting from defendants' violations of the FTC Act, including but not limited to rescission of contracts, the refund of monies paid, and the disgorgement of ill-gotten monies; and
 
4. Award plaintiff the costs of bringing this action, as well as such other and additional equitable relief as the Court may determine to be just and proper.

Dated:____________________, 2000. Respectfully Submitted,

DEBRA A. VALENTINE
General Counsel

________________________
David R. Spiegel
Tracey L. Brown
Attorneys for Plaintiff
Federal Trade Commission
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580
Telephone: (202) 326-3281
Facsimile: (202) 326-3395