Paul M. Warner
United States Attorney

By:

Utah State Bar Number
Assistant United States Attorney/Lead Counsel
Attorney For United States of America
185 South State Street, Suite 400
Salt Lake City, Utah 84111
(801) 524-5682

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

 

UNITED STATES OF AMERICA, Plaintiff,

v.

MRS. FIELDS FAMOUS BRANDS, INC.,
MRS. FIELDS' HOLDING COMPANY, INC., and
MRS. FIELDS' ORIGINAL COOKIES, INC., corporations, Defendants.

 

 


Civil Action 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 ("FTC" or "Commission"), for its Complaint alleges that:

1. Plaintiff brings this action under Sections 1303(c) and 1306(d) of the Children's Online Privacy Protection Act of 1998 ("COPPA"), 15 U.S.C.  6501-6506, 6502(c), and 6505(d), and Sections 5(a)(1), 5(m)(1)(A), 13(b), and 16(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C.  41-58, 45(a)(1), 45(m)(1)(A), 53(b), and 56(a), to obtain monetary civil penalties, a permanent injunction, and other equitable relief for defendants' violations of the Commission's Children's Online Privacy Protection Rule (the "Rule"), 16 C.F.R. Part 312.

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) and 56(a). This action arises under 15 U.S.C. 45(a)(1) and 6502(c).

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

DEFINITIONS

4. For purposes of this Complaint, the terms "child," "collects," "collection," "Commission," "delete," "disclosure," "Internet," "online contact information," "operator," "parent," "person," "personal information," "third party," "verifiable consent," and "website or online service directed to children," are defined as those terms are defined in Section 312.2 of the Rule, 16 C.F.R.  312.2.

THE CHILDREN'S ONLINE PRIVACY PROTECTION RULE

5. Congress enacted the Children's Online Privacy Protection Act, 15 U.S.C.  6501-6506, in 1998 to protect the safety and privacy of children online by prohibiting the unauthorized or unnecessary collection of children's personal information by Internet website operators. The Act directed the Federal Trade Commission to promulgate a rule implementing COPPA. The Commission promulgated the Children's Online Privacy Protection Rule, 16 C.F.R. Part 312, on November 3, 1999, under Section 1303(b) of COPPA, 15 U.S.C. 6502(b), and Section 553 of the Administrative Procedures Act, 5 U.S.C. 553. The Rule went into effect on April 21, 2000.

6. The Rule applies to any operator of a commercial website or online service directed to children that collects, uses, and/or discloses personal information from children, or to any operator that has actual knowledge that it is collecting or maintaining a child's personal information.

7. The Rule requires a subject website operator to meet specific requirements prior to collecting online, using, or disclosing personal information from children, including but not limited to:

a. Posting a privacy policy on its website providing clear, understandable, and complete notice of its information practices, including what information the website operator collects from children online, how it uses such information, its disclosure practices for such information, and other specifically required disclosures;
 
b. Providing clear, understandable, and complete notice of its information practices directly to parents when required by the Rule;
 
c. Obtaining verifiable parental consent prior to collecting, using, and/or disclosing personal information from children;
 
d. Giving parents the option to consent to the collection and internal use of their children's personal information without consenting to the disclosure of that information to third parties;
 
e. Providing a reasonable means for parents to review the personal information collected from their children and to refuse to permit its further use or maintenance;
 
f. Not conditioning children's participation in an activity upon children disclosing more personal information than is reasonably necessary to participate in that activity; and
 
g. Establishing and maintaining reasonable procedures to protect the confidentiality, security, and integrity of personal information collected from children.

8. Pursuant to 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). See also COPPA, 15 U.S.C. 6502(c).

DEFENDANTS

9. Defendant Mrs. Fields' Original Cookies, Inc., a Delaware corporation, is a wholly-owned subsidiary of defendant Mrs. Fields' Holding Company, a Delaware Corporation. Defendant Mrs. Fields' Holding Company dominates and controls the acts and practices of defendant Mrs. Fields' Original Cookies, Inc. Defendant Mrs. Fields' Holding Company is a wholly-owned subsidiary of defendant Mrs. Fields Famous Brands, Inc., a Delaware Corporation. Defendant Mrs. Fields Famous Brands, Inc. dominates and controls the acts and practices of defendant Mrs. Fields' Holding Company. All defendants maintain their offices and principal places of business at 2855 East Cottonwood Parkway, Suite 400, Salt Lake City, Utah 84121.

10. At the present time, and at various times since April 21, 2000, defendants are and have been operators of the www.mrsfields.com, www.pretzeltime.com, and www.pretzelmaker.com websites on the Internet ("websites"). Defendants use these websites to market their cookie and pretzel products and to provide information about the Mrs. Fields, Pretzel Time, and Pretzelmaker brands. Defendants market their products throughout the United States, including through the Internet.

11. The acts and practices of defendants alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. 44.

DEFENDANTS' COURSE OF CONDUCT

12. Defendants have collected personal information from children through the operation of portions of their websites that are directed to children. Each defendant is thus an "operator" of a "website or online service directed to children," as the Rule defines those terms.

 

Defendants' Information Collection Practices

13. Defendants' www.mrsfields.com, www.pretzeltime.com, and www.pretzelmaker.com websites offer birthday clubs that are specifically directed to children. The birthday club web pages explicitly state that only children twelve years old or younger may participate. Defendants encourage children to join these birthday clubs by offering to send them a birthday greeting and a coupon for a free cookie or a free pretzel. (See Exhibits A, B, and C.)

14. Children who want to register for the birthday clubs must provide personal information about themselves, including their first and last name, street address, email address, and date of birth, via an online form. (See Exhibits A, B, and C.) In addition, the "Mrs Fields Original Cookie Birthday Club" form asks for the child's telephone number. (See Exhibit A). In this manner, defendants have collected personal information from over 84,000 children. Defendants do not disseminate this information to third parties. Defendants use this information to send birthday club members a birthday greeting and coupon for a free cookie or pretzel.

15. Defendants do not notify or obtain verifiable consent from any parent or guardian prior to collecting children's personal information, as required by the Rule. Furthermore, defendants provide no means for parents to review or delete the information collected from their children, as required by the Rule.

Defendants' Privacy Policy

16. Defendants post a privacy policy on www.mrsfields.com, but the policy does not clearly, understandably, or completely disclose all of their information collection, use, and disclosure practices and other disclosures required by the Rule. (See Exhibit D.)

17. Defendants do not post a privacy policy on www.pretzelmaker.com or www.pretzeltime.com, as required by the Rule.

DEFENDANTS' VIOLATIONS OF THE CHILDREN'S
ONLINE PRIVACY PROTECTION RULE

18. At the present time and at various times since April 21, 2000, defendants are and have been operators of websites directed to children and have collected personal information from children.

19. In numerous instances, including the acts and practices described above, defendants have collected, used, or disclosed personal information from children in violation of the Rule, 16 C.F.R. Part 312, including:

a. Failing to provide sufficient notice on their websites of what information they collect online from children, and all other required content, in violation of Section 312.4(b) of the Rule, 16 C.F.R.  312.4(b);
 
b. Failing to provide notice to parents of what information they collect online from children, and all other required content, in violation of Section 312.4(c) of the Rule, 16 C.F.R.  312.4(c);
 
c. Failing to obtain verifiable parental consent before any collection, use, and/or disclosure of personal information from children, in violation of Section 312.5 of the Rule, 16 C.F.R.  312.5; and
 
d. Failing to provide a reasonable means for parents to review the personal information collected from their children and to refuse to permit its further use or maintenance, in violation of Section 312.6 of the Rule, 16 C.F.R.  312.6.

DEFENDANTS' UNFAIR OR DECEPTIVE ACTS OR PRACTICES
IN VIOLATION OF THE FTC ACT

20. 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."

21. Pursuant to 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). See COPPA, 15 U.S.C. 6502(c).

22. By and through the acts and practices described in Paragraph 19 above, defendants have violated Section 5(a)(1) of the FTC Act, 15 U.S.C.  45(a)(1).

CIVIL PENALTIES, INJUNCTION AND OTHER RELIEF

23. Defendants have 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).

24. Each collection, use, or disclosure of a child's personal information from April 21, 2000, through the filing of this Complaint, in which defendants have violated the Rule in one or more of the ways described above, constitutes a separate violation for which plaintiff seeks monetary civil penalties.

25. 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 Rule.

26. Under Section 13(b) of the FTC Act, 15 U.S.C. 53(b), this Court is authorized to issue a permanent injunction against defendants' violation of the FTC Act, as well as such ancillary relief as may be just and proper.

PRAYER

WHEREFORE, plaintiff requests this Court, pursuant to 15 U.S.C. 45(a)(1), 45(m)(1)(A), 53(b) and 57b, and the Court's own equitable powers to:

(1) Enter judgment against defendants and in favor of plaintiff for each violation alleged in this Complaint;
 
(2) Award plaintiff monetary civil penalties from defendants for each violation of the Rule;
 
(3) Permanently enjoin defendants from violating the Rule; and
 
(4) Award plaintiff such additional relief as the Court may deem just, proper, or necessary to redress injury to consumers resulting from defendants' violations of the Rule.

DATED:

OF COUNSEL:

JEFFREY KLURFELD
Regional Director
Western Region-San Francisco
Federal Trade Commission

LAURA FREMONT
KERRY O'BRIEN
Attorneys
Western Region-San Francisco
Federal Trade Commission
901 Market Street, Suite 570
San Francisco, CA 94103
(415) 848-5100

FOR THE UNITED STATES OF AMERICA:

ROBERT D. MCCALLUM, JR.
Assistant Attorney General
Civil Division
U.S. Department of Justice

PAUL M. WARNER
United States Attorney

By:

Assistant United States Attorney
United States Attorney's Office
185 South State Street, Suite 400
Salt Lake City, Utah 84111
(801) 524-5682

EUGENE M. THIROLF
Director
Office of Consumer Litigation

By:

Attorney
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530-0001