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Operators who auctioned computer-related products on Internet sites, but allegedly failed to deliver the merchandise that consumers paid for, have agreed to settle Federal Trade Commission charges that their conduct violated federal laws. The settlement bars the defendants from violating the Mail and Telephone Order Merchandise Rule and from misrepresenting that goods or services will be delivered. It also requires a payment of $10,000 for consumer redress.

Internet auction fraud complaints represent the second largest category of consumer complaints received by the FTC, accounting for more than 20,000 consumer complaints in 2001.

As part of "Operation Top Ten Dot Cons," in October 2000, consumer protection enforcers from nine countries, five U. S. agencies, and 23 states targeted the top scams on the Internet for law enforcement actions. The FTC filed a complaint against Auctionsaver, LLC., Richard Phim, Carman Lee Caldwell, Shade (aka Shane) Delmer, and Naomi Ruth Anderson charging that they consistently failed to deliver merchandise or provide refunds to consumers who had purchased their computer-related merchandise at Internet auction sites. The FTC alleged that the defendants violated the Mail and Telephone Order Rule by:

  • Soliciting orders without a reasonable basis to expect that they would be able to ship the merchandise on a timely basis - 30 days after receipt of a properly completed order, or, if applicable, within the time stated in the solicitation;
  • Failing to offer buyers the option to consent to shipping delays or to cancel their orders and receive prompt refunds; and
  • Failing to make prompt refunds to buyers when refunds were required.

The agency charged that the actions also violated the FTC Act. The settlement announced today ends the court action against Richard Phim and Carman Lee Caldwell, defendants who owned and controlled the businesses.

The settlement bars future violations of the Mail and Telephone Order Rule. It also bars the defendants from misrepresenting that goods and services will be delivered or provided upon receipt of payment from the consumers or making other misrepresentations of material facts. Based on financial disclosure statements provided by the defendants, they will be required to pay $10,000 in consumer redress. Should the financial statements be found to be inaccurate, the defendants will be required to provide $90,000, the estimated total amount of consumer injury. Finally, the settlement contains record keeping provisions to allow the FTC to monitor compliance with its order.

The Commission vote to accept the settlement was 5-0. The settlement was approved by the court on April 22, 2002. It was filed in the U. S. District Court for the Southern District of California.

On March 15, 2002, a default judgment was entered against Auctionsaver, Delmer and Anderson. The settlement with Phim and Caldwell concludes the case.

NOTE: Consent judgments are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the October 2000 complaint, the consent judgment, and the default judgment are available from the FTC's Web site at and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. X01 0003)
(Case No. 00CV2125 L)

Contact Information

Claudia Bourne Farrell,
Office of Public Affairs
John Jacobs,
Western Region - Los Angeles