National Collector’s Mint Inc., which sold 9/11-related coins and collectibles, including an “exclusively authorized” commemorative honoring the 10th anniversary of the September 11, 2001 attacks, has agreed to pay $750,000 to settle Federal Trade Commission charges that it deceived consumers, charged them for items they never ordered, and failed to properly mark its imitation items with “COPY.”
According to the FTC’s complaint against National Collector’s Mint Inc. and its president, Avram Freedberg, the defendants claimed their 9/11 coins were exclusively authorized, but their 9/11 commemoratives were imitations and were not marked “COPY,” as the Hobby Protection Act requires. In the summer of 2010, Congress authorized the U.S. Mint to manufacture and sell a tenth anniversary 9/11 commemorative medal, the complaint noted. Because of consumer confusion with the defendants’ products, the U.S. Mint issued a consumer alert warning that its medal is “the only official United States coin or medal to commemorate the 10th anniversary of the September 11th attacks.”
The FTC alleged that the defendants’ ordering and returns process was misleading and deceptive. The defendants’ television commercials directed consumers to an automated telephone ordering system to order products via voice or touch keypad recognition. The ordering system presented offers for additional products that consumers could not bypass, and often registered sales orders even when consumers indicated, repeatedly, that they wanted no additional items. The defendants allegedly failed to provide the total cost of the purchase, a breakdown of the items ordered, and critical refund policy terms, and their lengthy and confusing ordering system resulted in many consumers receiving products they did not order.
According to the FTC, consumers who tried to return items found that, contrary to the defendants’ promise, the return process was not simple and prompt, and it frequently involved previously undisclosed conditions. Consumers were told they could return items within 30 days for a full, prompt refund. But the defendants allegedly failed to disclose that consumers would have to pay for insurance and shipping first, and that, for purchases exceeding $100 they would have to obtain a return authorization number from a live telephone operator. Many consumers found it difficult to reach a live person, and those who did often got the runaround.
The proposed settlement agreement permanently prohibits the defendants from misrepresenting material facts about any product or service, and requires them to clearly disclose, before a customer consents to pay for anything, the total costs and fees, any refund policy, and any material limitation or condition that applies to any “Satisfaction Guarantee” or similar representation. The settlement also bars them from violating the Telemarketing Sales Rule, the Unordered Merchandise Statute, and the Hobby Protection Act.
The Commission vote authorizing the staff to file the complaint and approving the proposed settlement order was 5-0. The FTC filed the complaint and proposed consent order in the U.S. District Court for the Southern District of New York. The proposed order is subject to court approval.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The consent judgment is for settlement purposes only and does not constitute an admission by the defendant that the law has been violated. Consent judgments have the force of law when approved and signed by the District Court judge.
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(FTC File No. 1123098)
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