STATES DISTRICT COURT
UNITED STATES OF AMERICA,
PUBLISHERS INC., a corporation,
Civil Action No.
COMPLAINT FOR CIVIL PENALTIES,
Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission ("Commission"), for its Complaint alleges that:
1. Plaintiff brings this action under Sections 5(l), 9, 13(b) and 16(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. 45(l), 49, 53(b) and 56(a), to obtain monetary civil penalties and injunctive and other relief from defendant for its violations of a final order to cease and desist.
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(l), 49, 53(b) and 56(a).
3. Venue in the United States District Court for the District of Connecticut is proper under 15 U.S.C. 53(b) and under 28 U.S.C. 1391(b-c) and 1395(a).
4. Defendant International Masters Publishers Inc. is a Delaware corporation with its office and principal place of business located within the District of Connecticut at 300 First Stamford Place, Stamford, CT 06928. Defendant sells, through a continuity sales plan using direct mail, series of informational cards on a variety of topics, including, but not limited to, cooking, health, gardening, sewing, wildlife, home decorating and home repair. Defendant transacts business in the District of Connecticut.
PRIOR COMMISSION PROCEEDING
5. In a Commission proceeding bearing Docket No. C-3205, in which International Masters Publishers Inc. was charged by the Commission with violating Section 5(a) of the FTC Act, 15 U.S.C. 45(a), the Commission on January 14, 1987, issued against International Masters Publishers Inc., its officers, agents, representatives and employees, a consent order to cease and desist from engaging in certain business practices in connection with the advertising, offering for sale, sale, or distribution of recipe cards or any other product or service by means of a continuity sales plan in or affecting commerce (the "Commission's Order"). The Commission's Order was served upon defendant International Masters Publishers Inc. on January 26, 1987, and by operation of law became final and enforceable. It has remained in full force and effect ever since that date.
6. Copies of the Commission's Complaint and the Commission's Order are attached to this Complaint as Exhibit A.
7. The Commission's Order includes the following provision:
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IT IS FURTHER ORDERED that respondent International Masters Publishers Inc., its successors and assigns, and their officers, agents, representatives, and employees, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, offering for sale, sale or distribution of any recipe card or other product or service in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing, in any manner, directly or by implication, that any consumer's credit rating will or may be adversely affected, or representing, in any manner, directly or by implication, that there will or may be any adverse consequence to failing to pay any amount claimed to be delinquent, unless there is a reasonable likelihood such rating will be so affected or such consequence will occur.
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DEFENDANT'S DEBT COLLECTION ACTIVITIES
8. On numerous occasions during the five (5) years preceding the filing of this Complaint, in connection with the advertising, offering for sale, sale or distribution of informational cards in or affecting commerce, defendant, through its agents, has disseminated or caused to be disseminated to consumers allegedly owing debts to defendant, collection letters which include, but are not necessarily limited to, those attached as Exhibit B. These collection letters contain the following statements:
A. Exhibit B-1
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WE HAVE BEEN RETAINED BY YOUR CREDITOR TO EVALUATE YOUR CREDIT HISTORY WITH THEM AND TO CONFIRM THIS OUTSTANDING BALANCE. IF IT IS CORRECT AS STATED, THEY WILL BE ADVISED TO PROCEED WITH SUCH FURTHER COLLECTION ACTIVITY AS MAY BE REQUIRED TO ENFORCE PAYMENT. THE NATURE OF YOUR RESPONSE WILL MOST PROBABLY BE THE IMPETUS FOR ONE OR MORE OF THE FOLLOWING:
1. A PAID-IN-FULL RECEIPT ACKNOWLEDGING THE FINAL PAYMENT ON THIS ACCOUNT.
2. A REPORT TO A NATIONAL CREDIT BUREAU OF YOUR NEGATIVE CREDIT BEHAVIOR.
3. THE REFERRAL OF THIS DELINQUENT ACCOUNT TO AN ATTORNEY IN OR NEAR ANYTOWN TO PROCEED WITH IMMEDIATE LITIGATION.
4. THE TRANSFER OF YOUR CREDIT RECORDS TO A SECONDARY COLLECTION SERVICE FOR AN INVESTIGATION OF YOUR ASSETS.
YOU STILL HAVE AN OPPORTUNITY TO AVOID THIS SERIOUS IMPACT ON YOUR CREDIT REPUTATION BY SUBMITTING PAYMENT TO THIS OFFICE IN THE ENVELOPE WE HAVE PROVIDED.
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B. Exhibit B-2
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PERHAPS YOU DO NOT REALIZE THAT THIS OUTSTANDING DEBT HAS ADVERSELY AFFECTED YOUR CREDIT STANDING WITH OUR CLIENT. TO PRESERVE YOUR GOOD CREDIT STANDING AND PREVENT FURTHER ACTION FROM BEING TAKEN ON THIS ACCOUNT, PLEASE REMIT PAYMENT IN FULL.
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HDB/DPT HOWARD D. BADER
ENCLOSURE ATTORNEY AT LAW
C. Exhibit B-3
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WE ARE . . . ADVISING YOU THAT SHOULD YOUR PAYMENT, OR A REASON FOR NONPAYMENT, NOT BE RECEIVED BY OUR OFFICE, WE WILL BE LEFT WITH NO CHOICE OTHER THAN TO INFORM OUR CLIENT OF YOUR FAILURE TO PAY THIS BILL. BE ADVISED THAT OUR CLIENT MAY THEN AUTHORIZE US TO REFER YOUR ACCOUNT TO AN ATTORNEY.
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FIRST CAUSE OF ACTION
9. Through the use of the statements contained in the collection letters referred to in Paragraph 8, including but not necessarily limited to those attached as Exhibits B-1 and B-2, defendant has represented, through its agents, directly or by implication, that names of consumers who failed to pay debts purportedly owed defendant will or may be referred to a credit reporting agency and that such consumers' credit rating will or may be adversely affected.
10. In fact, since about 1990, names of consumers who failed to pay debts purportedly owed defendant have rarely, if ever, been referred to a credit reporting agency and such consumers' credit ratings have rarely, if ever, been adversely affected. Therefore, by making the representation set forth in Paragraph 9, when there was no reasonable likelihood that consumers' credit ratings would be adversely affected, defendant has violated Paragraph II of the Commission's Order.
SECOND CAUSE OF ACTION
11. Through the use of the statements contained in the collection letters referred to in Paragraph 8, including but not necessarily limited to those attached as Exhibits B-1, B-2 and
B-3, defendant has represented, through its agents, directly or by implication, that lawsuits will or may be filed against consumers who failed to pay debts purportedly owed to defendant.
12. In fact, since about 1990, few, if any, lawsuits have been filed against consumers who failed to pay debts purportedly owed to defendant. Therefore, by making the representation set forth in Paragraph 11, when there was no reasonable likelihood that such adverse consequence would occur, defendant has violated Paragraph II of the Commission's Order.
CIVIL PENALTIES AND INJUNCTION
13. Each collection letter containing any representations in violation of the Commission's Order in one or more of the ways described above, disseminated by defendant during the five (5) years preceding the filing of this Complaint, constitutes a separate violation for which plaintiff seeks monetary civil penalties.
14. Under Section 5(l) of the FTC Act, 15 U.S.C. 45(l), this Court is authorized to award monetary civil penalties of not more than $10,000 for each such violation of the Commission's Order.
15. Under Section 5(l) of the FTC Act, 15 U.S.C. 45(l), this Court is authorized to issue a permanent injunction against defendant's violating the Commission's Order, as well as to grant ancillary relief.
16. Under Section 13(b) of the FTC Act, 15 U.S.C. 53(b), this Court is authorized to issue a permanent injunction against defendant's violating the FTC Act, as well as to grant ancillary relief.
PRAYER FOR RELIEF
WHEREFORE, plaintiff requests this Court, pursuant to 15 U.S.C. 45(l), 49 and 53(b), and pursuant to the Court's own equitable powers to: