UNITED STATES DISTRICT COURT
Civil Action No. 99-WM-783
FEDERAL TRADE COMMISSION, Plaintiff,
DEBRA A. VALENTINE
JONATHAN A. SMOLLEN
Plaintiff, the Federal Trade Commission ("Commission"), for its Complaint alleges:
JURISDICTION AND VENUE
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 permanent and preliminary injunctive relief and other equitable relief, including disgorgement, against defendants for violations of Section 5 of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. This Court has subject matter jurisdiction over plaintiff's claims pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345, and 15 U.S.C. §§ 45(a) and 53(b).
2. Venue in this district is proper under 28 U.S.C. § 1391(b) and 15 U.S.C. § 53(b).
3. The Commission is an independent agency of the United States government created by statute (15 U.S.C. § 41 et seq.) with headquarters located at 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Commission is charged with enforcing Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and is authorized under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), to 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.
4. Defendant James J. Rapp is an individual residing in Colorado who currently does business as Touch Tone Information, Inc. ("Touch Tone"). Touch Tone is an unincorporated business entity that has been doing business since at least January 1997. Its principal place of business is located at Building 2, Suite 208, 2323 S. Troy Street, Aurora, Colorado 80014, and it maintains a mailing address at 303 South Broadway, Suite 414, Denver, Colorado 80209. Touch Tone sells confidential consumer information, including private financial account information, to customers located both in the United States and abroad. Individually, or in concert with others, James J. Rapp directs, controls, formulates or participates in the acts and practices set forth herein. He resides and transacts business in this District.
5. Defendant Regana L. Rapp is an individual residing in Colorado who does business as Touch Tone. Individually, or in concert with others, Regana L. Rapp directs, controls, formulates or participates in the acts and practices set forth herein. She resides and transacts business in this District. Defendants James J. Rapp and Regana L. Rapp are referred to herein collectively as "Touch Tone" or "defendants."
6. Prior to doing business as Touch Tone Information, Inc., defendants offered similar services as Touch Tone Data Research Corporation in Missoula, Montana, and Winter Information Network, Inc., in Logan, Utah.
7. Touch Tone's course of trade is in or affecting commerce, within the meaning of Section 4 of the FTC Act, 15 U.S.C. § 44.
DEFENDANTS' COURSE OF CONDUCT
8. Since at least January 1997, Touch Tone has advertised, offered, and sold information services. Touch Tone promotes itself as a "full service Information Brokerage Agency" and markets its services throughout the United States and the world via the Internet. Among its information services, Touch Tone offers the private financial information of individuals and businesses, which Touch Tone obtains and sells without their knowledge. This information includes current bank or brokerage account numbers and specific balances ("private financial information"). Attached hereto as Exhibit 1 is a true and correct copy of a price and services list posted on Touch Tone's Web site, located at "http://pidirectory.com/touchtone."
9. The private financial information that Touch Tone obtains and sells is confidential. Financial institutions would not knowingly disclose to Touch Tone, or permit Touch Tone to obtain, private financial information. Holders of bank or brokerage accounts have a reasonable expectation that the private financial information regarding their accounts will not be taken and sold to others.
10. Touch Tone often obtains private financial information through a practice known in the information brokerage industry as "pretexting," which involves making various misleading and false statements to financial institutions and others. Such tactics include calling financial institutions and pretending to be the account holder, thereby inducing the financial institution to disclose private financial information. After obtaining the private financial information, Touch Tone sells the information.
DEFENDANTS' VIOLATIONS OF
11. In numerous instances, in the course and conduct of its business, Touch Tone, directly or through its employees and agents, represents, expressly or by implication, that it is the holder of the account about which it is inquiring, and that it seeks disclosure of private financial information for the account holder's benefit.
12. In truth and in fact, Touch Tone is not the holder of the account about which it is inquiring, and it does not seek disclosure of the private financial information for the account holder's benefit.
13. Touch Tone's misrepresentations of material facts as set forth above constitute deceptive acts or practices in violation of Section 5 of the FTC Act.
14. In numerous instances, in the course and conduct of its business, Touch Tone discloses or sells private financial information obtained through the practices described in paragraph 10 above, without the knowledge or consent of the consumers to whom such information relates.
15. Touch Tone's practices as set forth above cause or are likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition, and therefore constitute unfair acts or practices in violation of Section 5 of the FTC Act.
16. Consumers have in fact been injured and, absent injunctive relief, will continue to be injured by Touch Tone's violations of Section 5 of the FTC Act.
THIS COURT'S POWER TO GRANT RELIEF
17. Section 13(b) of the FTC Act empowers this Court to issue injunctive relief against violations of the FTC Act, and, in the exercise of its equitable jurisdiction, to order disgorgement of monies resulting from unlawful acts or practices, and issue other ancillary equitable relief.
PRAYER FOR RELIEF
WHEREFORE, plaintiff requests that this Court:
Dated: ____ __, 1999
DEBRA A. VALENTINE