ReverseAuction - Consent & Final Order

UNITED STATES DISTRICT COURT
DISTRICT OF COLUMBIA

FEDERAL TRADE COMMISSION, 600 Pennsylvania Ave., N.W. Washington, DC 20580, Plaintiff,

REVERSEAUCTION.COM, INC., 2401 Pennsylvania Ave, N.W., Suite 300 Washington, DC 20037, a Delaware corporation, Defendant.

CIVIL ACTION NO.

STIPULATED CONSENT AGREEMENT AND FINAL ORDER

On January ___, 2000, plaintiff Federal Trade Commission ("Commission" or "FTC") commenced this action by filing its complaint against defendants ReverseAuction.com, Inc. ("ReverseAuction"). The complaint alleges that the defendant engaged in unfair or deceptive acts or practices in violation of Section 5 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 45, and seeks a permanent injunction and other equitable relief pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b).

The Commission and defendant ReverseAuction have agreed to the settlement of this action upon the following terms and conditions, without adjudication of any issues of fact or law.

NOW, THEREFORE, the Commission and defendant ReverseAuction, having requested the Court to enter this Order, it is therefore Ordered, Adjudged, and Decreed as follows:

FINDINGS

1. This Court has jurisdiction over the subject matter of this case and has jurisdiction over defendant. Venue in this district is proper;

2. The Commission has the authority under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), to seek the relief it has requested;

3. The Complaint states a claim upon which injunctive relief may be granted against defendant under Sections 5(a) and 13(b) of the FTC Act, 15 U.S.C. § § 45(a) and 53(b);

4. The activities of the defendant are in or affecting commerce, as defined in Section 4 of the FTC Act, 15 U.S.C. § 44;

5. Defendant has agreed to waive all rights to seek judicial review or otherwise challenge or contest the validity of the Final Order, and defendant waives any right that may arise under the Equal Access to Justice Act, 28 U.S.C.§ 2412;

6. This agreement is for settlement purposes only and does not constitute an admission by defendant that the law has been violated as alleged in the complaint or that the facts as alleged in the complaint, other than the jurisdictional facts, are true.

7. Except as herein provided, this action and the relief awarded herein are in addition to, and not in lieu of, other remedies as may be provided by law; and

8. Entry of the Final Order is in the public interest.

DEFINITIONS

For purposes of this order, the following definitions shall apply:

1. "Clear(ly) and prominent(ly)" shall mean in a type size and location that are not obscured by any distracting elements and are sufficiently noticeable for an ordinary consumer to read and comprehend, and in a typeface that contrasts with the background against which it appears.

2. Unless otherwise specified, "Defendant" shall mean ReverseAuction, and each of its successors and assigns, officers, agents, representatives, and employees.

3. "Disclosure" or "disclosed to third party(ies)" shall mean (a) the release of information in personally identifiable form to any other individual, firm, or organization for any purpose or

(b) making publicly available such information by any means including, but not limited to, public posting on or through home pages, e-mail services, message boards, or chat rooms.

4. "Personal identifying information" shall include, but is not limited to, first and last name, home or other physical address (e.g., school), e-mail address, telephone number, social security number, user identification name ("user ID"), feedback rating, or any information that identifies a specific individual, or any information which, when tied to the above, becomes identifiable to a specific individual.

PROHIBITION AGAINST MISREPRESENTATIONS

IT IS HEREBY ORDERED that defendant, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, or offering of any Internet auction company or web site in or affecting commerce, shall not make any misrepresentation, in any manner, expressly or by implication, about its agreement to comply with or be bound by any company's user agreement, privacy policy, or contract provision, that limits or prohibits the collection, use, or disclosure of consumers' personal identifying information.

II.

IT IS HEREBY ORDERED that defendant, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, or offering of any Internet auction company or web site in or affecting commerce, shall not make any misrepresentation, in any manner, expressly or by implication, concerning the features, terms, conditions, business practices or privacy policy of any other company, including, but not limited to, the following:

A. Falsely representing that the user ID utilized by consumers on any other Internet company or web site has expired or will expire;

B. Falsely representing that any Internet company or web site directly or indirectly provided ReverseAuction with the personal identifying information of such company's registered users;

C. Falsely representing that any Internet company or web site knew of, or authorized, ReverseAuction's dissemination of unsolicited commercial e-mail to the registered users of such company.

NOTICE REQUIREMENTS

III.

IT IS FURTHER ORDERED that, within five (5) business days of the date of entry of this final order, defendant shall send to all consumers who registered with ReverseAuction as a result of receiving the unsolicited commercial e-mail sent by ReverseAuction to eBay users between November 12, 1999 and November 15, 1999 the following e-mail message:

"ReverseAuction.com is sending this notice as a result of a Settlement Agreement with the Federal Trade Commission.

Between November 12, 1999 and November 15, 1999, you received an unsolicited commercial e-mail message from ReverseAuction.com stating that the user ID you use on eBay "will EXPIRE soon." Our intent was to inform you that we had reserved your eBay ID, for you to use on ReverseAuction.com, if you wished. We did not intend to suggest that the user IDs used by eBay registered users on eBay were about to expire on eBay. eBay did not have any knowledge that ReverseAuction.com had obtained your e-mail address and eBay user ID, nor did eBay give ReverseAuction.com permission to do so. ReverseAuction.com was solely responsible for the dissemination of this e-mail, and regrets any confusion it may have caused among eBay registered users.

ReverseAuction.com has agreed to delete from its database and not otherwise use or disclose the user ID, e-mail address, and feedback rating (which we also obtained) of all eBay users who received the e-mail but have not registered with ReverseAuction.com. ReverseAuction.com customers who registered after receiving the e-mail can always cancel their registration at any time and have their information deleted from our database. Please send us a reply e-mail message if you would like to cancel your registration with us. Unless you cancel, your current registration will remain in effect. ReverseAuction.com reaffirms that no other personally identifying information (such as your name, address, telephone number or any other confidential data) was viewed, transmitted, collected or utilized by ReverseAuction.com.

The ReverseAuction.com Privacy Policy, which is posted on our web site, will continue to govern our use of personal identifying information of any registered user on ReverseAuction.com."

Provided that, for any consumer covered by this Section who requested not to receive e-mail or regular mail communications from ReverseAuction under ReverseAuction's Privacy Policy, ReverseAuction, in lieu of sending an e-mail, shall provide the above-referenced message, for a six (6) month period, by causing it to automatically appear on the screen, clearly and prominently, the first time the consumer logs onto the "My Profile" area of the web site.

IV.

IT IS FURTHER ORDERED that within five (5) business days of the date of entry of this final order, defendant shall place on its web site, for a period of six (6) months, a clear and prominent notice that will automatically appear on the screen if and when any eBay registered user who received the e-mail sent by ReverseAuction registers with ReverseAuction:

"ReverseAuction.com is sending this notice as a result of a Settlement Agreement with the Federal Trade Commission.

ReverseAuction.com has agreed to delete from its database and not otherwise use or disclose the user ID, e-mail address, and feedback rating (which we also obtained) of all eBay users who received the e-mail but have not registered with ReverseAuction.com. ReverseAuction.com customers who registered after receiving the e-mail can always cancel their registration at any time and have their information deleted from our database by sending us an e-mail. ReverseAuction.com reaffirms that no other personally identifying information (such as your name, address, telephone number or any other confidential data) was viewed, transmitted, collected or utilized by ReverseAuction.com.

The ReverseAuction.com Privacy Policy, which is posted on our web site, will continue to govern our use of personal identifying information of any registered user on ReverseAuction.com."

REQUIREMENT THAT DEFENDANT DELETE, AND REFRAIN FROM USING OR DISCLOSING, THE USER IDS, E-MAIL ADDRESSES, AND FEEDBACK RATINGS OF CERTAIN EBAY CUSTOMERS

IT IS FURTHER ORDERED that defendant shall delete, and refrain from using or disclosing, the user IDs, e-mail addresses, and feedback ratings of all the eBay registered customers listed below:

A. All eBay customers who received an unsolicited email from ReverseAuction between November 12, 1999 and November 15, 1999, and who have not registered with ReverseAuction.

B. All eBay customers who received an unsolicited e-mail from ReverseAuction between November 12, 1999 and November 15, 1999, who registered with ReverseAuction as a result of such e-mail, and who have elected to cancel their registration with ReverseAuction in response to the notices required under Sections III or IV of this Order.

Provided, however, that defendant may retain the email addresses, user IDs, and/or feedback ratings for so long as needed to fulfill its notice obligation under Sections III and IV, and solely for those purposes, after which such information shall be deleted.

PRIVACY NOTICE

VI.

IT IS FURTHER ORDERED that defendant, directly or through any corporation, subsidiary, division, or other device, in connection with the advertising, promotion, or offering of any Internet service or web site, shall provide clear and prominent notice to consumers on the web site of its practices with regard to its collection and use of personal identifying information. Such notice shall include, but is not limited to, disclosure of:

A. what information is being collected (e.g., "name," "home address," "e-mail address," "age," "interests");

B. its intended use(s) and the consumer's ability to control such uses (e.g., the consumer's ability to "opt-in" or "opt-out" of particular uses, such as transfers to third parties);

C. the third parties to whom it will be disclosed (e.g., "advertisers of consumer products," mailing list companies," "the general public");

D. the consumer's ability to obtain access to or directly access such information and the means by which (s)he may do so;

E. the consumer's ability to remove directly or have the information removed from defendants' databases and the means by which (s)he may do so; and

F. the steps defendant has taken to ensure the security of the information collected and/or maintained at the site.

Such notice shall appear on the home page of defendant's Web site(s) and at each location on the site(s) at which such information is collected. Alternatively, defendant may comply with this Section by placing a clear and prominent hyperlink or button labeled PRIVACY NOTICE or PRIVACY POLICY on defendant's home page, and at each location on the site at which personal identifying information is collected, which directly links to the privacy notice screen(s) containing the required information.

DOCUMENT RETENTION

VII.

IT IS FURTHER ORDERED that defendant, and its successors and assigns, shall maintain for at least five (5) years from the date of service of this Order and, upon written request by FTC employees, make available to the FTC for inspection and copying:

A. All records and documents necessary to demonstrate fully its compliance with each provision of this Order, including the notice required by Sections III and IV of this Order;

B . A sample copy of any advertising and promotional material, including e-mail, regarding any Internet auction company or web site operated or maintained by defendant which is disseminated by defendant to any person;

C. Copies of any complaints received by defendant from third parties regarding defendant's promotional or advertising activities.

ORDER DISTRIBUTION

VIII.

IT IS FURTHER ORDERED that, for a period of five (5) years from the date of entry of this Order, defendant, and each of its successors and assigns, shall:

A. Deliver a copy of this Order to all current and future principals, officers, directors, and managers, and to all current and future employees, agents, and representatives having responsibilities with respect to the subject matter of this Order, and shall secure from each such person a signed and dated statement acknowledging receipt of the Order. Defendant shall deliver this Order to current personnel within thirty (30) days after the date of service of this Order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities; and

B. Maintain for a period of five (5) years after creation, and upon reasonable notice, make available to representatives of the Commission, the original signed and dated acknowledgments of the receipt of copies of the Order, as required by Section VIII(A) of this Order.

COMPLIANCE REPORTING

IX.

IT IS FURTHER ORDERED that, in order that compliance with the provisions of this Order may be monitored:

A. For a period of five (5) years from the date of entry of this Order, defendant, and its successors and assigns, shall notify the Commission of any proposed change in the structure of defendant ReverseAuction that may affect compliance obligations arising under this Order, such as creation, incorporation, dissolution, assignment, sale, or merger of subsidiaries, proposed filing of a bankruptcy petition, or change in the corporate name or address, or other action that would result in the emergence of a successor corporation, thirty (30) days prior to the effective date of any proposed change; provided, however, that, with respect to any proposed change in the corporation about which defendant learns less than thirty (30) days prior to the date such action is to take place, defendant shall notify the Commission as soon as is practicable after learning of such proposed change;

B. Sixty (60) days after the date of entry of this Order, defendant shall provide a written report to the FTC, sworn to under penalty of perjury, setting forth in detail the manner and form in which the defendant has complied and is complying with this Order;

C. For the purposes of this Order, defendant shall, unless otherwise directed by the Commission's authorized representatives, mail all written notifications to the Commission to:

Associate Director, Division of Financial Practices
Federal Trade Commission
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580

Re: FTC v. ReverseAuction.com

RETENTION OF JURISDICTION

IT IS FURTHER ORDERED that the Court retains jurisdiction of this matter for all purposes, including the construction, modification, and enforcement of this Order.

STIPULATED AND AGREED TO BY:

FOR THE PLAINTIFF:

DATED: _______________

_____________________________
MICHELLE CHUA
Federal Trade Commission
600 Pennsylvania Ave., NW
Washington, DC 20580
(202) 326-3248 (voice)
(202) 326-2558 (facsimile)

FOR THE DEFENDANT:

DATED: _______________

_________________________
DEBORAH M. LODGE
Patton Boggs, LLP.
2550 M Street, N.W.,
Washington, D.C. 20037

COUNSEL for ReverseAuction.com, Inc.

__________________________
JOHN MCCARTHY
Chairman of the Board, ReverseAuction.com, Inc.

IT IS SO ORDERED:

Dated:

United States District Judge