FEDERAL TRADE COMMISSION, Plaintiff,
NEW MILLENNIUM CONCEPTS,
INC. d/b/a RHINOPOINT.COM and
COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF
Plaintiff, the Federal Trade Commission ("FTC" or "the Commission") for its Complaint alleges as follows:
1. The FTC brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), to secure temporary, preliminary, and permanent injunctive relief, restitution, recission of contracts, disgorgement and other equitable relief for Defendants' deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
JURISDICTION AND VENUE
2. This Court has jurisdiction over this matter pursuant to 15 U.S.C. §§ 45(a) and 53(b), and 28 U.S.C. §§ 1331, 1337(a) and 1345.
3. Venue in the United States District Court for the Northern District of Illinois is proper under 15 U.S.C. § 53(b), and 28 U.S.C. §§ 1391(b) and (c).
4. Plaintiff FTC is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41-58. The FTC is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and to secure such equitable relief as may be appropriate in each case, including restitution for injured consumers. 15 U.S.C. § 53(b).
5. Defendant New Millennium Concepts, Inc. ("New Millennium") is an Illinois corporation. New Millennium's principal place of business is located at 2300 North Barrington Road, Suite 400, Hoffman Estates, Illinois 60195. New Millennium also does business as rhinoPoint.com.
6. Defendant Karl V. Kay ("Kay") is a resident of Illinois. Kay is the president and secretary of New Millennium. At all times material to this Complaint, acting alone or in concert with others, Kay has formulated, directed, controlled or participated in the acts and practices set forth in this Complaint.
7. At all times material to this Complaint, Defendants have maintained a substantial course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.
DEFENDANTS' BUSINESS ACTIVITIES
8. In or around November 1999, Defendants began operating and promoting an Internet Web site at www.rhinopoint.com.
9. Defendants' rhinopoint.com Web site represented that consumers who signed up as rhinopoint.com members and completed monthly marketing surveys would have their Internet access bill reimbursed for up to $22 per month.
10. To become a rhinopoint.com member, consumers were required to pay a one-time setup fee of between $9.95 and $15.95 by credit or debit card. In addition, consumers were required to fill out a "member profile form." The member profile form contained demographic information, including, but not limited to, name, address, phone number, age, employment type, salary range, and marital status. Defendants assured consumers that all personal information provided to rhinopoint.com would be treated as confidential and would not be sold, rented or given away to any individual or organization.
11. Defendants represented on their rhinopoint.com Web site that new members would receive their first survey 30 to 45 days after filling out the member profile form and paying the initial setup fee. Defendants further represented on the rhinopoint.com Web site that members' subsequent surveys and Internet access payments would be processed each month.
12. From approximately November 1999 until September 2000, at least 59,200 people signed up as rhinopoint.com members. Many of these consumers never received a monthly survey, and many of the consumers who did receive and complete a survey in accordance with the terms of membership to rhinopoint.com were never reimbursed for their monthly Internet access charges.
13. In September 2000 Defendants' rhinopoint.com Web site went offline. Defendants presently have in their possession a computerized database containing the demographic information from the member profile forms submitted by rhinopoint.com's members.
VIOLATION OF SECTION 5 OF THE FTC ACT
14. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits unfair or deceptive acts or practices in or affecting commerce.
15. As set forth below, Defendants, individually or in concert with others, have violated Section 5(a) of the FTC Act in connection with the advertising, offering for sale, or selling of service over the Internet.
16. Defendants have represented, expressly or by implication, that consumers who signed up as members of rhinopoint.com, by paying an initial setup fee and disclosing personal information on the member profile form, would receive monthly marketing surveys and would be reimbursed for their monthly Internet access charges after completing the monthly surveys.
17. In truth and in fact, numerous consumers who signed up as members of rhinopoint.com, by paying an initial setup fee and disclosing personal information on the member profile form, did not receive monthly marketing surveys and were not reimbursed for their monthly Internet access charges. Numerous other consumers who received and completed one or more marketing surveys were not reimbursed for their monthly Internet access charges.
18. Therefore, Defendants' representations, as set forth in paragraph 16, above, are false and deceptive, in violation of Section 5 of the FTC Act, 15 U.S.C. § 45.
19. Defendants' violations of Section 5(a) of the FTC Act have injured, and will continue to injure consumers. As a result of Defendants' unfair or deceptive acts or practices, consumers throughout the United States have suffered substantial monetary loss and disclosed sensitive personal information. Absent injunctive relief by this Court, Defendants are likely to continue to injure consumers and harm the public interest.
THIS COURT'S POWER TO GRANT RELIEF
20. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b) empower this Court to grant injunctive and other relief to prevent and remedy any violations of the FTC Act, and in the exercise of its equitable jurisdiction this Court may award redress to remedy the injury to consumers, order disgorgement of monies resulting from Defendants' unlawful acts or practices, and order other ancillary equitable relief.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff requests that this Court, as authorized by Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), and pursuant to its own equitable powers:
1. Enjoin Defendants preliminarily and permanently from violating Section 5(a) of the FTC Act;
2. Award such relief as the Court finds necessary to redress injury to consumers caused by Defendants' violations of the FTC Act, including, but not limited to, the refund of monies paid, and the disgorgement of ill-gotten gains; and
3. Award Plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.
Dated: ___________, 2001
John D. Graubert