Internet Auctioneer Settles FTC Charges

Operators of a Web-based computer auction business that delivered the computers to the winning bidders late or not at all have agreed to settle Federal Trade Commission charges that their business practices violated federal law. The settlement will require that each defendant post a $200,000 performance bond prior to engaging in Internet marketing or assisting others marketing over the Internet in the future. It also bars misrepresentations that they possess the goods or services they are offering for sale and that delivery will be made on receipt of payment. In addition, it bars future violations of the FTC Act and the Mail Order Rule, and prohibits the defendants from selling or sharing their customer lists.

The FTC alleged that Computers By Us, Inc., and its principals offered computers for sale on Internet auctions. Bidders were informed that their computers would be delivered after they had placed the winning bid and paid for the product. The FTC charged that in many instances, the computers were not supplied within the time frame spelled out in the Mail Order Rule, that when consumers had to wait extended periods of time to receive their computers, they were not given the option to cancel their orders and that requests for refunds were not honored.

The settlement requires that before the defendants engage in Internet marketing, they must obtain performance bonds in the amount of $200,000 each. The settlement bars misrepresentations, including misrepresenting that they are in possession of goods, or able to perform services being offered for sale, if they are not, and representing that delivery of goods or services will be made on receipt of payment if it will not. The settlement also bars violations of the Mail or Telephone Order Merchandise Rule. It specifically bars defendants from soliciting sales when they do not have a reasonable basis to expect that they will be able to ship the order within the time stated by them or, if no time is stated, within 30 days. It requires that if they cannot deliver the merchandise on time, they must notify consumers and give them the option to consent to the delay or to cancel the order and get their money back. The settlement bars them from sharing or selling their customer lists. Based on financial statements provided by the defendants, no consumer redress was ordered. Should the financial statements be found to be inaccurate, the defendants would be required to pay $200,000 in consumer redress. The settlements also contain record keeping provisions to allow the FTC to monitor compliance.

In addition to Computers By Us, Inc., the FTC complaint named Fenceway Computers and Tweekable Computers, and their principals, Jeffrey M. Wesko, Wanda M. Wesko, and Richard A. Wesko, Jr.

The Commission vote to approve the settlement was 5-0. It was filed in U. S. District Court for the District of Maryland, Northern Division by the Department of Justice at the request of the FTC. It is subject to court approval.

NOTE: A Stipulated Final Judgment and Order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the Stipulated Final Judgment and Order are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at www.ftc.gov. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Delores Gardner
Bureau of Consumer Protection
202-326-2264

(FTC File No. 002 3385)
(Civil Action No. L-00-3232)