Tiger Direct, Inc.

UNITED STATES OF AMERICA
BEFORE FEDERAL TRADE COMMISSION

In the Matter of
TIGER DIRECT, INC., a corporation.

DOCKET NO.

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Act, 15 U.S.C. § 41 et seq., and the Magnuson-Moss Warranty Act ("the Warranty Act"), 15 U.S.C. § 2301 et seq., and Rules 701 ("the Disclosure Rule") and 702 ("the Pre-Sale Availability Rule"), 16 C.F.R. Parts 701 and 702, promulgated thereunder, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission, having reason to believe that Tiger Direct, Inc., a corporation, ("Tiger" or "respondent"), has violated the provisions of said Acts and Rules, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. The definitions of terms contained in Section 101 of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, and in Rules 701 and 702, 16 C.F.R. §§ 701.1 and 702, promulgated thereunder shall apply to the terms used in this complaint.

2. Respondent Tiger Direct, Inc., is a Florida corporation with its principal office or place of business at 8700 West Flagler Street, 4th Floor, Miami, Florida 33174.

3. Respondent has advertised, offered for sale, sold and distributed, among other items, personal computers, software, hardware, printers, modems, and monitors, all of which are consumer products. Therefore, respondent is a supplier of consumer products.

4. In the ordinary course and conduct of its business, respondent sells or offers for sale consumer products for purposes other than resale or use in the ordinary course of the buyer's business. Therefore, respondent is a seller of consumer products.

5. The acts and practices of respondent alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act.

VIOLATIONS OF SECTION 5(a)(1) OF THE FTC ACT

6. Respondent has disseminated or has caused to be disseminated advertisements and promotional materials for Tiger-brand computer systems, including but not necessarily limited to the attached Exhibits A through C. These advertisements and promotional materials contain the following statements:

a. ONE-YEAR ON-SITE WARRANTY!
: b. 1 YEAR PREMIUM ON-SITE WARRANTY

7. Through the means described in Paragraph 6, respondent has represented, expressly or by implication, that:

a. for a period of one year after purchase, respondent would provide the on-site services of a technician to purchasers of Tiger-brand computer systems when notified that the computer system or any of its parts was defective or had malfunctioned.

b. respondent would fulfill its obligations under its on-site warranty within a reasonable period of time after first being notified by a purchaser of a Tiger-brand computer system of a defect or malfunction.

8. In truth and in fact,

a. respondent did not always provide the on-site services of a technician to purchasers of Tiger-brand computer systems when notified of a defect or malfunction; rather, respondent would not send a technician to provide on-site services until respondent's agent or third party service provider diagnosed the problem as a hardware failure over the telephone and determined that the consumer could not make the repair; and furthermore, respondent would not provide on-site services for the computer mouse, keyboard and speakers.

b. respondent did not fulfill its obligations under its on-site warranty within a reasonable period of time after first being notified by a purchaser of a Tiger-brand computer system of a defect or malfunction.

Therefore, the representations set forth in Paragraph 7 were, and are, false or misleading.

VIOLATIONS OF THE PRE-SALE AVAILABILITY RULE

9. Respondent has offered for sale to consumers Tiger-brand computer products with written warranties by means of catalogs or mail order solicitations, but has failed to disclose material warranty terms or otherwise comply with 16 C.F.R. § 702.3(c)(2)(I).

10. Section 110(b) of the Warranty Act, 15 U.S.C. § 2310(b), mandates that the failure to comply with a rule promulgated under the Warranty Act is a violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1). Therefore, respondent's failure to comply with the provisions of the Pre-Sale Availability Rule, 16 C.F.R. § 702, was, and is, a deceptive practice.

VIOLATIONS OF THE DISCLOSURE RULE

11. Respondent has given or offered to give written warranties, and is therefore a warrantor as that term is defined in Section 701.1(g) of the Disclosure Rule, 16 C.F.R. § 701.1(g).

12. Respondent has provided written warranties, but has failed to disclose, as required by Section 701.3(a)(3) of the Disclosure Rule, 16 C.F.R. § 701.3(a)(3), what the warrantor will not pay for or provide, where necessary for clarification, specifically:

a. that on-site warranty service is only available after the technician and the customer determine that a hardware failure has occurred and that service is required; and

b. that on-site service does not include defects or malfunctions of the speakers, keyboard, mouse, or other external components.

13. Respondent has provided written warranties, but has failed to disclose, as required by Section 701.3(a)(5) of the Disclosure Rule, 16 C.F.R. § 701.3(a)(5), a step-by-step explanation of the procedure that the consumer should follow in order to obtain performance of any warranty obligation, including the persons or class of persons authorized to perform warranty obligations.

14. Respondent has provided written warranties, attached as Exhibit D, that contain the following language:

LIMITATION OF LIABILITY

IN NO EVENT SHALL AEGIS BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF USE, LOSS OF DATA, LOSS OF BUSINESS AND PROFITS

but has failed to disclose, as required by Section 701.3(a)(8) of the Disclosure Rule, 16 C.F.R. § 701.3(a)(8), the following: "Some States do not allow the exclusion or limitation of incidental or consequential damages, so the above limitation or exclusion may not apply to you."

15. Respondent has provided written warranties but has failed to disclose, as required by Section 701.3(a)(9) of the Disclosure Rule, 16 C.F.R. § 701.3(a)(9), the following: "This warranty gives you specific legal rights, and you may also have other rights which vary from State to State."

16. Section 110(b) of the Warranty Act, 15 U.S.C. § 2310(b), mandates that the failure to comply with a rule promulgated under the Warranty Act is a violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1). Therefore, respondent's failure to comply with the provisions of the Disclosure Rule, 16 C.F.R. § 701, was, and is, a deceptive practice.

VIOLATIONS OF THE WARRANTY ACT

17. Section 103 of the Warranty Act, 15 U.S.C. § 2303, provides that a warrantor of consumer products costing more than $10 shall clearly and conspicuously designate any written warranty it offers as either a "full warranty" or a "limited warranty."

18. Respondent has made a written warranty for Tiger-brand computer products that cost more than $10, but has failed to designate its written warranty as "full" or "limited" as provided in Section 103 of the Warranty Act, 15 U.S.C. § 2303.

19. Respondent's failure to designate its written warranty as "full" or "limited" was, and is, a violation of Section 103 of the Warranty Act, 15 U.S.C. § 2303, and, pursuant to Section 110(b), 15 U.S.C. § 2310(b), was, and is, a deceptive practice.

20. Section 108 of the Warranty Act, 15 U.S.C. § 2308, provides that no supplier may disclaim or modify any implied warranty if the supplier makes any written warranty to the consumer with respect to a consumer product, except by limiting the duration of an implied warranty to the duration of a written warranty of reasonable duration.

21. Respondent has made a written warranty, attached as Exhibit D, that contains the following language:

THERE ARE NO OTHERWARRANTIES [sic] OR CONDITIONS RESPECTING THE EQUIPMENT, EXPRESS OR IMPLIED, AND AEGIS EXPRESSLY DISCLAIMS ANY WARRANTY OR CONDITION OF MERCHANTABLE QUALITY OR FITNESS FOR A PARTICULAR PURPOSE.

22. Respondent's disclaimer of implied warranties was, and is, a violation of Section 108 of the Warranty Act, 15 U.S.C. § 2308, and, pursuant to Section 110(b), 15 U.S.C. § 2310(b), was, and is, a deceptive practice.

THEREFORE, the Federal Trade Commission, this ________ day of ____________________, 1999, has issued this complaint against respondent.

By the Commission.

Donald S. Clark
Secretary