Online auctioneer Computers By Us agreed to settle federal charges that its business practices violated on-time delivery laws, the U.S. Federal Trade Commission (FTC) announced Thursday.
According to the regulatory agency, Computers By Us and its owners violated the 1975 Mail Order Rule by failing to deliver merchandise as promised and failing to honor refund requests.
Computers By Us, according to the FTC, offered computers for sale on online auctions. Winning bidders were told that their computers would be delivered to them after payment was received.
However, the FTC alleges, in many instances computers were not delivered within the time frame allowed by the Mail Order Rule. The rule requires vendors to notify customers in advance if they will be unable to deliver a product within 30 days.
Retailers are also required by law to give consumers the option of canceling their order and receiving a full refund.
The settlement bars the 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.”
The defendants are also barred from any future violations of the Mail Order Rule and are required to notify consumers if merchandise cannot be delivered on time.
The defendants are also required to obtain performance bonds in the amount of US$200,000 each if they ever engage in Internet marketing or assist others in Internet marketing in the future.
The FTC said that based on financial statements provided by the defendants, no consumer redress was ordered. However, if the financial statements are ever found to be inaccurate, the defendants will be required to pay $200,000 in consumer redress. The defendants are also barred from selling or sharing their customer lists.
In addition to Computers By Us, the FTC complaint named Fenceway Computers and Tweekable Computers, and their principals, Jeffrey M. Wesko, Wanda M. Wesko, and Richard A. Wesko, Jr. The case was filed in the U. S. District Court for the District of Maryland by the Department of Justice, at the request of the FTC.
The settlement was approved unanimously by the five FTC commissioners, but still must be approved by the court before it can take effect.
The Computers By Us case was highlighted on a list of “Top 10 Dot-Cons” released in October by the FTC. The FTC called auction fraud the No. 1 online scam.