NOTE: This website is where you can find advertising law information based on news briefs that appeared in past issues of Advertising Compliance Service, "Your Single Essential Advertising Law Resource," during the month of August 2000. Advertising Compliance Service was published from Sept. 1981 through Dec. 2015.
WEBSITES ILLEGALLY BILLED CONSUMERS FOR SERVICES ADVERTISED AS "FREE": FTC
FTC has charged the owners and operators of many websites with illegally billing thousands of consumers for services that were advertised as "free," and for billing other consumers who never visited the Web sites at all. FTC and the New York Attorney General filed suit in U.S. District Court seeking to halt these practices and have asked the Court to freeze the defendants' assets, pending trial, to provide for consumer redress.
Crescent Publishing Group, Inc., its owner, and principal were named as defendants in the federal court complaint, along with 64 affiliated corporations that run the adult entertainment Web sites. According to FTC's complaint, the "Free Tour Web Sites" generated income of $188 million between 1997 and October 1999--$141 million of which was generated in the first 10 months of 1999 alone.
According to FTC's complaint, defendants run many entertainment Web sites, promoting them as "free." The "Free Tour Web Sites" claim that consumers' credit card numbers are required solely to prove that the consumers are of legal age to view the material, and that the credit cards won't be billed, according to FTC. But thousands of consumers were charged recurring monthly membership fees ranging from $20 to $90, the complaint says. Consumers who tried to dispute the charges were met with a variety of barriers designed by the defendants to thwart their efforts, said FTC.
FTC and the New York Attorney General allege that Crescent and its principals violated the FTC Act and New York state law. They have asked the Court to halt the deceptive and unfair practices, to appoint a receiver to oversee the businesses and to freeze the defendants' assets pending trial to preserve them for consumer redress.
The complaint was filed August 23, 2000 in the United States District Court for the Southern District of New York.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
(Crescent Publishing Group, Inc., et al., Civil Action No. 00CV6315, FTC File No. 002 3001, August 23, 2000.)
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