FTC settles with online retailer that faked UK location

The company shipped electronics from the U.S., giving customers import duties and invalid warranties, the FTC said

The U.S. Federal Trade Commission has reached a settlement with a California-based Web retailer that allegedly deceived U.K. customers into believing they were protected by their country's consumer trade laws by selling them merchandise through websites with URLs ending in .co.uk, the agency said Thursday.

California firm Balls of Kryptonite sold cameras, video games and other electronic goods to British consumers from websites including Bestpricedbrands.co.uk, Bitesizdeals.co.uk and Crazycameras.co.uk, the FTC said in a press release. When customers received the merchandise, they were charged with unexpected import duties, left with invalid warranties and faced difficult cancellation and refund procedures, the FTC said.

The defendants, including owner Jaivin Karnani, promised fast shipping, but often didn't meet the dates, the FTC said. Without the consent of customers, as required by the FTC's Mail or Telephone Order Merchandise Rule, the defendants allegedly shipped the goods much later than promised. When customers tried to cancel the delayed orders, the company offered resistance or no response at all, the FTC said.

In some cases, the websites delivered different products than the ones customers ordered, the FTC said in a complaint filed Thursday in U.S. District Court for the Central District of California. In some cases, electronics had chargers incompatible with U.K. outlets, and in other cases, product manuals were entirely in Spanish or Chinese, the FTC said.

The defendants weren't available for comment.

The FTC filed the original complaint against the company in August 2009. Under the U.S. SAFE WEB Act of 2006, Congress gave the FTC the authority to sue U.S. companies that harm consumers abroad in an effort to discourage fraudulent companies from operating in the U.S.

Under the settlement, the company is banned from charging consumers for goods until they are in hand and ready to be shipped.

The settlement order prohibits the defendants from misrepresenting the location, quality, quantity, characteristics, and model numbers of products they sell, as well as their certification by government-sponsored information security programs. It also prohibits them from misrepresenting their policies regarding cancellation and exchanges, the existence of product warranties, and the total cost of the products sold.

The FTC settlement order also prohibits the defendants from violating the Mail Order Rule, and it imposes a US$500,000 judgment, which is suspended based on the defendants' inability to pay.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags governmentregulationinternete-commerceU.S. Federal Trade CommissionBalls of KryptoniteJaivin Karnani

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Grant Gross

IDG News Service
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