Tiger Direct, Inc

Volume 128 · 128 F.T.C. 517

Citation: 128 F.T.C. 517
Docket: C-3903
Complaint: 1999-11-04
Decision: 1999-11-04
Document type: consent order
Case type: consumer protection
Statutes: FTC Act (section 5); Magnuson-Moss Warranty Act
Industry: computer products distribution
Outcome: consent order entered
Relief: cease_and_desist; affirmative_disclosure; recordkeeping; compliance_reporting
Order term (years): 10
Commission counsel: The respondent, its attorney, and counsel
Source: Original volume PDF
Original PDF: This decision as a PDF

Cite this decision

Tiger Direct, Inc, 128 F.T.C. 517 (1999). Consumer Law Library, https://consumerlawlibrary.org/decisions/v128-0024

Report an error in this record (decision id v128-0024)

Order status: dismissed_no_order. Sunset may be extended by the latest qualifying federal-court complaint alleging an order violation; complaints, dismissal/appeal outcomes, and respondent-specific extensions are not fully tracked.

Cited by 0 later FTC decisions

Cites

128 F.T.C. 3 — NOVARTIS CORPORATION, ET AL cited_neutral

Text (OCR of the scan at left; may contain errors)

TIGER DIRECT, INC. 517

517 Complaint

IN THE MATTER OF

TIGER DIRECT, INC.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE MAGNUSON-MOSS WARRANTY ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT

Docket C-3903. Complaint, Nov. 4, 1999--Decision, Nov. 4, 1999

This consent order, among other things, prohibits Tiger Direct, a Florida-based advertiser and distributor of computer products, from representing that it provides on-site warranty service without disclosing all limitations or conditions that apply to obtaining the on-site service, prohibits the respondent from failing to adhere to the disclosure provisions of the Warranty Act, and requires the respondent, within a reasonable period of time, to fulfill its obligations under the warranty to the consumer.

Participants

For the Commission: Colleen Lynch, Andrew Caverly and Margaret Patterson.

For the respondent: Kip Schwartz, Holland & Knight, Washington, D.C.

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 CFR 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 CFR 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.

Complaint 128 F.T.C.

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 six, 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

TIGER DIRECT, INC. 519

517 Complaint

make the repair; and furthermore, respondent would not provide onsite 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 seven 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 CFR 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 CFR 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 CFR 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 CFR 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 CFR 701.3(a)(5), a step-by-step explanation of the procedure that the consumer should follow in order to obtain performance of any

Complaint 128 F.T.C.

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 CFR 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 CFR 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 CFR 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.

TIGER DIRECT, INC. 521

517 Complaint

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 OTHER WARRANTIES [sic] OR CONDITIONS RESPECTING THE EQUIPMENT, EXPRESS OR IMPLIED, AND AEGIS EXPRESSLY DISCLAIMS ANY WARRANTY OR CONDITION OF MERCHANTABILITY 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.

Complaint 128 F.T.C.

EXHIBIT A

09/29/99 TUE 12:22 FAX 210 490 3420 FTC LIBRARY 0012

Prices Slashed On Genuine Intel Pentium Systems! Complete Multimedia Systems! Featuring The New Pentium 200MHz! Ready To Run Right Out Of The Box! WINDOWS 95 PRE-LOADED! Why Pay More For Intel Quality & Performance?

Intel pentium processor is the heart of almost all quality personal computers. The Pentium processor delivers the performance you need to run today's and tomorrow's software. It's compatible with all of the applications you use. And it's made by the company that invented the microprocessor. So you can be sure you're getting the most advanced, most reliable processor available. No other processor can match the Pentium processor's combination of price and performance. So, if you're looking for a new PC, make sure it has an Intel Pentium processor inside. Then you'll know you're getting the very best.

Complete Pentium Systems! Ready-To-Run! - 133MHz, 166MHz, 200MHz Pentium® - 1.6GB IDE Hard Disk - 16MB EDO Ram - 1.44MB Floppy - 1 Year Onsite Warranty - 15" SVGA Monitor - 4X IDE CD-ROM Drive - 16-Bit Sound Card - 33.6K Voice Fax Modem - 104 Keyboard & Mouse - 2MB PCI Video - Mini Tower Case

$1,299 133MHz Pentium $1,499 166MHz Pentium $1,699 200MHz Pentium

THEY'RE HERE! INTEL PENTIUM PROCESSOR 200MHz

STANDARD 1.6GB HARD DRIVE

16MB EDO RAM

4X CD-ROM DRIVE

33.6 FAX MODEM

INTEL INSIDE PENTIUM

The Intel Inside Logo and Pentium are registered trademarks of Intel Corporation. All other brand or product names are trademarks or registered trademarks of their respective holders. Intel Pentium processor is the heart of almost all quality personal computers. The Pentium processor delivers the performance you need to run today's and tomorrow's software. It's compatible with all of the applications you use. And it's made by the company that invented the microprocessor. So you can be sure you're getting the most advanced, most reliable processor available. No other processor can match the Pentium processor's combination of price and performance. So, if you're looking for a new PC, make sure it has an Intel Pentium processor inside. Then you'll know you're getting the very best.

Complete Multimedia Systems! Featuring The New Pentium 200MHz! Ready To Run Right Out Of The Box! WINDOWS 95 PRE-LOADED! Why Pay More For Intel Quality & Performance?

Innovative Design! The new line of IBM PC compatible systems feature the latest in Intel Pentium processor technology. The systems are designed to be the ultimate in performance and reliability. The new line of systems are available in a variety of configurations to meet your needs. The systems are designed to be the ultimate in performance and reliability. The new line of systems are available in a variety of configurations to meet your needs.

The systems are designed to be the ultimate in performance and reliability. The new line of systems are available in a variety of configurations to meet your needs. The systems are designed to be the ultimate in performance and reliability. The new line of systems are available in a variety of configurations to meet your needs.

The systems are designed to be the ultimate in performance and reliability. The new line of systems

TIGER DIRECT, INC. 523

517 Complaint

EXHIBIT B

09/29/99 TUE 16:29 FAX 610 400 3910 TIGER DIRECT

MMX Pentiums! Over 60% Faster! $1379⁹⁹ The World's Fastest PC! Ready To Run Right Out Of The Box! Why Pay More For Intel Quality & Performance?

Tiger presents a complete line of affordable Intel Pentium processor-based systems with MMX technology. The MMX processor has 57 new instructions that were designed specifically to run today's new media applications. All featuring high speed hard drives, high speed CD-ROM drives, 1.44MB floppy drives, 33.6K modems and much more. These are our most popular multimedia systems with Windows 95 pre-installed. They're lowest-priced that ever before and now with even more features. We've made it easier than ever to own a complete Pentium processor-based system. Tiger's Pentium MMX performance system is an outstanding value featuring 16MB RAM, 1.6GB hard drive, and a 12X CD-ROM. This system costs less than last month's standard Pentium 100! It's the perfect time to upgrade to an Intel Pentium processor with MMX technology.

More Pentium MMX Technology! There has never been a better time to buy a new PC. New MMX technology delivers a whole new dimension in processing power, graphics, and audio. Get the "MMX Advantage" on new applications that are optimized for MMX technology. MMX delivers new capabilities for graphics, multimedia, video editing and the Internet.

Innovative Design The Tiger Pentium MMX processor-based systems are designed for maximum performance and years of worry-free operation. All Tiger systems are carefully manufactured and put through a rigorous burn-in and testing process. If you're looking for a new PC, consider a Tiger Pentium 133 system with MMX technology. It's the smart choice for your home or office.

Complete Pentium MMX Systems! $1379⁹⁹ INTEL INSIDE SALE! 133, 166 and 200MHz Pentiums! - 133, 166 or 200MHz - 16MB RAM - 1.6GB Hard Drive - 12X CD-ROM Drive - 33.6K Modem - 1.44MB Floppy - 1MB Video - 14" Monitor - 104 Keyboard - Microsoft Mouse - Windows 95 - 2 Speakers - 1 Year On-Site Warranty

CUSTOM CONFIGURATIONS AVAILABLE! Now we will custom-build these systems to your exact specifications. Call for a complete list of options and prices. Design the perfect system!

Pentium 133 ................ $1379 Pentium 166 ................ $1479 Pentium 200 ................ $1579

Monitor sold separately. See page 12 for monitors.

Above price includes all standard features. Upgrade options available. Call for details.

Also Available Pentium MMX Upgrades From Just $319⁹⁹ Motherboard/Case Upgrade Prices SLASHED! The Smartest Way To Upgrade!

The Smartest Way To Get A New Pentium MMX! Upgrading has never been easier. Just replace your old motherboard with a new Tiger Pentium MMX motherboard/case upgrade and save hundreds of dollars. You can use all your existing components including hard drive, floppy drive, CD-ROM drive, video card, sound card, modem, keyboard, mouse and monitor. The Pentium MMX processor is the smartest way to upgrade. The Pentium MMX processor delivers a whole new dimension in processing power, graphics, and audio. Get the "MMX Advantage" on new applications that are optimized for MMX technology. MMX delivers new capabilities for graphics, multimedia, video editing and the Internet.

Genuine Intel Pentium MMX Motherboard Upgrades! - Intel Pentium MMX Processor - 512KB Pipeline Burst Cache - 4 PCI Slots, 3 ISA Slots - 4 SIMM/DIMM Sockets - 2 USB Ports - 1 Parallel Port - 2 Serial Ports - 1 IR Port - 1 PS/2 Mouse Port - 1 PS/2 Keyboard Port - Flash BIOS - Baby AT Form Factor - 1 Year Warranty

With New DIMM Memory Slots! The new DIMM memory slots allow you to use the latest high-speed SDRAM memory. The DIMM slots also accept standard SIMM memory.

Today's Most Advanced Pentium Motherboard! FREE Tech Support!

Pentium 133 MMX Upgrade ................ $319 Pentium 166 MMX Upgrade ................ $379 Pentium 200 MMX Upgrade ................ $449

Next Day Delivery! • Order Today 1-800-338-4083 • 24-hours, 7 days Exhibit B

Complaint 128 F.T.C.

EXHIBIT C

From Tiger CPU by IBM! The P200+ 6x86! FROM JUST $399

1 Replace Your Motherboard With A New 6x86! Plug this new motherboard with 6x86 processor into your case for a difference you can see and feel. It beats Pentium® processors with a new processor many times faster than a Pentium-133. 30 DAYS FREE TECH SUPPORT! High-performance speed of a new motherboard is included. We will provide you with a new motherboard, Pentium®-class performance, and a new 6x86 processor. This offer is available for a limited time. You'll get a new motherboard, a new 6x86 processor, and a new 30-day free tech support. This is a great opportunity to upgrade your system. Call now for details. This motherboard is compatible with Windows 3.1, Windows 95, and Windows NT. It has 4 PCI slots, 4 ISA slots, and 1 shared slot. It also has 2 serial ports, 1 parallel port, and 1 PS/2 port. The motherboard also has a USB port. The 6x86 processor is a high-performance processor that is compatible with Pentium® processors. It has a 16KB internal cache and a 256KB external cache. The motherboard also has a 512KB pipeline burst cache. The 6x86 processor is a great choice for anyone who wants a fast and reliable computer. Call now for details.

2 Upgrade; Case, Motherboard, Power Supply! Direct! The motherboard, CPU, and case are all you need to upgrade your system. This upgrade kit includes a new motherboard, a new 6x86 processor, and a new case. The case has a 230W power supply and 3 external 5.25" drive bays and 2 external 3.5" drive bays. The motherboard has a 6x86 processor, 4 PCI slots, 4 ISA slots, and 1 shared slot. It also has 2 serial ports, 1 parallel port, and 1 PS/2 port. The motherboard also has a USB port. The 6x86 processor is a high-performance processor that is compatible with Pentium® processors. It has a 16KB internal cache and a 256KB external cache. The motherboard also has a 512KB pipeline burst cache. The 6x86 processor is a great choice for anyone who wants a fast and reliable computer. Call now for details.

3 Complete Ready-To-Run 6x86 With Case, Keyboard, Mouse, Speakers! Just plug it in and go! This system is ready to run. It includes a new motherboard, a new 6x86 processor, a new case, a new keyboard, a new mouse, and new speakers. The case has a 230W power supply and 3 external 5.25" drive bays and 2 external 3.5" drive bays. The motherboard has a 6x86 processor, 4 PCI slots, 4 ISA slots, and 1 shared slot. It also has 2 serial ports, 1 parallel port, and 1 PS/2 port. The motherboard also has a USB port. The 6x86 processor is a high-performance processor that is compatible with Pentium® processors. It has a 16KB internal cache and a 256KB external cache. The motherboard also has a 512KB pipeline burst cache. The 6x86 processor is a great choice for anyone who wants a fast and reliable computer. Call now for details.

Choose From Four Screaming Speeds:

TigerDirect has the perfect system for you. Whether you're looking for a fast and reliable computer for home or office, we have the system for you. Our systems are available in four screaming speeds: 6x86-P133+, 6x86-P150+, 6x86-P166+, and 6x86-P200+. All systems come with a 1-year warranty on parts and labor. Call now for details.

MOTHERBOARD ONLY $399 6x86-P133+ $399 6x86-P150+ $429 6x86-P166+ $499 6x86-P200+ $599

UPGRADE KITS $499 6x86-P133+ $499 6x86-P150+ $529 6x86-P166+ $599 6x86-P200+ $699

COMPLETE SYSTEMS $699 6x86-P133+ $699 6x86-P150+ $729 6x86-P166+ $799 6x86-P200+ $899

Exhibit C

TIGER DIRECT, INC. 525 Complaint EXHIBIT D

Tiger EXHIBIT D

Warranty

Your Serial # [bar code graphic] Nationwide Service 1-(905)-669-8699 (Important document. Keep in a safe place)

The image has been rotated 90 degrees clockwise.OCR result: Complaint 128 F.T.C.

EXHIBIT D WARRANTY CERTIFICATE Terms and Conditions The Consumer Products Division of [illegible] warrants to the original consumer purchaser that each new [illegible] brand product which proves to be defective in workmanship or material within 90 days from date of purchase will be repaired or replaced at [illegible] option, without charge for either parts or labor, at any [illegible] authorized service center. The warranty does not apply to [illegible] if the product has been misused, damaged, modified, or [illegible] to unauthorized repair. This warranty gives you specific legal rights, and you may also have other rights which vary from state to state. This warranty is in lieu of all other warranties, express or implied, including but not limited to any implied warranty of merchantability or fitness for a particular purpose, and [illegible] assumes no liability for any incidental or consequential damages. 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. To obtain warranty service, [illegible] the product to any [illegible] authorized service center. If you have any questions concerning this warranty, write to: Consumer Products Division, [illegible], [illegible], [illegible]. CUSTOMER'S OBLIGATIONS To obtain performance of this warranty, the customer must: 1. Complete and return the attached warranty registration card within 10 days of purchase. 2. Retain proof of purchase (such as a bill of sale) to establish the date of purchase. 3. Deliver the product to an authorized service center for warranty service. 4. Pay any transportation charges to and from the service center. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WARRANTY [illegible] warrants this product to be free from defects in material and workmanship under normal use for a period of 90 days from the date of purchase. This warranty extends only to the original consumer purchaser. EXCLUSIONS This warranty does not cover:

1. Products which have been subject to misuse, neglect, accident, or improper installation. 2. Products which have been modified or repaired by unauthorized persons. 3. Products which have been used for commercial purposes. 4. Normal wear and tear.

5. Damage caused by improper maintenance or cleaning. 6. Products with removed or altered serial numbers. MISCELLANEOUS This warranty gives you specific legal rights, and you may also have other rights which vary from state to state. WARRANTY LIMITATION ANY IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE LIMITED IN DURATION TO THE DURATION OF THIS WARRANTY. SOME STATES DO NOT ALLOW LIMITATIONS ON HOW LONG AN IMPLIED WARRANTY LASTS, SO THE ABOVE LIMITATION MAY NOT APPLY TO YOU. DAMAGE LIMITATION [illegible] SHALL NOT BE LIABLE FOR ANY INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES RESULTING FROM THE USE OF THIS PRODUCT. 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. GENERAL This warranty is governed by the laws of the State of [illegible]. This warranty is the complete and exclusive statement of warranty terms and no other warranty, oral or written, is authorized. If any provision of this warranty is held to be invalid or unenforceable, the remaining provisions shall remain in full force and effect. FOR SERVICE, CALL:

1-800-638-8639 000230

TIGER DIRECT, INC. 527

517 Decision and Order

DECISION AND ORDER

The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of complaint that the Boston Regional Office proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and

The respondent, its attorney, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true and waivers and other provisions as required by the Commission's Rules; and

The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondent has violated the said Act, and that a complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and having duly considered the comments received from interested persons pursuant to Section 2.34 of its Rules, now in further conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order:

1. Respondent Tiger Direct, Inc., is a corporation organized, existing and doing business under and by virtue of the laws of the State of Florida with its office or principal place of business located at 8700 West Flagler Street, 4th Floor, Miami, Florida.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

Decision and Order 128 F.T.C.

ORDER

DEFINITIONS

For purposes of this order, the following definitions shall apply:

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 CFR Parts 701 ("the Disclosure Rule") and 702 ("the Pre-Sale Availability Rule"), promulgated thereunder, shall apply to the terms used in this order.

2. Unless otherwise specified, "respondent" shall mean Tiger Direct, Inc., a corporation, its successors, assigns, officers, agents, representatives, and employees.

3. "Commerce" shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. 44.

4. "On-Site Service" shall mean providing the services of a qualified technician at the location of a product sold or supplied by respondent to remedy a problem with the product.

5. "Clearly and prominently" shall mean as follows:

A. In an advertisement communicated through electronic medium (such as television, radio, and interactive media such as the Internet and online services), the disclosure shall be presented simultaneously in both the audio and video portions of the advertisement. Provided, however, that in any advertisement presented solely through video or audio means, the disclosure may be made through the same means in which the ad is presented. The audio disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. The video disclosure shall be of a size and shade, and shall appear on the screen for a duration, sufficient for an ordinary consumer to read and comprehend it. In addition to the foregoing, in interactive media the disclosure shall also be unavoidable and shall be presented prior to the consumer incurring any financial obligation.

B. In a print advertisement, promotional material, or instruction manual, the disclosure shall be in a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend it, in print that contrasts with the background against which it appears. In multipage documents, the disclosure shall appear on the cover or first page.

C. On a product label, the disclosure shall be in a type size and location on the principal display panel sufficiently noticeable for an

TIGER DIRECT, INC. 529

517 Decision and Order

ordinary consumer to read and comprehend it, in print that contrasts with the background against which it appears.

The disclosure shall be in understandable language and syntax. Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement or on any label.

6. "Reasonable period of time" shall mean that period of time specified in respondent's advertisements, promotional materials or solicitations if such period is clearly and prominently disclosed in the advertisement, promotional material or other solicitation; or if no period of time is clearly and conspicuously disclosed in the advertisement, promotional material or other solicitation, a period no longer than thirty (30) days following the date the respondent first receives notice from the consumer of a problem with a product.

It is ordered, That respondent, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, promotion, sale, offering for sale or distribution of any consumer product, shall not represent, in any manner, expressly or by implication, that it provides On-Site Service unless respondent discloses, clearly and prominently and in close proximity to the representation, all limitations and conditions that apply to obtaining On-Site Service.

II.

It is further ordered, That respondent, directly or through any corporation, subsidiary, division or other device, in connection with the advertising, promotion, sale, offering for sale or distribution of any consumer product for which the respondent offers a written warranty, shall within a reasonable period of time after receiving notice from a consumer of a problem, fulfill its obligations under the warranty to the consumer.

III.

Decision and Order 128 F.T.C.

any consumer product for which the respondent offers a written warranty, do forthwith cease and desist from:

A. Failing to make the text of any written warranty on a consumer product readily available for examination by prospective buyers prior to sale through utilization of one or more means specified in Section 702.3(c) of the Pre-Sale Availability Rule, 16 CFR 702.3(c); B. Failing to disclose, as provided in Section 701.3(a)(3) of the Disclosure Rule, 16 CFR 701.3(a)(3), a statement of what the warrantor will not pay for or provide, where necessary for clarification; C. Failing to disclose, as provided in Section 701.3(a)(5) of the Disclosure Rule, 16 CFR 701.3(a)(5), a step-by-step explanation of the procedure 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; D. Excluding liability for any incidental or consequential damages arising from any consumer injury without clearly and conspicuously disclosing, as provided in Section 701.3(a)(8) of the Disclosure Rule, 16 CFR 701.3(a)(8), that some states do not allow for such exclusion; E. Failing to disclose, as provided in Section 701.3(a)(9) of the Disclosure Rule, 16 CFR 701.3(a)(9), that certain states may give the consumer legal rights in addition to those provided by the warranty; F. Failing to designate, as provided in Section 103 of the Warranty Act, 15 U.S.C. 2303, any written warranty that it offers for products costing more than $10 as either "full" or "limited"; and G. Disclaiming any implied warranty, except as permitted by Section 108 of the Warranty Act, 15 U.S.C. 2308.

IV.

It is further ordered, That respondent shall deliver a copy of this order to all current and future principals, officers, directors, and managers, and to all current and future employees, agents and representatives having responsibilities with respect to the subject matter of this order, and shall secure from each such person a signed and dated statement acknowledging receipt of the order. Respondent shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities.

TIGER DIRECT, INC. 531

517 Decision and Order

It is further ordered, That respondent shall provide written instructions to all current and future managers, employees, agents, and representatives having any sales, advertising, customer service, or policy responsibility on behalf of respondent as to respondent's specific obligations and duties under this order and under the Magnuson-Moss Warranty Act (15 U.S.C. 2301, et seq.), including, but not limited to, Sections 103 and 108 (15 U.S.C. 2303 and 2308), thereof, and Rules 701 and 702, 16 CFR Parts 701 ("the Disclosure Rule") and 702 ("the Pre-Sale Availability Rule"), promulgated thereunder. Respondent shall provide these instructions to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities.

VI.

It is further ordered, That respondent shall, for a period of ten (10) years from the date of service of the order, maintain and upon request make available to the Federal Trade Commission for inspection and copying (i) copies of all written instructions provided by respondent to its managers, employees, agents, and representatives having any sales, advertising, customer service, or policy responsibility on behalf of respondent pursuant to Part V., above; (ii) all warranties on consumer products costing more than $15 for which the respondent is the warrantor; and (iii) exemplars of all advertising by the respondent.

VII.

It is further ordered, That respondent shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this order; the proposed filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which respondent learns less than thirty (30) days prior to the date such action is to take place, respondent shall

Decision and Order 128 F.T.C.

notify the Commission as soon as is practicable after obtaining such knowledge. All notices required by this Part shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580.

VIII.

It is further ordered, That respondent shall, within sixty (60) days after the date of service of this order, and at such other times as the Federal Trade Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which it has complied with this order.

IX.

This order will terminate on November 4, 2019, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of:

A. Any Part in this order that terminates in less than twenty (20) years; B. This order's application to any respondent that is not named as a defendant in such complaint; and C. This order if such complaint is filed after the order has terminated pursuant to this Part.

Provided further, that if such complaint is dismissed or a federal court rules that the respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this Part as though the complaint had never been filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal.

THE KROGER CO., ET AL. 533

533 Complaint

IN THE MATTER OF

THE KROGER CO., ET AL.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 7 OF THE CLAYTON ACT AND SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT

Docket C-3905. Complaint, Nov. 8, 1999--Decision, Nov. 8, 1999

This consent order, among other things, requires Kroger and Group, supermarket corporations, to divest certain assets to Roundy's, Inc., which is one of the largest food wholesalers in the United States and an operator of company-owned supermarkets.

Participants

For the Commission: Michael Rose, Laurel Price, Richard Parker, Jeremy Bulow and Alan Fisher.

For the respondents: Deborah Feinstein, Arnold & Porter, Washington, D.C. and Eric Moy, Barnes & Thornburg, Indianapolis, IN.

COMPLAINT

Pursuant to the provisions of the Federal Trade Commission Act and the Clayton Act, and by virtue of the authority vested in it by said Acts, the Federal Trade Commission ("Commission"), having reason to believe that respondent The Kroger Co. ("Kroger") has entered into an agreement to acquire substantially all of the assets of respondent The John C. Group Company, Inc. ("Group"), all subject to the jurisdiction of the Commission, in violation of Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45; that such acquisition, if consummated, would violate Section 7 of the Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C. 45; and that a proceeding in respect thereof would be in the public interest, hereby issues its complaint, stating its charges as follows:

DEFINITION

PARAGRAPH 1. For the purposes of this complaint, the term "Supermarket" means a full-line retail grocery store with annual sales of at least $2 million that carries a wide variety of food and grocery

← 128 F.T.C. 502 · 128 F.T.C. 533 →