Buy.Com Inc.

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

IN THE MATTER OF BUY.COM INC.

CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATIONS OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-3978; File No. 9923282 Complaint, September 5, 2000--Decision, September 5, 2000 This consent order addresses BUY.COM’s advertising claims regarding the sale of a $269 Compaq Presario 5304 computer system based upon a $400 rebate that required consumers to enter into a three year contract for Internet service. The complaint alleges that BUY.COM represented that the total cost of the computer system was $269, but failed to disclose pertinent requirements and rebates necessary to purchase at the advertised price. The consent order prohibits BUY.COM from misrepresenting the price or cost to consumers of computer or computer related equipment, or from representing the cost of any of these products if that price is conditioned on the purchase of another product without disclosing the condition clearly and conspicuously along with the price of the additional product or service that must be purchased. The order also prohibits the respondent from making a claim about the after-rebate price or cost of any computer, computer-related product, or Internet access service, unless it discloses, clearly and conspicuously, and in close proximity to the after-rebate price or cost representation, the amounts of any rebates offered, and the total cost of the computer product or service, excluding any rebate amounts. Additionally, the order prohibits Respondent from making any representation about the cost of Internet access services unless it discloses the following material facts: (1) if consumers have to pay additional fees, charges, rebate repayments, or other costs to cancel the Internet access service; (2) the amounts of such costs must be disclosed; (3) if consumers may have to pay long distance telephone charges, hourly surcharges, or other costs in excess of local telephone fees to access the Internet service; (4) the amount of time required for purchasers to receive any rebate. These disclosures can be made through hyperlinks if the hyperlink clearly indicated the nature and importance of the information included.

Participants For the Commission: Michael Dershowitz, Michael Ostheimer, Joel Winston, C. Lee Peeler, and BE.

VOLUME 130 Complaint For the Respondents: Michael B. Green, Brobeck, Phleger, & Harrison.

COMPLAINT The Federal Trade Commission, having reason to believe that BUY.COM Inc., a corporation ("respondent"), has violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent BUY.COM Inc. is a Delaware corporation with its principal office or place of business at 85 Enterprise, Aliso Viejo, California 92656.

2. Respondent has advertised, offered for sale, sold, and distributed products to the public, including books, music and video recordings, personal electronic devices, computer software, and personal computers. BUY.COM sells these products through its Internet Web site, <www.buy.com>.

3. 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. 4. Respondent has disseminated or has caused to be disseminated advertisements for a Compaq Presario 5304 computer system, including but not necessarily limited to the attached Exhibits A through C. Exhibit A is a newspaper advertisement. Exhibit B is a subsequent newspaper and magazine advertisement. Exhibit C is a Web site advertisement. The advertisements contain the following statements:

A.

[Depiction: A Compaq Presario 5304 computer system.] "COMPAQ PRESARIO 5304 SYSTEM BUY.COM, INC. 689 Complaint WITH REBATES, INCLUDES 15" MONITOR, SPEAKERS, COLOR INKJET PRINTER, KEYBOARD, MOUSE, AND FREE SHIPPING. VISIT WWW.BUY.COM TODAY FOR REBATE DETAILS.

$269 CAN YOU FIND THE TYPPO IN THIS AD?"

[An extremely fine print disclosure, in approximately 4 point type, at the very top of the ad states: "BUY.COM,J BUYCOMP.COM,J BUYSOFT.COM,J BUYBOOKS.COM,J BUYVIDEOS.COM,J BUYGAMES.COM,J BUYMUSIC.COM,J and BUYSURPLUS.COMJ are trademarks or servicemarks of BUY.COM Inc. Prices subject to change. Quantities limited. Requires Compuserve activation. See site for details. Buy.com reserves the right to cancel this offer at any time. 81999"] (Exhibit A, Full page newspaper advertisement that appeared in USA Today, The Washington Post, The New York Times, The Sacramento Bee, The San Jose Mercury News, and The Wall Street Journal.) B.

[Depiction: A Compaq Presario 5304 computer system.] "COMPAQ PRESARIO 5304 SYSTEM WITH REBATES, INCLUDES 15" MONITOR, SPEAKERS, COLOR INKJET PRINTER, KEYBOARD, VOLUME 130 Complaint MOUSE, AND FREE SHIPPING. REQUIRES 36-MONTH COMPUSERVE 2000 PREMIER INTERNET SERVICE CONTRACT AT $21.95 PER MONTH. VISIT WWW.BUY.COM TODAY FOR ALL THE REBATE DETAILS.

$269* CAN YOU FIND THE TYPPO IN THIS AD?"

[A very fine print disclosure, in approximately 5 point type, at the very top of the ad states:

"*BUY.COM,J BUYCOMP.COM,J BUYSOFT.COM,J BUYBOOKS.COM,J BUYVIDEOS.COM,J BUYGAMES.COM,J BUYMUSIC.COM,J and BUYSURPLUS.COMJ are trademarks or servicemarks of BUY.COM Inc. Prices subject to change. Quantities limited. Complete System $869.00 - $400 Compuserve 2000 Premier Internet Mail-in Rebate - $200 Compaq Bundle Mail-in Rebate. Requires 36 months of Compuserve 2000 Internet service at $21.95 a month. Early cancellation may result in additional charges. See site for details. BUY.COM reserves the right to cancel this offer at any time. 1999"] (Exhibit B, Full page newspaper and magazine advertisement that appeared in The Wall Street Journal and PC Week Magazine). C.1.

"BUYCOMP.COM The Internet Computer Superstore COMPAQ $269* [Depiction: A Compaq Presario 5304 FREE Ground Shipping! computer system] BUY.COM, INC. 691 Complaint * After rebates A Complete System $269.00" [Hyperlink to: Exhibit C.3.] (Exhibit C.1., The home page of respondent=s Web site, <www.buy.com>).

C.2.

"COMPAQ $269* [Depiction: A Compaq includes: computer, monitor Presario 5304 computer with speakers, and printer. system] Click Here Now! [Hyperlink to: Exhibit C.3.] FREE Ground Shipping! *With rebates. Requires three year subscription to Compuserve internet service."

(Exhibit C.2., The main page of BUYCOMP.COM, the computer section of respondent=s Web site, <www.buy.com/comp/default .asp>).

C.3.

"COMPAQ Savings from BUY.COM [Depiction: A Compaq Presario System Price $869.00 5304 computer system.] iSave Rebate -$400.00 5304 Rebate -$200.00 Ground Shipping $0.00 Your Price $269.00! Click Here To Buy VOLUME 130 Complaint [Hyperlink to: Purchase application] Save a bundle...

when you combine the Compaq iSave $400 Internet rebate [Hyperlink to: Exhibit C.4.] with an additional $200 cash back [Hyperlink to: Rebate form] from Compaq. Here's How It Works 1. Order your new Compaq system.

2. Sign up for three years of Compuserve2000 Internet service within 30 days of your purchase).

3. Fill out both the iSave $400 Internet rebate form [Hyperlink to: Exhibit C.4.] and the $200 cash back form [Hyperlink to: Rebate form] and mail to Compaq. See full details on rebate forms.

Here's What You Get. . ."

(Exhibit C.3., Page of respondent=s Web site devoted to Compaq Presario 5304 computer system package offer, <www.buy.com/ comp/stores/compaq/600_promo.asp>) C.4.

"$400 Rebate (Mail-in Rebate) on the purchase of any Compaq Presario desktop PC and Compaq Monitor or Compaq Presario notebook PC, 7/25-10/9/99. Sign up for 3 years of Compuserve 2000 Premier Internet Service for $21.95 a month. Mail-in-rebate must be postmarked by 11/30/99.

To redeem this rebate offer, simply:

1. Purchase an eligible Compaq product 2. Sign up for Compuserve 2000 service using your Compaq/Compuserve CD rebate kit (CD kits are available from your local authorized reseller) 3. Fill in the form, then print it out; or print out the blank form, and fill it in by hand 4. Mail it to the address below with proof of purchase" BUY.COM, INC. 693 Complaint [A fine print disclosure at the very bottom of this web page states:

"Terms and Conditions $400 Mail-In Rebate requires (1) purchase of any eligible Compaq Presario desktop & monitor or notebook computer, (2) contract commitment to a 3 year (36 months) subscription for Compuserve 2000 Internet Service at the monthly rate of $21.95 or full prepayment of $790.20 at the time of registration, (3) a completed mail-in rebate form, and (4) a dated purchase receipt with a copy of your receipt and UPC Code. All of the above must be completed and received by Compuserve within 30 days of purchase. Offer subject to your acceptance of Compuserve Terms of Service. If prepayment is not chosen, membership termination prior to 36 months requires pro-rated repayment of the rebate plus a $50 cancellation fee, based on the following repayment schedule: Months 1-12/$400, Months 13-24/$300.00, and Months 25- 36/$200.00. Within 60 days of rebate approval, the rebate will be credited to your designated credit card or fulfilled by check sent to the name and address provided on the mail-in rebate form. Offer valid in the U.S. only for purchases through 10/9/99. You must be 18 years or older. Limit one per household. A major credit card is required. Premium Compuserve services carry surcharges, and communications surcharges may apply to AK and outside of the U.S. You may incur telephone charges, depending on your calling plan and location. Availability Access to Compuserve may be limited, especially during peak times."] (Exhibit C.4., Page of respondent=s Web site containing the application form for the iSave $400 Internet rebate, <www.buy.com/comp/stores/compaq/400_rebate_form.asp>. Consumers could purchase the Compaq Presario 5304 computer system without viewing this page.).

5. Through the means described in Paragraph 4, including but not necessarily limited to Exhibit A, respondent has represented, VOLUME 130 Complaint expressly or by implication, that the total cost of a Compaq Presario 5304 computer system is $269.

BUY.COM, INC. 695 Complaint 6. In truth and in fact, the total cost of a Compaq Presario 5304 computer system is not $269. In order to obtain the Compaq Presario 5304 computer system for $269, consumers are required to subscribe to Compuserve 2000 Internet service for 36 months at an additional cost of $21.95 per month or a full pre-payment of $790.20. Therefore, the representation set forth in Paragraph 5 was, and is, false or misleading.

7. In its advertisements, including but not limited to Exhibits A through C, for the Compaq Presario 5304 computer system respondent has represented that the total cost of the Compaq Presario 5304 computer system is $269 after rebates. In these advertisements, respondent has failed to disclose or failed to disclose adequately:

(a) with respect to Exhibits A and C, that in order to obtain the Compaq Presario 5304 computer system for $269, consumers are required to subscribe to Compuserve 2000 Internet service for 36 months at an additional cost of $21.95 per month or a full pre-payment of $790.20;

(b) with respect to Exhibits A and B, the amounts of the rebates, $200 and $400, and the total price of the computer system before rebates, $869;

(c) that consumers who cancel the Internet service within 3 years must repay all or a portion of the $400 rebate and pay a $50 cancellation fee; and (d) that Compuserve does not provide local access telephone numbers for its Internet service in all areas and, therefore that many consumers must either pay long distance telephone charges or surcharges of $6.00 per hour to access its Internet service.

VOLUME 130 Complaint Exhibits These facts would be material to consumers in their purchase or use of the product. The failure to disclose these facts, in light of the representation made, was, and is, a deceptive practice. 8. The acts and practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

THEREFORE, the Federal Trade Commission this fifth day of September, 2000, has issued this complaint against respondent. By the Commission.

Complaint Exhibits BUY.COM, INC. 697 Complaint Exhibits VOLUME 130 Complaint Exhibits BUY.COM, INC. 699 Complaint Exhibits __BOOKS VIDEOS ChooseaStore + Choose Store & Enter Keywords BUY.COM Fe Choose Category: Home | Feedback | eAccount Order tracking |B. the Internet Superstore Sales / Support - 888.880.1030 Rig mp3 player Qiven away everyday Pe Winner:

Welcome back Ava, If you are not Ava click here Going Back to School? Check out the great deals at our Back to School Store.

Customer Feedback... Click Here to read what BUY.COM customers are saying.

The Lowest Prices On Earth and More... BUY.COM Prefers — Ve reer = BUYCOMP.COM BUYSOFT.COM BUYMUSIC.COM Softens he Internet Computer Superstore The Internet Software Superstore The Internet Music Superstore $369 sl: _ w aarauiood, . New Top 10 $269.12 by — Y2K fiat =_ FRE hi 4 Click Here For More info & FREE Ground Spring - FREE Software Download = Runaway Bride $9.95 A Complete System $269.00 A BUYBOOKS.COM BUYVIDEOS.COM BUYGAMES.COM The Internet Book Superstore The Internet Video Superstore The Internet Game Superstore Matrix $14.49 NEL Blitz 2000 $49.95 A huge selection of DVDs for $14.99 or Billboard's top 25 single disc CD's for Great pricas-n home electronics and less! $9.95, computer Products.

Need some help? Click here. Employment Opportunities at BUY.COM. Press Releases, Company Info, Addrass..,.

Customer Service | FAQs | Site Guide | Company Info Advertsing | Terms Help Exhibit C.1 VOLUME 130 Complaint Exhibits BUY.COM, INC.

Complaint Exhibits 3LYCOMP.COM - jhe internet Computer Superstore AUP: Www puy.coOM comp stores compag OW ror ‘ HOME COMP SOFT BOOKS VIDEOS GAMES MUSIC SURPLUS BUNCGMPICOM) | ton aspiri Home | eAccount | eLease | esearch | Order Tracking | Basket; Checkout $269 Compaq System Sales / Support - 888.880.1030 COMPAL 9, iz rob | COMPAQ Savings from BUY.COM Macintosh P System Price $869.00 i iSave Rebate -$400.00 5304 Rebate -$200.00 Ground Shipping _— $0.00 Your Price $269.00! Click Here To Buy Save a bundle...

when you combine the Compaq iSave $400 Internet rebate with an additional $200 cash back from Compaq.

Here's How It Works 1. Order your new Compaq system 2. Sign up for three years of Compuserve2000 Internet service within 30 days of your purchase.

3. Fill out both the iSave $400 Internet rebate form and the $200 cash back form and mail to Compaq. See full details on rebate forms. Here's What You Get Presario 5304 Computer *M li 366 MMX Enhanced Processor _ *64MB Ram *4.3GB HD = * 56k Modem *32X CD BuySystem Presario MV520 Monitor . High-quality 0.28mm Dot Pitch + JBL Pro Amplified Speakers Mi gg «Max Res 1024x768 _ * 15" Monitor (13.8" Viewable) BuySystem Exhibit C.3 lof2 8/24/1997 3:48 PM VOLUME 130 Complaint Exhibits BUYCOMP.COM - The internet Computer Superstore 1 of 2 BUY.COM, INC.

Complaint Exhibits $400 Rebate (Mail-in Rebate) on the purchase of any Compaq Presario desktop PC and Compaq Monitor or Compaq Presario notebook PC, 7/25 - 10/9/99. Sign up for 3 years of Compuserve 2000 Premier Internet service for $21.95 a month. Mail-in rebate must be postmarked by 11/30/99. To redeem this rebate offer, simply:

: Darren esate ye cnvnemtane cD . Sign up for erve service using your CompaqiCompuServe CD rebate kit CB kits are available from your local authorized recelion) > . 3. Fill in the form, then print it out; or print out the blank form, and fill it in by hand 4. Mail it to the address below with proof of purchase Compaq / Compuserve “iSAVE" Rebate Offer Oompa | Compe ox 430800 El Paso, TX 88543-0800 $400 Mail-in Rebate Form 1. Credit information:

Os Expiration Date: CJ / C7] / Cc] (Check One) OO] Mastercard [] American Express [] Visa [J Discover Bank name (Mastercard/Visa only): (> 2. Compaq Presario PC Information:

Retailer where you purchased your computer: a | PC Serial Number. OOOOOOOOOOoOo PC Model # a Monitor Serial Number (if applicable): OOOOOOoOOoOooo Monitor Made CJ 3. UPC Barcode Information:

Provide the UPC barcode number from the outside of your computer: a | 4. Compuserve 2000 Enroliment:

Subscription program you wish to commit to (please check one) : C2 $400.00 mail-in- rebate. 3-year Commitment to CS2000 at $21.95 per month. OR 2 $400.00 Mail-In-Rebate. Prepayment of $790.20 for 3 Year Membership of Compuserve 2000 (36 months @21.95 per month) Exhibit C.4 hips www. buy.com: compystores/compaq/400_rebate_form.asp 8/27/1997 2:33 PM VOLUME 130 Complaint Exhibits BUY.COM, INC. 705 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 which the Bureau of Consumer Protection 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 Federal Trade 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 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 thirty (30) days, and having duly considered the comments received, now in further conformity with the procedure prescribed in ' 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the following order: 1. Respondent BUY.COM Inc. is a Delaware corporation with its principal office or place of business at 85 Enterprise, Aliso Viejo, California 92656.

VOLUME 130 Decision and Order 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.

ORDER DEFINITIONS For purposes of this Order, the following definitions shall apply:

1. ARebate@ shall mean cash, instant savings, instant credit, credit towards future purchases, merchandise, services, or any other consideration offered to consumers who purchase products or services from respondent, which is provided at the time of purchase, or subsequent to the purchase. 2. Unless otherwise specified, Arespondent@ shall mean BUY.COM Inc., a corporation, its successors and assigns and its officers, agents, representatives, and employees. 3. AClearly and conspicuously@ shall mean as follows: A. In an advertisement communicated through an electronic medium (such as television, video, radio, and interactive media such as the Internet and online services), the disclosure shall be presented simultaneously in both the audio and visual portions of the advertisement. Provided, however, that in any advertisement presented solely through visual 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 visual 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.

BUY.COM, INC. 707 Decision and Order B. In a print advertisement, promotional material, or instructional 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. C. On a product label, the disclosure shall be in a type size and location on the principal display panel sufficiently noticeable for an 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. 4. In the case of advertisements disseminated by means of an interactive electronic medium such as software, the Internet or online services:

(i) Ain close proximity@ shall mean on the same Web page, online service page, or other electronic page, and proximate to the triggering representation, and shall not include disclosures accessed or displayed through hyperlinks, pop-ups, interstitials or other means;

(ii) a disclosure made Athrough the use of a hyperlink@ shall mean a hyperlink that is itself clear and conspicuous, is clearly identified as a hyperlink, is labeled to convey the nature and relevance of the information it leads to, is on the same Web page, online service page, or other electronic page and proximate to the triggering representation, and takes the consumer directly to the disclosure on the click-through electronic page or other display window or panel. VOLUME 130 Decision and Order 5. ACommerce@ shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. ' 44. I.

IT IS ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the labeling, advertising, promotion, offering for sale, sale, or distribution of any computer, computer-related product or Internet access service, in or affecting commerce, shall not misrepresent, in any manner, expressly or by implication, the price or cost to consumers of such product or service. II.

IT IS FURTHER ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the labeling, advertising, promotion, offering for sale, sale, or distribution of any computer, computer-related product or Internet access service, in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, about the price or cost to consumers of any such computer, computer-related product or Internet access service when that price, cost, or any rebate is conditioned upon the purchase of any other product or service, unless it discloses clearly and conspicuously, and in close proximity to the representation that consumers must purchase the other product or service in order to obtain the represented price or rebate and the cost of the other product or service, including if a service, the length of time that consumers are required to purchase the service. Provided, that for purposes of this Part, use of the term Arebate@ or Adiscount,@ without any description or characterization of either term shall not, in and of itself, be deemed a representation about the price or cost to consumers of a product or service. BUY.COM, INC. 709 Decision and Order III.

IT IS FURTHER ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the labeling, advertising, promotion, offering for sale, sale, or distribution of any computer, computer-related product or Internet access service, in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, about the after-rebate cost of such product or service, unless it discloses, clearly and conspicuously, and in close proximity to the representation, the amounts of any and all rebates offered and the total price or cost to consumers of the product or service, excluding any and all rebate amounts (i.e., the beforerebate price).

Provided, however, if (1) the offer involves only one rebate and no other reductions in the total price of such product or service, and (2) respondent discloses the amount of that rebate as prescribed above, then respondent need not disclose the beforerebate price or cost of such product or service. IV.

IT IS FURTHER ORDERED that respondent, directly or through any corporation, subsidiary, division, or other device, in connection with the labeling, advertising, promotion, offering for sale, sale, or distribution of any Internet access service; or any computer or computer-related product for which the price, cost or any rebate is conditioned upon the purchase of Internet access service; in or affecting commerce, shall not make any representation, in any manner, expressly or by implication, about the price or cost to consumers of such Internet access service, unless it discloses, clearly and conspicuously: A. the dollar amounts of any and all fees, charges, rebate repayments, and other costs consumers are required to pay to cancel the Internet access service; and VOLUME 130 Decision and Order B. (1) that consumers may have to pay long distance telephone charges, hourly surcharges, or other costs in excess of local telephone service charges to access the Internet service, if that is the case; and (2) a means for each consumer to ascertain whether he or she would incur such costs or charges to access the Internet service and the amount of any such costs or charges. Provided that respondent may comply with Part IV.B.(2), above, by disclosing a means by which consumers may obtain information from the Internet service provider about available access phone numbers and the amount of any hourly surcharges or other costs to access the Internet service; and by advising consumers to contact their local telephone company to determine whether using the access telephone number closest to them will incur charges in excess of local service charges.

Provided that in the case of advertisements disseminated through an interactive electronic medium, such as software, the Internet or other online services, respondent may make the disclosures required by this Part through the use of a hyperlink. In addition, 1. for Part IV.A, above, any such hyperlink must be labeled: AEarly Cancellation of the Internet Service Will Result in Substantial Penalties. Click Here.@;

2. for Part IV.B, above, any such hyperlink must be labeled: AYou May Have to Pay Significant Telephone Charges to Use the Internet Service. Click Here.@ V.

IT IS FURTHER ORDERED that respondent BUY.COM Inc. and its successors and assigns shall for five (5) years after the last date of dissemination of any representation covered by this order maintain and upon request make available to the Federal Trade Commission for inspection and copying: BUY.COM, INC. 711 Decision and Order A. All advertisements and promotional materials containing the representation;

Provided however, that in the case of advertisements and promotional materials disseminated by means of an interactive electronic medium, respondent and its successors and assigns may comply with this provision by maintaining and making available all advertisements and promotional materials for computer or computer-related products or services for which the price, cost or any rebate is conditioned upon the purchase of Internet access service; but, multiple versions of advertisements and promotional materials need not be maintained or submitted, if they differ only in terms of the prices of the products or services being offered;

B. All materials that were relied upon in complying with this Order; and C. All tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations. VI.

IT IS FURTHER ORDERED that respondent BUY.COM Inc. and its successors and assigns 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. 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. VOLUME 130 Decision and Order VII.

IT IS FURTHER ORDERED that respondent BUY.COM Inc. and its successors and assigns 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 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, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. VIII.

IT IS FURTHER ORDERED that respondent BUY.COM Inc. and its successors and assigns shall, within sixty (60) days after 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 they have complied with this order. IX.

This order will terminate on September 5, 2020, 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: BUY.COM, INC. 713 Analysis to Aid Public Comment 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. By the Commission.

Analysis of Proposed Consent Order to Aid Public Comment The Federal Trade Commission has accepted, subject to final approval, an agreement containing a consent order from BUY.COM Inc. (Arespondent@).

The proposed consent order has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement or make final the agreement's proposed order.

VOLUME 130 Analysis to Aid Public Comment Respondent advertises, sells, and distributes books, music and video recordings, personal electronic devices, computer software, personal computers and other products though its Internet Website, www.buy.com. This matter concerns allegedly false and deceptive advertising claims regarding the sale of a $269 Compaq Presario 5304 computer system based upon a $400 rebate that required consumers to enter into a three year contract for Internet service.

The Commission=s proposed complaint alleges that respondent falsely claimed that the total cost of a Compaq Presario 5304 computer system was $269. In fact, in order to obtain the computer system for $269, consumers were required to subscribe to Compuserve 2000 Internet service for three years at an additional cost of $21.95 per month or a full payment of $790.20. The complaint also alleges that in representing that the total cost of the computer system was $269, respondent failed to disclose or failed to disclose adequately: (a) that consumers were required to subscribe to Compuserve 2000 Internet service for three years at an additional cost of $21.95 per month or a total cost of $790.20; (b) the amounts of the rebates, $200 and $400, and the total price of the computer system before rebates, $869; (c) that consumers who cancel the Internet service within three years must repay all or a portion of the $400 rebate and pay a $50 cancellation fee; and (d) that Compuserve does not provide local access telephone numbers for its Internet service in all areas, and therefore, that many consumers must either pay long distance telephone charges or surcharges of $6.00 per hour to access its Internet service. The complaint alleges that the failure to disclose these material facts is a deceptive practice. The proposed consent order contains provisions designed to prevent respondent from engaging in similar acts and practices in the future.

Part I of the proposed order prohibits respondent from making any misrepresentations as to the price or cost to consumers of any computer, computer-related product, or Internet access service. BUY.COM, INC. 715 Analysis to Aid Public Comment Part II of the proposed order prohibits respondent from making any representation about the price or cost to consumers of any computer, computer-related product, or Internet access service, when that price or cost, or any rebate, is conditioned upon the purchase of another product or service, unless respondent discloses clearly and conspicuously, and in close proximity to the price, cost or rebate representation that consumers must purchase the additional product or service in order to obtain the advertised price or rebate. In addition, Part II requires respondent to disclose the cost of the other product or service that must be purchased. Furthermore, if the advertised product or service is sold together with a service, respondent is also required to disclose the length of time that consumers are required to purchase that service. Part II also contains a proviso that permits respondent to use the terms Arebate@ or Adiscount@ without making the additional cost disclosures, as long as respondent does not describe or characterize the rebate or discount in any way. Part III of the proposed order prohibits the respondent from making a claim about the after-rebate price or cost of any computer, computer-related product, or Internet access service, unless it discloses, clearly and conspicuously, and in close proximity to the after-rebate price or cost representation, the amounts of any rebates offered, and the total cost of the computer product or service, excluding any rebate amounts (i.e., the beforerebate price). Part III also contains a proviso that states that if there is only one rebate involved in the offer, and no other reductions in the total price of the product or service, respondent need only disclose the amount of that one rebate, and need not also disclose the before-rebate price.

Part IV of the proposed order prohibits the respondent from making any representation about the price or cost of any Internet access service it offers for sale, unless it discloses certain material facts. If consumers have to pay additional fees, charges, rebate repayments, or other costs to cancel the Internet access service, the amounts of such costs must be disclosed. If consumers may VOLUME 130 Analysis to Aid Public Comment have to pay long distance telephone charges, hourly surcharges, or other costs in excess of local telephone fees to access the Internet service, this fact must be disclosed, along with a means for consumers to ascertain whether or not they would have to incur such costs and the amounts of any such costs. These disclosures must be clear and conspicuous.

Part IV of the proposed order also contains a proviso, that together with the definition of Athrough the use of a hyperlink,@ provides a way in which the disclosures required by Part IV can be made on the Internet with hyperlinks. These disclosures may be made through the use of hyperlinks, as long as each hyperlink label contains sufficient information about the nature and importance of the required disclosure, is, itself, clear and conspicuous, is on the same Web page and proximate to the Internet service price or cost representation, and leads directly to the full disclosure. According to the proviso, if a hyperlink is used to disclose information about Internet cancellation terms, it must be labeled as follows: AEarly Cancellation of the Internet Service Will Result in Substantial Penalties. Click Here.@ Similarly, if a hyperlink is used to disclose information about Internet access costs, it must be labeled: AYou May Have to Pay Significant Telephone Charges to Use the Internet Service. Click Here.@ Part V of the proposed order contains a document retention requirement, the purpose of which is to ensure compliance with the proposed order. It requires that respondent maintain copies of ads and promotional material that contain representations covered by the proposed order, and materials that were relied upon by respondent in complying with the proposed order. Part VI of the proposed order requires respondent to distribute copies of the order to various officers, agents and employees of respondent.

BUY.COM, INC. 717 Analysis to Aid Public Comment Part VII of the proposed order requires respondent to notify the Commission of any changes in corporate structure that might affect compliance with the order.

Part VIII of the proposed order requires respondent to file with the Commission one or more reports detailing compliance with the order.

Part IX of the proposed order is a Asunset@ provision, dictating that the order will terminate twenty years from the date it is issued or twenty years after a complaint is filed in federal court, by either the United States or the FTC, alleging any violation of the order.

The purpose of this analysis is to facilitate public comment on the proposed order. It is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms.

VOLUME 130 Complaint