Tiger Direct, Inc.; Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 9723075]

Tiger Direct, Inc.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged

violations of federal law prohibiting unfair or deceptive acts or

practices or unfair methods of competition. The attached Analysis to

Aid Public Comment describes both the allegations in the draft

complaint that accompanies the consent agreement and the terms of the

consent order--embodied in the consent agreement--that would settle

these allegations.

DATES: Comments must be received on or before August 23, 1999.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Andrew Caverly or Colleen Lynch,

Boston Regional Office, Federal Trade Commission, 101 Merrimac Street,

Suite 810, Boston, MA 02114-4719, (617) 424-5960.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 2.34 of

the Commission's Rules of Practice, 16 CFR 2.34, notice is hereby given

that the above-captioned consent agreement containing a consent order

to cease and desist, having been filed with and accepted, subject to

final approval, by the Commission, has been placed on the public record

for a period of sixty (60) days. The following Analysis to Aid Public

Comment describes the terms of the consent agreement, and the

allegations in the complaint. An electronic copy of the full text of

the consent agreement package can be obtained from the FTC Home Page

(for June 10th, 1999), on the World Wide Web, at ``http://www.ftc.gov/

os/actions97.htm.'' A paper copy can be obtained from the FTC Public

Reference Room, Room H-130, 600 Pennsylvania Avenue, NW, Washington, DC

20580, either in person by calling (202) 326-3627.

Public comment is invited. Comments should be directed to: FTC/

Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW,

Washington, DC 20580. Two paper copies of each comment should be filed,

and should be accompanied, if possible, by a 3\1/2\ inch diskette

containing an electronic copy of the comment. Such comments or views

will be considered by the Commission and will be available for

inspection and copying at its principal office in accordance with

Section 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR

4.9(b)(6)(ii).

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 Tiger Direct,

Inc. (``Tiger Direct''), a mail order retailer of computer products.

The proposed consent order has been placed on the public record for

sixty (60) days for reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) 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.

The Commission's complaint alleges that Tiger Direct violated

Section 5 of the Federal Trade Commission Act (``FTC Act''), 15 U.S.C.

45(a)(1), by deceptively advertising its on-site warranty service for

Tiger-brand computer systems. Additionally, the complaint alleges that

Tiger Direct has violated the Magnuson-Moss Warranty Act (``Warranty

Act''), 15 U.S.C. 2301 et seq., and two Rules promulgated thereunder:

the Rule concerning the Disclosure of Written Consumer Product Warranty

Terms and Conditions (``Disclosure Rule''), 16 CFR 701; and the Rule

concerning the Pre-Sale Availability of Written Warranty Terms (``Pre-

Sale Availability Rule''), 16 CFR 702. Under Section 110(b) of the

Warranty Act, 15 U.S.C. Sec. 2310(b), violations of the Warranty Act or

its Rules are also violations of Section 5 of the FTC Act.

First, the complaint alleges that Tiger Direct violated Section 5

of the FTC Act by misrepresenting that it would provide on-site

warranty service to purchasers of Tiger-brand computer systems when

notified that the system or any of its parts was defective or had

malfunctioned and that it would provide such service within a

reasonable period of time after being notified of a problem.

Second, the complaint alleges that Tiger Direct violated the Pre-

Sale Availability Rule by failing to disclose material warranty terms

or otherwise comply with the Rule. The complaint also alleges that

Tiger Direct failed to comply with the requirements of the Disclosure

Rule that certain language be

[[Page 33292]]

included in written warranties including: what the warrantor will not

pay for or provide, where necessary for clarification; a step-by-step

explanation of the procedure that the consumer should follow in order

to obtain performance of any warranty obligation; a notice that its

warranty exclusion of incidental and consequential damages does not

apply to consumers in states that prohibit such exclusions; and that a

consumer may have other rights that vary from state to state. In

addition, the complaint alleges that Tiger Direct violated the Warranty

Act by failing to clearly and conspicuously designate its written

warranty as ``full'' or ``limited'' and by disclaiming all implied

warranties, which the Warranty Act prohibits.

The proposed consent order contains provisions designed to remedy

the violations charged and to prevent Tiger Direct from engaging in

similar deceptive acts and practices in the future.

Part I of the proposed order prohibits Tiger Direct from

representing that it provides on-site service unless it discloses all

limitations and conditions that apply to obtaining on-site service

clearly, prominently and in close proximity to the on-site service

representation.

Part II of the proposed order provides that Tiger Direct shall

provide warranty service within a reasonable period of time after

receiving notice from a consumer of a problem. The order defines a

reasonable period of time as the time period specified in respondent's

promotional materials and advertisements, or if no time period is

specified in respondent's promotional materials and advertisements, a

period no longer than thirty (30) days after respondent receives notice

from a consumer of a computer problem.

Part III of the proposed order contains provisions designed to

remedy respondent's violations of the Warranty Act, the Disclosure Rule

and the Pre-Sale Availability Rule. It prohibits respondent from

failing to make the text of a warranty readily available; failing to

disclose a statement of what the warrantor will not pay for or provide;

failing to disclose a step-by-step explanation of the procedure the

consumer should follow to obtain warranty service; failing to make the

necessary disclosures regarding a consumer's rights under state law;

failing to properly designate its warranty as full or limited; and

disclaiming any implied warranty except as permitted.

Parts IV and V of the proposed order require Tiger Direct to

distribute copies of the order and written instructions regarding its

responsibilities and duties under the order and the Warranty Act,

including the Disclosure Rule and the Pre-Sale Availability Rule, to

certain current and future personnel. Part VI of the proposed order

requires Tiger Direct to maintain copies of all such written

instructions, as well as copies of warranties and advertising

exemplars. Part VII of the proposed order requires Tiger Direct to

notify the Commission of any changes in its corporate structure that

might affect compliance with the order. Part VIII of the order requires

Tiger Direct to file with the Commission one or more reports detailing

compliance with the order.

Lastly, Part IX of the proposed order provides for termination of

the order after twenty (20) years under certain circumstances.

The purpose of this analysis is to facilitate public comment on the

proposed order, and it is not intended to constitute an official

interpretation of the agreement and proposed order, or to modify any of

their terms.

By Direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 99-15839 Filed 6-21-99; 8:45 am]

BILLING CODE 6750-01-M