Is it a Bird? Or a Plane? No, it is the FTC Spreading its Wings to Protect British Consumers

Recently, the FTC showed that its powers can even exceed those of Superman when it entered into a settlement with Balls of Kryptonite, and its owner, along with his related companies (collectively referred to as "BOK"). The settlement resolved allegations that Balls violated Section 5 of the FTC Act and the FTC's Mail Order Rule. The FTC alleged that Balls violated Section 5 by marketing and selling electronic goods to British customers (you read that right British customers) who were falsely led to believe the companies were based in the UK because, among other things, the company's websites ended in ".co.uk" and prices were quoted in pounds sterling. The FTC also charged BOK with misrepresenting that the products were protected under UK consumer protection regulations, such as cancellation rights and manufacturers' warranties. BOK also allegedly misrepresented that they self-certified to the US Department of Commerce that they were complying with the EU's Data Directive prohibiting the transfer of personal data outside the EU. Finally, the FTC accused BOK of committing "numerous" violations of the Mail Order Rule by failing to deliver products to consumers at less than the speed of light, or at least within the promised delivery date without attempting to obtain the consent of the customer, and by not deeming an order cancelled and making prompt refunds when the customer refused to consent to further delays. The consent order prevents BOK from: making misrepresentations regarding their location; using foreign website designations; "charging customers for goods until they are in hand and ready to be shipped;" and violating the Mail Order Rule. The FTC's investigation of BOK raises an interesting question as to whether foreign consumers will become the FTC's new Lois Lane, leaving US consumers to be the former childhood sweetheart but still close friend, Lana Lang. While there is nothing in the FTC's mandate that requires it to exclusively protect US consumers, one could question whether this investigation was the most efficient use of the FTC's resources given that that the goods were sold into the UK market and only UK customers were targeted by the allegedly deceptive acts. In the same vein, it could also be argued that it would have been more appropriate to prosecute BOK under Metropolis's-or rather, the UK's consumer protection laws. In the UK, BOK would have had an obligation to abide by, amongst other things, the Trade Descriptions Act 1968, the Sale of Goods Act 1979, the Supply of Goods and Services Act 1982, as well as the Distance Selling Regulations 2000, which are particularly relevant in the UK. The Distance Selling Regulations stipulate that a vendor must provide accurate information about their business, providing details of its location, and of the goods that are being sold. They state that BOK should have provided the customers with the clear opportunity to cancel any order within a week of having received the goods, without reason. BOK should also have given them an adequate opportunity to complain should the customer have wanted to. The FTC made sure to note that they entered into an unprecedented Metropolis/Smallville alliance and received assistance from the UK's Office of Fair Trade (OFT), which it described in an earlier press release as one of its principal international law enforcement partners. The FTC and OFT became aware of BOK's conduct through numerous complaints from UK customers made through the website www.econsumer.gov. The website was created by consumer protection agencies from 25 countries, including the FTC, to help coordinate international enforcement efforts. The FTC also noted that it brought the case under provisions added to the FTC Act by the US SAFE WEB Act of 2006. The SAFE WEB provisions confirm that the FTC has kryptonite-immune powers to sue US-based companies, like BOK, who harm consumers abroad, as part of a strategy to prevent the United States from becoming a haven for fraud. With increasingly more commerce being conducted over the Internet, it is likely that cross-border fraud similar to what occurred in this case will become more common. As a result, the FTC may have tough decisions as to where to direct their resources, especially given the current budget crisis. If it turns out that combating cross-border harm becomes more of a focus of the FTC enforcement efforts, let's hope for the FTC staffers' sake that the new Metropolis is somewhere with better weather and kinder, gentler tabloids. – Amy Mudge, Chester Choi, and Alex Watts

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