[Federal Register Volume 64, Number 119 (Tuesday, June 22, 1999)]
[Notices]
[Pages 33291-33292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15839]


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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