[Federal Register Volume 72, Number 85 (Thursday, May 3, 2007)]
[Notices]
[Pages 24584-24586]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8403]


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FEDERAL TRADE COMMISSION

[File No. 062 3066]


InPhonic, Inc.; Analysis of Proposed Consent Order 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 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 May 29, 2007.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``InPhonic, Inc., File No. 062 3066,'' to 
facilitate the organization of comments. A comment filed in paper form 
should include this reference both in the text and on the envelope, and 
should be mailed or delivered to the following address:

[[Page 24585]]

Federal Trade Commission/Office of the Secretary, Room 159-H, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be filed in paper form, must be clearly 
labeled ``Confidential,'' and must comply with Commission Rule 4.9(c). 
16 CFR 4.9(c) (2005).\1\ The FTC is requesting that any comment filed 
in paper form be sent by courier or overnight service, if possible, 
because U.S. postal mail in the Washington area and at the Commission 
is subject to delay due to heightened security precautions. Comments 
that do not contain any nonpublic information may instead be filed in 
electronic form as part of or as an attachment to e-mail messages 
directed to the following e-mail box: [email protected].
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
makes every effort to remove home contact information for individuals 
from the public comments it receives before placing those comments on 
the FTC Web site. More information, including routine uses permitted by 
the Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Matthew D. Gold, FTC Western Regional 
Office, 901 Market Street, Suite 570, San Francisco, CA 94103, (415) 
848-5100.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec.  2.34 of 
the Commission 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 thirty (30) 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 April 27, 2007), on the World Wide Web, at http://www.ftc.gov/os/2007/04/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing a consent order from InPhonic, Inc. 
(``InPhonic'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for reception 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.
    InPhonic, located in Washington, DC, is an online marketer of 
wireless telephone packages. Each wireless telephone package includes a 
name-brand wireless device and a wireless service contract with a 
national or regional wireless carrier. This matter concerns allegedly 
deceptive and unfair practices regarding InPhonic's advertised mail-in 
rebates.
    The FTC complaint alleges that in representing that substantial 
mail-in rebates were available to purchasers of its wireless telephone 
packages, InPhonic failed to disclose, or failed to adequately disclose 
that: (1) Consumers would not be able to submit a rebate request until 
at least three or six months after purchase; (2) consumers would be 
required to submit wireless bills establishing three or six months of 
continuous wireless service in good standing; (3) consumers would not 
receive their rebate check until approximately six or nine months after 
purchase; (4) an e-mail address would be required to be eligible for 
the rebate; (5) consumers who changed their wireless phone numbers 
after purchase would be disqualified from receiving a rebate; and (6) 
any rebate submission that did not strictly comply with all rebate 
terms and conditions or that was deemed in any way illegible could be 
rejected with little or no opportunity to resubmit. The complaint 
alleges that the failure to disclose or adequately disclose these 
material facts is a deceptive practice.
    The complaint also alleges that InPhonic misrepresented that 
consumers seeking to redeem its ``customer appreciation rebate'' needed 
to establish that their first three months of wireless service had been 
paid in full. According to the complaint, numerous consumers who waited 
to submit their fourth wireless bill in order to establish that their 
first three months of wireless service had been paid in full were 
unable to submit the rebate request within the 120-day time period 
specified in the offer, and InPhonic rejected such rebate requests as 
untimely. The complaint further alleges that Inphonic misrepresented 
that consumers whose rebate requests contained missing, incorrect, or 
illegible information would be given a reasonable opportunity to 
resubmit their request.
    According to the FTC complaint, in numerous cases, InPhonic 
rejected rebate requests, or consumers were prevented from submitting 
valid requests, because InPhonic failed to supply to consumers with one 
or more pieces of required documentation and consumers, despite their 
best efforts, were unable to obtain such documentation from InPhonic. 
According to the complaint, many consumers did not receive the required 
rebate redemption form, a box containing a required UPC code, and/or a 
required ``Guide to Wireless Service'' and, despite repeated attempts 
to contact respondent, were unable to obtain the documentation. The 
complaint alleges that this constitutes an unfair practice.
    Finally, according to the complaint, InPhonic promised to provide 
consumers with rebate checks within 12 weeks of rebate submission, if 
they purchased a wireless phone and service plan, and submitted a valid 
rebate request with supporting documentation. The complaint alleges 
that after receiving rebate requests in conformance with these terms, 
InPhonic extended the time period in which it would deliver the rebates 
without consumers agreeing to this extension of time and failed to 
deliver the rebates to consumers within the promised time period. 
According to the complaint, this constitutes an unfair business 
practice.
    The proposed consent order contains provisions designed to prevent 
InPhonic from engaging in similar acts and practices in the future and 
to redress

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consumers. Part I.A. of the proposed order prohibits InPhonic from 
making a claim about the amount of any rebate, unless it discloses, 
clearly and conspicuously, unavoidably, and prior to consumers 
incurring any financial obligation: any time period that consumers must 
wait before submitting a rebate request; that consumers who change 
their wireless phone numbers after purchase are disqualified from 
receiving a rebate, if that is the case; that any rebate submission 
that does not strictly comply with all rebate terms and conditions, or 
that is deemed in any way illegible, may be rejected with little or no 
opportunity to resubmit, if that is the case; any requirement for 
submitting bills, records, or any other documentation, with a rebate 
request; when consumers can expect to receive their rebates; and that 
an e-mail address is required to be eligible for the rebate, if that is 
the case. Part I.B. of the proposed order prohibits InPhonic from 
making a claim about the amount of any rebate unless it also discloses, 
clearly and prominently, on any rebate coupon or form, all terms, 
conditions, or other limitations of the rebate offer.
    Part II of the proposed order prevents InPhonic from 
misrepresenting what documentation consumers must submit with any 
rebate request and from misrepresenting any material terms of any 
rebate program.
    Part III of the proposed order prohibits InPhonic from representing 
that consumers will have the opportunity to resubmit deficient rebate 
requests, unless it gives consumers a reasonable period of time in 
which to resubmit such requests and notifies them precisely how to 
correct any deficiencies.
    Part IV.A. of the proposed order prohibits InPhonic from failing to 
provide, or to make reasonably available to consumers, all required 
rebate documentation. Part IV.B. prohibits InPhonic from making any 
representation about the time in which any rebate will be mailed, or 
otherwise provided to purchasers, unless it has a reasonable basis for 
the representation at the time it is made. Part IV.C. prohibits 
InPhonic from failing to provide any rebate within the time specified 
or, if no time is specified, within thirty days.
    Part V of the proposed order requires InPhonic to send rebates to 
eligible purchasers. Eligible purchasers include consumers whose rebate 
requests were previously denied solely on the basis of one or more of 
the following reasons: (1) The consumer changed his/her wireless phone 
number; (2) the signature on the rebate form was illegible; (3) 
InPhonic failed to provide the consumer with required information or 
documents; (4) the e-mail address was missing from the rebate form; or 
(5) the request was late due to the consumer's submission of a fourth 
wireless bill. In addition, eligible purchasers include consumers whose 
requests were denied due to a curable deficiency, but where the 
consumer was not given at least thirty days to resubmit the request.
    Parts VI through IX of the proposed order are reporting and 
compliance provisions. Part X of the proposed order is a ``sunset'' 
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.

    By direction of the Commission.
Donald S. Clark,
Secretary.
 [FR Doc. E7-8403 Filed 5-2-07; 8:45 am]
BILLING CODE 6750-01-P