The Federal Trade Commission today announced a settlement with Tactica International, Inc. (Tactica), under which the New York City-based company will pay a $300,000 civil penalty for allegedly failing to live up to its shipment promises for a wide range of products, including the Epil-Stop hair-removal system. According to the FTC, Tactica violated the Commission’s Mail or Telephone Order Merchandise Rule (Mail Order Rule) by failing to ship products to consumers when promised, or in 30 days when no time was promised, and failing to give consumers the option of consenting to the delays or cancelling their orders.
The FTC also contends that the company had no reasonable basis for its delivery promises, or within 30 days if no specific delivery date was promised. The FTC’s complaint and consent decree were filed today by the U.S. Department of Justice at the Commission’s request.
“The Mail Order Rule is perfectly clear,” said Howard Beales, Director of the FTC’s Bureau of Consumer Protection. “When companies know they can’t live up to their delivery promises, or can’t deliver within 30 days of receiving an order, they’re required to notify the buyer and offer an opportunity to okay the delay or cancel the order. Companies have to live up to their end of the bargain for consumers to maintain their confidence in the mail-order system.”
The Commission’s Complaint
The complaint and consent decree announced today were filed against Tactica International, Inc. d/b/a IGIA and IGIA.com. According to the Commission, Tactica advertises health and personal grooming products by catalog, in the print media, on television through infomercials, and in retail stores. Some of its products included the Ion-Aire hair dryer, Epil-Stop hair removal products, Therma-Spa paraffin bath, and the Igia Terrycloth robe. Typically the advertising for these products either contained no shipment representations or represented that a consumer should allow “three-to-four weeks for delivery.” Under the Rule, the merchant must have a reasonable basis for any express or implied shipment representation or, if no shipment representation is made, a reasonable basis for shipment within 30 days of receiving a consumer’s order.
The FTC’s complaint alleges that when Tactica promised consumers that it would ship in time for delivery within three to four weeks, it often failed to have a reasonable basis for that promise. Other times, when Tactica made no shipment representations, the company allegedly had no reasonable basis for completing shipment within 30 days. Having learned that it could not ship in the promised time or 30 days, the company allegedly failed to notify consumers of the delay and offer them the right to cancel and obtain a prompt refund, as required by the Rule.
In addition, according to the complaint, when Tactica did attempt to notify consumers of shipment delays, it violated the Mail Order Rule by failing to provide them a definite revised shipment date and by failing to offer them the option to cancel and obtain a prompt refund.
Terms of the Consent Decree
Under the terms of the proposed consent decree, which requires court approval, Tactica is prohibited from violating the Mail Order Rule in the future, specifically with regard to the conduct alleged in the Commission’s complaint. In addition, for five years, Tactica and any successor entities must keep records demonstrating their full compliance with the terms of the order. They also must provide copies of the order and the FTC’s Business Guide to the Mail or Telephone Order Rule to their supervisory or managerial employees, and must subsequently certify their compliance with these terms to the Commission. Tactica also is subject to stringent reporting requirements. Finally, it will pay a civil penalty of $300,000, due within 30 days of the entry of the consent decree.
The Commission vote to refer the complaint and proposed consent decree to the DOJ for filing was 5-0. The complaint and consent decree were filed on behalf of the FTC in the U.S. District Court for the Southern District of New York on April 21, 2004.
NOTE: The proposed consent decree is for settlement purposes only and does not constitute an admission of a law violation. Consent decrees have the force of law when signed by the judge.
Copies of the documents mentioned in this release are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov .
The FTC enters Internet, telemarketing, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
(FTC File No. 012-3192; Civ. No. 04 CV 3038)