Case: 4:20-cv-01021-RLW Doc. #: 1 Filed: 08/04/20 Page: 1 of 15 PageID #: 1
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MISSOURI
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`Federal Trade Commission,
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`Plaintiff,
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` v.
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`American Screening, LLC, a Louisiana limited liability
`company;
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`Ron Kilgarlin Jr., individually and as an officer of
`American Screening, LLC; and
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`Shawn Kilgarlin, individually and as an officer of
`American Screening, LLC
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`Defendants.
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`Case No. 4:20-cv-1021_
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`COMPLAINT FOR
`PERMANENT INJUNCTION
`AND OTHER EQUITABLE
`RELIEF
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`Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), for its Complaint
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`alleges:
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`1.
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`The FTC brings this action under Sections 13(b) and 19 of the Federal Trade
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`Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b), 57b; and the Mail, Internet, or Telephone
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`Order Merchandise Rule (“MITOR”), 16 C.F.R. Part 435, to obtain permanent injunctive relief,
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`restitution, rescission or reformation of contracts, the refund of money or return of property, the
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`payment of damages, and other equitable relief for Defendants’ acts or practices in violation of
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`Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and in violation of MITOR.
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`JURISDICTION AND VENUE
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`2.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a),
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`and 1345.
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`3.
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`Venue is proper in this District under 28 U.S.C. § 1391 (b)(1-2), and 15 U.S.C.
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`§ 53(b).
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`PLAINTIFF
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`4.
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`The FTC is an independent agency of the United States Government created by
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`statute. 15 U.S.C. §§ 41-58. The FTC enforces Section 5(a) of the FTC Act, 15 U.S.C. § 45(a),
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`which prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also
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`enforces MITOR, 16 C.F.R. Part 435, which requires mail-, Internet-, or phone-based sellers to
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`have a reasonable basis for advertised shipping times, and when sellers cannot meet promised
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`shipping times, or in the absence of any promised shipping time, ship within 30 days, to provide
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`buyers with the option to consent to a delay in shipping or to cancel their orders and receive a
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`prompt refund.
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`5.
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`The FTC is authorized to initiate federal district court proceedings, by its own
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`attorneys, to enjoin violations of the FTC Act and MITOR, and to secure such equitable relief as
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`may be appropriate in each case, including rescission or reformation of contracts, restitution, the
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`refund of monies paid, and the disgorgement of ill-gotten monies. 15 U.S.C. §§ 53(b), 57b; 16
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`C.F.R. Part 435.
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`DEFENDANTS
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`6.
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`Defendant American Screening, LLC (“American Screening”) is a member-
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`managed limited liability company with its distribution center in St. Louis, Missouri. American
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`Screening transacts or has transacted business in this District and throughout the United States.
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`In addition, one or more consumers who were injured by the Defendants’ conduct set forth below
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`reside in this District.
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`7.
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`Defendant Ron Kilgarlin, Jr., is the founder, sole member, manager, and
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`purported CEO of American Screening, which has 30 employees. At all times material to this
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`Complaint, acting alone or in concert with others, he has formulated, directed, controlled, had the
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`authority to control, or participated in the acts and practices of American Screening, including
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`the acts and practices set forth in this Complaint. Mr. Kilgarlin Jr. is married to Defendant
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`Shawn Kilgarlin. Defendant Kilgarlin Jr., in connection with the matters alleged herein,
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`transacts or has transacted business in this District and throughout the United States.
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`8.
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`Defendant Shawn Kilgarlin is the chief operating officer, quality manager, and
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`quality management representative for American Screening. At all times material to this
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`Complaint, acting alone or in concert with others, she has formulated, directed, controlled, had
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`the authority to control, or participated in the acts and practices of American Screening,
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`including the acts and practices set forth in this Complaint. Her responsibilities included
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`overseeing responses to consumer complaints and quality control of American Screening’s
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`products. Defendant S. Kilgarlin, in connection with the matters alleged herein, transacts or has
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`transacted business in this District and throughout the United States.
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`COMMERCE
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`9.
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`At all times material to this Complaint, Defendants have maintained a substantial
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`course of trade in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act,
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`15 U.S.C. § 44.
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`DEFENDANTS’ BUSINESS ACTIVITIES
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`Overview
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`10.
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`Before the recent pandemic, Defendants mostly sold drug test and professional
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`medical equipment. After the pandemic spread to the United States, they sought to capitalize on
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`the high demand for personal protective equipment (“PPE”) by marketing and selling masks,
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`gloves, hand sanitizer, and other PPE through their website. Defendants represented—and still
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`represent to this day—that they would ship all products “24-48 hours after processing, pending
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`product availability,” and that the advertised PPE was “in stock” and/or “available to ship.”
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`11.
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`Defendants’ promises to ship currently available products 24-48 hours after
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`processing are, in many cases, false. Consumers, including many small businesses and medical
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`practitioners, have complained they still have not received PPE items they ordered weeks or even
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`months ago. Although Defendants have repeatedly failed to ship in accordance with the periods
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`promised on the company’s website, they have not informed consumers of the delay, and ignored
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`persistent consumer questions and refund demands.
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`12.
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`Based on these practices, the Better Business Bureau revoked American
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`Screening’s accreditation on June 11, 2020.
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`Defendants’ Shipping Policy
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`13.
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`American Screening markets and sells medical supplies and equipment; medical
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`tests (used by employers to screen employees for drug use); health, sanitation, and beauty
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`products; and PPE to consumers throughout the United States and internationally. Defendants
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`sell these products in bulk to hospitals, local governments, schools, and nursing homes—as well
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`as to individual consumers.
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`14.
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`American Screening exclusively sells these goods through its website,
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`www.american screeningcorp.com.
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`15.
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`American Screening ships products ordered online, and makes representations
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`about the speed of its order processing.
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`16.
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`Specifically, American Screening tells consumers that its practice (the “Shipping
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`Policy”) is to ship paid-for orders 24-48 hours after processing pending product availability.
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`17.
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`Additionally, American Screening represents its PPE products are “in stock”
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`and/or “available to ship.”
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`18.
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`The Shipping Policy also states that orders made before 2:00 Central Standard
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`Time are processed the same day the order is placed, and that in some cases orders called in by
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`as late as 4:00 pm Central Standard Time can be processed that day.
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`19.
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`Defendants also offer consumers “Overnight/Expedited shipping” to “ensure we
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`meet your deadlines.”
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`20.
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`American Screening displays its Shipping Policy on its own separate page on its
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`website, as follows:
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`21.
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`American Screening includes a statement at the top of its home page that
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`“[p]roducts may ship 7-10 business days after [an] order has been placed.”
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`22.
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`Despite American Screening’s shipping representations, many consumers have, as
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`of the filing of this complaint, still not received the PPE they ordered weeks or even months after
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`placing their orders.
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`23.
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`American Screening’s website continues to make express representations next to
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`individual items of PPE (including gloves, masks and disinfecting products) that the items are
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`“in stock” and “available to ship.” For example, American Screening’s website contained the
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`following representation as of June 23, 2020:
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`24.
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`Consumers relied and continue to rely on these representations of timely
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`shipment, and in some cases even paid for expedited shipping, only to wait weeks and months
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`without receiving the PPE they ordered.
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`Defendants’ Failure to Ship PPE During Pandemic
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`25.
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`American Screening lacked a reasonable basis to believe it would be able to ship
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`PPE within the promised time. Indeed, in response to numerous consumer complaints, its
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`representatives regularly admitted the items consumers ordered were not in stock despite
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`American Screening’s express representations to the contrary.
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`26.
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`American Screening received hundreds of complaints regarding the shipping
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`delays. However, American Screening did not respond to many of these consumers and
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`continued to make the “in stock” and “available to ship” representations regarding PPE described
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`above. When it did respond to consumer complaints, it often failed to offer cancelations and
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`refunds.
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`27.
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`For instance, one American Screening customer placed an order for PPE on
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`March 18, 2020, but still had not received the items over a month later when he filed a complaint
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`on April 24, 2020. He stated, “When the Coronavirus became known I was looking for face
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`masks, gowns, gloves and face shields for my wife’s medical practice. I found American
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`Screening on line thru a Google search. Their website indicated they had the gowns and the face
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`shields so I placed an order with them for $215. A few days later I checked their website and the
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`site indicated my order was complete. I called and spoke to a customer service person (female)
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`and she told me that the order showed complete because I had placed the order, they had taken
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`my money and input the order into their system. I was also told that all of the items were out of
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`stock (this status was not shown on their website) and were expected in 2 weeks at which time
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`my order would be shipped. Over the last three weeks I have called (the answering system takes
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`the call, transfers it and then the system disconnects my call), I have tried to leave a voice mail
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`but the mailbox is full. I have sent e-mails asking for update and all to no avail. The website
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`currently shows (as of April 24, 2020) that the order is scheduled to ship between April 6 and
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`April 17. It is now April 24 and nothing has shipped nor been received by me.”
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`28.
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`In another complaint filed on May 27, 2020, a consumer stated, “I ordered basic
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`sanitation supplies in bulk, because they were advertised on the website as in stock. I was
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`provided an order confirmation number. Several days later I was informed via email that supplies
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`were backordered. That was March 15. I waited until about the 15th of May and then began
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`trying to contact the company through every possible avenue, to no avail. Finally, after several
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`days I received a call from a representative of the company who told me the product had shipped,
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`but gave me the name of a shipping company (GLC) which I can't find ANY trace of. She wasn't
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`able to provide me with a tracking number, but said she could email it to me the following day.
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`That email was never received. Further attempts at communication have yielded no results, and
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`no product has ever arrived.”
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`29.
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`Another American Screening customer filed a complaint on May 4, 2020,
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`complaining of a nearly $10,000 order for gowns for essential workers that she placed in late
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`March 2020 that had still not arrived, despite the company’s representation that the items were in
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`stock and the company’s promise to ship the order within 7-10 days. She stated that “[o]n March
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`20 and March 21st, my company ordered a combined total of 7,500 isolation gowns for our
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`essential workers who work with our medical patients. They advertised that they were in stock.
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`The combined total was $9759.84. They immediately charged my credit card and I haven't heard
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`from them since. They do not answer the phone. They cannot provide a tracking number. They
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`never have an available person on the 'live chat' and all phone numbers lead to a voice mailbox
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`that is 'full'. We realize PPE is hard to find. That's not what they tell you. It's here and you'll have
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`it in 7-10 days. It's now May 4th, I have nothing. They are scamming people who are desperate
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`to protect front line workers. I want a refund. Who can help me with a refund? No one. They
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`never answer their phone or provide updates.”
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`30.
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`In numerous instances, when American Screening failed to ship one or more
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`pieces of ordered PPE within the promised timeframes, American Screening did not offer
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`consumers the opportunity to consent to a delay in shipping or to cancel their orders and receive
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`refunds.
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`31.
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`In numerous instances, when American Screening failed to ship one or more
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`pieces of ordered PPE within the promised timeframes, and also failed to offer consumers the
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`required opportunity to either consent to a delay in shipping or to cancel their orders and receive
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`refunds, American Screening did not deem the orders cancelled and issue refunds.
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`32.
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`In numerous instances, when American Screening failed to ship one or more
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`pieces of ordered PPE within the promised time, consumers demanded cancellation and prompt
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`refunds, despite having not been informed of this option. Even in these cases, American
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`Screening did not cancel orders or provide prompt refunds to consumers.
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`VIOLATIONS OF THE MAIL, INTERNET, OR
`TELEPHONE ORDER MERCHANDISE RULE
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`33. MITOR, 16 C.F.R. Part 435, prohibits sellers from soliciting any order for the sale
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`of merchandise ordered through the mail, via Internet or by telephone “unless at the time of the
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`solicitation, the seller has a reasonable basis to expect that it will be able to ship any ordered
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`merchandise to the buyer” either “[w]ithin that time clearly and conspicuously stated in any such
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`solicitation; or [i]f no time is clearly and conspicuously stated, within 30 days after receipt of a
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`properly completed order from the buyer.” 16 C.F.R. § 435.2(a)(1).
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`34.
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`“Receipt of a properly completed order” means “where the buyer tenders full or
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`partial payment . . . the time at which the seller receives both said payment and an order from the
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`buyer containing all of the information needed by the seller to process and ship the order.” 16
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`C.F.R. § 435.1(c).
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`35.
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`“Shipment” means the act of physically placing the merchandise in the possession
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`of a carrier. 16 C.F.R. § 435.1(e).
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`36. Where a seller is unable to ship merchandise within the seller’s advertised time or
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`within 30 days if no time is given, the seller must offer to the buyer “clearly and conspicuously
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`and without prior demand, an option either to consent to a delay in shipping or to cancel the
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`buyer’s order and receive a prompt refund.” 16 C.F.R. § 435.2(b)(1).
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`37.
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`Any such offer “shall be made within a reasonable time after the seller first
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`becomes aware of its inability to ship.” 16 C.F.R. § 435.2(b)(1).
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`38.
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`The offer must fully inform the buyer of the buyer’s right to cancel and provide a
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`definite revised shipping date or inform the buyer that the seller cannot make any representation
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`regarding the length of the delay. 16 C.F.R. § 435.2(b)(1)(i).
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`39.
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`A seller must “deem an order canceled and . . . make a prompt refund to the buyer
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`whenever the seller receives, prior to the time of shipment, notification from the buyer cancelling
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`the order pursuant to any option [under MITOR] . . . [or] [t]he seller fails to offer the option [to
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`consent to a delay or cancel required by § 435.2(b)(1)] and has not shipped the merchandise”
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`within the time required by MITOR. 16 C.F.R. § 435.2(c), (c)(1), (c)(5).
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`40.
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`Pursuant to Section 18 of the FTC Act, 15 U.S.C. § 57a(d)(3), and 16 C.F.R. §
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`435.2, a violation of MITOR constitutes an unfair or deceptive act or practice in or affecting
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`commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
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`Count I – Violations of MITOR
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`41.
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`In numerous instances, when Defendants:
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`a.
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`represent they would ship purchased goods, including items of PPE listed
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`on American Screening’s website as “in stock” and/or “available to ship,” within 24-48 hours of
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`processing; or that goods may ship within 7-10 business days after an order has been placed, they
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`do not have a reasonable basis to expect to ship the goods within these timeframes;
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`b.
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`fail to ship orders within the timeframe required by MITOR, they also fail
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`to offer customers the opportunity to consent to a delay in shipping or to cancel their order and
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`receive a prompt refund;
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`c.
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`fail to ship orders within the timeframe required by MITOR and fail to
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`offer consumers the opportunity to consent to a delay in shipping or to cancel their order, they do
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`not cancel those orders or provide consumers a refund;
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`d.
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`receive cancellation and refund requests from consumers pursuant to any
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`option under MITOR, they do not deem those orders cancelled or provide a prompt refund.
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`42.
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`Defendants’ practices as alleged in Paragraph 41 violate MITOR, 16 C.F.R. §
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`435.2(a), (b), and (c), and therefore are unfair or deceptive acts or practices in violation of
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`Section 5 of the FTC Act, 15 U.S.C. § 45(a).
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`VIOLATIONS OF THE FTC ACT
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`43.
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`Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts
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`or practices in or affecting commerce.”
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`44. Misrepresentations or deceptive omissions of material fact constitute deceptive
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`acts or practices prohibited by Section 5(a) of the FTC Act.
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`Count II– Section 5 Violations
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`45.
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`In numerous instances in connection with the advertising, marketing, promotion,
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`offering for sale, or sale of goods, including PPE, Defendants have represented and continue to
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`represent, directly or indirectly, expressly or by implication, that:
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`a.
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`the items are “in-stock” or “available to ship,” and they will process the orders the
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`same day or the next day after an order, and ship the orders within 24-48 hours of
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`processing;
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`b.
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`c.
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`items will ship within 7-10 business days after an order is placed;
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`specific PPE items are “available to ship” or “in stock.”
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`46.
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`In truth and in fact, in numerous instances in which Defendants have made the
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`representations set forth in Paragraph 45:
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`a. Defendants failed to process orders the same day or the next day after an order
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`was placed and then to ship those items within 24-48 hours of processing;
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`b. Defendants failed to ship items within 7-10 business days after an order was
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`placed;
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`c. The specific PPE items Defendants represented were “available to ship” or “in
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`stock” were not.
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`47.
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`Therefore, Defendants’ representations set forth in Paragraph 45 are false,
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`misleading, or unsubstantiated, and constitute a deceptive act or practice in violation of Section
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`5(a) of the FTC Act, 15 U.S.C. § 45(a).
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`CONSUMER INJURY
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`48.
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`Consumers are suffering, have suffered, and will continue to suffer substantial
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`injury as a result of Defendants’ violations of the FTC Act and MITOR. Additionally,
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`Defendants have been unjustly enriched as a result of their unlawful acts or practices. Absent
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`injunctive relief by this Court, Defendants are likely to continue to injure consumers, reap unjust
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`enrichment, and harm the public interest.
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`THIS COURT’S POWER TO GRANT RELIEF
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`49.
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`Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant
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`injunctive and such other relief as the Court may deem appropriate to halt and redress violations
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`of any provision of law enforced by the FTC. The Court, in the exercise of its equitable
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`jurisdiction, may award ancillary relief, including rescission or reformation of contracts,
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`restitution, the refund of monies paid, and the disgorgement of ill-gotten monies, to prevent and
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`remedy any violation of any provision of law enforced by the FTC.
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`50.
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`Section 19 of the FTC Act, 15 U.S.C. § 57b, and MITOR authorize this Court to
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`grant such relief as the Court finds necessary to redress injury to consumers resulting from
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`Defendants’ violations of MITOR, including the rescission or reformation of contracts and the
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`refund of money.
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`PRAYER FOR RELIEF
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`Wherefore, Plaintiff FTC, pursuant to Sections 13(b) and 19 of the FTC Act, 15 U.S.C.
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`§§ 53(b), 57b, MITOR, and the Court’s own equitable powers, requests that the Court:
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`A.
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`Enter a permanent injunction to prevent future violations of the FTC Act by
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`Defendants;
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`B.
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`Award such relief as the Court finds necessary to redress injury to consumers
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`resulting from Defendants’ violations of the FTC Act and MITOR, including restitution,
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`rescission or reformation of contracts, the refund of money or return of property, the payment of
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`damages, and public notification respecting the rule violation or the unfair or deceptive act or
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`practice; and
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`C.
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`Award Plaintiff the costs of bringing this action, as well as such other and
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`additional relief as the Court may determine to be just and proper.
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`Respectfully submitted,
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`ALDEN F. ABBOTT
`General Counsel
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`/s/ Dillon J. Lappe
`NICHOLAS CARTIER, 495850(DC)
`DILLON JOSEPH LAPPE, 82876(MI)
`Federal Trade Commission
`600 Pennsylvania Avenue NW, CC-9534
`Washington, DC 20580
`(202) 326-2014; ncartier@ftc.gov (Cartier)
`(202) 326-2833; dlappe@ftc.gov (Lappe)
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`Attorneys for Plaintiff
`FEDERAL TRADE COMMISSION
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`Dated: Aug. 04, 2020
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`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`15
`
`