`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
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`FEDERAL TRADE COMMISSION,
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`Plaintiff,
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`v.
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`ZAAPPAAZ LLC, also d/b/a Wrist-Band.com,
`WBpromotion.com, CustomLanyard.net, and WB
`Promotions; and
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`AZIM MAKANOJIYA, individually and as an
`officer of ZAAPPAAZ LLC,
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`Defendants.
`
`Civil Matter No. ____________
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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) and 57b; and the Mail, Internet, or Telephone
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`Order Merchandise Rule (“MITOR”), 16 C.F.R. Part 435, to obtain temporary, preliminary, and
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`permanent injunctive relief, restitution, rescission or reformation of contracts, the refund of
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`money or return of property, the payment of damages, disgorgement of ill-gotten monies, and
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`other equitable relief for Defendants’ acts or practices in violation of Section 5(a) of the FTC
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`Act, 15 U.S.C. § 45(a), and in violation of MITOR, 16 C.F.R. Part 435.
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`JURISDICTION AND VENUE
`1
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`Case 4:20-cv-02717 Document 1 Filed on 08/04/20 in TXSD Page 2 of 19
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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), (c)(1), (c)(2), and
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`(d), and 15 U.S.C. § 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,
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`15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce.
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`The FTC also enforces MITOR, 16 C.F.R. Part 435, which requires mail-, Internet-, or phone-
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`based sellers to have a reasonable basis for advertised shipping times, and, when sellers cannot
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`meet promised shipping times or ship within 30 days, to provide buyers with the option to
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`consent to a delay in shipping or to cancel their orders and receive a 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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`2
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`DEFENDANTS
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`6.
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`Defendant Zaappaaz LLC (“Zaappaaz”), also doing business as Wrist-Band.com,
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`WBpromotion.com, CustomLanyard.net, and WB Promotions, is a Texas corporation with its
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`principal place of business at 35 Cadence Court, Richmond, Texas, 77469. Zaappaaz transacts
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`or has transacted business in this District and throughout the United States. At all times material
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`to this Complaint, acting alone or in concert with others, Zaappaaz has advertised, marketed,
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`distributed, or sold merchandise to consumers throughout the United States.
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`7.
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`Defendant Azim Makanojiya is the founder, president, and a director of Zaappaaz,
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`a company he created in 2008. In 2017, Mr. Makanojiya pled guilty, individually and on behalf
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`of Zaappaaz, to charges of price fixing brought by the Department of Justice’s antitrust criminal
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`division. At all times material to this Complaint, acting alone or in concert with others, he has
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`formulated, directed, controlled, had the authority to control, or participated in the acts and
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`practices of Zaappaaz, including the acts and practices set forth in this Complaint. Defendant
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`Makanojiya resides in this District and, in connection with the matters alleged herein, transacts
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`or has transacted business in this District and throughout the United States.
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`COMMERCE
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`8.
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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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`3
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`DEFENDANTS’ BUSINESS ACTIVITIES
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`Overview
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`Seeking to capitalize on demand for personal protective equipment (“PPE”)
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`9.
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`because of the COVID-19 pandemic, Defendants began marketing facemasks, face shields,
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`gloves, and other merchandise advertised as PPE through their website in March 2020.
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`Defendants promised consumers the PPE was “in stock” and would ship the same day, and
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`offered guaranteed delivery dates, with higher shipping costs for faster delivery.
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`10.
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`Defendants’ same-day shipping promises and guaranteed delivery dates were, in
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`many cases, false. In fact, Defendants frequently waited weeks to ship products and failed to
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`inform consumers of the delay. “Guaranteed” delivery dates passed without delivery of
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`purchased goods, and Defendants ignored persistent consumer questions and refund demands.
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`Defendants’ Shipping Practices
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`11.
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`Zaappaaz markets and sells consumer goods, including customized merchandise
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`such as wristbands, lanyards, keychains, can coolers, and various PPE, to consumers throughout
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`the United States and internationally.
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`12.
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`Zaappaaz sells these goods through its websites, www.Wrist-Band.com,
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`WBpromotion.com, and CustomLanyard.net.
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`13.
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`During the early months of the pandemic in the United States, obtaining PPE and
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`related products as quickly as possible was paramount for many consumers. PPE was in high
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`demand and difficult to find.
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`14.
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`In response, Zaappaaz began selling PPE, claiming its products were in stock and
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`shipped the same day as the order. At the same time, Zaappaaz also began offering consumers
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`guaranteed delivery dates, allowing consumers to pay for faster delivery.
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`15.
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`Zaappaaz clearly and conspicuously displays these shipping, delivery, and in-
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`stock guarantees across multiple product pages.
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`16.
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`For example, Zaappaaz tells consumers that its 1 Gallon Liquid Sanitizer is “IN
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`STOCK,” “GUARANTEED TO SHIP TODAY,” and offers the option to select the desired
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`guaranteed delivery date.
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`Ex. A (June 1, 2020, wrist-band.com website).
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`17.
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`Similarly, Zaappaaz represents that it has face shields and no contact infrared
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`thermometers “IN STOCK” and available to “SHIP[] SAME DAY.”
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`5
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`Exs. B & C (June 1, 2020, wrist-band.com website).
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`6
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`18.
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`Zaappaaz tells consumers its facemasks are “GUARANTEED TO SHIP
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`TODAY” and it has “20,000+ in Stock.” Zaappaaz offers more than one option for delivery
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`date, with different shipping prices depending on the shipping speed. For example, this $2.99
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`face mask (when buying at least 10 masks) has a shipping charge of $5.34 per mask for the
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`merchandise to arrive the next day.
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`Ex. D (June 1, 2020, wrist-band.com website).
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`19.
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`After selecting a desired delivery date, that date is described as “Guaranteed.”
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`7
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`Ex. E (June 1, 2020, wrist-band.com website).
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`20.
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`Similarly, Zaappaaz tells consumers that its vinyl disposable gloves are
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`“GUARANTEED TO SHIP TODAY” and it has “20,000+ in Stock.” They guarantee next day
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`delivery for $14.48 per piece, for a product that costs $14.99 for one box.
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`Ex. F (June 1, 2020, wrist-band.com website).
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`8
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`21.
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`In numerous instances, Zaappaaz failed to ship purchased goods the same day,
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`and failed to meet guaranteed delivery dates.
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`22.
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`For example, two Zaappaaz consumers, on April 1, 2020, spent $4,776.73 on
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`facemasks, goggles, and face shields for their daughter, a nurse who has an underlying medical
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`condition and works in a hospital. They paid over $400 for two-day shipping. Yet, they did
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`not receive their order on the guaranteed delivery date. After the date passed, the consumers
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`asked to cancel the order, but were told that PPE orders are non-refundable and non-returnable.
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`23.
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`Another consumer ordered infrared thermometers on April 7, 2020, with
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`guaranteed delivery two days later. When the Defendants failed to deliver the order on the
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`guaranteed date, the consumer asked that his order be cancelled, but his request was denied.
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`Despite the failure to deliver his order, Zaappaaz sent this consumer an email advertising the
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`same product he had ordered as in stock and ready to ship.
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`24.
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`In numerous instances, Zaappaaz promised consumers that they would receive
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`full or prorated refunds of their shipping costs when their orders did not arrive on the guaranteed
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`delivery dates.
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`25.
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`For example, one consumer purchased ten face shields on April 5, 2020, for
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`$232.81. The order total included a $52.91 shipping fee with a delivery date of April 7, 2020.
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`When the order did not arrive as promised, the consumer asked to cancel her order, but was told
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`it was non-refundable. After multiple communications with wrist-band.com, they offered to
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`refund the rush shipping charge once the consumer received her package. As of July 24, 2020,
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`the consumer was still waiting for her promised refund.
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`9
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`26.
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`Zaappaaz received dozens of complaints regarding its shipping delays and failures
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`via emails, phone calls, and chat messages through its websites. Zaappaaz responded to some of
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`these messages, continuing to tell consumers that their orders would ship soon, and refunds were
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`not available on PPE products.
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`27. Meanwhile, Zaappaaz continued to advertise its PPE products as in stock and
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`available to ship same day, when it knew the products would not ship in the promised time.
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`28. Wrist-Band.com desktop webpages, including pages explaining the refund policy
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`and advertising PPE products, announce a 100% money back guarantee in a banner at the bottom
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`of webpages.
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`Ex. G (May 29, 2020, wrist-band.com website).
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`29.
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`The mobile website promises “Satisfaction Guaranteed” to consumers in their
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`shopping carts when they start the checkout process.
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`Ex. H (June 1, 2020, wrist-band.com mobile website).
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`30.
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`As of at least June 1, 2020, Wrist-Band.com has stated on its desktop webpages
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`that PPE is non-returnable and non-refundable. This disclaimer appears on the PPE product
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`pages below the photos of the product. In order to view this disclaimer on the Wrist-Band.com
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`10
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`mobile website, the user must click a “Click Here to View Details” button below the product
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`images.
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`31. Wrist-Band.com continues to display the 100% money back guarantee on
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`multiple desktop webpages, including the PPE webpage.
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`32.
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`In numerous instances, Zaappaaz offered its same day shipping policy for its
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`advertised PPE goods, without having a reasonable basis for this claim.
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`33.
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`In numerous instances, Zaappaaz did not ship one or more pieces of ordered
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`merchandise within the time represented by its shipping guarantees.
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`34.
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`In numerous instances, when Zaappaaz failed to ship one or more pieces of
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`ordered merchandise within the time represented by its shipping guarantees, Zaappaaz did not
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`offer consumers the opportunity to consent to a delay in shipping or to cancel their orders and
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`receive refunds.
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`35.
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`In numerous instances, when Zaappaaz failed to ship one or more pieces of
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`ordered merchandise within the time represented by its shipping guarantees, it also failed to offer
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`consumers the required opportunity to either consent to a delay in shipping or to cancel their
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`orders and receive refunds. Zaappaaz did not deem the orders cancelled nor issue refunds.
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`36.
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`In numerous instances, when Zaappaaz failed to ship one or more pieces of
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`ordered merchandise within the time represented by its shipping guarantees, consumers
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`demanded cancellation and prompt refunds, despite having not been informed of this option.
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`Even in these cases, Zaappaaz did not cancel orders or provide prompt refunds to consumers.
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`37.
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`Dozens of consumers have complained directly to Zaappaaz, the Better Business
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`Bureau (“BBB”), and the FTC, particularly during the initial months of the COVID-19
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`pandemic, that Zaappaaz breached its stated policies.
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`Zaappaaz’s Defective, Inferior, or Incorrect Products
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`38.
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`Zaappaaz advertises, markets, solicits orders for, and sells a range of consumer
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`goods it describes as PPE. Zaappaaz provides images of these products and represents certain
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`information about them.
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`39.
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`In many cases, Zaappaaz’s descriptions and images do not match the products
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`they ultimately deliver to consumers; instead, in numerous instances, consumers receive
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`defective or inferior products.
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`40.
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`For example, one consumer paid $579.20 for five automatic hand sanitizer
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`dispensers for business use during the COVID-19 pandemic. The wrist-band.com website
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`advertised that the dispensers worked with any type of hand sanitizer (liquid, gel, or foam). The
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`delivered products, however, did not dispense liquid or gel hand sanitizer. The consumer asked
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`for a refund, but was told all sales were final and the consumer would need to purchase new
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`nozzles, for $25 each, for the dispensers to work.
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`41.
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`In some instances, consumers receive goods, but Defendants do not deliver the
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`products consumers ordered; rather, the orders are incomplete or incorrect.
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`42.
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`For example, on April 7, 2020, a consumer ordered a number of products,
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`including no touch thermometers and disposable gloves, to protect the safety and welfare of
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`employees at a food manufacturer. The consumer purchased the products because of the
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`guaranteed four-day shipping for her order, but Defendants failed to deliver for almost two
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`months. When her order finally arrived, it was incomplete and missing a thermometer.
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`43.
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`Numerous consumers complained directly to Zaappaaz, the FTC, and the BBB
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`that the goods they received were defective, inferior, or incorrect.
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`
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`Defendant Makanojiya
`12
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`44.
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`At all times material to this Complaint, acting alone or in concert with others,
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`Defendant Makanojiya controlled all aspects of Zaappaaz LLC, including directly participating
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`in Zaappaaz’s practices alleged above and receiving consumer complaints.
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`45.
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`Defendant Makanojiya was Zaappaaz’s point of contact for interactions with the
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`BBB. Because of this position, Defendant Makanojiya received the complaints that consumers
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`filed with the BBB.
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`46.
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`Defendant Makanojiya knew, or should have known, that Zaappaaz’s claims of
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`same day shipping, in many instances, and especially during the COVID-19 pandemic, were
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`false or unsubstantiated and made without a reasonable basis.
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`47.
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`Additionally, Defendant Makanojiya knew, or should have known, that defective,
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`inferior, or incorrect goods were being delivered to consumers.
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`48.
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`Based on the facts and violations of law alleged in this Complaint, the FTC has
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`reason to believe that Defendants are violating or are about to violate laws enforced by the
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`Commission because, among other things, they have consistently touted their same day shipping
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`and guaranteed delivery date promises, notwithstanding consistent known failures to honor these
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`guarantees, and because they deliver defective, inferior, or incorrect products.
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`VIOLATIONS OF THE MAIL, INTERNET, OR TELEPHONE ORDER
`MERCHANDISE RULE
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`49. 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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`13
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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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`50.
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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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`51.
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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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`52. 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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`a)
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`Any such offer “shall be made within a reasonable time after the seller
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`first becomes aware of its inability to ship.” 16 C.F.R. § 435.2(b)(1).
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`b)
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`The offer must fully inform the buyer of the buyer’s right to cancel and
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`provide a definite revised shipping date or inform the buyer that the seller cannot
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`make any representation regarding the length of the delay. 16 C.F.R.
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`§ 435.2(b)(1)(i).
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`53.
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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), and (c)(5).
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`54.
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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 – MITOR Violations
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`55.
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`In numerous instances, when Defendants:
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`a)
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`represent they will ship purchased goods the same day, they do not have a
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`reasonable basis to expect to ship the goods the same business day;
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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 consumers the opportunity to consent to a delay in shipping or to cancel
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`their order and 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
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`their order, they do not cancel those orders or provide consumers a prompt 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
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`prompt refund.
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`56.
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`Defendants’ practices as alleged in Paragraph 55 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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`57.
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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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`15
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`58. 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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`59.
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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, specifically PPE and related products, Defendants have
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`represented, directly or indirectly, expressly or by implication, that they:
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`a)
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`b)
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`c)
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`d)
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`will ship goods the same day they are purchased;
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`will deliver by a guaranteed date(s);
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`have multiple items in stock and ready to ship;
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`will refund the full or prorated cost of shipping when orders do not arrive
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`on time;
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`e)
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`f)
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`deliver the goods consumers order; and
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`provide a 100% Money Back Guarantee for their goods.
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`60.
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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 59, Defendants:
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`a)
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`b)
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`c)
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`d)
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`e)
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`f)
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`failed to ship goods the same day they were purchased;
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`failed to deliver purchased goods by the guaranteed delivery date;
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`do not have sufficient goods in stock to make shipments as advertised;
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`failed to refund shipping costs as promised;
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`delivered defective, inferior, or incorrect goods; or
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`refused to refund consumers’ money, despite requests to do so.
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`61.
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`Therefore, Defendants’ representations set forth in Paragraph 59 are false,
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`misleading, or unsubstantiated, and constitute deceptive acts or practices 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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`62.
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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. In addition,
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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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`63.
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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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`64.
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` Section 19 of the FTC Act, 15 U.S.C. § 57b, and MITOR, 16 C.F.R. Part 435,
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`authorize this Court to grant such relief as the Court finds necessary to redress injury to
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`consumers resulting from Defendants’ violations of MITOR, including the rescission or
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`reformation of contracts, and the refund of money.
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`PRAYER FOR RELIEF
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`17
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`Case 4:20-cv-02717 Document 1 Filed on 08/04/20 in TXSD Page 18 of 19
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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) and 57b, MITOR, 16 C.F.R. Part 435, and the Court’s own equitable powers, requests
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`that the Court:
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`A.
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`Award Plaintiff such preliminary injunctive and ancillary relief as may be
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`necessary to avert the likelihood of consumer injury during the pendency of this action and to
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`preserve the possibility of effective final relief, including but not limited to, temporary and
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`preliminary injunctions;
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`B.
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`Enter a permanent injunction to prevent future violations of the FTC Act and
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`MITOR by Defendants;
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`C.
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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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`D.
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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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`Dated: August 4, 2020
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`Respectfully submitted,
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`Alden F. Abbott
`General Counsel
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` /s Michelle Schaefer
`MICHELLE SCHAEFER, Attorney-in-Charge, pro
`hac vice pending
`ANNE COLLESANO, pro hac vice pending
`600 Pennsylvania Avenue, NW, CC-9528
`18
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`Case 4:20-cv-02717 Document 1 Filed on 08/04/20 in TXSD Page 19 of 19
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`Washington, DC 20580
`(202) 326-3515; mschaefer@ftc.gov
`(202) 326-2485; acollesano@ftc.gov
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`James E. Elliott, Assistant Regional Director
`Texas Bar # 06557100
`S.D. Texas #14
`Federal Trade Commission
`Southwest Region
`1999 Bryan Street, Suite 2150
`Dallas, Texas 75201
`(214) 979-9373; jelliott@ftc.gov
`(214) 979-9350 (main office)
`(214) 953-3079 (fax)
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`Attorneys for Plaintiff
`FEDERAL TRADE COMMISSION
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`19
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