CompUSA Inc.; Analysis To Aid Public Comment, 13501-13502 [05-5512]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 70, Number 53 (Monday, March 21, 2005)]
[Notices]
[Pages 13501-13502]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-5512]


=======================================================================
-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

[File No. 022 3278]


CompUSA Inc.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

-----------------------------------------------------------------------

SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before April 11, 2005.

ADDRESSES: Comments should refer to ``CompUSA Inc., File No. 022 
3278,'' 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: 
Federal Trade Commission/Office of the Secretary, Room H-159, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be filed in paper form, as explained in the 
SUPPLEMENTARY INFORMATION section. 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 filed in electronic form (except comments containing any 
confidential material) should be sent to the following e-mail box: 
consentagreement@ftc.gov.

FOR FURTHER INFORMATION CONTACT: Kerry O'Brien, Linda Badger, or 
Matthew Gold, FTC Western Regional Office, 901 Market St., Suite 570, 
San Francisco, CA 94103. (415) 848-5189.

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's Rules of Practice, 16 CFR 2.34, notice is hereby given 
that the above-captioned consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of 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 March 11, 2005), on the World Wide Web, at https://www.ftc.gov/os/
2005/03/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. Written comments must be submitted 
on or before April 11, 2005. Comments should refer to ``CompUSA Inc., 
File No. 022 3278,'' 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: Federal Trade Commission/Office of the Secretary, 
Room H-159, 600 Pennsylvania Avenue, NW., Washington, DC 20580. If the 
comment contains any material for which confidential treatment is 
requested, it must be filed in paper (rather than electronic) form, and 
the first page of the document must be clearly labeled 
``Confidential.''\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 
filed in electronic form should be sent to the following e-mail box: 
consentagreement@ftc.gov.
---------------------------------------------------------------------------

    \1\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be 
accomplished 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).
---------------------------------------------------------------------------

    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 https://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 https://
www.ftc.gov/ftc/privacy.htm.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted an agreement to a 
proposed consent order with CompUSA Inc. (``CompUSA''). CompUSA is a 
major retailer of personal computers, computer-related hardware and 
software products, and other consumer electronics products. CompUSA 
advertises, labels, offers for sale, sells, and distributes all of 
these products to the public. The Commission has separately accepted an 
agreement with the principals of Q.P.S., Inc. (``QPS''), which 
manufactured computer peripheral products sold by CompUSA.
    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

[[Page 13502]]

withdraw from the agreement or make final the agreement's proposed 
order.
    This matter concerns cash rebate offers that CompUSA advertised to 
consumers. Among the products that CompUSA marketed were QPS computer 
peripheral products, as well as CompUSA-labeled computer peripheral 
products. In marketing these and other products, CompUSA advertised 
mail-in rebates, which it has funded and which third-party 
manufacturers, such as QPS, have funded.
    The complaint alleges that CompUSA engaged in deceptive and unfair 
practices relating to both the QPS-funded rebates and the CompUSA-
funded rebates. First, the complaint alleges that CompUSA falsely 
represented that QPS-funded rebate checks would be mailed to purchasers 
of advertised QPS products within six to eight weeks, or within a 
reasonable period of time. Although these rebates were designed and 
intended to be funded by QPS, CompUSA was involved in their creation, 
and disseminated advertisements and rebate forms for these rebates. 
From September 2001 until December 2001, many consumers experienced 
delays ranging from one to six months in receiving their promised 
rebates, which ranged from $15 to $100 in value. From January 2002 
through July 2002, many consumers experienced similar delays, and 
thousands of consumers never received their promised rebates from QPS. 
Despite knowledge of these significant problems, CompUSA continually 
advertised these QPS rebates until shortly before QPS filed for 
bankruptcy in August 2002.
    Second, the complaint alleges that CompUSA falsely represented that 
it would deliver CompUSA-funded rebates to purchasers of its computer 
peripheral products within six to eight weeks, or within a a reasonable 
period of time. Between September 2001 and June 2002, many consumers 
experienced delays ranging from one week to more than three months in 
receiving their promised rebates. The rebates at issue ranged from $3 
to $100 in value.
    Finally, the complaint alleges that, in the advertising and sale of 
computer peripheral products, CompUSA offered to deliver rebates within 
six to eight weeks if they purchased the advertised computer peripheral 
products and submitted valid rebate requests for CompUSA-funded rebate 
offers. After receiving rebate requests in conformance with these 
offers, CompUSA unilaterally extended the time period in which it would 
deliver the rebates to consumers without consumers agreeing to this 
extension of time. According to the complaint, this constituted an 
unfair business practice.
    The proposed order contains provisions designed to prevent CompUSA 
from engaging in similar acts and practices in the future. Part I 
applies to CompUSA Rebates, which are rebates that are designed and 
intended to be funded by CompUSA. Specifically, Part I.A. prohibits the 
company from representing the time in which it will mail any CompUSA 
Rebate, unless it possesses competent and reliable evidence 
substantiating the claim. Part I.B. prohibits CompUSA from failing to 
provide any CompUSA rebate within the time specified, or if no time is 
specified, within thirty days. Part I.C. requires that the company not 
``misrepresent, in any manner, expressly or by implication, any 
material terms of any CompUSA Rebate program.''
    Part II of the proposed order relates to CompUSA's advertising of 
Manufacturer Rebates, which are rebates that are designed and intended 
to be funded by a manufacturer or third party other than CompUSA. This 
provision prohibits the company from making any representation about 
the availability of any Manufacturer Rebate unless (1) it has an 
established record with the manufacturer demonstrating that the 
manufacturer has consistently paid rebates in a timely manner; or (2) 
if it does not have such an established record with the manufacturer, 
CompUSA has conducted a reasonable financial analysis of the 
manufacturer and that financial analysis demonstrates the 
manufacturer's ability to timely pay the rebates being offered.
    Part III of the proposed order is a redress provision which 
requires CompUSA to pay all valid rebates requests to consumers who 
purchased QPS products at CompUSA and whose rebates are due or past 
due. This provision also requires CompUSA to send a rebate to any 
eligible QPS purchaser who contacts it or the FTC for a period of 
seventy-five (75) days after service of the order.
    Parts IV through VIII of the proposed order are reporting and 
compliance provisions. Part IX is a provision ``sunsetting'' the order 
after twenty years, with certain exceptions.
    The purpose of this analysis is to facilitate public comment on the 
proposed order, and it is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 05-5512 Filed 3-18-05; 8:45 am]
BILLING CODE 6750-01-P