135.  U.S. v. CDnow, Inc., and CDnow Online, Inc. (E.D. Penn.) (August 2000)

136.  U.S. v. Southdale Kay-Bee Toy, Inc., (D. Minn.) (August 2000)

137.  U.S. v. Federated Department Stores, Inc., (D. Del.) (August 2000)

138.  U.S. v. Franklin W. Bishop, (N.D. Cal.) (August 2000)

139.  U.S. v. The Original Honey Baked Ham Company of Georgia, Inc. (N.D. Ga.) (August 2000)

140.  U.S. v. Patriot Computer Corporation (N.D. Tex.) (August 2000)

141.  U.S. v. Toysrus.com, LLC, (D.N.J.) (August 2000)

Defendants: CDnow, Inc., CDnow Online, Inc.; Southdale Kay-Bee Toy, Inc., KBkids.com LLC, Federated Department Stores, Inc., Macys.com, Inc. ; Franklin W. Bishop d/b/a Minidiscnow.com; The Original Honey Baked Ham Company of Georgia, Inc.; Patriot Computer Corporation; Toysrus.com, LLC, and Toysrus.com, Inc.

Type:  Mail Order Rule

The FTC alleged that seven large Internet e-tailers failed to comply with the Mail Order Rule during the 1999 holiday shopping season. The FTC alleged that all seven companies failed to offer buyers a timely option either to consent to a delay in shipping or to cancel their orders and grant prompt refunds. The FTC alleged that six companies (all but CDnow) sent no notices as required by the Rule and failed to deem certain orders canceled. Four defendants (KBkids.com, Macys.com, Toysrus.com, and Minidiscnow.com) were charged with taking orders without a reasonable basis for their shipping representations.

The FTC obtained consent decrees with all seven companies and civil penalties totaling $1.5 million. Macys.com was required to fund an Internet consumer education campaign about the Mail Order Rule. The penalty amounts against KBkids.com, Toysrus.com, and The Original Honey Baked Ham Co. took into account money the companies spent in mitigating consumer injury.  CDnow's $300,000 penalty was waived except for $100,000 due to its poor financial condition. Minidiscnow.com, was required to reimburse each consumer who had ordered, but not received, any of the company's products. The consent decrees contained injunctive provisions prohibiting future Rule violations and required compliance reports within 120 days of the decrees demonstrating procedures to comply with the Rule.