Attorney General Reaches Settlement With Buy.com To Protect New York Consumers From False Advertising

State Attorney General Spitzer today announced that he has signed an Assurance of Discontinuance with Buy.Com, an "Internet Superstore," which requires that the Company clearly disclose to consumers any and all costs for products and services.

Buy.Com is a California-based Internet company that sells computer hardware, software, books, music, as well as videos and computer games, through ten website specialty stores nationwide.

The inquiry into Buy.Com's business and advertising practices, which resulted in the settlement, was initiated jointly by the Attorney General's Consumer Frauds and Protection and Internet Bureaus. The Attorney General found that the Company repeatedly engaged in deceptive business practices and false advertising through print and on-line advertisements.

In August and September 1999, Buy.Com placed advertisements in USA Today, the Washington Post, the New York Times, and over the Internet, offering a $269 computer after mail-in rebate. The ads failed to disclose that, in order to get the computer for the advertised price, consumers were required to sign up for three years of Internet service, at a cost of over $20 per month. Nor did the ads notify consumers that some customers would incur long-distance telephone charges to use Compuserve's Internet service, or that early cancellation of the Internet service would result in a fee and forfeiture of the mail-in rebate.

"My office aggressively monitors advertising to ensure consumers make decisions based on accurate and complete information," said AG Spitzer. "We are committed to protecting New York consumers by ensuring that companies comply with the requirements of the State business laws."

By signing the Assurance of Discontinuance, Buy. Com has agreed to disclose fully and conspicuously in all print, television, radio and Internet advertisements: the existence and cost of any requirements in a service agreement; the fact that consumers will or may incur additional charges associated with such agreements, including telephone calls; and the existence and amount of any penalties or forfeitures for early termination.

"We will do all we can to guarantee companies meet their obligations to make full and fair disclosures to customers, whether they are offering their products and services for sale in stores or via the Internet" said Spitzer.

The case was handled in the Attorney General's Office by Assistant Attorney General Melissa Saren of the Consumer Frauds and Protection Bureau, which is under the direction of Bureau Chief Tom Conway, and by Assistant Attorney General Ken Dreifach of the Internet Bureau, which is under the direction of Bureau Chief Caitlin Halligan.

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