For
Release: March 18,
2004
FTC
Halts Fraudulent Computer Business
Scam Targeted Spanish-speaking
Consumers
The Federal Trade Commission has charged a California-based
business with deceiving Spanish-speaking consumers who responded
to its offer of a complete computer system for three payments
of $199 without a social security number or credit check.
The FTC alleges that despite the defendants’ claims,
they did not deliver the entire computer at the time the first
payment was made. Instead, consumers opened their boxes and
allegedly found only keyboards, speakers, and other peripherals
that would be useless without the computer itself. Only then,
the FTC charges, did they learn that they would not receive
the full computer until all the payments had been made. At
that point, according to the FTC, some consumers decided that
they had been scammed and just gave up. Others made the final
two payments, which with shipping and handling totaled more
than $700, and ended up with junk computers that were salvaged
or damaged computers that did not work. A U.S. district court
has issued a temporary restraining order halting the defendants’
business practices and freezing their assets.
According to the FTC’s complaint,
defendants Unicyber Technology, Inc., Unicyber Gilboard, Inc.,
and Chul K. Han have advertised their computer systems via
Spanish-language television ads, claiming that they offered
a payment plan that did not require a social security number
or credit check. The agency alleges that when consumers called
a toll-free number to order the system, defendants’
sales representatives repeated the claims made in the ads
but informed consumers that the installment payment amount
was not $199, but instead was $245, due to “shipping
and handling” costs. In some cases, defendants’
sales representatives attempted to “upsell” consumers
by pitching additional peripherals, such as CD burners, or
component upgrades, such as larger monitors. During these
sales calls, the representatives allegedly also informed consumers
that defendants did not accept personal checks or credit cards,
explaining that the shipment will be delivered cash on delivery
(“C.O.D.”) and consumers must obtain a money order
to give to the delivery person when the computer system arrived.
The representatives assured consumers that the computer system
would arrive in one shipment approximately one week later.
According to the FTC, defendants sent consumers
a large box labeled “Computer” and “Fragile.”
Only after consumers paid C.O.D. for this shipment did they
discover that, instead of a complete computer system, the
box contained only a few flimsy computer peripherals. The
FTC’s complaint alleges that, when consumers called
the company to find out what happened to the rest of their
computer systems, they learned that defendants would not ship
the missing pieces until after consumers sent in the two remaining
payments. The defendants’ representatives informed consumers
they would receive the computer monitor after mailing a second
money order, and a central processing unit after mailing the
third money order.
The FTC’s complaint alleges that
some consumers, believing they had been deceived, gave up
at this point and refused to make any further payments. Consumers
who went along with defendants’ plan and made all three
payments were further defrauded when they received not a functional
computer system but useless components – salvaged and
refurbished older computer models that were damaged, too old
to run currently available applications, or otherwise did
not work properly, if at all. Those consumers who attempted
to obtain refunds from the defendants were often unsuccessful.
“We believe these fraudsters
cheated consumers out of millions of dollars,” said
Howard Beales, Director of the FTC’s Bureau of Consumer
Protection. “They promised a complete computer system,
and delivered nothing but junk.”
The FTC’s complaint states that the
defendants’ business practices are deceptive in violation
of the FTC Act. The FTC further alleges that consumers have
been harmed substantially, and continue to be harmed, by the
defendants’ operation. The FTC’s complaint asks
the court to permanently bar the defendants from future deceptive
practices and order them to pay consumer redress.
The FTC has created a hotline for consumers
who may have been affected by Unicyber’s business practices.
Consumers may call 310-824-4393 – information is available
in English and Spanish.
The Commission vote to authorize
staff to file the complaint was 5-0. The Complaint
was filed in the U.S. District Court for the Central District
of California on March 9, 2004.
NOTE: The Commission files
a complaint when it has “reason to believe” that
the law has been or is being violated, and it appears to the
Commission that a proceeding is in the public interest. The
complaint is not a finding or ruling that the defendant has
actually violated the law. The case will be decided by the
court.
Copies
of the Commission’s complaint are available
from the FTC’s Web site at http://www.ftc.gov
and also from the FTC’s Consumer Response Center, Room
130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
The FTC works for the consumer to prevent fraudulent, deceptive,
and unfair business practices in the marketplace and to provide
information to help consumers spot, stop, and avoid them.
To file a complaint, or to get free information on any of
150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357),
or use the complaint form at http://www.ftc.gov
. The FTC enters Internet, telemarketing, identity theft,
and other fraud-related complaints into Consumer Sentinel,
a secure, online database available to hundreds of civil and
criminal law enforcement agencies in the U.S. and abroad.
MEDIA CONTACT:
Jen Schwartzman
Office of Public Affairs
202-326-2674
STAFF CONTACT:
Jennifer Brennan or Kenneth Abbe
FTC Western Region - Los Angeles
310-824-4343
(FTC File No. 032 3186)
(Civ. No. 04-1569 LGB (MANx))
(http://www.ftc.gov/opa/2004/03/unicyber.htm)
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Related Documents:
FTC
v. Unicyber Technology, Inc., et al., defendants. U.S. District
Court Central District of California Western Division,
File No.: 032-3186, Civil Action No.:
CV04-1569LGB (MANx)
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