101.  FTC v. U.S. Republic Communications, Inc., Civil Action No. H-99-3657 (S.D. Texas filed Oct. 21, 1999)

Defendants: U.S. Republic Communications, Inc. and T. Gary Remy

Type:  Web Site Cramming

Remy and U.S. Republic allegedly used telemarketers to target small businesses, offering to design and host Web sites on a free trial basis. They claimed their service included "registering" the small businesses' Web sites with major Internet search engines to drive potential customers to the sites. The small businesses allegedly were told that they would receive paperwork about the Web site and that no charges would be incurred unless the business ordered the Web site on a permanent basis. Despite their claims, U.S. Republic added charges of $25 a month to the telephone bills of small businesses, often when the defendants had not sent a sample Web site design or when the small businesses had rejected the offer. Many times the defendants continued to charge small businesses even after they stated they had "canceled."

The FTC alleged violations of Section 5, and the defendants entered into a Stipulated Final Order to settle these allegations. The order bars the defendants from misrepresenting their Web site services and from misrepresenting that consumers are under no obligation and will not be charged during a trial period. The Order requires defendants to disclose, in certain instances, that they cannot guarantee that a Web site will be indexed or listed by major search engines. The Order also requires that approximately 124,000 small businesses be notified that they may have a right to cancel their Web site and collect redress.

The Commission’s complaint and the Stipulated Final Order were filed on Oct. 21, 1999 in federal district court for the Southern District of Texas. Through the redress process, defendants returned $2.8 million to consumers