Markets Wired

The Federal Trade Commission charged an online marketer with falsely promising consumers next-day shipping of facemasks and other personal protective equipment (PPE) to deal with the coronavirus pandemic.

In a federal court complaint against SuperGoodDeals.com, Inc. and its owner, Kevin J. Lipsitz, the FTC alleged the company sought to capitalize on the soaring demand for PPE from consumers worried about being exposed to the coronavirus. Beginning in March, SuperGoodDeals’ website said PPE was “in stock,” and touted “Pay Today, Ships Tomorrow.”

But according to the FTC, it frequently it took weeks for SuperGoodDeals to ship the PPE merchandise customers ordered.

“Unscrupulous merchants are taking advantage of consumers in their hour of need by not delivering goods—including masks and other personal protective equipment—as promised, and failing to provide required refunds,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “The FTC will not tolerate this, and we are working closely with criminal authorities to put a stop to it.”

The U.S. Attorney’s Office for the Eastern District of New York concurrently brought a criminal case against Mr. Lipsitz alleging that he engaged in price gouging and mail and wire fraud.

Online shopping problems like the ones cited in the FTC’s complaint against SuperGoodDeals are the largest source of coronavirus-related complaints the Commission has received from consumers since the pandemic began, according to figures released by the FTC.

According to the FTC’s complaint, SuperGoodDeals received hundreds of complaints about the shipping delays through emails, phone calls, and website chat messages. Some of the complaints were from customers who were in dire need of PPE, including one customer who ordered disposable masks for child welfare workers making in-home visits; another who ordered masks for a family member who is a nurse; and a third who ordered masks for her immunocompromised mother.

The FTC alleged that SuperGoodDeals’ deceptive tactics violated the FTC Act, and that the company also violated the FTC’s Mail Order Rule, which requires that companies advertising that they can ship merchandise within a certain timeframe have a reasonable basis for the promised timeframe. The Rule also requires that, if companies find they cannot meet the promised timeframe, they must seek the customer’s consent to the delayed shipment, or refund their money. SuperGoodDeals did not notify consumers, seek their consent to delayed shipments, and they did not refund their money.

In addition to its false claims about next-day shipping, the FTC also alleged that some of the other merchandise sold through the SuperGoodDeals’ website, such as Yeti tumbler mug, were falsely advertised as “authentic” or “certified.”

The Commission vote authorizing the staff to file the complaint was 4-0-1, with Commissioner Rebecca Kelly Slaughter not participating. The complaint was filed in the U.S. District Court for the Eastern District of New York.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.