The U.S. Federal Trade Commission has settled a 2009 complaint it made against an e-commerce site that it accused of stealing millions of dollars from customers through unauthorized charges and debits to their bank accounts.
The settlement with Classic Closeouts, Classiccloseouts.com and owner Daniel Greenberg, announced Thursday, bans Greenberg from owning or consulting for any Web-based businesses that handle customer credit or debit card accounts. The settlement also imposes a judgment of US$2.08 million against Greenberg, but the amount is suspended after he recently filed for bankruptcy, the FTC said in a press release.
The FTC filed a complaint against Classic Closeouts, Greenberg and several other people in U.S. District Court for the Eastern District of New York in June 2009, during an agency crackdown on scammers.
Classiccloseouts.com offered a variety of goods for sale, but the FTC alleged that the site made unauthorized charges and debits to customers' accounts ranging from $59.99 to $79.99.
Classiccloseouts.com had this promise on the site: "We guarantee that every online transaction you make at Classiccloseouts.com will be 100% safe. This means you pay nothing if unauthorized charges are made to your card as a result of shopping at our online store."
When customers attempted to contact the site about the mystery charges, they received no response, the FTC said. Many customers disputed the charges with their credit card vendors or banks, but in many cases, the site challenged the disputes by falsely claiming that customers had chosen to join a frequent shopping club through an affiliate site of Classic Closeouts, the FTC said.
In some cases, the financial institutions reinstated the charges after the site challenged the disputes, the FTC said.
During a hearing in June 2009, the court temporarily halted the business practices that the FTC complained about. Classiccloseouts.com is no longer operating.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is email@example.com.