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Deceptive Internet Access Fee Operator Settles FTC Charges [11/20/2001]

November 20, 2001

An Internet operation that conned consumers into paying membership fees and turning over sensitive personal and financial information by deceptively claiming it would pay for their Internet access has agreed to settle Federal Trade Commission charges that the operation violated federal law. The settlement bars the defendants from making misrepresentations in the advertising, promotion, or sale of any products or services, bar them from collecting or disclosing personal information obtained by misrepresentations, and require that within 30 days, they delete or destroy the personal identifying information that they collected from consumers.

On May 23, 2001, the FTC filed suit in U.S. District Court naming as defendants New Millennium Concepts, Inc., doing business as rhinoPoint, and their principal, Karl V. Kay. Kay and the businesses are based in the Chicago suburb of Hoffman Estates.

The FTC alleged that the defendants operated a Web site where they offered to pay Internet access fees for consumers who became part of their "network" and paid a one-time "set-up" fee ranging from $10 to $16. To join the network, consumers completed a questionnaire detailing personal information and agreed to complete monthly marketing surveys. Consumers who signed up were required to complete "member profile forms" that asked for such information as credit card numbers and income level. The Web site claimed it marketed "group data response to companies that provide us survey questions for our members." The site's privacy policy stated, "We do not sell or provide individual names, addresses, phone numbers, credit information or other personal contact information data to outside parties under any circumstances."

On June 1, 2001, the Court entered a stipulated preliminary injunction order that prohibited misrepresentations, froze the defendants' assets, and barred the use of the consumer data, pending trial. The settlement announced today concludes that litigation.

The settlement bars the defendants from making misrepresentations in the advertising, promotion, or sale of any products or services.

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