FTC v. ReverseAuction.com

Citation: Federal Trade Comm’n v. Reverseauction.com, Inc., Civil Action No. 000032 (D.D.C. Jan. 6, 2000)

FTC Complaint
In January 2000, the Federal Trade Commission (FTC) filed a complaint against Reverseauction.com, Inc. According to the complaint, ReverseAuction.com is an online site that features "Declining Price" and "Wanted" auctions. In the process of marketing and promoting its new site, ReverseAuction.com registered with eBay, a competitor site, and agreed to comply with eBay's User Agreement and Privacy Policy. The agreement and policy protect consumers' privacy by prohibiting users from gathering and using personal identifying information, such as eBay users' personal e-mail addresses, for unauthorized purposes, including the purpose of sending spam.

After agreeing to comply with the User Agreement and Privacy Policy, ReverseAuction.com harvested eBay users' personally identifying information and used the data to spam eBay members with a message promoting its own online auction site. The message contained a deceptive subject line informing the eBay user that his or her eBay user ID "will EXPIRE soon." According to the complaint, many consumers concluded that the eBay user ID and other information had been provided to ReverseAuction.com, or authorized, by eBay. The complaint alleges that violation of the eBay User Agreement and Privacy Policy, sending the deceptive spam, and representing that eBay authorized the mailing are deceptive or unfair acts that violate Section 5 of the FTC Act.

Settlement Agreement
The Settlement Agreement bars ReverseAuction.com from making the misrepresentations in the future. In addition, it requires ReverseAuction.com to provide notice to consumers who, as a result of receiving ReverseAuction.com's spam, registered or will register with ReverseAuction.com. The notice informs these consumers that their eBay user IDs were not about to expire on eBay, and that eBay did not know of, or authorize, ReverseAuction.com's dissemination of the spam. The notice also provides these consumers the opportunity to cancel registration with ReverseAuction.com and have their personal identifying information deleted from ReverseAuction.com's database.

In addition, the order requires ReverseAuction to delete, and refrain from using or disclosing, the personal identifying information of eBay members who received ReverseAuction.com's spam but who have not registered with ReverseAuction.com. Finally, the settlement requires ReverseAuction.com to disclose its own privacy policy on its Internet site, and contains record-keeping provisions to allow the FTC to monitor compliance.