A former Santa Monica-based online electronics dealer has refunded nearly 100 former customers more than $145,000 in a settlement agreement that city attorneys said is the largest-ever recovery in a consumer protection prosecution.
The customers of the dealer TV Authority ñ who are from all over the U.S. and abroad ñ claimed that they paid often thousands of dollars for plasma TVs and other high-end electronics, but never received them, said deputy city attorney Eda Suh. The city’s investigation showed that the business developed problems in meeting a high volume of orders in 2006, but allegedly continued to take payments long after, resulting in dozens of consumers who lost their money, Suh said.
In November 2007 the city’s Consumer Protection Unit filed 14 criminal charges against the former owners of TV Authority. The unit first learned of the problem in late 2006, when several former customers complained that they had paid for TVs but received nothing.
The defendants were charged with violating a California law that makes it a crime for online and telephonic sellers to take payment but not ship the goods (or provide a refund) within 30 days, city attorneys said.
“This law is a valuable tool for prosecutors and consumers when Internet sales go bad,” said Suh, who prosecuted the case. “It holds business accountable to deliver the goods or give a refund.”
The business owners had claimed that they were working to provide refunds to all customers, but this commitment was never completed, city attorneys said.
In January 2008 the court ordered TV Authority to shut down all advertisement on the Internet and to post a notice informing the public that it was being investigated by the city. This led to increased complaints to the Consumer Protection Unit.
The breakthrough in the case came in March 2008, when prosecutors obtained a copy of TV Authority’s complete customer database through an agreement with one of the former owners. Based on that data, city consumer specialist Paula Rockenstein wrote to the more than 5,000 former customers. Rockenstein eventually learned that nearly 100 people still had not received their TVs or refunds ñ in the amount of nearly $150,000.
Under the agreement, the criminal charges against the owners were dismissed in exchange for full refunds to all known customers who still had not received TVs or refunds.
“We are pleased that the business owners were willing to cooperate and do the right thing,” said Suh. “In these uncertain economic times, each dollar returned is sure to help.”