1-800 Contacts in Focus for Unfair Competition and Raising Prices

1-800 Contacts in Focus for Unfair Competition and Raising Prices

Posted By Golomb & Honik, P.C. || 22-Dec-2016

Over the past few years, 1-800 Contact has filed no fewer than 15 lawsuits against its online competitors, claiming violations of competitive keyword advertising practices—while historically engaging in the same practices it sought to suppress. Among the 15 lawsuits, in which 1-800 contacts claimed other online sellers of contact lenses engaged in competitive keyword advertising, thereby violating trademark laws, only one competitor (Lens.com) refused the settlement agreement in favor of 1-800 Contacts. That agreement stopped competitors from bidding on variations off the 1-800 Contact trademark.

FTC Votes 3-1 to File Suit Against 1-800 Contacts

1-800 Contacts is now facing allegations regarding antitrust violations from the Federal Trade Commission—an agency which rarely ventures into issues regarding keyword advertising. The FTC complaint against 1-800 Contacts states that, although the company holds a 50 percent share of the online retail market for contact lenses, it aggressively polices bidding agreements, threatens litigation and demands compliance from other contact lens online sellers. The FTC believes the efforts of 1-800 Contacts to restrict competitive keyword advertising could have three serious effects:

  1. Consumers suffer from a less competitive market;
  2. Other sellers are hindered in their efforts to reach consumers, and
  3. Search engines are less efficient when participation is limited.

The FTC notes that 1-800 Contacts has effectively made it more difficult for consumers to purchase contact lenses online for the lowest price, and has prevented consumers from accessing truthful information regarding contact lenses. The remedies proposed by the FTC include banning 1-800 Contacts from threatening competitors with lawsuits under specific circumstances, and banning the company from engaging in competitor contracts which suppress information which is truthful and non-misleading. The laws concerning keyword advertising have become much clearer over the past few years, which may be why the FTC waited until now to bring a lawsuit against 1-800 Contacts.

1-800 Contacts Chooses to Fight the “Voice of the Consumer” Agency

Interestingly, it appears 1-800 Contacts has chosen to fight the FTC on these allegations, despite the fact that the FTC is, well, a U.S. governmental agency with considerably more resources than the companies it typically targets. The FTC is widely viewed as the “voice of the consumer,” which makes it a much more sympathetic litigant than 1-800 Contacts (or any other profit-driven company). Further, the 1-800 Contacts case will be heard before an FTC administrative law judge, making it even more curious that 1-800 Contacts apparently refused a settlement offer.

How Far Will 1-800 Contacts Go to Defend the FTC Allegations?

In a nutshell, the FTC is claiming 1-800 Contacts committed antitrust violations through the use of “overreaching trademark demands.” (There are some who believe the trademark status is exceptionally weak for 1-800 Contacts anyway, due to the fact that it is more a phone number than a “source identifier”). Predictably, 1-800 Contacts strongly disagrees with the FTC’s allegations, but consider this: 1-800 Contacts spent over $650,000 pursuing Lens.com in 2010 regarding the use of competitive keyword ads which apparently generated a whopping $20 in profits for Lens.com. That is not a typo--$650,000 dollars spent over the use of competitive keyword ads which generated $20 in profit for Lens.com. Because of this, you can expect 1-800 Contacts to come out swinging against the FTC.

For its part, the FTC will continue to maintain that the bidding agreements engaged in by 1-800 Contacts harm consumers by restraining competition (resulting in higher prices for consumers) as well as through the reduction of relevant (truthful) advertisements by other online sellers of contact lenses. The trial is scheduled to begin on April 11, 2017, and the result of the trial could cause significant changes in trademark infringement and competitive keyword advertising laws.

1-800 Contacts In Focus For Unfair Competition And Raising Prices

Online contact lens giant 1-800 Contacts is under investigation by the Federal Trade Commission (FTC) for unfair competition and deceptive business practices. Consumers who purchased contact lenses online from 1-800 Contacts paid more than should have, according to the FTC.

Golomb & Honik, P.C. has filed a federal class action lawsuit on behalf of consumers against 1-800 Contacts. If you purchased contact lenses online from 1-800 Contacts, call the lawyers at Golomb & Honik, P.C. today at 1-800-355-3300 or 1-215-985-9177 or fill out our confidential Contact Form to see what your rights may be.

The national consumer protection lawyers at Golomb & Honik have successfully represented individuals in Philadelphia, Pennsylvania, New Jersey, and throughout the United States.

Categories: Class Action
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