wuts with ONSL?
Onsale Files Request for "Declaratory Relief" in Santa Clara County
MENLO PARK, Calif.--(BUSINESS WIRE)--April 23, 1999--Onsale(R) Inc. (Nasdaq: ONSL), a
leading Internet real-time retailer, today filed a request for declaratory relief in
Santa Clara County Superior Court against the Santa Clara County District Attorney and
California Attorney General regarding an issue related to Onsale's atCost(TM) program.
The company introduced Onsale atCost on January 19, 1999 as a new and innovative way
for businesses and consumers to purchase a broad selection of quality computer products
directly over the Internet. Onsale displays to customers its wholesale invoice price for
the merchandise and then adds fees instead of the more traditional retail markup.
Shortly after the company launched Onsale atCost, the Santa Clara District Attorney
sent an inquiry to Onsale seeking information about Onsale's atCost program and asserting
that Onsale atCost might be in violation of certain provisions of the California Business
and Professions Code. In particular, the District Attorney's office asserted to Onsale
that Onsale's atCost web site must fully disclose all sources of profit directly related
to orders placed through Onsale atCost. Prior to its recent 'free shipping' promotion,
Onsale charged customers standard UPS rates, but negotiated a reduced cost with its
suppliers - a common industry practice.
Despite Onsale's disagreement with the District Attorney's positions, Onsale has
cooperated fully and moved swiftly to address the concerns raised by the District
Attorney's office. Although Onsale believes that its atCost disclosures fully satisfy all
of Onsale's legal obligations and that its customers were not misled into making
purchases by virtue of those disclosures, Onsale revised its Onsale atCost disclosures in
consultation with the District Attorney. At issue now is whether Onsale should pay to the
District Attorney's office a civil penalty, and should provide compensation to its
customers.
"We invented a new form of retailing, and provided revolutionary disclosures to
customers of the invoice cost Onsale paid to its vendors for each product, as well as a
detailed breakdown of each fee Onsale would charge the customer to complete the
transaction," said Jerry Kaplan, Onsale's president and CEO. "The District Attorney is
taking an even broader view of what disclosures should be made. Since there are no
existing laws or guidelines addressing this issue, we are happy to modify our web site to
satisfy this broader definition, but do not feel that we should be subject to penalties
due to this difference of opinion. We are therefore asking the courts to review this
matter and resolve it expeditiously in a fair and equitable manner.
"Our goal with Onsale atCost is to give our customers more information than they
typically get prior to making a purchase," Mr. Kaplan added. "It's ironic that we're
being taken to task for making these additional disclosures. We inform our customers
about the invoice price and all additional charges before any purchase takes place. Our
customers are thus free to compare our total charges with those found at other Internet
sellers and traditional retailers and to chose the best price available. We do not
believe our Onsale atCost disclosures have misled consumers in any way and are confident
the court will agree."
About Onsale
Onsale (Nasdaq: ONSL) is a leading Internet real-time retailer providing low prices
and personalized service through automation. Onsale atCost offers computer equipment at
wholesale prices directly to businesses and consumers. Onsale atAuction offers bargains
on excess merchandise and services through online auctions, such as personal computers,
consumer electronics, sports and fitness equipment, and vacation packages. Onsale atCost
and Onsale atAuction are located on the World Wide Web at www.onsale.com.
Note to Editors: Onsale is a registered trademark and Onsale atCost is a trademark of
Onsale, Inc. All other companies and their brand names mentioned are trademarks or
registered trademarks of their respective holders.
This press release contains forward-looking statements regarding the company and its
expectations which involve certain risks and uncertainties. These risks and other
uncertainties are described in more detail in the company's most recent quarterly report
on Form 10-Q and annual report on Form 10-K under "Risk Factors."
CONTACT: Onsale, Inc.
Brian K. Fawkes, 650/470-2713
bfawkes@onsale.com
14:02 EDT APRIL 23, 1999 |
