The FTC prohibits a former ClassicCloseouts.com CEO from handling any cardholder accounts.
Bill Briggs , Senior Editor
In a settlement announced late last week, the Federal Trade Commission has banned Daniel Greenberg, the former CEO of ClassicCloseouts.com, from handling any consumer cardholder accounts.
In 2009 the FTC alleged that Greenberg illegally acquired funds from consumers by making unauthorized charges and debits to their bank accounts.
Under terms of the settlement, which coincided with a ruling by the U.S. District Court for the Eastern District of New York, Greenberg now is banned from “owning, controlling, or consulting for any Internet-related business that handles consumers’ credit card or debit card accounts.”
He also is prohibited from making unauthorized charges to consumers’ accounts, making false or misleading statements while selling any goods or services, and using any false or assumed name, including an unregistered, fictitious company name, in his business dealings, the FTC says.
Greenberg, who ran ClassicCloseouts.com, a now-defunct Top 500 retail site, “made unauthorized charges and debits to consumers’ accounts months or years after they bought low-cost clothing or household goods from Classic Closeouts,” according to an FTC complaint in 2009.
Attempts to contact Greenberg were unsuccessful.
The settlement with Greenberg also imposed a judgment of $2.08 million. Because Greenberg has filed for bankruptcy, the judgment will be suspended, the FTC says, contingent on “his surrender of certain personal and household items and the fulfillment of other conditions related to the bankruptcy proceeding.”
In Operation Short Change, a 2009 crackdown on alleged criminals taking advantage of the economic downturn to bilk vulnerable consumers through a variety of schemes, the FTC filed a complaint against ClassicCloseouts.com and several other companies.
The FTC complaint charged the defendants with making unauthorized charges and debits to consumers’ accounts ranging from $59.99 to $79.99, and charging some accounts multiple times. Consumers who attempted to contact the defendants to contest the charges received no response, the FTC says.
At a court hearing in June 2009, the court issued a temporary halt to the alleged illegal conduct of Classic Closeouts, as well as an asset freeze and a receivership order. In July 2009, the FTC amended its complaint and named two more individuals—Jonathan Bruk and Stephanie Greenberg—along with several related companies, as defendants.
On Dec. 13, the district court granted the FTC’s motion for a default judgment and permanent injunction against Greenberg, the other defendants and Classic Closeouts.
Classic Closeouts, through its now-shuttered e-commerce site ClassicCloseouts.com, competed with mass merchants such as UnbeatableSale.com Inc., No. 306 in the Internet Retailer Top 500 Guide, and ShoppersChoice.com LLC, No. 374.
Other companies targeted by the FTC last summer included Google Money Tree, for allegedly misrepresenting that they were affiliated with Google and lured consumers into divulging their financial account information, and Grants For You Now, operators of web sites that deceived consumers by promising free government grant money to use for personal expenses or to pay off debt.