Website owners given jail time

JERUSALEM - The owners of an online auction website will be taking orders of a different nature soon, as an Israeli court sentenced them to prison for breaching consumer protection laws.

It is apparently the first time in Israel that a prison sentence was handed down under the internet sales rules and consumer protection laws.

The sentence was meted out to the owners of the Direct Auction Company, who run two websites, (www.thebid.co.il) and a brochure advertising the auctions. Sales were conducted by internet bidding: The defendants advertised a minimum bid next to the suggested retail price, and the public was invited to submit bids accordingly. The company agreed to supply the auction winners with the product within the time frame advertised and charged the consumer’s credit card directly.

Admitted guilt

The defendants admitted they did not provide the service they had promised to consumers who ordered products, and said about some 60 clients did not receive products they bid on, or did not receive them within the time promised.

"The defendants, themselves or through their representatives, prevented, delayed or made it difficult for consumers to cancel the transaction and be reimbursed for the money paid,” read the indictment.

Municipal court Judge D. Reich-Shefiya found the defendants intentionally misled consumers about important details pertaining to the transactions, and said that in practice some of the auctions were even fictitious or did not take place at all.

She then rejected a plea bargain and berated both the prosecution and defense for even suggesting it: “It’s unfortunate that I did not receive reasonable explanations or clarifications from either side in this case.

“The defendants committed grave offenses. Beyond what they have done to the particular consumers in this case, is the severe and ongoing damage they have done to all credit card sales in general, and through the internet in particular,” she wrote.

Raising the bar

The judge went on to say that the consumer protection laws for online sales require a more expansive interpretation because their infringement can damage the entire existence of a modern, open market, and the public who engages in it.

As such, the severity of these crimes must be comparable to those committed in other markets and under other laws.

"In my opinion, if until now prison sentences have not been handed down for infringement of these laws, it is time to raise the bar for punishment of these offenses.”

Both the company and the owners were fined, with the owners to serve three months in jail with a six month suspended sentence.