The Federal Trade Commission forced a Georgia woman to sell her car as punishment for selling cosmetic contact lenses over the internet without first asking for customers’ prescriptions. In papers filed last week with a federal court in Atlanta, the US Attorney for the Northern District of Georgia, acting on the FTC’s behalf, accused Da Young Kim, the sole owner and manager of Gothic Lens LLC, of failing to obey the Commission’s rules governing the sale of contact lenses. The FTC fined Kim $50,000, but due to her limited financial resources, the Commission seized her car in lieu of payment.
According to the DOJ/FTC complaint, Kim’s Gothic Lens LLC sold “decorative” contact lenses for theatrical and other uses (such as Halloween costumes). In 2003, Congress enacted the “Fairness to Contact Lens Consumers Act,” which granted the FTC a regulatory franchise over sellers of contact lenses. Additionally, in 2005 Congress decreed that decorative (non-medical) contact lenses were “restricted medical devices” subject to the regulatory monopoly of the Food and Drug Administration. Because of these two decrees, anyone selling decorative contact lenses must, under FTC rules, obtain and verify prescriptions from a government-licensed optometrist or ophthalmologist for every consumer who wishes to purchase such “restricted medical devices.”
The FTC claimed that, “In numerous instances, in connection with the advertising and sale of [decorative] contact lenses, [Kim and Gothic Lens LLC] have sold [decorative] contact lenses to consumers without obtaining the consumers’ contact lens prescription or verifying the prescription by direct communication with the prescriber.” The FTC did not provide any details about these “numerous instances,” nor did it say how it learned of the alleged violations. (In many cases, the FTC conducts its own “undercover” operations against small businesses, having an FTC employee make a fraudulent purchase to test compliance with Commission mandates.)
Notably, the FTC did not allege a single instance of consumer harm caused by Kim or Gothic Lens LLC’s actions. Although an FTC press release about the case warned, “The improper use of contact lenses, whether they are corrective or not, can cause corneal ulcers, corneal abrasions, vision impairment, and blindness,” none of the supporting court documents suggested there was ever any improper use of contact lenses by Kim or Gothic Lens LLC’s customers. In fact, the FTC’s use of this statement in its press release appears to be an attempt to mislead the public about the facts of this case by suggesting, without cause, that the accused somehow acted with intent to injure customers.
Under a consent decree imposed by the FTC and the US Attorney’s office, Kim is subject to criminal penalties if she fails to comply with numerous FTC business and record-keeping requirements for up to the next eight years. The consent decree also threatens additional financial penalties if Kim fails to disclose all of her financial records to the Commission.
As noted above, the consent decree also requires Kim to auction off her personal automobile and transfer the sale proceeds to the FTC — as a “civil penalty owed the United States Government” and not, the DOJ emphasized, as compensation for any alleged injury to an individual.
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How anyone can read a story like this and not feel revulsion in the pit of their stomach is beyond me. One more productive member of society providing something consumers want, shut down (and had her car stolen, to boot!).
And the car IS theft. No one was harmed. How can restitution be involved when there’s no transgression? It boggles the mind.
Off to the gulag with this gal. Remember, we are all Europeans now. When in doubt, a citizen should think it’s forbidden unless allowed by the authorities.
To prepare my children for adulthood, I have them fill out a 10 page application for every activity, from going outside to play with neighborhood kids, fly a kite, play on the i-Pad, eat a cupcake, etc. To keep things real, I sometimes arbitrarily deny applications for made up reasons, or no reasons at all. When they appeal to mom, she makes them grovel and beg before denying the appeal. My kids are on the way to success. They will blow away any China Mom Kids.
Oh, the US Government was harmed by this. You hurt their feel of omnipotence and shall punish you for daring to deny their Godliness.
Grand Theft FTC
Now I feel like an idiot – the other day I went looking for novelty contact lenses for a party, and I was astounded to see that something so simple was not already a thriving internet business. Surely by now, 2010 (well, it was like a month ago), I should be able to get contact lenses online? They’re tiny, and weigh practically nothing, the postage cost would be a joke!
Ah, but I forgot, my government was looking out for me. For all Austrians’ talk of “hidden, unseen” costs of government, we sure seem to find a lot of blatant, obvious ones…
Oh sure, once you start looking, you can find truth. The problem is, is that most people aren’t looking! That which is hidden and unseen is only that to those who purposely blind themselves or to those who have no conception of what the pattern might look like. Kind of like how when a blind man becomes able to see, everything is still blurry until his mind builds an image library.
I wonder what Senator Rand Paul thinks about this.
Why is she being held personally liable for the actions of her LLC? Shouldn’t, at most, the DOJ be able to get a judgment lien against the business? If this were an action against one of the big guys, there is no way that the CEO, the majority shareholder, or the Board of Directors would be asked to sell their personal vehicles to pay off the company’s debts.It’s not even as though she’s deciding to sell her car to put more equity into the business so that it can pay off its debts – the consent decree is acting on the owner personally.
America: the land where you can start a small business with your last pennies, and end up being forced to sell your car and facing criminal prosecution even while making profit by giving your customers what they want.
I think if this was a civil action by someone (without a law to back it up) the LLC would be protection, but against the state LLC is no protection. That’s just a guess on my part but it would make sense based on the notion of the state as our great guardian.
I actually don’t like limited liability in many cases but if there isn’t gross negligence (or intentional harm) I don’t see it, and I don’t think not knowing about every single possible regulation when there are thousands of new ones every year is gross negligence.
This isn’t a case of tort liability. It’s a statutory violation. The FTC generally holds owners of businesses liable regardless of corporate form. Normally a non-owner employee would not be held liable, although I’ve seen exceptions.
The government doesn’t give a damn about entity status. Try not paying payroll taxes for your Inc or LLC and see what happens. Limited liability is a grant from the State. And like IP, it’s a bogus construct that would not exist in Libertania.
What kind of statist would support this? I’d like to see the man who thinks we can’t buy contact lenses for ourselves. What a joke.
Just woke up…first article I read…pretty sick. Thank god she’s in jail, otherwise she’d be satisfyin consumers and creating jobs during the worst depression in 80 years.
I agree. I feel so much safer now. Who knows how many potential criminals out there will now be stopped from selling me something I want. Thank god the government is protecting me from having things I didn’t even know I didn’t want.
Yeah but if they don’t go after the cosmetic contact-lens sellers then how are they going to get a legal precedent in place so they can nail the Dollar Store owners and clerks for selling hair replacement products (fright wigs) and prosthetic devices (rubber noses) without official authorization. If you keep hiding behind this “Halloween” dodge then where would the government be? Out of work and out of money, that’s where. Try to think about that the next time you go off on the FTC. They’re just working slobs trying to make a dishonest living so they can pay off their gigantic student loans racked up at insignificant law schools.
What’s interesting is how interlocking the state’s monopoly is. You don’t get prescriptions from a state-licensed optometrist, and another arm of the state will take your vehicle.
Desire to control anything and everything — that is the psychological trait that draws people to DC.
This is what happens when we take law out of its natural state and place it into the hands of a coercive monopoly. Harry Browne was right: the state (or “government,” as he called it) doesn’t work.
I’ve been watching a lot of Stossel recently. This story of government corruption seems like the kind that’s right up his alley.
And this is what we’re forced to pay these baboons to do? Hard to believe, if I didn’t know better……..
I would’ve went out and wrecked the car immediately after court. Well, that’s not true. I never would’ve showed up for court in the first place. As long we keep letting the government do things like this, it will only get worse. It’s high time we stood up and took this country back and restored it to it’s very roots. Reform my ass. We need a full fledged revolution. Cleansing by fire. Burn it all down and start from scratch.
10,000,000 dead cops and politicians -silk screen t-shirts for sale. Support your local militants.
Violence begets more violence. Economically, violence is the substitution of your own values onto others, necessarily producing a net drop in wealth as between the perpetrator and the victim.
Instead of seeking to “restore[] it to it’s [sic] very roots,” the means of achieving liberty should be non-cooperation and the creation of voluntarily funded alternatives. For if you try to impose by force a new social order, then those in control after the revolution will be those who see no problem using force to reshape society – and again the individuals in the country will be subject to arbitrary violence.
If you are sincere about liberty, support those who seek liberty not by reducing the liberty of others, but by refusing to contribute to the force already being applied.
(And from a pragmatic POV, do you really expect to be able to overcome the powerful propaganda and military capabilities of the state by playing their own game of violence?)
The real absurdity is that, since the lenses are non-corrective, there is no prescription. This woman’s car was stolen by the state because she could not produce a document that did not, and could not, exist.
Even if they were corrective lenses, it still doesn’t justify FTC action.
Of course not. This action by the FTC is an example of statist violence against an individual, and further justification to shut down the FTC. I have been reading Sprading’s Great Libertarians and came across this quote from Benjamin Tucker which is applicable, “We enact many laws that manufacture criminals, and then a few that punish them.” This is a case of making something a crime which is no crime.
Antitrust really is the mother of all regime uncertainty.
OMG that is such a terrible news. What happened to the customers who happened to buy those unprescribed products? Hair Replacement Service
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