Feds accuse 1-800 Contacts of unfair business practices in complain

The U.S. government has filed a complaint against 1-800 Contacts, alleging that the online contact lens seller reached agreements with 14 rivals to hamper consumers seeking to compare prices. 

The U.S. government has filed a complaint against 1-800 Contacts, alleging that the online contact lens seller reached agreements with 14 rivals to hamper consumers seeking to compare prices.

The Federal Trade Commission alleged in an administrative complaint that the Draper-based company had agreed with other online contact lens retailers that they would not advertise to customers who had searched online for 1-800 Contacts. 1-800 Contacts agreed, for its part, to not advertise to customers who searched for its rivals, whose names were redacted from the complaint.

The retailer is the world’s largest contact lens store, according to its website, which touted total sales to more than 8 million customers.

“1-800 Contacts has aggressively policed the bidding agreements, complaining to competitors when the company has suspected a violation, threatening further litigation, and demanding compliance,” the complaint said. The FTC action was not filed in district court but to its own administrative court.

The agency federal alleged in a statement last week that 1-800 Contacts’ business tactics amount to “an unfair method of competition in violation of federal law.” The trial on the complaint is scheduled to begin April 11, 2017.

The federal complaint states that 1-800 Contacts entered into “bidding agreements” with more than a dozen competitors to inappropriately affect search engine queries. The agreements were “designed to keep search engines from displaying one party’s advertisements in response to a search query that includes terms specified by the other party — typically trademarked terms or variations of them,” FTC spokesperson Betsy Lordan said in a statement.

1-800 Contacts responded in a statement released last week, denying the FTC’s claims of anti-competitive business tactics. “1-800 Contacts strongly disagrees with the Federal Trade Commission’s contention that settlement agreements designed to protect its trademark hinder competition,” the company statement said. “1-800 Contacts is confident in its legal position and will vigorously defend its intellectual property rights.”

“1-800 Contacts has a long history of advocating for increased competition and consumer rights, including championing the passage of the landmark Fairness to Contact Lens Consumers Act of 2003 that increased convenience and lowered prices for consumers, and opposing recent price fixing by manufacturers,” the company’s statement continues. “1-800 Contacts strongly believes in a competitive contact lens marketplace and will continue to be a leading advocate for providing consumers with more choice, greater convenience and lower prices.”