• by Wendy Davis  @wendyndavis, August 6, 2009

Fake online identities have been around as long as the Web, but one Los Angeles company took a masquerade too far, according to the Federal Trade Commission.

The company, named "Balls of Kryptonite," allegedly posed online as a UK-based retailer in order to trick British residents into believing the cameras, video games and other electronics it sold were covered by the country's strong consumer protection laws.

The FTC says in court papers that company and its sole officer, Jaivin Karnani, pretended to operate out of the UK by creating Web sites with URLs like www.bestpricedbrands.co.uk and www.bitesizedeals. co.uk. The company also allegedly listed prices in pounds rather than dollars and said it would ship via the "Royal Mail."

Karnani denies misleading consumers, but stipulates in court papers that his Web sites use "co.uk" names and state prices in pounds. He also stipulates that the company sometimes failed to ship products as quickly as consumers anticipated.

U.S. District Court Judge Dean Pregerson in the central district of California recently issued a temporary restraining order banning the company from misrepresenting its location. The order also requires the company to disclose certain financial information to the FTC.

The FTC alleges in its complaint that the site sold UK consumers products that were different from what they ordered or were incompatible with UK power systems. "In other instances the user manuals and camera controls are entirely in Spanish or Chinese," the FTC says in its papers, which were quietly filed last month. The agency said in a statement issued Thursday that this action marks the first time it has sued a U.S. company that is exclusively doing business abroad.

The commission also alleges that UK purchasers assumed they were protected by the country's consumer protection laws, which give them the right to cancel a transaction within seven days of receiving merchandise and the right to full refunds for returns.

Karnani's lawyers did not return messages seeking comment, but the company argues in his court filings that it informs visitors it's based in the U.S. in the "About Us" section of its sites. Karnani also alleges that the company's home pages have said "From the US to Your Door" since June.

In addition, Karnani denies engaging in deceptive business practices, stating that purchasers have asked banks to deny payment for fewer than 1% of transactions. "It is highly unlikely that a company engaging in deceptive or dishonest business practices would be able to maintain a chargeback ratio below an industry standard 1% chargeback level," he argues. He also says that the company gives people refunds when it learns of incompatibility problems.