The Department of Justice Antitrust Division recently announced that California-based Custom Wristbands Inc. (d/b/a Kulayful Silicone Bracelets, Kulayful.com, Speedywristbands.com, Promotionalbands.com, Wristbandcreations.com, and 1inchbracelets.com) (“Custom Wristbands”) and its top executive Christopher Angeles agreed to plead guilty for conspiring to fix prices for wristbands and other customized novelty products sold online.
This is the second e-commerce company to plead guilty to price-fixing in recent weeks.
Earlier this month, DOJ secured a guilty plea from Zaappaaz Inc. (“Zaappaaz”), a Texas e-commerce company, and its founder, Azim Makanojiya, who admitted to taking part in a price-fixing conspiracy. Zaappaaz, which operates online as WB Promotions, Wrist-Band.com and Customlanyard.net, allows shoppers to customize silicon bracelets (similar to the once-ubiquitous LIVESTRONG bracelets) with designs and text. Makanojiya founded Zaappaaz in 2007 while he was an undergraduate student at the University of Houston. After just a year of operation, Zaappaaz was earning over $6.9 million annually and had become the largest online retailer of silicone wristbands in the United States.
According to the charges filed by DOJ, in both the Custom Wristbands and Zaappaaz cases, beginning in at least 2014, the conspirators held in-person meetings and used social media platforms and encrypted messaging applications (such as Facebook, Skype and Whatsapp) to reach and implement their illegal agreements.
As part of its plea agreement, Zaappaaz agreed to pay a $1.9 million criminal fine. Custom Wristbands agreed to pay a $409,342 criminal fine. The individual defendants face up to 10 years in prison and a maximum of a $1 million fine.
The Antitrust Division’s investigation into price-fixing in the online promotional products industry is ongoing, and further indictments and/or plea agreements may be forthcoming. Last month, a trade publication reported that the FBI interviewed executives of Totally Promotional, an Ohio-based customized promotional products company, about potential price-fixing in the industry. That company has denied any involvement in the scheme but confirmed it is aware that the government is closely scrutinizing the industry.
We will continue to monitor this investigation as it develops.
