1-800 Contacts Class Action Alleges Anti-Competitive Online Advertising

Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.

Online contact lens retailer 1-800 Contacts Inc. is accused of scheming to prevent competition in the online market for contact lenses and hampering consumers seeking to compare prices, according to a class action lawsuit filed in federal court Thursday by two California consumers.

Plaintiffs J Thompson and William Duncanson allege 1-800 Contacts conspired to restrain competition in the direct-to-consumer and online markets for contact lenses by fixing prices for direct-to-consumer online ads.

Contact lens retailers such as 1-800 Contacts rely heavily on internet advertising to attract and inform consumers about their products and to direct consumers to their websites and phone representatives. The vast majority of the advertising is done through internet search engines such as Google and Yahoo!.

Typically, when consumers conduct web searches for contact lenses, they are presented with options from a range of contact lens sellers.

However, according to the 1-800 Contacts lawsuit, through agreements that rigged search results in response to online user queries, 1-800 Contacts ensured that consumers were only presented with one option – “to pay whatever the defendants wanted to charge in a competition-free market.”

“In particular, 1-800 Contacts abused its monopoly power and entered into bilateral agreements with each of its competitors/co-conspirators to not bid against each other in advertising auctions conducted by internet search engines,” the plaintiffs allege.

They bring the proposed class action lawsuit for damages and other relief against 1-800 Contacts and other named and unnamed defendants for alleged violations of the Sherman Antitrust Act and California’s Cartwright Act and Unfair Competition Law.

Thompson and Duncanson seek to represent a certified Class of all direct-to-consumer purchasers of contact lenses, including those who purchased contact lenses online, in the United States and a subclass of all California residents.

This lawsuit comes on the heels of a complaint filed by the U.S. Federal Trade Commission against 1-800 Contacts in August.

The FTC’s lawsuit claims that 1-800 Contacts used a series of bidding agreements with as many as 14 rival contact lens sellers to give it an unfair advantage in online advertising.

Those agreements allowed 1-800 Contacts to bid without competition for advertisement listed on search engines such as Google or Bing. The result, according to the FTC, was that some consumers paid higher prices for their contact lenses.

The FTC alleges 1-800 Contacts competitors were prompted to sign the anti-competitive agreements after the contact lens maker filed or threatened to file lawsuits related to use of its trademark.

The lawsuit also follows a similar complaint lodged against 1-800 Contacts in September by a California woman. The plaintiff in this case, Pam Stillings, claims 1-800 Contacts charged inflated prices for contact lenses because of agreements the company made with over a dozen competitors to fix bids for online advertisements.

Thompson and Duncanson are represented by Steven M. Jodlowski, Patrick J. Coughlin, David W. Mitchell, Brian O. O’Mara, and Carmen A. Medici of Robbins Geller Rudman & Dowd LLP; Brian J. Robbins, George C. Aguilar, Gregory Del Gaizo of Robbins Arroyo LLP; and Joshua S. Brownstein and M. Ryder Thomas of Brownstein Law Group PC.

The 1-800 Contacts Anti-Competitive Online Advertising Scheme Class Action Lawsuit is J Thompson and William P. Duncanson v. 1-800 Contacts Inc., et al., Case No. 3:16-cv-02552, in the U.S. District Court for the Southern District of California.

UPDATE: On Sept. 25, 2017, 1-800 Contacts agreed to pay $7 million to end a class action alleging the company conspired with other retailers to hike the prices of online contacts.

UPDATE 2: On July 5, 2019, Luxottica reached a settlement with customers, extracting itself from a class action lawsuit alleging that 1-800 Contacts and other companies colluded to reduce competition in the contact lens market.

UPDATE 3: On Sept. 17, 2019, Walgreens and Vision Direct agreed to settle antitrust class action claims against them, leaving 1-800 Contacts as the only remaining defendant in the litigation.

UPDATE 4: July 2020, the 1-800 Contacts class action settlement is now open. Click here to file a claim.