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LG Inks Internet Watchdog Firm

5/17/2005 08:43:00 AM Eastern

Englewood Cliffs, N.J. — In an effort to protect its firm policies against distributing its products on line, LG Electronics has hired Net Enforcers, a company that tracks and monitors resellers and trans-shippers who sell products on the Internet without manufacturer authorization.

“We want to ensure that a consumer who goes into a store gets a quality presentation, sees product properly merchandised and is explained the benefits of our products and our leadership by a well-trained sales person,” said Bob Perry, LG’s sales VP.

Perry said LG does not allow any dealer to sell LG-branded consumer electronics products — not including IT peripheral products and appliances — on the Internet. Dealers are permitted to merchandise LG CE goods on the Web, but the sale must take place in a brick-and-mortar store, he added.

Perry said “it appears there are some errant dealers, who perhaps unbeknownst to them, are transferring [LG-branded CE] products to the Internet. In some of our conversations with dealers, they are concerned that this is undermining their ability to invest properly and get a strong return on their investment for retail displays, training, etc.”

Perry said Net Enforcers will assign a team to constantly search the Internet for errant dealer and auction sites and find LG consumer electronics available for sale, tracking the source of the product, including tracing serial numbers back to dealers who originally purchased the products. In addition, Net Enforcers will monitor violations in using the LG brand and trademarks by unauthorized dealers and resellers.

The contract runs one year, said Perry, adding that “we fully expect to extend that contract after one year.” He said Net Enforces was a cost-effective program for the benefit gained by LG and its dealers.

Perry said LG signed on Net Enforcers “after seeing product appearing in clearly inappropriate places, and began to get complaints from consumers that after they bought the product they weren’t getting good service, support or installation,” said Perry, adding that in one case a consumer was not getting satisfactory warranty service.

The problems became more pronounced “in the last four or five months as LG products became more desirable, and the brand began to get recognized more strongly,” Perry said.

“We feel this is critical to ensure the LG brand remains a premium brand and that dealers who are committed to this brand are able to generate the kind of return on investment that’s necessary to ensure a quality customer experience at retail,” Perry said.

Joseph Loomis, Net Enforcers’ president, said, “We will be there to help Bob keep the retailers happy, keep a fair competitive market and protect the brand against abuse of the logo.”

Perry said he does not believe unauthorized Internet distribution is a widespread problem for LG.

“This is an issue of a couple bad apples,” Perry said. “But we do not want it to become widespread problem, which is why we are investing in this investigative program through Net Enforcers.”

Enforcement measures imposed on those found violating LG policies range from termination of dealership agreements to trademark-violation litigation.

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