Three Canadian telemarketing companies that operated boiler rooms in Quebec and Ontario are banned from selling directories or non-durable office supplies as part of a settlement with the Federal Trade Commission. According to the FTC, the defendants engaged in fraudulent business practices in the sale of business directories and non-durable office supplies, and targeted businesses primarily in the United States. The settlement also bans the defendants from telemarketing any product or service into the United States without having certain protections in place.
In November 2002, the FTC filed a complaint in federal district court in Ohio against
Hanson Publications, Inc. (Hanson); 9069-5057 Quebec, Inc. (Hanson-Quebec); Associated Merchant Paper Supplies, Inc. (AMPS); Albert Mouyal; Adrian P. Towning; and Charles Hamouth. The FTC coordinated this action with Canada’s Competition Bureau, which also brought a criminal action against the defendants. The FTC alleged that the defendants used telemarketing operations based in Canada to convince businesses across the United States to accept delivery of, and make payment for, business directories, and paper and ink supplies for credit card machines. The FTC alleged that the defendants used deceptive scripts to mislead consumers into believing that their company had a prior, ongoing relationship with the defendants, and that someone else at the company already had purchased the product. Defendant AMPS also used a script that misstated its identity and the nature of the call to get details about the businesses’ credit card machines and the personnel in charge of them, the FTC alleged. The defendants then used repeated telephone calls and letters threatening collection in order to convince consumers to pay for goods that often were unwanted and overpriced, the FTC alleged.
The settlement announced today includes all of the defendants except Albert Mouyal. The stipulated final order, which the court signed on January 7, 2004, bans the settling defendants from selling directories or non-durable office supplies. The stipulated final order alsobans them from telemarketing any product into the United States, unless they have the customer’s agreement to purchase the product either in writing or in a face-to-face transaction. The settlement prohibits the defendants from misrepresenting that consumers ordered goods that were shipped and/or billed to them, and that the entity on whose behalf the misrepresentation is being made is connected with or is the customer’s regular supplier of goods or services. The settlement further prohibits the defendants from violating the Telemarketing Sales Rule.
The settlement requires the defendants to pay $839,000 for consumer redress, and contains an avalanche clause which requires them to pay $70 million if it is found that the defendants misrepresented their financial condition. The settlement also contains various recordkeeping requirements to assist the FTC in monitoring the defendants’ compliance.
The FTC’s East Central Region - Cleveland handled this matter, with assistance from the International Division of the Bureau of Consumer Protection. The FTC received significant assistance from the Toronto Strategic Partnership, a cross-border fraud law enforcement partnership which, in addition to the FTC, includes Canada’s Competition Bureau; the Anti-Rackets Section of the Ontario Provincial Police; the Toronto Police Service Fraud Squad; the Ontario Ministry of Consumer and Business Services; the York Regional Police Service; the United States Postal Inspection Service; and the Ohio Attorney General’s Office. The Office of Foreign Litigation of the Department of Justice also provided significant assistance, successfully defending a legal action brought by the settling defendants in Canada.
The Commission vote authorizing staff to file the proposed stipulated final order and permanent injunction was 5-0.
NOTE: This stipulated final order and permanent injunction is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated final orders have the force of law when signed by the judge.
Copies of the stipulated final order and permanent injunction are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Office of Public Affairs
(FTC Matter X030009)
(Civil Action No. 1:02 CV 2205)