A federal district court has awarded the Federal Trade Commission $7.5 million against two Canadian companies and an individual accused of tricking U.S. businesses and organizations into paying for unordered business directories and listings. The court also permanently banned the defendants from selling business directories or listings to U.S. residents. In addition, the court ordered the defendants to return uncashed checks totaling over $140,000 to approximately 300 consumers.
The FTC’s original complaint filed in February 2005 charged six individuals and three Canadian companies with fraudulently telemarketing directories and listings. The FTC alleged the defendants called businesses and organizations in the U.S. and told employees they were merely verifying information for a directory listing previously authorized by another employee. If employees were hesitant, telemarketers assured them that they had a trial period, typically 30 days, to review the directory. The complaint alleged the defendants then sent an invoice for the business directory purchase, which no one had in fact authorized. If the business or organization did not pay the invoice, the bill was referred to an in-house collection company that hounded the company.
The district court entered a summary judgment order against two of the companies and one individual. A summary judgment was entered against 9125-8954 Quebec Inc., doing business as Global Management Solutions; 9125-8947 Quebec Inc, doing business as Commutel Marketing and Marketing USA; and Ty Nguyen. The order requires them to pay $7,578,186 and forfeit all rights to all frozen assets, including the uncashed checks and $40,000 from a frozen merchant account the defendants used to process credit card payments. The order also permanently bans the defendants from selling business directories or listings to U.S. residents.
The FTC also has reached settlements with three other defendants. Byron Steczko and Cory Kornelson, former presidents of two of the corporate defendants, agreed to permanent bans on selling business directories or listings to U.S. residents. Phong Anh Vo, another former corporate defendant president, also entered into a settlement with the FTC. In addition, the settlement orders entered a $3,819,481 judgment against Steczko, a $2,086,482 judgment against Kornelson, and a $1,618,268 judgment against Vo. All of the judgments are suspended based on the defendants’ inability to pay. The FTC previously announced settlements with two other individuals, Kelly Nguyen and Minh Tam Vo, and a default judgment was entered against a third corporate defendant, American Business Solutions.
All of the orders announced today also prohibit the defendants from misrepresenting that consumers:
The orders also prohibit the defendants from misrepresenting any material fact about a any good or service, or any material fact about the terms, conditions, or limitations of any refund or guarantee policy. The orders announced today require that in outbound calls, the defendants disclose promptly and conspicuously the identity of the seller, that the purpose of the call is to sell goods or services, and the nature of the goods or services. The defendants must disclose in a clear and conspicuous manner all material terms, conditions, and limitations of any refund or guarantee policy or any policy of non-refundability.
The FTC worked closely with and received invaluable help in bringing this case from several Canadian law enforcement partners: the Canadian Competition Bureau; the Canada Revenue Agency; the Victoria Police Department; the Royal Canadian Mounted Police; and the Business Practices and Consumer Protection Authority of British Columbia. In addition, the FTC appreciates the investigative assistance it received from the U.S. Postal Inspection Service; the Washington State Office of the Attorney General; the State of Nevada Office of the Attorney General; and the Better Business Bureau.
The Commission votes authorizing the staff to file the stipulated final orders for permanent injunction were 5-0. The U.S. District Court for the Western District of Washington entered the settlements with Phong Anh Vo on May 10, 2006, and with Byron Steczko and Cory Kornelson on July 19, 2006. The Court entered the summary judgment order against Global Management Solutions, Commutel Marketing and Marketing USA, and Ty Nguyen on August 1, 2006.
NOTE: A stipulated final order is for settlement purposes only and does not constitute an admission by a defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.
Copies of the summary judgment order and the stipulated final orders 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 in English or Spanish (bilingual counselors are available to take complaints), 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/ftc/complaint.htm. 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.
(File No. X050038, Civ. No. 05-0265 TSZ)