Small businesses and nonprofits should never be on the receiving end of another company’s deceptive practices. An FTC action challenges the methods of companies that allegedly pitch offers for “no risk” business publications and then follow up with hefty bills for unauthorized orders. But it doesn’t stop there. The FTC says if a business refuses to knuckle under to payment demands, the defendants turn the account over to a debt collector, whom the FTC also has sued. Notably, the defendants have received warnings about their practices for years.
The pitch begins with a call to a business or nonprofit group – including schools, fire departments, and even police stations – placed by telemarketers calling on behalf of American Future Systems, which uses names like Progressive Business Publications or the Center for Education & Employment Law. The caller claims to have a question or wants to share information with the office go-to person on a certain topic – say HR, employment law, or environmental compliance. Even if the receptionist asks “Are you selling something?” they’re scripted to answer no.
Once they get the employee on the line, the telemarketer offers to send samples of a newsletter or book at “no risk” so “you can see if it is a good fit with what you’re already doing there.” The telemarketer may mention the cost of a subscription, but says they’ll follow up to see if the employee likes the sample. The telemarketer also asks the employee for their birthdate “just to verify that I spoke to you.”
According to the FTC, the employee is left with the impression they’re getting a free, no-obligation sample to review. So it’s a shock when an invoice shows up claiming a balance due of hundreds of dollars. The complaint alleges the invoice doesn’t include information about how to cancel and doesn’t give a telephone number or email address. What’s more, the FTC says the defendants send those invoices without asking if the employee is authorized to incur financial obligations on their employer’s behalf. And even if businesses find a way to tell the defendants to stop, the complaint alleges those requests are often ignored.
So more newsletters arrive followed by more invoices, some of which give the employee’s birthdate as purported proof of the order. If the business refuses to pay, they’re eventually threatened that the account will be referred to a collection agency. According to the FTC, that’s one promise the defendants often keep – and that’s when defendant International Credit Recovery, also known as ICR, enters the picture. The FTC alleges ICR makes misrepresentations to get people to pay, including that the purported debts are valid, that they have a legal obligation to pay, and that failing to pay will result in legal action or have a negative impact on their credit rating.
You’ll want to read the complaint for allegations about other illegal practices, but the FTC says the Progressive Business Publications defendants misrepresented trial offers, failed to clearly disclose negative option terms, and violated the Unordered Merchandise Statute. The lawsuit charges that the ICR defendants used misrepresentations to induce payment from consumers.
There’s another reason to read the complaint in this case. It alleges a long history of consumer complaints against Progressive Business Publications, including a settlement with the U.S. Postal Service, two alerts placed by the Better Business Bureau on the company’s public BBB profile, and a defamation action the company filed against the BBB that resulted in a jury verdict in the BBB’s favor.
The FTC says ICR, too, has been the subject of substantial consumer discontent, including the unenviable “honor” of being the top generator of BBB complaints in its region. In addition, ICR was the subject of a U.S. Department of Agriculture alert regarding their collection practices for publications businesses and other entities claim they didn’t order.
The case is pending in federal court in Pennsylvania. But here are steps you can take any time to help protect your business.
Alert your staff. Take a minute to talk to your employees about how operations like this work. The FTC has a brochure, Scams and Your Small Business, that can clue you in on common B2B scams. Even if you don’t have a purchasing department, tell your team to funnel cold calls through one person. We suggest a skeptical sort who insists on looking every possible gift horse in the mouth.
Spread the word. Nonprofit groups are targeted, too, but it can be difficult to educate volunteers who work at different times. If you’re active in organizations in your community, discuss B2B deception in a newsletter or email that goes to volunteers and place a warning on every desk where a phone rings. Too busy to draft something on your own? You’re welcome to get language from the FTC brochure.
Report questionable practices to the FTC. When you smell a scam, contact us with any information you have.