FTC Puts Business Directory Scam out of Business

A Canadian defendant and his business are permanently banned from selling business directories and listings in those directories to U.S. consumers. To settle the Federal Trade Commission charges they were fraudulently telemarketing directories and listings, the defendant and his mother, another director of the business, will also forfeit all rights to uncashed checks they received because of their scheme. The FTC will be able to return to U.S. consumers those checks that have been seized from the defendants’ U.S. mailboxes, worth more than $36,000.

In addition to the settlement with the two individuals, the FTC has been granted a default judgment against the business, which includes a $908,710 judgment. Both the settlement and the default judgment have been entered by the judge.

The FTC charged Kelly Nguyen, founder and president of the Victoria, British Columbia-based American Business Solutions (ABS), and his mother, Minh Tam Vo, another director of ABS, and several related Canadian companies and their principals with deceptively marketing business directories to U.S. consumers through unsolicited phone calls. According to the FTC, the defendants misled businesses and organizations into believing that someone in their organization previously authorized the purchase of the directory and the listing. The complaint alleged the defendants then mailed invoices to these businesses and organizations, typically billing them between $249 and $459 for the directory and the listing. After receiving these invoices, the FTC alleged, many individuals realized that no one from their organization ordered a directory listing. In many instances, according to the complaint, when organizations refused to pay the invoices, they were referred to the defendants’ in-house collection company, which harassed them with frequent telephone calls, dunning notices, and threats to initiate legal action and damage credit ratings.

In addition to releasing their rights to uncashed checks, Nguyen and Vo are prohibited from attempting to collect any payments for business directories or listings in these directories. They also are barred from making the kinds of misrepresentations alleged in the Commission’s complaint or misrepresenting any material fact about a good or service, or the terms, conditions, and limitations of any refund or guarantee policy. Also, they must make certain additional disclosures regarding the nature of the solicitation in any outbound telemarketing calls. Further, if the defendants are found to have misrepresented their financial status to the FTC, they will have to pay $908,710, which represents the total amount of consumer injury in this case.

The FTC's case against the remaining defendants – Global Management Solutions; Commutel Marketing, also doing business as Marketing USA; Ty Nguyen; Cory Kornelson; Byron Steczko; and Phong Anh Vo -- continues.

The FTC worked closely with and received invaluable help in bringing this case from several Canadian law enforcement partners: the Victoria Police Department; the Canadian Competition Bureau in Vancouver, British Columbia; the Canada Revenue Agency; 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 State of Nevada Office of the Attorney General; the Washington State Office of the Attorney General; and the Better Business Bureau of the Southland in California.

The Commission vote authorizing the staff to file the stipulated final order for permanent injunction was 5-0 and it was entered by the U.S. District Court for the Western District of Washington on February 9, 2006. The Court entered the default judgment against ABS on November 16, 2005.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation.

Copies of the stipulated final order 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.

(FTC File No. X050038,

Civ. No.05-0265 TSZ)