Canada-Based Schemes Targeted Small Businesses, Nonprofits in U.S.
The Federal Trade Commission has halted two Canada-based schemes that defrauded small businesses and nonprofits in the United States by billing them for unwanted listings in online “yellow pages” business directories.
The owner of a Montreal-based operation that bilked millions of dollars from businesses, churches, nonprofits and local governments will be banned from the business-directory industry under a settlement with the FTC.
In June 2014, the FTC charged Oni Nathifa Julien and several of her companies with contacting organizations under the guise of confirming contact information in a directory in which their organization already appeared. The defendants billed organizations $479.95 or more, using invoices with the walking fingers image often associated with local yellow page directories. If the recipients disputed the invoices, the defendants used deceptive collection tactics, such as playing altered or incomplete audio recordings to give the false impression that an employee of the organization had authorized a directory listing.
Under the settlement order, Julien is prohibited from misrepresenting any good or service, including that organizations have a preexisting business relationship with her or anyone else, that they have agreed to buy something, or that they owe money. She is also barred from continuing to collect money from past customers or profiting from or keeping their personal information. The order imposes a $3,081,969 judgment that will be suspended due to Julien’s inability to pay. The full judgment will become due immediately if she is found to have misrepresented her financial condition.
The Commission vote approving the proposed stipulated order for permanent injunction and monetary judgment was 5-0. The order was entered by the U.S. District Court for the Western District of Washington at Seattle on March 10, 2015.
NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.
Medical Yellow Directories
At the FTC’s request, a federal court has halted a Quebec-based scheme that allegedly defrauded medical practices, churches, and retirement homes, generating more than 1,800 complaints from consumers. The FTC seeks to stop the illegal practices permanently.
According to a complaint filed by the FTC, the defendants used a variety of business names, typically including the words “American” and “Yellow,” to send consumers unsolicited invoices bearing the well-known “walking fingers” image and seeking $480.95 or a similar amount for a one-year directory listing. Consumers were directed to send checks to U.S. addresses that are really commercial mail receiving agencies that forward mail to Quebec.
The invoices named someone from the targeted organization and showed the listing as it purportedly would appear in a directory, suggesting that someone previously agreed to buy a listing. Those who ignored the invoices received more of them with statements such as “COLLECTION WARNING” and “LAST CHANCE TO PROTECT YOUR CREDIT SCORE IN GOOD STANDING!!!” and demands for larger payments, such as $2,385.95, with no explanation for the higher amount.
When consumers still refused to pay, the defendants sent dunning notices, posing as a third-party debt collector, General Credit Protection Inc.-Credit Bureau Recovery. Although they told Better Business Bureaus and state attorneys general that they would stop demanding payment and remove complaining consumers from their customer lists, the defendants kept sending invoices demanding payment.
The defendants are American Yellow Browser Inc.; American Yellow Group Inc.; Distribution H.E.P. Inc., also doing business as American Yellow Distribution and Medical Yellow Directories Inc.; Official Yellow Guide Inc.; Publication A.A.P. Inc., also d/b/a All American Pages and Official Yellow Guide; Publication A.Y.B. Inc., also d/b/a American Yellow Browser Inc., American Yellow Group Inc., and All American Pages Inc.; Publications A.Y.D. Inc.; Ivan Chernev, also d/b/a American Yellow Corporation Inc., General Credit Protection Inc., and Credit Bureau Recovery; and German Lebedev, also d/b/a American Yellow Directories Inc.
The complaint alleges that the defendants misrepresent that consumers have agreed to buy a business directory listing and owe them money, in violation of the FTC Act.
The Commission vote authorizing the staff to file the complaint in the U.S. District Court for the Northern District of Illinois, Eastern Division, was 5-0. The court entered a temporary restraining order against the defendants on March 10, 2015, and a preliminary injunction against them on March 24, 2015.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.
The FTC would like to thank the United States Postal Inspection Service, United States Immigration and Customs Enforcement – Homeland Security Investigations, the Canadian Anti-Fraud Centre, Wisconsin Department of Agriculture, Trade and Consumer Protection, and the Attorneys General of Illinois and North Dakota for their assistance.
The FTC also would like to acknowledge the Royal Canadian Mounted Police and Centre of Operations Linked to Telemarketing Fraud (Project COLT) for their invaluable assistance. Launched in 1998, Project COLT combats telemarketing and mass marketing crime and includes members of the RCMP, Sureté du Québec, Service de Police de la Ville de Montréal, Canada Border Services Agency, Competition Bureau of Canada, Canada Post, U.S. Department of Homeland Security (U.S. Immigration and Customs Enforcement and the U.S. Secret Service), the U.S. Postal Inspection Service, the FTC, and the Federal Bureau of Investigation. Since its inception, Project COLT has recovered more than $26 million for victims of mass marketing fraud.
To learn more about directory scams, read Small Business Scams.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
Office of Public Affairs
Maxine Stansell, FTC Northwest Region
Medical Yellow Directories
John Hallerud, FTC Midwest Region