A U.S. judge has shut down an online business listing operation that allegedly bilked more than US$14 million from U.S. small businesses and churches.
Judge Virginia Kendall of the U.S. District Court for the Northern District of Illinois, Eastern Division, issued a temporary restraining order against the Canadian operation Monday at the U.S. Federal Trade Commission's request.
The operation sold unwanted business listings, calling them yellow page listings, to U.S. businesses and organizations, the FTC said. The operation, based in Montreal, has generated more than 13,000 complaints, the FTC said in a news release.
The defendants used corporate shells and mail drops in the U.S. to hide their actual location, the FTC said in a complaint. The defendants often called business and organizations purporting to verify contact information to update or confirm existing directory listings, the agency said.
In some cases, the defendants said they were calling in response to a cancellation request, and asked to verify the organization's contact information to confirm the cancellation. But the defendants had no prior relationship with the businesses, the agency said.
The bills sent by the defendants often totalled $500 or more and had a "walking fingers" image often associated with a local yellow pages directory. Some businesses paid the bill, apparently thinking someone in their organization had ordered these listings.
Other consumers paid after the defendants used partially recorded phone conversations with consumers who had verified their contact information to convince them that they had a binding oral contract with the defendants, according to the FTC's complaint.
"Hiding behind borders to scam churches and small businesses is a tactic that we've seen before," Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement. "Scammers need to know that we have great relationships with our law enforcement partners in Canada and, as this case shows, we can and will work together to protect our consumers."
The FTC is seeking to have the judge permanently halt the operation and require the defendants to return money they took from U.S. businesses and organizations.
Consumers who ignored the bills or refused to pay received collection calls and nonpayment notices, often with added interest charges, late fees, and legal fees, as well as threats of collection agency referral, credit rating damage, and legal action, the FTC alleged. The defendants created two debt collection companies to help recover the charges, the agency said.
The defendants include 15 related companies located throughout the U.S. The defendants weren't immediately available for comment.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is firstname.lastname@example.org.
Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.