Chicago Judge Backs FTC to Stop Online Directory Scam

At the request of the Federal Trade Commission, a federal judge in Chicago has temporarily restrained a European-based operation that has purported scammed small businesses and nonprofit organizations, including churches, out of millions of dollars. Judge Harry Leinenweber of the U.S. District Court for the Northern District of Illinois issued the court order halting the practice and freezing the defendants’ assets. The FTC is also seeking to permanently stop the illegal practices and to require that the defendants pay refunds to their victims.

According to court filings by the FTC, the defendants operate their scheme from Palma de Mallorca, Spain, using corporations based in England and the Netherlands. Since 2009, they have sent unsolicited faxes to churches, doctors’ and dentists’ offices, and local retailers in the United States, Canada, Australia, and possibly other countries. Each fax sent to a U.S. business or nonprofit includes a name such as YellowPage-Illinois.com, depending upon the location of the organization, and a “walking fingers” logo similar to the one commonly associated with local yellow pages.

The FTC alleges that these faxed forms falsely imply that the business or nonprofit has a pre-existing relationship with the defendants. The forms contain information about the business or nonprofit, and a Yellow Page ID number, and instruct the recipient to confirm and update the information and sign and fax the form back by a certain deadline. Hidden in fine print at the bottom of the form is the only disclosure that the fax is a solicitation for new business and that organizations that return the form are ordering an $89 per month, two-year registration in the defendants’ online directory, payable a full year in advance. Many consumers do not notice the fine print and sign and return the form, believing that they are just updating their local yellow pages listing. Often the person who signs and returns the form is not authorized to purchase services on behalf of the business or nonprofit.

According to the FTC, organizations that return the form then receive a faxed invoice seeking payment of $1,068 for 12 months of directory listings. They are instructed to direct the payment to Yellow Page B.V. at a New York City address. If the business or nonprofit tries to cancel, they are often told that the cancellation period has expired, and that the defendant intends to enforce the contract. Organizations that refuse to pay receive faxes seeking late fees and threatening to refer the alleged debts to a collection agency and injure their company’s credit rating.

The complaint names Jan Marks; Yellow Page Marketing B.V., also doing business as Yellow Page B.V. and Yellow Page (Netherlands) B.V.; Yellow Publishing Ltd.; and Yellow Data Services Ltd..

In conjunction with the FTC’s case, the Canadian Competition Bureau, which took the lead in coordinating the joint effort, also filed a lawsuit against this operation, alleging that the defendants’ deceptive scheme similarly targets small businesses and other organizations in Canada. In addition, the Australian Competition and Consumer Commission previously brought an action against the defendants’ operations in Australia, and provided assistance to the current enforcement effort.