Canadian Companies Scammed Small Businesses with Directory Scheme

Canadian Companies Scammed Small Businesses with Directory Scheme
Image: morgueFile
March 27, 2015

The Federal Trade Commission (FTC) 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.

One of the companies has agreed to settle the FTC's complaint, while another has had its operations stopped temporarily.

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.

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 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.

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