FTC Action: International Scammers Banned from Business Directory Business
the defendants targeted small businesses and non-profits
In an action first brought by the Federal Trade Commission (FTC) in 2013, a federal court has banned a Slovakia-based company and two of its executives from the business directory business, ending a scam that for years took millions of dollars from small businesses and nonprofits in the United States and other countries.
A default judgment entered against Construct Data Publishers, also doing business as Fair Guide, and a stipulated final judgment and permanent injunction against Wolfgang Valvoda and Susanne Anhorn, resolve the 2013 FTC action.
In its complaint, the FTC had alleged that, using direct mail, the defendants tricked retailers, home-based businesses, local associations and others into thinking they had a preexisting business relationship with the defendants.
The defendants falsely suggested that consumers had to return a form confirming or updating their contact information for a trade show they had attended or planned to attend.
Many recipients did not notice a statement, buried in fine print at the bottom of the form, that by signing and returning it they were agreeing to pay $1,717 annually to the company for a listing on its website.
A default judgment entered earlier in this case against the defendants was vacated in December 2014. That month, the U.S. Attorney for the Southern District of Illinois indicted Valvoda on mail fraud charges.
The FTC's civil case continued until recently, when the agency reached a settlement with Valvoda and Anhorn, and Construct Data Publishers defaulted after filing bankruptcy proceedings in Slovakia.
Under the final orders, the defendants are banned from the business directory business. They also are prohibited from misrepresenting any product or service, attempting to collect payment for their business directory listings, profiting from consumers' personal information, or failing to dispose of consumers' personal information properly.
The order against Construct Data Publishers imposes a $7 million default judgment, including the transfer of $344,000 to the FTC from the court's registry. The order against Valvoda and Anhorn imposes judgments of $2.1 million and $4.5 million, respectively, which will be suspended upon payment of $200,000.
The full judgments will be imposed immediately if the defendants are found to have misrepresented their financial condition.