At the request of the Federal Trade Commission, a U.S. district court judge has frozen the assets of a Canadian operation and ordered a halt to its allegedly unlawful practices - billing businesses in the continental U.S. and Puerto Rico for directory listings they did not order - until the matter is resolved in court. The Commission seeks to permanently prohibit the defendants from future violations and make them give up their ill-gotten gains.
According to the FTC's complaint, the defendants deceptively sell Internet business directory listings and Web page hosting services by phone to Spanish-speaking businesses. The defendants allegedly tell consumers they are calling from the yellow pages or the local telephone company to verify or update business names, addresses, and telephone numbers. The call is frequently referred to as a renewal, and they typically do not mention cost. If asked, they say the cost will be "the same as last year," although the consumers have never purchased their services.
As stated in the complaint, the defendants' bills typically arrive in envelopes bearing a symbol often associated with the local telephone company's yellow pages directory - the familiar two fingers walking across a directory. The bills come from a company called Enterprise Who's Who and typically charge $359.40 on the initial bill. Many businesses pay the bills believing they are from their local telephone company, or after being told that someone at the business agreed to the service and that the defendants have a tape of the authorization. Consumers who question the charges are threatened with collection and bad credit. Consumers who listen to the defendants' tape hear no authorization but are still threatened with collection.
When consumers continue to refuse to pay, the defendants allegedly send letters from a purported collection agency, PCM Collections, and threaten adverse credit reports and lawsuits. In many cases, consumers pay the bills to protect their credit.
Consumers who pay often receive additional invoices for other unordered services, variously described as the balance owed for the original service, a renewal fee, or an additional Web hosting service. The defendants continue to tell consumers they have taped authorizations. When consumers ask to cancel additional unauthorized services the company sometimes chargesthem undisclosed cancellation fees ranging from $299 to $500. If these bills are not paid promptly, the defendants pursue collection through re-billing, threatening letters, and dunning telephone calls. If consumers complain to the Better Business Bureau, the defendants agree to stop charging those consumers, but they continue to bill and dun them.
The defendants are 9163-7710 Quebec, Inc., doing business as Enterprise Who's Who and PCM Collections, and its chief executive officer, Rodolfo Garcia Rodriguez, Jr. They are charged with violating the FTC Act by falsely representing that they have a preexisting business relationship with consumers, that consumers have agreed to purchase their services, and that consumers owe them money.
The FTC appreciates the assistance of the Royal Canadian Mounted Police and Project COLT, a multi-agency, U.S.-Canada initiative formed in the 1990s to combat telemarketing fraud.
The Commission vote to authorize staff to file complaint was 4-0. The complaint was filed in the U.S. District Court for the District of Puerto Rico. Judge Gustavo A. Gelpi issued a temporary restraining order on October 9, 2008, and a preliminary injunction on October 17, 2008.
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 complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.
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 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC's Web site provides free information on a variety of consumer topics.
(FTC File No. 0823167)