Court Order Closes the Book on Canadian Registry Scheme

A set of defendants based in Calgary, Canada, has been permanently barred from selling business directories and listings to U.S. residents, thus resolving a federal district court complaint the Federal Trade Commission filed in 2003. The FTC alleged that the defendants deceived consumers and businesses by claiming they had already agreed to purchase the business directory and a listing in the directory.

According to the Commission, the defendants violated the FTC Act by billing the consumers and businesses up to $399 for the unauthorized listings and business directories. In addition, while the defendants “guaranteed” that purchasers could get a full refund if not satisfied with their purchase, they allegedly failed to honor their 30-day refund policy in many instances. Non-paying consumers were referred to the defendants’ collection department, which made numerous telephone calls and sent repeated dunning notices to consumers.

The stipulated final judgment and order, filed yesterday, resolves the Commission's charges against the following defendants: 1) Ambus Registry, Inc. (Ambus); 2) Sukhraj Singh Chana, individually and as a director and officer of Ambus; and 3) Garther Cheung, individually and as a director and officer of Ambus.

The Commission’s Complaint

According to the FTC’s original complaint, which led to a preliminary injunction against Ambus and its officers on July 16, 2003, the defendants trained their telemarketers to use deceptive sales tactics to convince consumers and businesses in the United States that someone in their company had authorized a listing in the defendants’ directory, as well as the purchase of the directory itself. The defendants, all based in Calgary, Alberta, allegedly billed the consumers between $299-$399 for the listing and directory, and, despite a supposed 30-day trial period, rejected consumers’ requests for a full refund. When consumers refused to pay for the unordered merchandise, they were turned over to the defendants’ in-house collection department and subjected to repeated collection efforts.

The complaint charged the Ambus defendants with three separate counts of FTC Act violations. Count I alleged the defendants falsely represented that consumers previously had authorized the purchase of the business directory and their listing in the directory. Count II alleged they falsely represented that consumers had agreed to buy the directory, as well as a listing in it. According to the Commission, Ambus claimed that consumers who simply verified their information for its representatives had authorized the purchase of the listing and directory. Count III charged the defendants with falsely representing that consumers had a right to cancel their directory and listing without obligation. According to the Commission, although Ambus’ representatives assured consumers that they could send the packages back within 30 days, in fact, at best, Ambus provided only partial refunds and did not fully honor its 30-day trial period.

The Final Judgment and Order

The final judgment and order contains strong injunctive relief against the defendants' allegedly illegal conduct. First, the defendants and their employees and associates are permanently barred from engaging in, participating in, or assisting others in the advertising, promoting, telemarketing, offering for sale, or distributing business directories and/or listings in business directories to U.S. residents. In addition, in connection with the telemarketing of any product, good, or service to U.S. residents, the defendants are barred from: 1) misrepresenting any material fact related to the product, good or service; 2) failing to disclose clearly and conspicuously all material terms and conditions of any refund or guarantee policy; 3) misrepresenting the terms or conditions associated with any refund or guarantee policy – including that consumers can readily get a refund upon request; 4) violating the TSR in the future; and 5) assisting others in engaging in any of these activities.

The judgment and order also require the defendants to stop all attempts to collect payment from consumers for the business directory and/or listings in the directory. The defendants also have agreed to forfeit all rights to uncashed consumer checks sent to the company in response to the defendants’ telemarketing scheme. These checks will be returned to the U.S. consumers. The defendants also are barred from selling their customer lists and, if they are found to have misrepresented their financial condition to the Commission, must pay a judgment of almost $2.4 million. Finally, the order contains monitoring and reporting terms to ensure the defendants comply with all of its injunctive provisions, and the order requires them to distribute copies to selected individuals.

The Commission vote to approve the stipulated final judgment and order announced today was 5-0. The order was signed by the judge and entered in the U.S. District Court for the Western District of Washington at Tacoma on May 11, 2004. The FTC worked closely with the Canadian Competition Bureau and Alberta Government Services in investigating this case and filing the original complaint. The FTC also received invaluable assistance from the Better Business Bureau of Southern Alberta, the Royal Canadian Mounted Police, and the Calgary Police.

NOTE: This stipulated final judgment is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated judgments have the force of law when signed by the judge.

Copies of the Commission’s complaint and stipulated final judgment and order are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.

(FTC File No. X030062; Civ. No. CV03-1294RBL)