A federal district court awarded the Federal Trade Commission $7.5 million against two Canadian companies and an individual accused of tricking U.S. businesses and organizations into paying for unordered business directories and listings.
The U.S. District Court for the Western District of Washington also permanently banned the defendants from selling business directories or listings to U.S. residents. In addition, the court ordered the defendants to return more than $140,000 in un-cashed checks to 300 consumers.
The FTC’s original complaint filed in February 2005 charged six individuals and three Canadian companies with fraudulently telemarketing directories and listings.
The FTC alleged that the defendants called businesses and organizations in the United States and told employees they were verifying information for a directory listing previously authorized by another employee.
If employees were hesitant, telemarketers assured them that they had a trial period to review the directory, the FTC said. The defendants then sent an invoice for the business directory purchase, which no one had authorized. If the business or organization did not pay, the bill was referred to an in-house collection company, the complaint alleged.
The district court entered a summary judgment against two of the companies and one individual. A summary judgment was entered against 9125-8954 Quebec Inc., doing business as Global Management Solutions; 9125-8947 Quebec Inc., doing business as Commutel Marketing and Marketing USA; and Ty Nguyen. The order requires them to pay $7,578,186 and forfeit all rights to all frozen assets, including the uncashed checks, and $40,000 from a frozen merchant account the defendants used to process credit card payments.
The FTC also reached settlements with three other defendants. Byron Steczko and Cory Kornelson, former presidents of two of the corporate defendants, who agreed to permanent bans on selling business directories or listings to U.S. residents. Phong Anh Vo, another former corporate defendant president, also entered into a settlement with the FTC.
In addition, the settlement orders entered a $3,819,481 judgment against Mr. Steczko, a $2,086,482 judgment against Mr. Kornelson, and a $1,618,268 judgment against Vo. All of the judgments are suspended based on the defendants’ inability to pay.
The FTC previously announced settlements with two other individuals, Kelly Nguyen and Minh Tam Vo, and a default judgment was entered against a third corporate defendant, American Business Solutions.
The orders also prohibit the defendants from misrepresenting any material fact about a any good or service, or any material fact about the terms, conditions, or limitations of any refund or guarantee policy.
