OTTAWA, August 30, 2011
— The Competition Bureau announced that five individuals were sentenced by an Alberta court for their involvement in Ambus Registry Inc., a cross-border deceptive telemarketing scheme promoting business directories.
The Bureau’s investigation found that, over a three-year period, Ambus telemarketers used an "assumed sale" technique to defraud over 10,000 businesses, government agencies, educational institutions and not-for-profit agencies in the United States. The technique involved a sales pitch that led telephone recipients to believe that a sale had already taken place, and that their business was legally obliged to complete the purchase. It was estimated that the company’s fraudulent operations amounted to over $3.75 million in losses for the victim businesses.
This investigation was conducted with the assistance of the Alberta Partnership Against Cross-Border Fraud, a partnership of law enforcement agencies of which the Bureau is a member, that includes: Alberta Government Services, the Calgary Police Service, the Edmonton Police Service, the RCMP, the U.S. Federal Trade Commission and the United States Postal Inspection Service.
The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.
The Competition Bureau has undertaken a similar action on July 18, 2011 against companies falsely using the Yellow Page logo to deceive businesses worldwide. The international investigation speared by the Canadian Competition Bureau uncovered that that the individuals and companies sent faxed forms to targets displaying symbols that closely resemble the well-known trademark of the Yellow Pages Group (YPG), thus deceiving businesses into believing the forms came from the YPG. Businesses were led to believe that the forms were intended only to update contact information for an online business directory listing but, buried in the fine print, was a stipulation that by returning the form, the businesses were committing to a two-year contract for the listing, at an annual cost of $1,428.
"This scam has targeted thousands of businesses in Canada and around the world, forcing them to pay for a directory listing of little or no value," said Melanie Aitken, Commissioner of Competition. "We are committed to cracking down on fraud that victimizes consumers and businesses. Significantly, the action we are taking today underscores the importance of working with our international partners to frustrate these types of multi-jurisdictional scams."
The Bureau has been working closely with the FTC throughout this investigation. "We are committed to collaborating with our international partners in combating fraud that preys on consumers and businesses," said David Vladeck, Director of the Bureau of Consumer Protection for the FTC. "We applaud our colleagues in Canada for leading this international effort and also for providing support in our investigation."
According to court papers filed by the FTC, the defendants operate their scheme from Palma de Mallorca, Spain, using corporations based in England and the Netherlands. Since 2009, they have sent unsolicited faxes to churches, doctors’ and dentists’ offices, and local retailers in the United States, Canada, Australia, and possibly other countries. Each fax sent to a U.S. business or nonprofit includes a name such as YellowPage-Illinois.com, depending upon the location of the organization, and a "walking fingers" logo similar to the one commonly associated with local yellow pages.
The FTC alleges that these faxed forms falsely suggest that organizations have a pre-existing relationship with the defendants. The forms contain information about the business or nonprofit, and a Yellow Page ID number, and instruct the recipient to confirm and update the information and sign and fax the form back by a certain deadline. Buried in fine print at the bottom of the form is the only indication that the fax is a solicitation for new business and that organizations that return the form are ordering an $89 per month, two-year registration in the defendants’ online directory, payable a full year in advance. Many consumers do not see or read the fine print and instead sign and return the form, believing that they are merely updating their local yellow pages listing. Often the person who signs and returns the form is not authorized to purchase services on the business’s or nonprofit’s behalf.
According to the FTC, organizations that return the form then receive a faxed invoice seeking payment of $1,068 for 12 months of directory listings. They are directed to make payment to Yellow Page B.V. at a New York City address. The defendants often tell businesses or nonprofits that try to cancel that the cancellation period has expired, and that they intend to enforce the contract. Organizations that refuse to pay receive faxes seeking late fees and threatening to refer the alleged debts to a collection agency and harm their company’s credit rating. In some instances, organizations pay the defendants simply to end the harassment.
The complaint alleges that Jan Marks; Yellow Page Marketing B.V., also doing business as Yellow Page B.V. and Yellow Page (Netherlands) B.V.; Yellow Publishing Ltd.; and Yellow Data Services Ltd., falsely represented that businesses and nonprofits had a preexisting business relationship with them, and falsely represented that they were affiliated with a local yellow pages directory, in violation of the FTC Act.
In addition to this coordinated effort by the FTC and Canadian Competition Bureau, the Australian Competition and Consumer Commission previously brought an action against the defendants’ operations in Australia, and provided assistance to the current enforcement effort.