The Federal Trade Commission has charged several Canadian-based companies and their principals with fraudulently telemarketing U.S. consumers by tricking them into paying for unordered business directories and listings in them.
Named, as defendants were Global Management Solutions, Commutel Marketing, American Business Solutions, Ty Nguyen, a.k.a. Hiep Manh Nguyen, Cory Kornelson, Byron Steczko, Kelly Nguyen, a.k.a. Phu Minh Huy Nguyen and Minh Tam Vo.
American Business and Commutel allegedly ran telemarketing operations out of Victoria, British Columbia, and Montreal. Global handled debt collection for the other two companies.
The U.S. District Court in Washington, DC has granted an order temporarily halting the defendants’ business practices and freezing their assets.
A preliminary injunction hearing is scheduled for March 15.
According to the FTC, the defendants made unsolicited telemarketing calls to businesses and organizations across the U.S. since 2003. The defendants allegedly told call recipients they were merely verifying the consumer’s name, address, and telephone number for a listing in a business directory. The defendants allegedly mislead consumers into believing that someone in their organization previously authorized the purchase of the directory and listing.
If call recipients were reluctant to verify the listing information, or did not believe that their company has ordered the directory and listing, the defendants assure them that they have a trial period, typically 30 days, during which they can review the directory at no cost. The defendants then record consumers verifying their business information.
The complaint further alleged that the defendants subsequently billed recipients between $349 and $459 for the Commutel Business Directory CD-ROM, and between $249 and $399 for the American Business Solutions Directory CD-ROM.
Unlike the defendants’ representation in the initial telephone call, however, the invoices list the individual with whom the defendants spoke as the person who authorized the order. After receiving these invoices, the FTC alleges, many consumers realize that no one from their organizations ordered a directory listing. When consumers call to cancel the orders, the defendants claim that the recorded verification call is a “binding oral contract,” and thus refused to cancel, according to the FTC.
In many instances, according to the complaint, when consumers refuse to pay the invoices, they are referred to the defendants’ in-house collection company, which allegedly harassed them with frequent telephone calls, dunning notices, and threats to initiate legal action and damage consumers’ credit ratings.
When consumers advised these allegedly bogus collection agents that they do not owe anything, the collecting defendants nevertheless continue their collection efforts. The FTC contends that many consumers ultimately pay the invoices because they believe it is the only way to stop the harassment, the complaint continued.
