The US Federal Trade Commission has charged Canadian defendants Pinacle Publishing and M.D.S.C. Publishing with scamming small businesses and charities in the United States out of millions of dollars by billing them for business directory services they did not order or authorize, in violation of federal law. The FTC charges that the defendants refuse consumers’ requests to cancel the services, and use an in-house collection service to harass consumers whose accounts allegedly are past-due. The lawsuit seeks unspecified compensatory and punitive damages.

According to the FTC’s complaint, defendants Pinacle Publishing and M.D.S.C. Publishing have made telemarketing calls to small businesses, charities, and other organizations across the U.S. since at least 2000. The defendants allegedly claim that they are calling to verify consumers’ names, addresses, and telephone numbers for listing in their business directory. Consumers are allegedly led to believe that they are already listed in this directory and that the defendants are updating information in connection with a renewal of the listing. The FTC alleges that the defendants then record consumers verifying their information, and later use the recordings to prevent them from canceling unauthorized orders. Consumers often are not told that there is a fee associated with being listed in the business directory.

The FTC’s complaint states that, after speaking with consumers, the defendants mail invoices, typically billing them $389.99 for a “2 YEAR SILVER STAR LISTING at ‘www.allpinacle.com,’” $279.99 for a two-year listing in M.D.S.C.’s “American Business Directory,” or $336.99 for the “M.D.S.C. AMERICAN CORPORATE & COMMUNICATIONS C-D DIRECTORY.” The invoices allegedly claim that the consumer with whom the defendants spoke authorized the order. The FTC charges that the defendants mailed invoices even to those consumers who expressly said they were not interested in the directory.

According to the FTC, upon receiving the invoices, many consumers realize that no one from their organization ordered a directory listing. When they call to cancel the order, they allegedly are told that the defendants have a tape recording of the order being placed. The defendants allegedly claim that the recording is a “binding oral contract,” and they therefore refuse to allow consumers to cancel orders. In numerous instances, consumers refuse to pay the invoices and are then referred to defendants’ in-house collections department, which allegedly harasses them with phone calls and repeated dunning notices and threatens to initiate legal action and damage consumers’ credit ratings. In some cases, the in-house collections department employees allegedly masquerade as lawyers retained by the defendants to force consumers to pay their invoices. The FTC contends that many consumers ultimately pay the invoices because they believe it is the only way to stop the harassment.

The FTC also alleges that the defendants also try to convince consumers to pay the invoices by pledging that they will not contact the consumers again after the invoices are paid. Once the invoices have been paid in reliance on such a pledge, however, the defendants allegedly proceed to send the consumer additional invoices and to attempt to collect on those new invoices.

The FTC’s complaint, which names 4049705 Canada, Inc., doing business as Pinacle; 3782484 Canada, Inc., doing business as M.D.S.C. Publishing; and Terrence Croteau as defendants, and states that the defendants violated the FTC Act by misrepresenting that:

• they have a preexisting business relationship with consumers;

• that the consumers have agreed to purchase a business directory or directory listing;

• that they have retained lawyers to collect on consumers’ accounts; and

• that they will not contact consumers again if the consumers will make full or partial payments.

The FTC has asked the court to issue a temporary restraining order that bars the defendants’ illegal business practices and freezes the defendants’ assets. Persons who have been taken advantage of by these companies should contact the prosecuting attorneys at the FTC.