Saturday, February 12, 2005

State sues Internet company for fraud

State sues Internet company for fraud

I've been complaining about the misleading direct mail propagated by Yellow Pages Inc. who sends out direct mail that looks exactly like a small refund check. The fine print on the back and the enclosed collateral piece explains how depositing the "check" obligates the depositor for a recurring service fee that is often either added on the telephone bill or it is directly deducted from the depositor's bank account. Clearly, many business people fail to read or understand the fine print because this company is rolling in cash as if they were doing something illegal.

They've been cleared by the FTC of wrongdoing, but I can't imagine how this sort of thing can be allowed to continue.

Here is the first state lawsuit that I've seen, and I must say that I'm thrilled. I believe that it is only a matter of time before this company is shut down in a class action lawsuit.


State sues Internet company for fraud

Businesses bilked: Complaints to Madigan's office from Kane, DuPage, other counties

By Jim Faber

ST. CHARLES — Somehow, a $3.47 check from Yellow Pages Inc. slipped through the accounting system at Della Long Halper's office here and was cashed.

Then Yellow Pages Inc. — not affiliated with the Yellow Pages put out by local phone companies — took the check and turned it into a minor headache for Halper, who retired from practice as a clinical psychologist last year. It turns out the check included a contract in fine print on its flip side, obligating Halper to pay $177 per month for Internet advertising.

So many of those checks make it through at small businesses around the state that this week, Illinois Attorney General Lisa Madigan filed charges against Yellow Pages Inc. and a California collection agency. Twenty-six small businesses and individual consumers in Kane, DuPage, Cook, McHenry and nine other counties filed complaints with Madigan alleging they had been deceptively lured into signing advertising contracts and then hounded for payments and added interest.

The lawsuit was filed in Cook County Circuit Court and names as defendants Yellow Pages Inc. of Nevada, doing business as, and Continental Recovery Services of California, doing business as Continental Recovery and Filing Solutions and CRF Solutions.

"There's something wrong with having to make sure you haven't hired someone," Halper said Thursday.

In fact, Halper said she paid a few hundred dollars over a few months to another "yellow pages" company thinking it was the phone book company. Her business was built through local referrals, and the office didn't even have Internet access, she said.

Madigan's suit claims Yellow Pages Inc. turned over the unpaid contracts to Continental Recovery for collection. The collection agency then allegedly illegally added interest to the balances being collected on behalf of Yellow Pages Inc.

Yellow Pages Inc. actually dropped its collections claims against Halper after she fought with the company and reported the problem to Madigan's office.

Both companies are charged with violations of the Illinois Consumer Fraud and Deceptive Business Practices Act. Continental Recovery also is charged with failure to register with the Illinois Department of Financial and Professional Regulation.

The suit seeks a civil penalty of $50,000 from each company and $50,000 per fraud committed. Madigan also wants all contracts rescinded and restitution to be paid to companies that fell victim to the fraud.


Anonymous Anonymous said...

This fraud is being committed in Ohio also. My question is this, does CRF have to be registered in Ohio to perform as a collection company?

Thanks for any input.

9:35 AM  

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