US small businesses and churches were targeted by websites based in Montreal, Canada and a result were bilked out of $14 million . After receiving more than 13,000 consumer complaints the FTC filed a Complaint against Modern Technology Inc. and 14 other related businesses (incorporated in Wyoming, Nevada, New York, Delaware, and Vermont) and the FTC alleged among other things:
…the defendants operated from Montreal, using corporate shells and mail drops in the U.S. to hide their actual location.
Typically, they made phone calls pretending they were verifying contact information to update or confirm existing directory listings.
In some cases, the defendants said they were calling in response to a cancellation request, and asked to verify the organization’s contact information to confirm the cancellation.
In fact, the defendants had no prior relationship with the consumers.
The bills sent by the defendants averaged $499.99 or more and had a “walking fingers” image often associated with a local yellow pages directory. Some consumers paid, thinking someone in their organization had ordered these listings.
Other consumers paid after the defendants used partially recorded phone conversations with consumers who had verified their contact information to convince them that they had a binding oral contract with the defendants…
Based on the FTC Complaint US District Judge Virginia Kendall in Chicago issued a Temporary Restraining Order on November 18, 2013 and set a hearing for December 2, 2013 for the defendants to show cause why a Temporary Injunction should not be issued.
It will be interesting to follow to see if the FTC can recover any of the $14 million and how this case may impact the FTC’s enforcement against other bad Internet players.