Company that mailed “activation” checks as a way to bill for Internet advertising to stop practice, pay restitution
Thousands of Missouri businesses, churches, schools and non-profit organizations that were billed by a Nevada company for Internet advertising they didn't know they were buying can apply for restitution under a 34-state agreement led by Attorney General Jay Nixon.
Nixon says the businesses and organizations often did not realize that depositing an “activation” check for $3.25 from YP Corp. — which does business under the names YP.com, YP.net and Yellow-Page.net — triggered a monthly charge of $25 to $30 on their telephone bills or from their bank accounts for an Internet directory listing. Under the agreement filed today in Cole County Circuit Court, YP Corp. will pay a total of $2 million for restitution and costs to the states and also will stop using the activation checks as the sole means of obligating businesses to purchase its services.
“Over the last three years, YP.com sent more than two million activation checks into Missouri and as many as 14,000 Missouri companies and organizations deposited them, initiating the monthly charges,” Nixon says. “While more than 10,000 of those accounts were closed at the customers' request or because the charges were not paid, many of the others who continued to be billed were not even aware of the ongoing charges until they were contacted by my office during the investigation into the scheme. Our agreement ensures that YP.com will stop using these checks as a way of triggering charges.”
The activation checks that were deposited often were processed as routine customer or vendor payments, Nixon says. In addition, checks sent to churches or non-profit organizations often were handled or deposited by volunteers.
Fine print on the back of the check stated that depositing the check in a business account authorized YP Corp. or its subsidiary Telco to either place a charge for Internet advertising on the business' phone bill or make an automatic withdrawal from the business' bank account. The monthly charges often turned up on phone bills under the listing “YELLOWPAGE INET MTHLYFEE” and typically were for $29.95; the charges often were listed identified as miscellaneous charges from ILD Teleservices Inc. or other third-party entities.
Missouri was the lead state in negotiating the settlement with YP Corp. Under the agreement, YP will send letters to current customers, informing them of their right to cancel their agreements and of their eligibility to receive restitution equal to two months' billing.
Businesses and organizations that paid the YP.com charges can apply for partial restitution online at the Attorney General's Web site, ago.mo.gov or receive an application form by calling the Consumer Protection Hotline at 1-800-392-8222. Of the $2 million to be paid by YP Corp nationwide, $120,000 will be set aside as restitution for Missouri businesses and organizations.
The deadline to apply for possible restitution is Feb. 28, 2007. Nixon is encouraging businesses and organizations to check their records and past phone bills to determine if they were charged a monthly fee by YP.com for Internet advertising they didn't want or knowingly agree to.
Nixon says the Federal Trade Commission reached a settlement with YP Corp. in 2001 that required restitution and some language changes on the check solicitation, but did not stop YP from continuing to use the activation checks as part of its marketing. Today's agreement puts a halt to the practice, he says.
In addition to Missouri, the states reaching settlements with YP Corp. include Alaska, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Washington, West Virginia and Wyoming.
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