Have you ever received a call from someone claiming that you owe money for something you never bought (or even heard of)? Last week a Florida court issued an order against Montreal-based Francois Egberongbe and Robert N. Durham, both individually and doing business under such names as Nationwide Marketing Bureau, National Business Advertising, National Biz Ads and Yellow Business Ads. According to the Federal Trade Commission (FTC), Egberongbe and Durham had been operating a scam in which they would call and send invoices to small businesses and non-profits requesting payment for online business directory listings that had never been ordered (debt collection schemes like these have been around for a long time, targeting both consumers and small businesses).
According to the settlement with the FTC and the State of Florida, the defendants must pay $1.7 million (yes, that’s U.S. dollars), which is to be used to reimburse those who fell victim to the scam. The defendants are also prohibited from providing, promoting, advertising or attempting to collect payments for any “online business directory” service, and are subject to ongoing compliance reporting obligations.
With agencies like the FTC becoming more ‘global’ in their approach to enforcement, it is increasingly difficult for Canadian companies to avoid consequences for conducting these types of activities in the U.S. (and vice versa). At least one of the defendants wisely chose to retain U.S. counsel on this matter, as opposed to ignoring the complaints and waiting for a default judgment. Adam Guerbuez, a Montreal-based “email marketer”, chose the latter approach and was successfully sued by Facebook in Califorina under the CAN-SPAM Act back in 2008 for $873 million. Two years later a Quebec court agreed to enforce the judgment. Although it is unclear whether the FTC will ever collect from the Canadians in this case, because this is a court order for monetary relief, it looks more like a civil judgment than a regulatory penalty, which could increase the likelihood that this would also be enforced by a Quebec court.