Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—W.D. Wash.: FTC obtains TRO against marketers of deceptive online business directory scheme, (Jul 8, 2014)

By Linda O’Brien, J.D., LL.M.

The federal district court in Seattle granted the FTC’s motion for a temporary restraining order against marketers involved in an operation that induced consumers to pay for unwanted listings in online business directories. The temporary restraining order will remain in effect until the court rules on the agency’s motion for preliminary injunction. The FTC’s request for an asset freeze was denied (FTC v. OnlineYellowPagesToday.com, July 3, 2014, Jones, R).

Oni Julien and her four entities operated a Montreal-based enterprise that sold listings in its online business directories through unsolicited telephone calls. The FTC filed a complaint against Julien and the companies, alleging that the defendants engaged in deceptive business practices by misrepresenting that consumers were previously or already listed in their business directories in violation of the FTC Act. Based on the misrepresentations, many consumers believed they were in the directory and provided contact information. The defendants recorded the telephone calls to convince consumers to pay for the listing. The FTC also alleged that the defendants sent invoices to consumers of over $480 and, if the consumers refused to pay, they were threatened with collection actions. The FTC moved for a temporary restraining order and asset freeze.

The FTC showed that it would likely succeed on the merits of its claims of deceptive business practices. The factual record demonstrated that the defendants falsely represented to consumers that they had a preexisting business relationship and agreed to purchase listings in the defendants’ directories, when in fact consumers did not agree to purchase a new listing. Moreover, the defendants did not oppose or dispute the allegations of deceptive acts.

The public interest in stopping the defendants’ FTC Act violations and preserving the illicit proceeds for restitution to victims outweighed any private interest by the defendants in continuing their deceptive and misleading practices. According to the court, the defendants were to cease soliciting consumers for the sale of online directory listings and to prominently post on its website that they were prohibited from engaging in deceptive practices pursuant to the temporary restraining order.

However, the FTC failed to show that there was a likelihood of dissipation of the claimed assets or an ability to recover monetary damages. The FTC presented no evidence that the defendants have in the past, are in the process of, or are likely in the future to hide or dissipate their assets. Thus, the FTC was not entitled to an asset freeze in its proposed temporary restraining order, the court concluded.

The case is No. C14-838 RAJ.

Attorneys: Maxine R. Stansell for the Federal Trade Commission.

Companies: OnlineYellowPagesToday.Com Inc.; USYellowPageDirectory.com Inc.; 7703236 Canada Inc.; 7095333 Canada Inc.

Cases: ConsumerProtection WashingtonNews