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Company busted by FTC for luring companies paying for online directory

Discussion in 'BlackHat Lounge' started by Junkfood00, Aug 13, 2013.

  1. Junkfood00

    Junkfood00 Elite Member

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    FTC Stops Foreign Operation That Scammed Many Small Businesses and Nonprofits Into Paying Millions of Dollars for Bogus Online Directory

    At the Federal Trade Commission?s request, a federal judge has temporarily halted a Slovakia-based operation that allegedly tricked small businesses and non-profits into collectively paying millions of dollars to be listed in an online directory in which they had no interest in being listed and for which they did not understand they would be charged. The FTC is seeking to permanently halt the alleged scam and require the defendants to refund the fees.

    According to the FTC, the defendants send mailings to retailers, home-based businesses, local associations, and others who attend trade shows. The mailings mention a specific trade show or exhibition and are designed to appear as though they are merely asking the recipient to update and check the accuracy of information for the ?exhibitors directory? for the named trade show or exhibition.

    As alleged in the FTC?s complaint, the mailings include a form stating that the recipient?s basic information has been listed in the directory for free, and instructing them to confirm its accuracy or make corrections on the form. The form falsely suggests that the parties have a preexisting business relationship and that the directory listing is related to the recipient?s participation in the named trade show or exhibition. Many recipients do not notice a statement, buried in fine print at the bottom of the form, that by signing and returning the form they agree to pay the defendants $1,717 per year for three years. Often, the person who returns the form is not even authorized to enter into contracts for their employer.

    According to the complaint, long after the form is signed and returned and the defendants? 10-day cancellation period has expired, the defendants send an invoice demanding payment of $1,717 to a Slovakian bank account. Those who challenge the invoice are told the order cannot be canceled. Late payment notices follow, with late fees added, and some organizations pay just to end the harassment.

    The FTC?s complaint was filed against Construct Data Publishers a.s., also doing business as Fair Guide, Wolfgang Valvoda, and Susanne Anhorn. Construct Data moved from Austria to Slovakia in 2008, after being sued by Austrian authorities for deceptive practices. To settle the Austrian case, Construct Data agreed to stop soliciting businesses in the European Union.

    The Commission vote authorizing the staff to file the complaint was 4-0. The U.S. District Court for the Northern District of Illinois, Eastern Division, issued a temporary restraining order and asset freeze on March 15, 2013.

    The FTC acknowledges the assistance of the United States Postal Inspection Service, the Attorney General's Offices of California and Illinois, the Better Business Bureaus serving Central Ohio, Metropolitan New York, and Chicago and Northern Illinois, and the Canadian Anti-Fraud Centre.

    NOTE: The Commission files a complaint when it has ?reason to believe? that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law.

    The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC?s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

    Source: http://www.ftc.gov/opa/2013/03/fairguide.shtm


    This is strongly correlated with what some blackhatters are doing. Like listing someone with intention of online reputation damage and requiring a fee for info removal. This is pure scam and not what we call blackhat, at all. Do something constructive ffs, neg seo and such is not smart, rather retarded, a loser business.
     
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  2. kvmcable

    kvmcable Supreme Member

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    Yeah don't be like Yelp :p
     
  3. omagad

    omagad Jr. VIP Jr. VIP Premium Member

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    Finally, some legal proof that blackhat =/= scam. You all thanked and rep'd user Veyron for his snake oil salesman methods like This One not realising he was actually teaching you how to scam innocent business owners, which actually is illegal and not blackhat.
     
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  4. TheMasterOfMoney

    TheMasterOfMoney Jr. VIP Jr. VIP Premium Member

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    Read:
    "As alleged in the FTC's complaint, the mailings include a form stating that the recipient's basic information has been listed in the directory for free, and instructing them to confirm its accuracy or make corrections on the form. The form falsely suggests that the parties have a preexisting business relationship and that the directory listing is related to the recipient's participation in the named trade show or exhibition. Many recipients do not notice a statement, buried in fine print at the bottom of the form, that by signing and returning the form they agree to pay the defendants $1,717 per year for three years. Often, the person who returns the form is not even authorized to enter into contracts for their employer.

    According to the complaint, long after the form is signed and returned and the defendants' 10-day cancellation period has expired, the defendants send an invoice demanding payment of $1,717 to a Slovakian bank account. Those who challenge the invoice are told the order cannot be canceled. Late payment notices follow, with late fees added, and some organizations pay just to end the harassment."

    Thats the illegal part. Basically they trick you into thinking you already have a relationship with them. If I come and tell you I created this new directory, which will be an authority website for people who look for X and you believe me (and I showed you my proofs and real stats), it isnt illegal. It is called advertising. Veyron just showed how you can make money from it, legit money from it. If you dont want, you just dont answer and keep with your life. If you accept you just join the directory. It is that easy and not illegal at all.
     
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  5. muscleteen

    muscleteen Regular Member

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    Just reading the thread you linked to... It's not the same thing at all man..
     
  6. educatedfool

    educatedfool Jr. VIP Jr. VIP Premium Member

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    I thought the same when I saw the title at 1st. But, when I read the full post, I realized it's not the same. In fact, if someone has read Veyron's thread you mentioned, then most probably he/she would have thought the same IMO, unless the person reads the full post.

    I wonder why you're targeting Veyron, but I agree with "TheMasterOfMoney".

     
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  7. omagad

    omagad Jr. VIP Jr. VIP Premium Member

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    First of all, these 2 cases are not 100% alike. That's not what I'm saying, but before you rush and defend scammers please get your facts straight.

    False / deceptive advertising is still punished by law.

    Code:
    Most deception involves written or oral misrepresentations, or omissions of material information. 
    Deception may also occur in other forms of conduct associated with a sales transaction. 
    The entire advertisement, transaction or course of dealing will be considered. 
    The issue is whether the act or practice is likely to mislead, rather than  whether it causes actual deceptions.
    Source:
    Code:
    http://www.ftc.gov/bcp/policystmt/ad-decept.htm
    So let me put it this way. You, as a internet savvy person, would you buy a listing in his directory that has no visitors and brings you zero benefits? Of course not! Then why would you consider fair to take someone's money if they don't understand what they get / you deliberately fail to correctly describe your service?
     
  8. Junkfood00

    Junkfood00 Elite Member

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    Veyron is somewhat scamming his clients if his sites are not receiving any traffic from day one. Calling it advertising but no eyeballs are viewing the advertisement is a scam. His way of doing business won't hold for long, most of those dentists will stop paying and eventually going after him with class action lawsuit

    When you sell something of no value, it resembles of the pyramid game of referring others, and this is again illegal.

    Now the story in the OP is not the same but it is also deceptive marketing, don't do that shit, it's not worth the trouble.
     
  9. TheMasterOfMoney

    TheMasterOfMoney Jr. VIP Jr. VIP Premium Member

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    I think he mentioned he would rank the site too. If you rank it, which wouldnt be so hard since it is a local term (best restaurants in Sandusky, Ohio), you would get traffic. If they accept it, then who are you to judge? If you go to a Louis Vuitton store, they sell you the same quality shirt you would get @ Ralph Lauren except they sell you it at $600. If you accept it, then why is it a scam? If you tell them what is the directory about, what is the problem? Veyron said he would tell them he canĀ“t guarantee clicks.
    e