New Hampshire businesses may be eligible for damages as the result of a $2 million, 34-state settlement involving an Arizona-based online yellow pages directory company.
Under the settlement, negotiated by New Hampshire Attorney General Kelly Ayotte and the attorneys general of 33 other states, YP Corp. and its wholly owned subsidiary, Telco Billing Inc. have agreed to change a business practice and pay $2 million to resolve charges claiming the company engaged in deceptive business practices.
According to Ayotte, YP Corp., which has been doing business as YP.com, began mailing activation checks — usually made out in the amount of $3.50 — to potential customers as far back as Jan. 1, 2003. These negotiable checks were made out in the name of the receiving consumer, business or other organization and, when deposited into the recipient’s bank, would activate an account in the recipient’s name obligating it to pay for an “Internet Advertising Package” — an enhanced listing on YP.com’s online yellow pages directory
Fine print found on the back of the activation checks stated that by depositing the check the recipient had agreed to purchase advertising from YP.com. The fine print also stated that, through depositing the check, the recipient had given YP.com permission to either include in advance, monthly charges on the recipient’s phone bill or debit the bank account to which the check was deposited.
The state said that many of the recipients were unaware of the obligations accompanying the deposit of the check.
“This settlement is an important message to companies that use real, negotiable checks to obtain new customers and also a reminder to consumers to be extra careful when they receive an unsolicited check in the mail, as it may have strings attached,” Ayotte said.
According to the attorney general’s office, the settlement mandates that YP.com end the use of activation checks as a sole means of obligating businesses to purchase its products and services.
The $2 million will be paid as restitution to former customers nationwide that were affected by the practice deemed as well as to the states as reimbursement for investigation costs.
YP Corp. also has agreed to contact current activation check customers to inform them of their right to cancel their agreement with YP.com as well as their potential eligibility for at least partial refund of related costs they have incurred. Admitting wrongdoing was not part of the settlement, however.
Businesses that deposited an activation check from YP.com and were billed for an online yellow pages listing, and believe that they did so without understanding the consequences of depositing the check, should contact the New Hampshire attorney general’s office no later than Jan. 15, 2007, for information about how to obtain restitution, attorney general’s office said.
Inquiries should be sent in writing to David Rienzo, assistant attorney general, Consumer Protection and Antitrust Bureau, 33 Capitol St., Concord, N.H. 03301.
Current YP Corp. customers being billed through their telephone bill or bank account for a listing and became a customer through an activation check should be contacted by YP.com by letter within two weeks of the settlement, the AG’s office said.
This article appears in the December 22 2006 issue of New Hampshire Business Review