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Marketing Firm Prohibited From Baiting Consumers With "Live Checks"

April 26, 2006

• Whose Fingers Are Doing the Walking? • Texas Sues Yellow Pages Directories • Kentucky Slams Book on Yellow Pages • Oregon Files Racketeering Lawsuit Against Internet Yellow Pages Company • Marketing Firm Prohibited From Baiting Consumers With "Live Checks"

It's called a "live check" promotion. A check for a small amount comes in the mail with seemingly no strings attached. But consumers who cash the checks find themselves obligated for products or services they never intended to buy.

Twenty eight states have reached a settlement with a Nevada-based firm accused of luring consumers and small business owners into unknowingly purchasing on-line directory listings through the use of promotional checks.

Under the terms of a multi-state agreement Electronic Directories Company, LLC, is prohibited from using promotional checks to bait consumers and small business owners into buying listings in their directories.

The various state attorneys general charged the checks did not clearly explain that, by cashing them, consumers were committing to pay for an annual listings in Yellow Pages publications. Those consumers who cashed the checks were later hit with a bill averaging $179.

"Consumers and small business owners must be wary of live check promotions," said Massachusetts Attorney General Tom Reilly.

"Promotional checks are almost always used to lure consumers into making a much bigger purchase. In this case, by cashing a check for very little money - $2 or $3 - consumers were unknowingly purchasing advertising with this company."

According to the settlement, Yellow Pages used checks, described as "instant cash back offers," to lure consumers and small business owners into contracting for annual advertising listings in an online directory and printed publication.

The face of the checks gave no indication that if cashed, it would commit the consumer to paying for an online directory listing. The information on the back of the check and on a separate disclosure used such small print and vague language as to make it virtually illegible.

Additionally, consumers and businesses that did not subsequently pay the invoices had their accounts referred by Yellow Pages, Inc., to a collection agency.

Under the terms of the agreement, Continental Recovery Service, the Yellow Pages' collection agency, will cease all collection activity related to the check solicitation program.

Also, the collection company will certify that no adverse credit information has been reported, and that it will not report adverse credit information about any prior customers in connection with the check solicitation program to any credit reporting agency.

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