Yellow Pages Marketing B.V. et al. Fined Over $9 Million for Misleading Advertising
April 26, 2012
Authors: Jennifer McKenzie and Tamara Luk
On March 1, 2012, the Ontario Superior Court of Justice found that a network of five national and international companies and three individuals (principals and employees of the companies) (respondents) violated the Competition Act for making false and misleading statements. The corporate respondents all have names similar to the famous telephone directory provider, Yellow Pages Group (YPG).
In January 2010, the respondents launched websites and sent unsolicited faxes to individuals and businesses throughout Canada and the rest of the world. The faxes and sites used features remarkably similar to those of YPG, such as prominent display of the words “Yellow Pages” and a logo similar to YPG’s “Walking Fingers” design. The faxes gave the impression that they were sent on behalf of YPG to update recipients’ existing YPG records and to obtain additional Google advertising for a fee of over $2,000. However, the fine print revealed that recipients who returned the fax sheets were actually signing a new two-year contract with the respondents and not with YPG.
More than 1,400 Canadians complained to the Competition Bureau, who brought the court action against the respondents in July 2011.
The Court found that the faxes were designed to deceive and appear as though they were sent from YPG. The fine print was insufficiently prominent and did nothing to clarify that the faxes had not been sent by YPG. Most of the complainants believed the faxes were sent by YPG and stated they would not have ordered the respondents’ service if they had known they were unaffiliated with YPG. This underscored the materiality of the false or misleading representations.
The Court declared null and void any contracts entered into between the respondents and Canadians. In addition, the Court ordered that the respondents:
- publish on their websites and send to customers corrective notices stating they are unaffiliated with YPG and they have engaged in conduct that violates the Competition Act;
- repay all payments received from Canadians (restitution);
- pay over $9 million in administrative monetary penalties ($8 million by the corporate respondents and just over $1 million by the three individual respondents).
Similar investigations and court cases involving the respondents have been pursued in the U.S. by the Federal Trade Commissioner (FTC) and in Australia by the Australian Competition and Consumer Commission.
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