International Scammers Banned from Business Directory Business

International Scammers Banned from Business Directory Business

In an action brought on by the Federal Trade Commission in 2013, a federal court has banned a Slovakia-based company and two of its executives from the business directory business, ending a scam that for years took millions of dollars from small businesses and non-profits in the United States and other countries.

In its complaint, the FTC had alleged that, using direct mail, the defendants tricked retailers, home-based businesses, local associations and others into thinking they had a preexisting business relationship with the defendants. The defendants falsely suggested that consumers had to return a form confirming or updating their contact information for a trade show they had attended or plan to attend. Many recipients did not note a statement, buries in the fine print at the bottom of the form, that by signing and returning it they were agreeing to pay $1,717 annually to the company for a listing on its website.

A default judgment entered earlier in this case against the defendants was vacated in December 2014. That month, Valvoda was indicted on mail fraud charges. The FTC’s civil case continued until recently, when the agency reached a settlement with Valvoda and Anhorn, and Construct Data Publishers defaulted after filing bankruptcy proceedings in Slovakia.

Under the final orders announced yesterday, the defendants are banned from the business directory business. They also are prohibited from misrepresenting any product or service, attempting to collect payment for their directory listings, profiting from consumers’ personal information, or failing to dispose of consumers’ personal information properly.

The order against Construct Data Publishers imposes a $7 million default judgment, including the transfer pf $344,000 to the FTC from the court’s registry. The order against Valvoda and Anhorn imposes judgments of $2.1 million and $4.5 million, respectively, which will be suspended upon payment of $200,000. The full judgment will be imposed immediately if the defendants are found to have misrepresented their financial condition.