Oregon Department of Justice

Attorney General Ellen F. Rosenblum

Oregon Department of Justice - Attorney General Ellen F. Rosenblum
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December 14, 2006

Myers gets refunds for Oregon small businesses & other organizations who deposited small 'reward' checks in their banks without knowing they were agreeing to be in an online yellow page directory

Attorney General Hardy Myers today filed an agreement with two Nevada corporations settling concerns they deceived Oregon small businesses and other organizations into depositing small checks resembling rebates or rewards in their bank accounts only to discover that by doing so they were purchasing an enhanced online yellow page listing. Named in an Assurance of Voluntary Compliance (AVC) filed in Marion County Circuit Court are YP Corp., doing business as YP.Com, YP.Net and Yellow-Page.Net, and Telco Billing, Inc., a wholly-owned subsidiary of YP Corp. Both Nevada corporations are headquartered in Mesa, Arizona but do business from both states. The AVC admits no law violation.

"Activation checks are inherently deceptive," Myers said. "Designed to look like a token or dividend, Oregonians that deposited the checks in many cases did so without knowing they were purchasing an online yellow page listing." This is the second agreement filed this week and the third this year by the Oregon Department of Justice involving the use of "activation checks" in the misleading marketing of a product or service.

"In this case alone, over 13,000 Oregonians deposited the checks and currently more than 3,000 Oregon small businesses and organizations are being billed by Telco Billing for a service many didn't want or did not knowingly authorize," Myers explained. "The Oregon Department of Justice is committed to protecting small businesses from solicitations using activation checks and is following through on this commitment by introducing legislation to ban their use."

According to the terms of today's settlement with Oregon and 33 other states, YP Corp. has agreed to stop using "activation checks" to obligate businesses to purchase its products and services.  YP Corp. also has agreed to pay $2 million, collectively, to the states to be used for partial restitution to former YP.com customers that did not understand the consequences of depositing YP.com's activation check and to reimburse the states for their investigation costs. As a lead state, Oregon will receive $111,000 which includes $85,000 for investigative costs and the Department of Justice Consumer Protection and Education Fund and $26,000 to pay partial refunds to past customers who file complaints with DOJ.

YP Corp. also agreed to contact its current "activation check" customers to inform them of their right to cancel their agreement with YP.com and of their potential eligibility for at least a partial refund of monies paid to YP.com.

The states investigators found that since at least January 1, 2003, YP Corp. sent businesses and other organizations "activation checks" in the mail.  These checks were made payable to the business or organization for a small amount, usually around $3.50.  On the back of the checks, in fine print above the endorsement line, was language stating that by depositing the check, the recipient agreed to purchase advertising from YP.com for its on-line yellow pages directory.  The fine print also stated that by depositing the check, the recipient authorized YP.com through YP Corp.'s subsidiary Telco Billing, Inc. to bill the monthly fees in advance, on the business's telephone bill or by debiting the amount from the bank account into which the recipient deposited the check, or by other methods.  The envelope that the check was mailed in also contained YP.com advertising material.

"It is important to point out that many small businesses and organizations do not endorse the backs of token or reward checks. They send them in a stack of other checks to be deposited into their bank accounts," Myers explained. "Marketers print contracts on the back of these checks knowing the so-called agreement may never be read."

Current YP.com customers who are being billed through their telephone bill or bank account or credit card for a listing and became a customer by depositing an activation check should expect to be contacted by letter within the next two weeks by YP Corp.  Any customers with questions may call the Attorney General's hotline.

Any Oregon business or organization that deposited an "activation check" from YP.com since January 1, 2003 and was billed for an online yellow page listing by doing so, and believes that it did so without understanding the consequences of depositing the check, should call the Attorney General's hotline by February 28, 2007 for information on how to request a partial refund from DOJ. The hotline numbers are (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) or toll-free at 1-877-877-9392. Justice is online at www.doj.state.or.us.


Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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