They produced, published and mailed out a real 1000+ page book, twice a year, and I'm aware that it cost them millions of dollars and lots of manpower to do so. We can debate the usefulness of paper-based yellow pages in this day and age until the cows come home, but either way it would not mean they committed fraud.
I do not think the pervious commentor was implying that they committed fraud; he or she was simply saying that they likely benefit from deceiving people. Many legit companies benefit from deceiving people.
I think it's rather rude of you and that previous commentor to assert such things. A company does not 'deceive' its customers just because you think the service they offer is useless and could only possibly be sold as a result of grandiose claims of effectiveness and other false pretenses.
In fact, in this day and age, large parts of the worlds still work the same way they worked ten years ago. Time and time again, we internet savvy folks grossly overestimate the amount of business and consumption that has shifted to 'the web'. Yes, Amazon has a revenue of 24.5 billion. Do you realize what the total size of that market is?
I know someone that still makes money printing books of coupons that the receivers can redeem to obtains discounts, rebates, etc. If you honestely believe that companies only invest in that out of custom and the false belief that it still yields results, then you are out of your mind. You are mistaking intelligence for knowledge and making claims about a subject you actually don't know anything about.
Sending businesses invoices that are not really invoices until you read the fine print is scammy, even if the majority will never get paid it is essentially hoping for administrative people not being 'on the ball' enough to realize what they're doing.
Big corporations invented 'purchase orders' for that reason so they're fairly well protected, but the smaller companies that outsource their books because they're too busy doing their work are the ones that are the victims of companies like these.
I've received a couple of such 'not invoices' from companies here in NL and Belgium and they're usually crafted well enough that you have to read them three times before you realize they're not legit. One of them actually presented itself as a 'kvk' which is short for 'kamer van koophandel', the local chambers of commerce.
They're parasites, pure and simple, selling a service for which there is no real demand other than to create a 'product' used as a fig-leaf to hide the scam behind.
Do you by chance have an example of the solicitations in question? Showing that the solicitation was designed in good faith (and not to confuse people) can go a long way to quell the rumor mill.
- They clearly state that it's not a bill/invoice.
- The fine print explains that there is no obligation to subscribe.
- The fine print explains that they are not affiliated with the actual Yellow Pages.
- The fine print font is larger than your typical bank statement fine print.
- The typical Yellow Pages logo is prominently featured in the solicitation. This is probably not illegal, but can be seen as potentially misleading.
- The first line of the return card is addressed to YELLOW PAGES (as opposed to Yellow Pages United). Probably not illegal, but again, potentially misleading.
Opinion:
I think they (United Directories, not Hashrocket) adopted an unpleasant business model that I wouldn't want to be associated with. But considering Exibit A, it appears that as far as the solicitation goes, they may be operating within the borders of legality. It will be interesting to see what the court will decide.
If it is within the borders, it's just so, not by much. Also, legalities aside, this is unethical business behaviour and I wouldn't want to be associated with it in any shape or form.
But, hey, maybe there's no such thing as bad publicity.
I think in this case, there is such thing as bad publicity. And as much as it may be unfair, I'd be surprised if this story didn't affect Hashrocket as well (which is not guilty of any wrongdoing).
This kind of deceptive business is quite common, and they usually get away with it. It would be naive to think that the Feds have the resources to go after every company that engages in deceptive marketing. There is something more here. They have taken the trouble to get access to bank accounts, this is no minor step. I think they saw enough in those accounts to warrant going after this. While there may well have been a sweep account involved, the document seems to clearly imply that they looked at the pattern of individual deposits coming in from the "customers." To say that this is some overzealous prosecutor desperate for fame seems a bit hasty.
Consider that they pulled records of how many business reply cards came into the PO box and compared that to how many names were actually published in the book. They compared that to the bank accounts. While I have my doubts that the actual solicitation was illegal and that the total dollar amounts were so high, there seems to be more here than just an out of control prosecutor.
If United billed far more names than they actually published in the book, that would be fraud.
After reading the complaint, I think its pretty clear the reason the Feds thought it warranted this much investigation:
"In November 2009, two victims from the Charles Smith/YPDP fraud scheme contacted the United States Attorney's Office in the Northern District of Georgia, indicating that they were still receiving fraudulent Yellow Pages solicitations..."
When they investigated and realized that the solicitation came from a company owned by Charles Smith's brother, I'm sure that was enough to launch a full fledged investigation.
My analysis was in fact limited to the legality of the solicitation. I'm in no way qualified to figure out the legality of their operations in general.
Mark's brother Charles has been estranged from the family for 20 years or more. I have known the family which is very close knit and court was the first time I ever heard of the existence of Charles.
Just to clarify per what was presented by both the prosecution and the defense in the case the walking fingers logo and yellow pages name are public domain. The various local phone companies engaged in the exact same business model have no more claim to them than anyone else. The only difference being that most of them were given the advantage of government subsidies and a bureaucratic pseudo monopoly blessing.
True, although I'm betting the local phone companies' distribution model more accurately fits the traditional definition of "the Yellow Pages". When people think "Yellow Pages" they think of a free telephone directory distributed to all residences and businesses in the area being advertised in.
According to the complaint, United Directories published 27,626 copies of the book in 2009. Exhibit A of the complaint is an advertisement they sent to a small business in North Las Vegas for the "National Business Edition" of the "Yellow Pages". I don't see how, with 27,626 copies printed, the United Directories' Yellow Pages could possibly meet the traditional definition of "the Yellow Pages" in a "National Business Edition".
So yes, while probably not illegal, its deceptive to use the term "Yellow Pages" when you're just publishing a lower circulation business to business directory.
