Attorney General's News Release
March 3, 2008
Nixon says company that billed for Internet ads through “activation” checks will stop practice, pay restitution
Jefferson City, Mo. — Missouri businesses, schools, churches and non-profit organizations that were billed by a Florida company for Internet advertising they didn’t know they were purchasing will receive more than $10,458 in restitution under a 26-state settlement, according to Attorney General Jay Nixon. The agreement is the result of an investigation by Nixon and other state Attorneys General regarding the use of “activation checks” by Directory Billing LLC, which does business as USDirectory.com.
Nixon says that under the settlement filed today in Cole County Circuit Court, Directory Billing has agreed to stop using activation checks as the means of obligating businesses to purchase its products and services. The company has also agreed to pay a total of $400,000 to the states to be used both for restitution to former Directory Billing customers that did not understand the consequences of depositing the activation check, and to reimburse the states for their investigation costs. Directory Billing also agreed to contact its current activation check customers to inform them of their right to cancel their agreement and of their eligibility for a partial refund of monies paid to Directory Billing.
Within the next three weeks, Directory Billing will contact by letter its current customers who are being billed through their telephone bill or bank account for a listing and who became customers by depositing an activation check. The letter will advise them of this fact and offer a partial refund if they elect to cancel.
“Many Missouri businesses and organizations received these activation checks and deposited them, unaware of the monthly charges that triggered,” Nixon said. “They continued to be billed, and many were unaware of the charges they were accumulating until contacted by my office during the investigation of this scheme. Today’s agreement ensures that Directory Billing will stop using these checks as a way to initiate charges.”
Missouri and the other states alleged that since early 2004, Directory Billing sent businesses and other organizations “live” activation checks in the mail. These checks were made payable to the business or organization for a small amount, usually $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 Directory Billing in its online yellow pages directory. The fine print also stated that by depositing the check, the recipient authorized Directory Billing to bill monthly fees through the business’ telephone bill or through automatic debiting of the amount from the bank account into which the recipient deposited the check, or by other methods.
Nixon’s investigation revealed that some activation check recipients who deposited these activation checks did so without knowing that they were purchasing Directory Billing’s online advertising services or that they were authorizing a monthly billing through their telephone bill or through debits from their bank account. In some of these cases, the recipients remained unaware that they were being billed for several months, or longer, following that deposit. Most businesses were billed at a rate of $49.95 a month.
Missouri businesses and organizations that believe they were victimized by this practice must deliver or mail a complaint showing their payment amounts to the Attorney General’s Office before April 30, 2008 to be eligible for restitution. Complaints can be filed online at ago.mo.gov, or by phone at (800)392-8222. Additionally, currently-paying customers will be contacted directly by Directory Billing.
