The Federal Trade Commission has permanently halted the operations of
Canadian con artists who allegedly posed as domain name registrars and
convinced thousands of U.S. consumers, small businesses and non-profit
organisations to pay bogus bills by leading them to believe they would
lose their domain names unless they paid.
In the case a federal district court judge in Chicago, Robert M. Dow,
Jr., ordered a temporary halt to the deceptive claims and froze the
defendants' assets, pending trial. The settlement and default judgment
orders announced today end that litigation. The settlement order and
default judgement were made in March, however the judgement was only
made public on Monday this week.
Settlement and default judgment orders signed by the court will bar the
deceptive practices in the future, although stipulated orders are for
settlement purposes only and do not necessarily constitute an admission
by the defendants of a law violation. However stipulated orders have the
full force of law when signed by the judge.
In June 2008, the FTC charged Toronto-based Internet Listing Service
with sending fake invoices to small businesses and others, listing the
existing domain name of the consumer's web site or a slight variation on
the domain name, such as substituting ".org" for ".com." The invoices
appeared to come from the businesses' existing domain name registrar and
instructed them to pay for an annual "WEBSITE ADDRESS LISTING." The
invoices also claimed to include a search engine optimization service.
Most consumers who received the "invoices" were led to believe that they
had to pay them to maintain their registrations of domain names. Other
consumers were induced to pay based on Internet Listing Service's claims
that its "Search Optimization" service would "direct mass traffic" to
their sites and that their "proven search engine listing service" would
result in "a substantial increase in traffic."
The FTC's complaint charged that most consumers who paid the defendants'
invoices did not receive any domain name registration services and that
the "search optimization" service did not result in increased traffic
to the consumers' Web sites.
The orders bar the defendants from misrepresenting: that they have a
preexisting business relationship with consumers; that consumers owe
them money; that they will provide domain name registration; and that
they will provide "search optimization services" that will substantially
increase traffic to consumers' Web sites. The defendants are also
required to disclose any material restrictions or aspects of any goods
or services they provide.
The settlement order, entered against defendants Isaac Benlolo, Kirk
Mulveney, Pearl Keslassy, and 1646153 Ontario Inc., includes a suspended
judgment of $4,261,876, the total amount of consumer injury caused by
the illegal activities. Based on the inability of the settling
defendants to pay, they will turn over $10,000 to satisfy the judgment.
The default judgment order was entered against defendant Steven E. Dale
and includes a judgment in the amount of $4,261,876.
Charges against Ari Balabanian and Data Business Solutions were dismissed by the court at the FTC's request.
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