Industry Canada

Industry Canada
Competition Bureau Canada

Competition Bureau Canada

May 26, 2006 10:29 ET

Ten-Year Business Directory Scam Results in Deceptive Telemarketing Charges

OTTAWA, ONTARIO--(CCNMatthews - May 26, 2006) -

Competition Bureau Investigation Uncovers Scheme Operating in Toronto and Montreal

The Competition Bureau announced today that three people have been charged for their involvement in deceptive telemarketing activities over a 10-year period in Toronto. They are: Judy Neinstein, 62, Toronto; Bernard Fromstein, 54, Oakville; and Paul Barnard, 54, Ajax. Two others were charged for their involvement in the alleged scam, operating out of Montreal: James Sharo, 56, St-Hubert, and George Pavlopoulos, 35, St-Hubert.

The companies have also been charged: Datacom Marketing Inc. (Ontario 1431798), Datacom Direct Inc. (Ontario 1417524) and the Quebec affiliate Datacom Marketing Inc., Quebec registration number 1149885080. Charges include counts under both the Competition Act and the Criminal Code.

"Everyone is a potential target of deceptive telemarketing," said Raymond Pierce, Deputy Commissioner, Competition Bureau. "We encourage businesses and consumers alike to recognize fraud, report it and stop it."

The Bureau alleges that at the height of its operation in 2002, Datacom scammed over 50,000 Canadian and American businesses out of more than $23 million. According to Bureau estimates, Datacom's volume of commerce during the investigation period was over $150 million.

As part of the alleged scam, Datacom telemarketers contacted small and medium-sized businesses in Canada and the United States, claiming that they were updating information in their business directory listings. The telemarketers implied that the business had ordered a listing in the past and that someone in the company had already authorized an order.

The telemarketers failed to disclose important information, such as which company they represented, the price of the directory, the terms and conditions to return it, the purpose of the call and the nature of the product, as required by the telemarketing provision of the Competition Act. The businesses subsequently received a business directory, which they likely would not have ordered had it not been for the false representations.

The Bureau received over 150 complaints from businesses about this scam, many of which were forwarded from PhoneBusters, the Canadian Anti-Fraud Call Centre.

This investigation was conducted with the assistance of the Federal Trade Commission of Chicago, the Toronto Strategic Partnership and the Service de Police de la Ville de Montreal.

Members of the Toronto Strategic Partnership include the Competition Bureau, the Toronto Police Service, the Ontario Provincial Police, the RCMP, Ontario's Ministry of Government Services, the U.S. Federal Trade Commission, the United States Postal Inspection Service, and the UK's Office of Fair Trading.

The FTC also announced this week that a U.S. district court ordered a temporary halt and asset freeze against the defendants.

The Competition Bureau is an independent law enforcement agency that promotes and maintains fair competition so that all Canadians can benefit from competitive prices, product choice and quality service. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

Contact Information

  • Competition Bureau
    Maureen McGrath
    Communications Advisor
    (819) 953-8982
    (613) 296-2187 (cell)
    Competition Bureau
    Information Centre
    (819) 997-4282
    1 (800) 348-5358