Market Wire, December, 2009
The Competition Bureau announced today that the Ontario Superior Court has imposed a record $15 million fine against DataCom Marketing Inc. for operating a business directory scam targeting Canadian and U.S. businesses.
Toronto-based DataCom contacted thousands of small and medium-sized businesses between 1994 and 2005, tricking businesses into believing that they had already ordered a business directory listing and using deceptive scripts and aggressive collection tactics. Victims lost hundreds of dollars each while the scam netted $12.9 million in profits.
“We applaud the court’s decision,” said Melanie Aitken, Commissioner of Competition. “This is a clear signal to fraudulent telemarketers that their acts will be treated seriously by the courts. In turn, we, at the Bureau, will not hesitate to take action against fraudulent telemarketers when we uncover evidence that the law has been violated.”
In his decision, Justice Ian Nordheimer of the Ontario Superior Court wrote that this sort of activity “…must be deterred. It has impacts not only for businesses in this country but also for Canada’s international business reputation.”
The founder and former president of DataCom, Bernard Fromstein, was previously sentenced ( http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03112.html ) to two years in jail, three years probation and a 10-year ban on telemarketing activities. Another senior manager, Paul Barnard, received a two-year conditional sentence (http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02666.html) after cooperating in the investigation. The fine represents a record amount under the deceptive marketing provisions of the Competition Act.
The investigation was conducted with the assistance of the Toronto Strategic Partnership against fraud and the Service de Police de la Ville de Montreal
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