I spend a lot of time reading about and writing about the Local Search industry so I am not sure how this one slipped by. I was poking around the BBB of San Jose and came across a notice of government action indicating that Merchant Circle had settled an allegation of unlawful marketing practices from the Santa Clara District Attorney. A quick check showed that the settlement occurred in May of this year. From the release:
Agency: District Attorney
Description: NEWS RELEASE
MERCHANTCIRCLE PAYS $900,000
FOR UNLAWFUL MARKETING PRACTICES
Santa Clara County District Attorney Dolores A. Carr announced today her office has settled a consumer protection lawsuit against WYBS, dba MerchantCircle, an internet social networking company for small businesses. The action arose out of an investigation by the District Attorney’s office.
The District Attorney alleged that from 2006 to 2008, MerchantCircle engaged in improper automated telemarketing campaigns which violated California “live voice” requirement for automated calls. Some of those calls also contained unverified statements that the MerchantCircle website had reviews, ratings, or video footage of the recipient business.
Without admitting wrongdoing, WYBS, dba MerchantCircle, consented to a judgment entered in Santa Clara County Superior Court requiring it to pay $700,000 in civil penalties and $50,000 in investigative costs. MerchantCircle with also pay $150,000 into the Consumer Protection Trust Fund, a trust used to fund investigation and prosecution of consumer protection law violations statewide. MerchantCircle cooperated with the investigation, has brought its telemarketing practices into compliance with California laws, and has agreed to implement additional procedures to ensure future compliance.
“These penalties should remind any business engaging in telemarketing in California that this state has strict laws requiring the use of an actual person to allow call recipients to ‘opt out’ of the message.” said District Attorney Dolores Carr.“These business are also placed on notice that any statements they make to consumers must be true and verified.”
Date of Action: 5/20/2010