Old News But Interesting News: Merchant Circle Pays $900,00 To Settle Alleged Unlawful Marketing Practices

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

Merchant Circle has been criticized here and elsewhere (here, here and here) over the years but complaints had been quiet of late. No wonder.

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Old News But Interesting News: Merchant Circle Pays $900,00 To Settle Alleged Unlawful Marketing Practices by

9 thoughts on “Old News But Interesting News: Merchant Circle Pays $900,00 To Settle Alleged Unlawful Marketing Practices”

  1. No wonder most people missed MerchantCircle’s settlement with criminal enforcement – they strategically unleashed a record-number of press releases during that day and week of May.

    Let us remember and speculate just how many times MC execs have lied publicly about their activities.

    What can one expect with a figure like Ben Smith running the show. Once Ben Smith is out we can expect a company that is run more ethically. Until then…

  2. I completely missed this, too, Mike. Wow, that’s nearly a million dollar settlement. Rather big news. I am not sorry to see MC obliged to obey the law. Not sorry at all. Thank you for reporting on this oddly absent story.

  3. @Miriam

    Yes, I did some Google searching and found only 2 local newspaper reports of the event. It was not covered in any of the marketing, search or technology blogs nor in any mainstream press outside of their local market.

    @MC Critic
    I checked MC’s press releases and they published 5 press releases in May of 2010.

    This compares to one each in Jan. & March, two in April, one in June, four in July, two in August and two in September of this year. They published 12 in all of 2009, and also 12 in 2008.

    So it does appear that the volume for May was high.

  4. Well Google may score a C- at BBB, but MerchantCircle “coincidentally” joined BBB in May, days before their Unlawful Telemarketing settlement for $900k… and they got an A >> http://sanjose.bbb.org/Business-Report/MerchantCircle-228893

    Another inside story – Allegedly MC hurriedly moved to Mountain View in late April to quickly depart from the county where the District Attorney bringing the complaint was located, unsure of a settlement. I’m not clear what legal advantage that may have provided but it speaks volumes to the CEO’s mindset

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