The Federal Trade Commission (FTC) has announced it is seeking to permanently halt a Slovakia-based operation from scamming small businesses and nonprofit organizations into collectively paying millions of dollars to be listed in an online exhibitors’ directory called FAIR Guide.

After reviewing complaints filed by ASAE and other organizations, the FTC secured a temporary restraining order and asset freeze on the defendants, Construct Data Publishers, which allegedly sent mailings to retailers, associations, and other businesses who typically attend tradeshows. The mailings mention a specific tradeshow or exhibition and ask the recipient to check the accuracy of information for the exhibitors’ directory for the show.

ASAE charged in its complaint to the FTC that the publishers’ form suggests that the parties have a preexisting business relationship with the named tradeshow and that the directory listing is related to the recipient’s participation in it. Buried in the fine print on the form is a statement that by signing and returning the form, the recipient agrees to pay Construct Data/FAIR Guide $1,717 per year for three years.

According to the FTC’s investigation, after the form is signed and returned to the defendants, Construct Data/FAIR Guide sends an invoice demanding payment to a Slovakian bank account. “Those who challenge the invoice are told the order cannot be canceled,” the FTC said. “Late payments follow, with late fees added, and some organizations pay just to end the harassment.”

The FTC said Construct Data/FAIR Guide moved from Austria to Slovakia in 2008 after being sued by Austrian authorities for deceptive practices. To settle the Austrian case, the defendants agreed to stop soliciting businesses in the European Union. The FTC is now seeking to permanently stop the defendants from soliciting tradeshow exhibitors in the United States and require Construct Data/FAIR Guide to refund all fees collected.

FTC staff has acknowledged that ASAE’s comprehensive complaint about the Construct Data firm, which ASAE also lodged with other law enforcement authorities, was important in bringing FTC’s attention and resources to the matter. The agency also acknowledged the assistance of the U.S. Postal Inspection Service, the Attorney General’s Offices of California and Illinois, the Better Business Bureaus serving Central Ohio, Metropolitan New York, and Chicago and Northern Illinois, and the Canadian Anti-Fraud Centre.

“ASAE is gratified that the FTC is taking action to stop this scam and secure refunds for the many businesses that fell prey to the defendants’ deceitful solicitations,” said ASAE President and CEO John H. Graham IV, CAE. “We urge anyone who has been solicited or contacted for payment by the defendants to let ASAE know so that we can notify the FTC and assist in their ongoing legal action.”

(Wavebreak Media/Thinkstock)