Highlands Ranch business owner Kevin Mangone was immediately skeptical when he received a letter last year mentioning the name of a Canadian company he said swindled him a year earlier.
He tossed it out.
It turns out the letter was from the Federal Trade Commission telling business owners like Mangone that Ontario-based Datacom Marketing Inc. and its owners were being investigated for fraud. Mangone might be able to get his money back.
The FTC announced this week that it had settled with Datacom and its owners for $505,000 in restitution – paltry compared with the $50 million the company and its affiliates had allegedly scammed out of American businesses since 2000 for listings in phone directories the FTC said were useless.
The agency said businesses often were tricked into believing they agreed to be listed in the directories and were billed later.
Already burned once, Man gone said, he ignored the FTC’s letter. He learned of the settlement Wednesday when contacted by the FTC.
“I threw it out right then,” Mangone said of the letter. “I didn’t trust it. I thought it was another scam.”
Datacom’s scheme worked simply: A telemarketer called U.S. companies, saying he or she was with the “records department” of one of a series of business directories and was checking on information the company had already provided for previous listings.
In truth, much of the information was culled from other business-information sources.
A second person purportedly from Datacom’s “shipping department” would phone to verify a shipping address and tape the conversation to use as proof the sale was authorized.
The directories were either inaccurate or useless, according to the FTC.
“Datacom did a sales approach to make it sound like they already had a relationship with the business and get them to agree to a new directory,” said John Hallerud, an FTC attorney who led the investigation. “A lot of businesses, if they are large operations, are compartmentalized and are not sure what’s happening in every section.”
He added: “They might catch the problem, but then they’d be hassled into paying.”
That’s what happened to Mangone, of Highlands Ranch Automotive. He said Datacom tricked one of his employees into believing the company was renewing a listing in the “Arizona-Colorado-New Mexico Business Directory,” Mangone said. The company then sicced a collection agency on the repair-shop owner when he refused to pay the $500 bill.
“It was pretty much a pain in the neck, them hounding me all the time to pay up,” said Mangone, 45.
When the collection agency called, Mangone said, he gave in and paid half the amount.
As part of the settlement, Datacom also agreed to forfeit more than $1 million in uncashed checks and invoices from business owners told to pay for something they had never ordered.
Staff writer David Migoya can be reached at 303-954-1506 or dmigoya@denverpost.com.
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Q&A
Q: How can a business avoid being scammed into paying for something it did not authorize?
A: Designate certain employees as buyers and use only signed purchase orders to authorize transactions. Keep blank order forms secure.
Q: What’s the best response to a telemarketer’s sales pitch that can avoid a swindle?
A: Be skeptical of unsolicited calls, and advise all employees to tell salespeople they must speak only to authorized buyers and must have a purchase order.
Q: Where can you report a business- product or -service scam?
A: File a complaint with the FTC at or call 877-FTC-HELP. You also can report scams to the U.S. Postal Inspection Service, the Colorado attorney general’s office or your local Better Business Bureau.
Q: What should you do if you receive something in the mail you didn’t order along with an invoice?
A: Don’t pay it – and don’t return it – until you have requested additional information from the company that sent the item. Treat the item as a gift. Don’t provide any personal or corporate financial information, and insist the sender merely prove you ordered the item.
Q: Can you keep unsolicited items mailed to you without paying for them?
A: Yes. It is illegal for a seller to send you a bill for an item you did not order, or ask you to return merchandise in lieu of payment.
Source: Federal Trade Commission
