Corrections or additions?

This article by Kathleen McGinn Spring was prepared for the March

12, 2003 edition of U.S. 1 Newspaper. All rights reserved.

Beware Those Directory Deals

Eric Berkowsky recently called U.S. 1 Newspaper to

find out whether a representative had called to solicit a directory

listing of his company for $360. At first, recalling that his

company’s

information had appeared in the paper’s business directory in past

years, he thought the call was legitimate.

"Three-hundred-and-sixty

dollars sounded about right for an ad," he says. "It sounded

like it was repeating what we did last year."

Then he received another call, reminding him that an invoice for $360

would be on the way, and he became suspicious. He called the

accounting

department of his 20-person architectural, planning, and construction

company, Berkowsky and Associates Inc. at 2551 Route 130 South in

Cranbury and found out that no such check had been issued last year.

(U.S. 1’s records indicate that the Berkowsky firm has never purchased

any ad in any U.S. 1 publication.)

The individuals who contacted Berkowsky gave as their names Fabian,

a woman, and Adam. But, while U.S. 1 is verifying company information

for its annual directory, it does not charge for the listings, and

it does not have a Fabian or an Adam on staff.

Berkowsky is the second person who has contacted the newspaper seeking

information about what appears to be a directory scam. Craig Villas

of ETD Discount Tire on Route 1 North was also contacted and he also

thought at first that the caller was from U.S. 1. He was asked for

$385.

Meanwhile, U.S. 1 Newspaper itself nearly fell for a slightly

different

directory scam. The paper received a check for $3.17 from

Yellow-Page.Net

— an unusually small amount but not unheard of in the paper’s

classified ad department, which almost stamped it for deposit. A

lengthy

form letter in the same envelope said that "the enclosed bank

check is real, so be sure to cash it right away! It’s

Yellow-Page.Net’s

dramatic way of celebrating and alerting companies, like yours, that

this yellow page data is currently receiving a tremendous amount of

page views every day."

The letter continues in the same vein, in tiny print, for another

four paragraphs before it asks "Can your company afford to allow

the competition to gain an advantage when it costs only $17.95 per

month if you respond now?" Yes, signing the check triggers a

$17.95

monthly charge. Nine paragraphs further, and on the back, it is

revealed

that charge will not turn up as a monthly bill, but rather will be

included in a phone bill. One or two or three months hence, who would

connect the $3.17 check with the charge?

Yellow-Page.Net’s letter included — front and center — the

seal of the Yellow pages I.M.A., the Berkeley Heights-based trade

organization for Yellow Page directories. Christopher Bacey, director

of communications for the group, asked for comment about the $3.17

check, says "We’re aware of the situation, but misleading bills

are not illegal."

The use of the name "Yellow Pages" on a directory is not

illegal

either. "`Yellow Pages’ was never trademarked," says Bacey.

Yellow-Page.Net does publish a directory, on the Internet at

www.yellow-page.net.

It does not appear to be of much help in researching businesses since

names appear in no alphabetical or geographical order. Still,

"preferred

customers" can link to their websites, and each gets a listing

with a map to its offices.

"It’s a directory," says Bacey, who worked for the Associated

Press before going into corporate communications. "It is a real

business. It has sales of $5 million."

DeVal Johnson is a founder of the business. A graphic designer who

had been designing phone books, he moved into web design and saw

opportunity

on the ‘Net. He and a friend founded Yellow-Page.Net, which has its

offices in Mesa, Arizona. A publicly-traded company (OTCBB: YPNP),

it has 750 shareholders and is now trading for just about a nickel

a share.

The company is now sending out 1 million of its checks every month.

Johnson says response rate is about 2 percent. "We get one or

two complaints a month," he cheerfully admits.

Customers are billed — on their phone bills — by

Telco-Billing,

a subsidiary of Yellow-Page.Net. Johnson says a customer who doesn’t

wake up to the charge right away, even 12 months down the road, can

receive a refund.

Yellow Page.Net’s most recent 10Q filing with the SEC

reveals that the company does indeed have sales of $5 million. The

filing states that "We currently derive almost all of our revenue

from selling Preferred Listing." As of September 30, 2002, the

company had sold such listings to 106,439 companies. This, it tells

the SEC, is less than six-tenths of 1 percent of the country’s

businesses.

The company’s 10 Q adds that it has pulled in these customers through

a direct mail solicitation, which "includes a promotional

incentive

(ie. generally a $3.50 check), which if cashed by the business

automatically

signs the business up for the Preferred Listing service for an initial

12 automatic renewals."

The filing says that the company mails a written confirmation card

to new customers, "generally" within days of activation. This

is true, says Johnson, who says a postcard goes out in about a month.

Johnson denies that his company is operating a scam. But the Yellow

Pages trade group has received a number of complaints against

Yellow-Page.Net.

Bacey, its spokesman, supplied a letter from John Greco, the

organization’s

CEO, to Robert Lendino, vice president national sales operation of

Yellow Pages Media. "Thank you for your recent letter expressing

concern over a marketing solicitation used by Yellow-Page.Net,"

he writes. "As you know, the Yellow Pages I.M.A. continues to

engage in a public awareness campaign to prevent the proliferation

of `bogus’ yellow pages invoice schemes that not only cost advertisers

huge sums annually, but also shed a negative light on the legitimate

Yellow Pages industry.

"Our efforts target those scams that deceive advertisers into

thinking they are renewing their regular Yellow Pages ad, when in

reality they are receiving a new solicitation," Greco continues.

"We are also targeting those scams that charge an advertiser for

placement in a directory that does not exist or is so narrowly

distributed

that it provides no benefit."

But, writes Greco, "the marketing approach used by Yellow-Page.Net

abides by all required advertising regulations and disclosures. That

being said, some confusion has been created among a few Yellow Pages

advertisers."

Indeed. Yellow-Page.Net has told Greco that it will refund money to

unhappy customers. The problem in great part, though, is recognizing

that a purchase has even been made.

The same situation exists in another solicitation that arrived at

U.S. 1 Newspaper’s offices at about the same time as the

Yellow-Pages.Net

"gift check." This one was from Yellow Pages, Inc. Cleverly,

it contains one neon yellow rectangle right up near the top. Inside

is a date, April 9, 2003 to be exact. The eye is drawn right to it,

and then downward to a second — much larger — neon yellow

box. Following the yellow, one’s eye misses the type above it, type

that reads "This is not a bill" and the type that reads

"We

are not your local phone company."

The piece of paper sure looks like a bill. It itemizes charges and

presents a "total amount" of $296. Farther down — in red

— it states "Please make check payable to Yellow Pages,

Inc."

It would not be difficult for a busy bookkeeper — his eye drawn

to the yellow bottom line — to send off a check. Yes, above the

yellow, it does say "This is a solicitation for the order of goods

or services, or both, and not a bill." And Yellow Pages Inc. does

have what appears to be a useful Internet directory

(www.yellowpagesinc.com).

A quick spin on Google for "Yellow Pages" returned 3,400,000

sites. Among them are The Ultimate Yellow Pages, At Hand Network

Yellow

Pages, Superpages.com:Yellow Pages, Yellow Pages Online, and

Switchboard

Internet Yellow Pages — and their equivalents in any number of

foreign languages.

There is obviously gold in that thar’ yellow. And Yellow-Page.Net

has revenues of $5 million from fewer than 1 percent of the country’s

businesses. Think of the possibilities! Meanwhile if someone named

Fabian or Adam should call about a directory, call the police before

you call U.S. 1.

— Kathleen McGinn Spring


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— the web site for U.S. 1 Newspaper in Princeton, New Jersey.

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