YP.com Sued for "Cramming" - LEC Billing

According to the CBS Affiliate in Rockford, IL (near Chicago) YP.com was sued for tricking local merchants into a monthly fee billed on their phone bills. The practice, called LEC billing, is frequently used by incumbent yellow page publishers. The benefit is reduced churn - many advertisers mistakenly believe they have to pay the charge or lose phone service. Further, LEC billing makes it easier for the advertiser to say "yes" vs.a charge billed to a credit card, or invoicing.

It is interesting this story hits the day MerchantCircle announced 400,000 of their 650,000 merchants have no other social networking presence. Reading into the MerchantCircle press release, I estimate that about 10% of the 650,000 merchants are active (5% added a photo to their profile in October).

MerchantCircle enticed 400,000 merchants to create their first social networking profile and perhaps ~40,000 are actively building their profiles. The profile is free with several options for a paid upgrade.

FastCall411 uses autodialing to verify local listings. With such high merchant turnover in local search, we want to insure that the merchant is still in business and we also want to verify that the merchant has a history of answering their phone (good customer service) with some indication that the merchant wishes to service searching consumers.

YP.com is apparently tricking merchants into verifying their listings then billing them with a misleading sales pitch.

I am all for pushing the envelop, but the accusations against YP.com are concerning. If too many local merchants get burned our industry will suffer.

Here's the story:

Chicago – Attorney General Lisa Madigan today filed a lawsuit against a Las Vegas-based corporation, alleging that, in offering Internet yellow pages listings, this company bilked small businesses in Illinois and across the country through a practice known as “cramming.” Cramming involves adding charges to a consumer’s telephone bill that the consumer never wanted or ordered.

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