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Toronto Company Receives Record $15 Million Fine

December 18, 2009

OTTAWA, December 18, 2009 — The Competition Bureau announced today that the Ontario Superior Court has imposed a record $15 million fine against DataCom Marketing Inc. for operating a business directory scam targeting Canadian and U.S. businesses.

Toronto-based DataCom contacted thousands of small and medium-sized businesses between 1994 and 2005, tricking businesses into believing that they had already ordered a business directory listing and using deceptive scripts and aggressive collection tactics. Victims lost hundreds of dollars each while the scam netted $12.9 million in profits.

"We applaud the court’s decision," said Melanie Aitken, Commissioner of Competition. "This is a clear signal to fraudulent telemarketers that their acts will be treated seriously by the courts. In turn, we, at the Bureau, will not hesitate to take action against fraudulent telemarketers when we uncover evidence that the law has been violated."

In his decision, Justice Ian Nordheimer of the Ontario Superior Court wrote that this sort of activity "….must be deterred. It has impacts not only for businesses in this country but also for Canada’s international business reputation."

The founder and former president of DataCom, Bernard Fromstein, was previously sentenced to two years in jail, three years probation and a 10-year ban on telemarketing activities. Another senior manager, Paul Barnard, received a two-year conditional sentence after cooperating in the investigation. The fine represents a record amount under the deceptive marketing provisions of the Competition Act.

The investigation was conducted with the assistance of the Toronto Strategic Partnership against fraud and the Service de Police de la Ville de Montréal. Members of the Toronto Strategic Partnership include the Competition Bureau, the Toronto Police Service, the Ontario Provincial Police, the RCMP, Ontario's Ministry of Government and Consumer Services, the U.S. Federal Trade Commission, the U.S. Postal Inspection Service, and the U.K. Office of Fair Trading.

The Competition Bureau is an independent law enforcement agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

For more information contact:
Gabrielle Tassé
A/Senior Communications Advisor
Public Affairs Branch
Phone: 819-953-7734

Information Centre
Competition Bureau
Phone: 819-997-4282

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