The Federal Trade Commission said today it has shut down the operations of Canadian con artists who allegedly acted as domain name registrars and convinced thousands of U.S. consumers to pay bogus bills by making them believe they would lose their website addresses unless they paid.

In June 2008, the FTC charged Toronto-based Internet Listing Service with sending fake invoices to small businesses and others, listing the existing domain name of the consumer’s website or a slight variation on the domain name, such as substituting ".org" for ".com." The invoices appeared to come from the businesses’ existing domain name registrar and instructed them to pay for an annual "WEBSITE ADDRESS LISTING."

The invoices also claimed to include a search engine optimization service. Most consumers who received the "invoices" were led to believe that they had to pay them to maintain their registrations of domain names. Other consumers were induced to pay based on Internet Listing Service’s claims that its "Search Optimization" service would "direct mass traffic" to their sites and that their "proven search engine listing service" would result in "a substantial increase in traffic."

The FTC’s complaint charged that most consumers who paid the defendants’ invoices did not receive any domain name registration services and that the "search optimization" service did not result in increased traffic to the consumers’ Web sites.
A federal district court judge in Chicago, Robert M. Dow, Jr., ordered a temporary halt to the deceptive claims and froze the defendants’ assets, pending trial. The settlement and default judgment orders announced today end that litigation.

The orders bar the defendants from misrepresenting: that they have a preexisting business relationship with consumers; that consumers owe them money; that they will provide domain name registration; and that they will provide "search optimization services" that will substantially increase traffic to consumers’ websites.

The settlement order, entered against defendants Isaac Benlolo, Kirk Mulveney, Pearl Keslassy, and 1646153 Ontario Inc., includes a suspended judgment of $4,261,876, the total amount of consumer injury caused by the illegal activities. Based on the inability of the settling defendants to pay, they will turn over $10,000 to satisfy the judgment.