News

MerchantCircle pays $900,000 in consumer case

Settlement is for alleged unlawful marketing practices by Mountain View company

A Mountain View-based Internet social-networking company for small businesses will pay $900,000 in a settlement of a consumer-protection lawsuit based on not having a "live voice" in automated phone calls, Santa Clara County District Attorney Dolores A. Carr announced today.

The payment is part of a settlement between WYBS, which does business as MerchantCircle, and the District Attorney's office after an investigation by Carr's office, she said.

From 2006 to 2008, MerchantCircle allegedly used improper automated telemarketing campaigns which violated California's "live voice" requirement for automated calls.

Telemarketers in California must use an actual person to allow call recipients to "opt out" of the message.

Some of those calls also contained unverified statements that the MerchantCircle website had reviews, ratings or video footage of the recipient business.

WYBS consented to pay $700,000 in civil penalties and $50,000 in investigative costs. MerchantCircle will pay $150,000 into the Consumer Protection Trust Fund, a trust used to fund investigation and prosecution of consumer-protection law violations statewide,according to the district attorney's office.

WYBS and MerchantCircle did not admit wrongdoing, according to the settlement announcement. MerchantCircle cooperated with the investigation, has brought its telemarketing practices into compliance with California laws, and has agreed to implement additional procedures to ensure future compliance, the announcement said.

"These penalties should remind any business engaging in telemarketing in California that this state has strict laws requiring the use of an actual person to allow call recipients to 'opt out' of the message.

"These businesses are also placed on notice that any statements they make to consumers must be true and verified," Carr said.

MerchantCircle was founded in 2005 and is the largest social network of local business owners in the nation, according to its website.

The online site combines social-networking features with customized listings that allow local merchants to attract new customers by uploading pictures, writing blogs, publicizing events, creating coupons and newsletters, and connecting with other merchants at no cost.

The company also offers low-cost online marketing services. More than 1,000,000 local businesses are members, according to the company website.

MerchantCircle officials could not be reached for comment.

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