FTC Halts Scam Targeting Trade Show Exhibitors

Posted by Patrick Durkin on April 24, 2013 in Trade Show

The Federal Trade Commission (FTC) has stopped an alleged scam by Construct Data/Fair Guide that tried to get ATA Trade Show exhibitors to pay $1,717 annually to be included in an online "exhibitor directory" that had no connection to the Show

This effort by Construct Data/Fair Guide doesn't exclusively focus on ATA Trade Show exhibitors. It targets retailers, local associations, home-based businesses and others that exhibit at any number of trade shows in North America.

The company allegedly tricked small-businesses and nonprofit organizations into collectively paying millions of dollars in recent years to have their companies listed in an online directory. It sometimes succeeded, even though most exhibitors had no interest in being included, and didn't realize they were being charged.

A federal judge this month granted an FTC request to temporarily stop Construct Data/Fair Guide's solicitations. The FTC is seeking to permanently halt the alleged scam and require the defendants to refund fees paid by unsuspecting exhibitors.

Maria Lewis, ATA Trade Show coordinator, said about 12 to 20 exhibitors have contacted her in recent years after being solicited by Fair Guide. Typically, they asked Lewis if they should agree to the listing. Lewis informed them that Fair Guide is not affiliated in any way with the Trade Show, and repeatedly advised ATA members not to provide any information.

The ATA's official "Show Guide and Membership Directory" is published annually by Zebra Publishing, a longtime ATA partner. Additionally, official Trade Show vendors are qualified as such by the ATA's "show service provider" logo.

"We are working with all our partner vendors this year to make sure this logo appears on their documents, forms or other materials they may provide to Show exhibitors," said Lewis. "We want the exhibitors to get used to looking for it and recognizing it as a stamp of approval."

Fortunately, most ATA members did not cooperate with Fair Guide. "Two or three had their credit cards charged, but most just filled out only the information form," Lewis said. "We heard from our members when they received a bill for $1,700 and started panicking. If they didn't provide their credit card information, they had nothing to worry about."

According to the FTC, the defendants send mailings to exhibitors, mention a specific trade show or exhibition, and make it appear they're merely asking recipients to update and check the accuracy of information for the "exhibitor directory" for the show or exhibition. The mailings include a form stating the recipient's basic information was listed in the directory for free, and instructs them to confirm its accuracy or make corrections on the form.

The form falsely suggests the parties have an existing business relationship, and that the directory listing is related to the recipient's participation in the named trade show or exhibition.

Many recipients don't notice a statement, buried in fine print at the bottom, that by signing and returning the form they agree to pay $1,717 annually for three years. Often, the person returning the form is not authorized to enter into contracts for their employer.

According to the complaint, long after the form is signed, returned and the defendants' 10-day cancellation period expired, the defendants send an invoice demanding payment of $1,717 to a foreign bank account. Those challenging the invoice are told the order cannot be canceled. Late payment notices follow, with late fees added. Some organizations pay just to end the harassment.

The FTC's complaint was filed against Construct Data Publishers, which also does business as Fair Guide, Wolfgang Valvoda, and Susanne Anhorn.