Attorney General Rob McKenna yesterday announced a multi-state settlement with a California-based marketer of Internet directory listings.

Yellow Pages, Inc., will pay $525,000 to resolve allegations of deceptive marketing practices brought by Washington and 26 other states.

According to McKenna, Washington and other states alleged that Yellow Pages, Inc., tricked businesses into paying for advertising services they never intended to purchase, then referred the debt to collections if they failed to pay. “Washington law prohibits any sort of deceptive solicitation for products or services. Consumers must give their informed consent before obligating themselves to purchase products and services,” said McKenna.

The Washington State Attorney General’s Office sued Yellow Pages in February 2005 after more than 75 Washington businesses and organizations complained about the company’s marketing practices. According to the lawsuit, the company sent deceptive mailings in the form of checks that resembled a customer refund or rebate, but instead were a contract to buy business listings on its Web site.

Under the terms of the agreement, the company and its president, John Wurth, deny any wrongdoing but agree to pay $525,000 in fines, legal costs and attorneys’ fees to the states. Washington’s share is $25,000. The company must also provide refunds to consumers who were billed for services as a result of its check mailings.

The settlement prohibits Yellow Pages from sending solicitations in the form of a check which, when cashed or deposited, purports to obligate the consumer to pay for goods or services. The company is also restricted from collecting payments from consumers who previously received check solicitations or attempting to automatically renew any contracts with those consumers.

According to consumer complaints, the company mailed checks to businesses that appeared to be from local telephone companies or other businesses with which the recipient had an existing account. Once the checks were deposited, Yellow Pages immediately billed the businesses  approximately $180 for one year of advertising services. Businesses that failed to pay the bill promptly were referred to collection services that actively pursued payment.

The Washington Attorney General’s Office Consumer Protection Division filed a Consent Decree today in King County Superior Court. The following states also filed settlements with Yellow Pages Inc. in their courts: Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Idaho, Illinois, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Jersey, North Dakota, Oregon, Pennsylvania, Tennessee, Texas and Wisconsin.