Companies are being warned not to give the green light to callers from "Yellow Pages" until they have established them as bona fide representatives.

Dozens of businesses have recently been caught up in an advertising scam by Island Yellow Pages, a 'company' operating from the US Virgin Islands. Its callers have contacted retailers during the renewal subscription period for the Bermuda Yellow Pages soliciting business by saying simply that they are from "Yellow Pages".

Those entering into financial agreements are then threatened with civil law suits unless they pay up. The Bermuda Police Service and the Bermuda Yellow Pages have been bombarded with complaints from dozens of aggrieved local companies caught up in the scam. The cost of a bogus advertisement typically runs into a couple of hundred dollars.

Island Yellow Pages has operated a similar sting in the Bahamas, with callers soliciting money for online telephone directory services reputedly for the Bahamas Telephone Directory. The Bahamas Telecommunications Company (BTC) warned its customers that any advertising should be placed directly to its authorised sales agents.

Bermuda Police Service Fraud Squad detectives are currently investigating Island Yello0w Pages. They did not wish to comment yesterday, but three years ago warned the public against a similar scam.

In 2005, Police said they had received "numerous complaints" from people claiming "the person to whom they spoke did not do anything to correct this belief or make it clear that they were not the Bermuda Yellow Pages".

According to The Consumer Protection Act of 1999, this type of practice comes under 'Unfair business practices' as 'a false, misleading or deceptive consumer representation'. This includes 'a representation using exaggeration, innuendo or ambiguity as to a material fact or failing to state a material fact if such use or failure deceives or tends to deceive'.

However, as Island Yellow Pages is based in the Virgin Islands, UK laws do not apply. The Police said: "The Island Yellow Pages are based in the US Virgin Islands and accordingly, are not answerable to the laws of Bermuda. The Bermuda Police Service wishes to advise people to ascertain the identity of any person or company prior to entering into any type of financial agreement with them."

Gary Taylor, Bermuda Yellow Pages general manager, said yesterday: "The Police are doing the best they can but it is a problem, and one which is quite prevalent. As we close the directory once a year, these people probably feel it's an opportunity to join in and take advantage.

"We're disappointed there are companies out there like this. It really damages our brand.

"We are the Bermuda Yellow Pages and when we've got people calling up and not really explaining who they are, it's difficult.

"We've been getting lots of complaints and have had to point out to our clients that we're not in any way connected to Island Yellow Pages. But this is taking up a huge amount of our time — it's a distraction and one which in itself means a loss of money."

Mr. Taylor said: "If anyone calls you out of the blue, just clarify who you're speaking to, what company they are from, and make sure by saying: 'Are you from Bermuda Yellow Pages?'."