FTC bombs massive robocall operation

FTC says SBN Peripherals made 370 million illegal robocalls

The Federal Trade Commission today had a federal court in Chicago halt a major telemarketing operation that made at least 370 million calls illegal phone calls pitching worthless extended auto warranties and credit card interest rate-reduction programs.  

According to the FTC, one telephone service provider told the FTC that during a single day in April 2009 the defendants - SBN Peripherals -- sent 2.4 million calls to consumers - more than 27 calls per second. The FTC charges the robocalls violated the agency's Do Not Call Registry Rule. The court temporarily froze the assets of SBN and appointed a receiver to take control of the operation. 

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Asia Pacific, a foreign shell company for SBN, made many of the calls and lists its addresses in locations as disparate as the Northern Mariana Islands, Hong Kong, and the Netherlands, the FTC's complaint stated. 

According to the FTC, three of Asia Pacific's telemarketing numbers accounted for more than 25,000 consumer complaints to the agency in the past year. Two of those telephone numbers - 301-882-9986 and 757-990-8981 - generated more complaints to the FTC during the past year than any other robocall number. Many of the calls were made to cell phones, sticking consumers with additional charges. 

The FTC says the company allegedly used a technology known as "voice broadcasting" to deliver its fraudulent pitches. The FTC charges that the recordings falsely claimed that the caller had urgent information about the consumer's auto warranty or credit card interest rate. Consumers who pressed "1" for more information were transferred to live telemarketers at a variety of different locations, who used fraudulent practices to sell inferior extended auto service contracts or worthless debt-reduction services, the FTC stated.

The FTC says such calls may be familiar to consumers who have answered the phone, only to be greeted by a recording from "Stacey at Account Holder Services" or "Rachel at Cardholder Services" pitching a purported service to lower their credit card interest rate. 

As part of its court moves today, the FTC had a court in Florida issue a temporary restraining order against one of SBN's cohorts, Fereidoun "Fred" Khalilian and his company, The Dolce Group Worldwide, LLC, also known as My Car Solutions. Khalilian is well-known to the FTC from a 2001 settlement that banned him from all travel-related telemarketing and required him to pay $185,000 in consumer redress for making deceptive pitches for travel packages, the agency stated. 

My Car Solutions has  marketed purported extended auto warranties by blasting prerecorded phone messages, or robocalls, to consumers, warning them that their car's warranty is about to expire and instructing them to "press one" to talk with a representative, the FTC alledges.   According to the complaint, consumers are then transferred to the defendants' telemarketers who identify themselves as from the "service contract department," and state that they will "verify" information about the consumers' cars and "confirm" other information, including their zip code. 

In December, the FTC went after three outfits that allegedly made robocalls to sell worthless credit-card interest-rate reduction programs for large up-front fees of as much as $1,495.   

The lawsuits against Economic Relief Technologies; Dynamic Financial Group; and JPM Accelerated Services (JPM)  allege the defendants broke the law by making illegal robocalls to consumers and that their deceptive sales pitches violated the FTC Act and the FTC's Telemarketing Sales Rule.   The companies violated a host of regulations, the FTC says, from calling consumers whose phone numbers are on the National Do Not Call Registry; calling consumers who had previously asked not to be called; and failing to transmit their caller ID information, as required. 

FTC rules prohibiting most robocalls took effect Sept. 1, 2009.  With the rules,  prerecorded commercial telemarketing robocalls will be prohibited, unless the telemarketer has obtained permission in writing from consumers who want to receive such calls.  Hopefully the rules will go a long way to helping consumers eat dinner in peace without being interrupted by amazingly annoying telemarketer blather or in this case prerecorded blather. 

The change will not affect a customer's ability to continue to receive calls that deliver informational prerecorded messages - notifying, for example, that your flight has been cancelled, or that you have a service appointment. Such purely informational calls are not covered by the TSR because they do not attempt to sell the called party any goods or services, the FTC said.

 The requirement is part of amendments to the agency's Telemarketing Sales Rule (TSR) that were announced a year ago. After September 1, sellers and telemarketers who transmit prerecorded messages to consumers who have not agreed in writing to accept such messages will face penalties of up to $16,000 per call.

Follow Michael Cooney on Twitter: nwwlayer8   

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