FTC sues to stop robocallers

FTC goes after robocallers who claimed to help out with credit card problems

The Federal Trade Commission today said it was going 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. 

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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. 

The court has issued an order temporarily halting the robocalls pending trial. 

According to three FTC complaints, all of the companies made illegal pre-recorded robocalls to consumers, using names like "card services," "credit card services" or "account services," the FTC stated. 

The robocalls claimed the defendants' services could lower the interest rate on consumers' credit cards, the FTC stated. In each case, consumers who pressed 1 after hearing the automated call were transferred to live telemarketers who allegedly misrepresented that consumers could dramatically lower the rates on their credit card, the FTC stated. The companies also said consumers would save thousands of dollars in a short period of time by lowering their interest rates and would be able to pay off their debts faster - for an up-front fee ranging from $495 to $1,495. However, after securing the fee, the defendants allegedly did not negotiate lower rates on behalf of consumers and provided few refunds to those who were dissatisfied with the service, the FTC stated. 

The FTC said  Economic Relief went a step further allegedly operating a related scam: using names like "Auto Protection Center" and "Warranty Services," they tricked consumers into believing they were affiliated with their vehicle manufacturer or dealership, and falsely stated that the consumers' vehicles' warranties were about to expire. 

The FTC also noted that this was the second major swipe at robocallers it has taken this year. In May took action against some robocallers by asking a federal court to shut down two companies that have been bombarding consumers with hundreds of millions of allegedly deceptive robocalls in an effort to sell vehicle service contracts. 

According to the FTC, the robocalls have prompted tens of thousands of complaints from consumers who are either on the Do Not Call Registry or asked not to be called. Five telephone numbers associated with the defendants have generated a total of 30,000 Do Not Call complaints. Consumers received the robocalls at home, work, and on their cell phones, sometimes several times in one day. Businesses, government offices and even 911 dispatchers also have been subjected to the calls, the FTC said. 

The FTC named as defendants Voice Touch and a company affiliated with Voice Touch called Network Foundations .  A second complaint named Transcontinental Warranty, which sells extended auto warranties. In its complaints, the FTC said the companies are operating a massive telemarketing scheme that uses random, pre-recorded phone calls to deceive consumers into thinking that their vehicle's warranty is about to expire. Consumers who respond to the robocalls are pressured to purchase extended service contracts for their vehicles, which the telemarketers falsely portray as an extension of the manufacturer's original warranty.

FTC rules prohibiting most robocalls took effect Sept. 1.  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 your ability to continue to receive calls that deliver informational prerecorded messages - notifying you, 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. 

The FTC said it also issued a new publication, the National Do Not Call Registry Data Book for Fiscal Year 2009, which contains information about the Registry, along with a breakdown of consumer complaints about companies violating the Do Not Call rules. According to the Data Book, there are more than 191 million numbers on the Do Not Call Registry. 

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