FTC whacks four more telemarketing scammers

FTC has bagged nine of 13 Tele-PHONEY scammers

The Federal Trade Commission today settled charges with four telemarketing scammers who were charging for products that were never ordered, making bogus claims about their products, and harassing consumers with unwanted phone calls, the commission stated.

With the settlements, defendants in nine of the 13 scammers charged in last year's wide-ranging FTC crackdown known as "Tele-PHONEY" have settled FTC's charges, and courts have permanently prohibited the telemarketers' illegal activity, garnered profits and  suspended operations of unscrupulous telemarketers who allegedly defrauded more than 500,000 consumers, resulting in losses of more than $100 million. 

The settlements contain judgments totaling more than $27.6 million, although as is unfortunately the case with many of these judgments, large portions have been suspended by the courts.

The vast Tele-PHONEY project included 13 FTC cases, more than 80 state law enforcement actions, criminal actions against more than 90 defendants, and eight cross-border telemarketing fraud actions brought by Canada's Competition Bureau and the British Columbia Business Practices and Consumer Protection Authority. The Commission estimates that as a result of the law enforcement actions consumers will save approximately $30 million over the next year. 

The 13 cases include actions against a variety of telemarketers, ranging from companies that allegedly sent unordered household goods to consumers, to those that offered phony tax rebates or prescription drug plans. In other cases, the callers allegedly deceived consumers through the use of fraudulent sweepstakes pitches or offers of free gifts or promised that for an advance fee, consumers would be "guaranteed" to receive loans or credit cards that never materialized or were useless. Other defendants allegedly used consumers' bank account information to bill them without their authorization, harassed them to pay for unordered goods, and violated the rules of the Do Not Call Registry. 

The settlements announced this week include:

  • Montreal-based Med Provisions operated a bogus online pharmacy that sold sham "membership packages" to elderly consumers for $389. The defendants claimed their online pharmacy could save customers 30 percent to 50 percent on prescription drug costs, and offered a 30-day money-back "guarantee." But according to the FTC, consumers who ordered the package got either nothing, or a prescription drug card that turned out to be worthless. Consumers did not get refunds.
  • Steven Breitling/ICS Financial Firm used phony loan offers to bilk consumers out of $75 each. Consumers received a direct mailing from ICS Financial "guaranteeing" them a loan of between $2,000 and $5,000. Those who responded were contacted by telemarketers, who told them that to get their loan they first had to pay a $75 consulting fee and sign a contract. Consumers who paid the fee never received any loans, and many never heard from the company again, according to the complaint.
  • City West Advantage or Unified Services allegedly deceived consumers into disclosing their bank account information, and then charged them about $149 without their permission. The defendants called consumers and told them they had won a $1,000 shopping spree or other "free gift," and that the bank account information they provided would be used to charge them $1.95 for shipping and handling. Consumers who hesitated were called back repeatedly and harassed by telemarketers, even after consumers asked them to stop calling. Consumers who provided their financial information were charged approximately $149 without their consent.
  • Direct Connection Consulting  allegedly billed consumers for products they never agreed to buy after bombarding them with a confusing sales pitch over the phone. The defendants contacted consumers with promises of free gift cards, gas cards, or free resort vacations. The telemarketers often read their pitch so fast that consumers didn't understand or realize they were agreeing to pay for products or services. Consumers who understood the pitch were told that they would not be billed, since they did not provide their billing information. However, although consumers did not know it, the telemarketers already had their billing information and charged their credit cards or debited their bank accounts, without providing the "free" goods or the services they promised.

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