The Federal Trade Commission (FTC) is widening its campaign against telemarketers who violated the Do Not Call Rule and other laws by making hundreds of thousands or even millions of recorded robocalls to consumers.
This latest effort targets three groups that allegedly made robocalls to sell worthless credit-card interest-rate reduction programs for hefty up-front fees of as much as $1,495. The court has issued an order temporarily halting the robocalls pending trial.
"The FTC has heard the public outcry against robocalls and has taken swift action to stop them. During these difficult economic times, the last thing anyone needs is to be bombarded by robocalls pitching worthless interest-rate reduction programs," said FTC Chairman Jon Leibowitz.
The three complaints follow two filed in May that led to court orders stopping other telemarketers from using robocalls with deceptive claims aboutextended auto warranties. Since September 1, 2009, virtually all robocalls have been illegal, unless the recipients have provided written authorization to receive the pre-recorded calls.
According to the three FTC complaints, Economic Relief Technologies, LLC, Dynamic Financial Group (U.S.A.) Inc., and JPM Accelerated Services (JPM) and related defendants made illegal pre-recorded robocalls to consumers, using names like "card services," "credit card services" or "account services."
The robocalls allegedly claimed the companies' services could lower the interest rate on consumers' credit cards. 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 telemarketers 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. They then falsely stated that if consumers did not save a "guaranteed" amount -- typically $2,500 or more -- they could get a full refund of the up-front fee.
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.
Economic Relief Technologies also allegedly operated 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 claimed that the consumers' vehicles' warranties were about to expire. The scheme is similar to several stopped by a court order at the FTC's request earlier this year.
The lawsuits claim the companies 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.
Additional charges include:
• Calling consumers whose phone numbers are on the National Do Not Call Registry.
• Calling consumers who had previously asked not to be called.
• Failing to transmit their caller ID information, as required.
• "Spoofing" or masking their caller ID information.
• Failing to promptly identify themselves, the purpose of their call, and/or the nature of the goods or services they were selling.
• Improperly abandoning calls.
• Failing to make required disclosures in their robocalls.
To help consumers and businesses understand their rights and responsibilities when it comes to pre-recorded telemarketing calls, the FTC issued two new alerts, "New Rules for Robocalls" and "Reining in Robocalls."
Separately, the FTC has 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.