Florida Attorney General Charlie Crist has filed a civil complaint against Consumer Grants USA, Inc., and two of its corporate directors for violations of Florida's Unfair and Deceptive Trade Practices Act.
The lawsuit alleges that the company used misleading solicitations to entice consumers to pay hundreds of dollars for information that was actually available to the public for free.
Consumer Grants USA, a St. Petersburg company established less than one year ago, claims to conduct a legitimate telemarketing business designed to offer governmental grant guidebooks to consumers.
In June 2004, an investigation conducted by the Attorney General's Office and the Tampa Better Business Bureau showed that telephone solicitors for Consumer Grants USA allegedly informed consumers that they had been selected for, or "won," a guaranteed federal government grant worth between $5,000 and $25,000.
After paying a fee that ranges from $239 to $299, consumers actually received a guidebook listing government grants. Most of the information in the guidebook, available to consumers for free from public sources, listed grants that the consumers did not qualify to receive.
"Public information means that it is available to the public free of charge - not to be sold by unscrupulous telemarketers," said Crist. "These citizens were victimized and deserve to be reimbursed."
In one example, Consumer Grants USA informed consumers that they had won a grant from the Government Grant Information Guide because they had been prompt and reliable in paying their taxes to the IRS.
Consumer Grants USA allegedly instructed consumers to pay a "one-time processing fee" in order to receive a grant. Consumers were asked to give their personal banking account information so that Consumer Grants USA could withdraw the fee and then deposit the grant funds into the same bank account. After receiving the book that lists possible government grants, some of the consumers attempted to contact the company for refunds but were informed that they would have to receive three grant denials before any refunds.
This undisclosed refund policy is in violation of Florida telemarketing laws, including 501.615 and 501.059 that prohibit telemarketing companies from practicing business without a license obtained from the Department of Agriculture and Consumer Services, and that prohibit telemarketing companies from accepting funds from customers without a signed agreement. The Attorney General's complaint also alleges that the company violated the law by offering "free" gifts without disclosing financial requirements and by resisting consumer requests to cancel transactions or to obtain refunds.
The complaint was filed in Pinellas County Circuit Court and included charges against Consumer Grants USA and against James T. Lovern, President/Director, and Leo J. Corrigan, Vice President/Director. The Attorney General's complaint seeks civil penalties of $10,000 per transaction, or $15,000 per transaction involving elderly consumers, as well as injunctive relief under at least six different sections of Florida law.