The Federal Trade Commission has filed a federal district court complaint against Vector Direct Marketing, LLC, accusing it of making misleading claims in selling services that supposedly protected consumers' privacy.
Vector, based in Tempe, Ariz., is charged with violating the FTC Act and the Telemarketing Sales Rule during the phone sale of services that supposedly protected consumers personal information including their social security number, credit card numbers, and bank account numbers from fraud and identity theft.
According to the Commission, consumers got little or nothing for their nearly $400 investment. The FTC also alleges that the company made threatening follow-up calls to customers who decided to cancel their payments.
The FTC filed the complaint announced today against Vector Direct Marketing, LLC (Vector), doing business as National Solicitation Guard and Anti-Solicitation Company. The complaint also names Lisa Miller the registrant of Vector Directs Tempe, Arizona, mail drop and Mike Stafford, both of whom are Vectors members and mangers.
False promises and scare tactics are not legitimate sales practices, said Howard Beales, Director of the FTCs Bureau of Consumer Protection. Telemarketers with business models built on intimidation should expect to hear from Federal Trade Commission attorneys.
According to the FTC, since at least February 2003, Vector telemarketed services that it claimed would stop unwanted telemarketing calls and protect consumers personal information from fraud and identity theft. In calls to consumers, Vector allegedly told them that their personal information including social security number, credit card numbers, and bank account information could be found on various telemaketing lists. They also, in some cases, allegedly told consumers that Vector already had been able to buy this personal information from third-party list managers or brokers, and at times even repeated the consumers credit card number in an attempt to get them to buy Vectors services.
In addition, the FTC alleges that the defendants often told consumers that they had been identified as a target for fraud or identity theft, and often made threatening statements about the risk of not buying their services.
These purported services, which the defendants sold for between $380 and $399, allegedly included Vectors assurance that the consumers personal information and financial information would be deleted from the telemarketing lists and that some consumers would receive a call-screening device that could stop all or most telemarketing calls. The FTC alleges, however, that only some of the consumers who purchased a call-screening device ever received one.
In addition, Vector told consumers that by signing up for their service, they would personally receive the $1,500 fine collected every time a telemarketer called them. The fine collection and distribution allegedly never occurred. Finally, when customers later decided they did not want to buy Vectors services, the defendants allegedly called and harassed them by threatening legal action or other serious consequences if they failed to pay, frightening some into resuming their payment. In some instances, the FTC alleges, Vector charged consumers for their services, even if they did not agree to buy them.
According to the FTC, some consumers received written materials from Vector informing them that, [t]he process of removing your personal information [from telemarketing lists] has already begun. We have sent legal notice to the three major list compilers on your behalf . . . demanding that you (sic) information be added to there (sic) do not call list, and preventing your information from being added to any future sales lists.
In fact, the list compilers mentioned, Equifax, Experian, and TransUnion, are credit reporting agencies that do not sell customer lists that contain personal and/or financial information. The FTC alleges that Vectors legal notice to these companies, therefore, did not afford consumers any protection. The companies do maintain opt-out and do-not-solicit lists, but there is no evidence that the names of Vector consumers were added to these lists.
The complaint was filed under seal in the U.S. District Court for District of Arizona at Phoenix on January 15, 2004 and unsealed on January 30, 2004.