FTC Looks to Put Robocalls on Hold7 Nov, 2012 By: Doug McPherson
WASHINGTON – Five telemarketing companies in Arizona and Florida are getting a serious busy signal after allegedly making millions of illegal pre-recorded calls.
The Federal Trade Commission (FTC) is beefing up its efforts against illegal robocalls by announcing it pulled the plug on those companies just two weeks after it held a meeting to address such calls. Federal courts granted the FTC’s request to temporarily halt the five robocall operations that allegedly deceived consumers into paying hundreds or thousands of dollars by making phony claims that they could reduce credit card interest rates in return for an upfront fee.
The five complaints announced last week were filed against the following companies and their principals: Treasure Your Success, Ambrosia Web Design, A+ Financial Center LLC, The Green Savers, and Key One Solutions LLC. Each complaint alleges, among other things, that the defendants violated the FTC Act by misrepresenting that consumers who buy their services will have their credit card interest rates reduced substantially and will save thousands of dollars as a result of lowered credit card interest rates.
FTC Chairman Jon Leibowitz said in a statement that such companies are “public enemy number one” and that the agency is “cracking down on illegal robocalls by bringing law enforcement actions and pursuing technical solutions to the problem.”
The agency is putting its money where its mouth is. At a recent “Robocall Summit,” the FTC issued a challenge to the public offering a $50,000 cash prize for the best technical solution to block illegal robocalls on landlines and mobile phones. The FTC reports that it gets more than 200,000 complaints monthly about robocalls, including calls from “Rachel” that pitch consumers with a supposedly easy way to save money by reducing their credit card interest rates. After collecting an up-front fee, however, the FTC believes that the companies do little if anything to fulfill their promises.
In some cases, the FTC alleges the telemarketers claim to be calling from the consumer’s credit card company. In other cases, they use “cardholder services” to suggest a relationship with a bank or credit card company. If the consumer expresses an interest in the rate reduction offer, the telemarketer sometimes conducts a purported “audit” to determine whether the consumer qualifies. Consumers provide their financial and personal information, and are then put on hold while the “audit” is completed. According to the FTC, the “audit” typically is used only to determine whether consumers have enough credit available on their credit cards to pay the company’s fee.
After consumers have been “approved” for the program, the FTC says the telemarketer tells callers there’s an up-front fee, typically ranging from several hundred dollars to nearly $3,000. To convince them to pay the fee, telemarketers often say that it will be more than offset by the money the consumer will save through the program. In some cases, the FTC alleges that consumers’ credit cards were charged even if they did not agree to pay for the service. In other cases, the defendants allegedly do not disclose a fee at all, or claim there will be no fee.