FTC Takes Action as Robocall Cop

Jenna Greene

The National Law Journal

2012-11-02 00:00:00.0

Rachel from Cardholder Services, the Federal Trade Commission has your number.

The agency today announced that it filed five suits against companies allegedly responsible for making millions of illegal, prerecorded calls from Rachel, a perky-voiced woman who promises to lower your credit card interest rates, and others in violation of the FTC Act.

Such calls have triggered more than 200,000 consumer complaints to the FTC each month. "At the FTC, Rachel from Cardholder Services is public enemy number one," said FTC Chairman Jon Leibowitz in a news release. "We're cracking down on illegal robocalls by bringing law enforcement actions and pursuing technical solutions to the problem."

The FTC in suits filed in Arizona and Florida, federal courts alleged that the calls themselves violate the Telemarking Sales Rule, and that the services offered are deceptive and misleading.

The calls claim to have an "important message" about the consumer's credit card account, and invite the recipient to press 1 to be connected to a live telemarketer and pitched allegedly bogus offers for lower interest rates.

"They were sweet talkers," said Alyce Weisbach, an 84 year-old woman from Skokie, Ill., who shared her story at a FTC press conference. "They just get you."

The telemarketers charged Weisbach's credit card $1,890, supposedly to lower her interest rates, but she said the fee was not disclosed to her, nor were the promised benefits delivered. She eventually got her money back, but the FTC said others are not so fortunate.

"Robocalls are almost always illegal, and it's illegal to charge money up front," said Charles Harwood, the deputy director of the FTC's Bureau of Consumer Protection. The Telemarketing Sales Rule specifically bans companies from charging an advance fee for debt relief services.

According to Harwood, the companies charged several hundred dollars to nearly $3,000 for their services, promising to reduce credit card interest rates to 6.9 percent, or even as low as 0 percent.

He also noted that the phone number where the calls supposedly originate is often phony, and the name displayed on caller ID is just generic enough to prompt consumers to pick up the phone.

With a few exceptions, prerecorded robocalls have been illegal since 2009, regardless of whether the recipient is on the Do Not Call list. The FTC recently offered a $50,000 cash prize for the best technical solution to block robocalls.

The FTC sued Treasure Your Success and The Green Savers in U.S. District Court for the Middle District of Florida, and A+ Financial Center in Florida's Southern District. The agency sued Ambrosia Web Design and Key One Solutions Inc. in U.S. District Court for the District of Arizona.

The complaints charge the defendants with multiple violations of the Telemarketing Sales Rule, and with violating the FTC Act, which bars false or misleading marketing. Harwood estimated that the five companies combined have made about $30 million from the calls.

In each case, the FTC has already secured a temporary restraining order freezing the companies' operations. Harwood said the agency will seek permanent injunctions as well as consumer refunds.

"If you get a robocall, just hang up," he said. "If you're using robocalls to sell products, we're looking for you."

This article originally appeared in The National Law Journal.