Have you ever gotten those annoying calls saying your warranty for a old battered auto is expiring? We have even gotten them on cell phones.
Those flaky services have raked in over $10 million dollars and make more than 1.8 million calls a day. Over 30,000 do not call complaints have been filed! The calls are deceptive and the FTC is taking action. They filed a temporary restraining order and plan to shut down the operations. The FTC is also seeking injunctions to refund ill-gotten gains. It is estimated 1 billion of the nuisance calls have been made to Americans.
The Federal Trade Commission is asking a federal court to shut down the telemarketing campaign that has been bombarding U.S. consumers with
hundreds of millions of allegedly deceptive "robocalls" in an effort to
sell them vehicle service contracts under the guise that they are
extensions of original vehicle warranties. The FTC named Voice Touch and Transcontinental Warranty.
Editors' Note: We couldn't find a photo a robocaller, so we posted at pic of robocop.
In two
related complaints filed in federal court, the Commission took action
against both the promoter of the phony extended auto warranties, as
well as the telemarketing company that it hired to carry out its
illegal, deceptive campaign. In its complaints, the agency contends
that the companies are operating a massive telemarketing scheme that
uses random, pre-recorded phone calls to deceive consumers into
thinking that their vehicle's warranty is about to expire. Consumers
who respond to the robocalls are pressured to purchase extended service
contracts for their vehicles, which the telemarketers falsely portray
as an extension of the manufacturer's original warranty.
"This is one of the most aggressive telemarketing schemes the FTC has
ever encountered," said FTC Chairman Jon Leibowitz. "I'm not sure which
is worse, the abusive telemarketing tactics of these companies, or the
way they try to deceive people once they get them on the phone. Either
way, we intend to shut them down."
According to papers the FTC filed with the court, the robocalls have
prompted tens of thousands of complaints from consumers who are either
on the Do Not Call Registry or asked not to be called. Five telephone
numbers associated with the defendants have generated a total of 30,000
Do Not Call complaints. Consumers received the robocalls at home, work,
and on their cell phones, sometimes several times in one day.
Businesses, government offices and even 911 dispatchers also have been
subjected to the calls.
Those who answer the pre-recorded calls hear a message telling them
that their vehicle warranty is about to expire and that they should
"extend coverage before it is too late." They are told to "press one"
to speak to a "warranty specialist." The "specialists" then mislead
consumers into believing that their company is affiliated with the
dealer or manufacturer of the consumer's vehicle. They try to sell
consumers a service contract for between $2,000 and $3,000, which they
falsely portray as an extension of the vehicle's original warranty. The
seller of extended auto warranties sued by the FTC allegedly took in
more than $10 million on the sale of these deceptively marketed service
contracts.
In their robocalls, the companies dial
every phone number within a particular area code and prefix
sequentially, without knowing anything about the vehicles of the
consumers they call, or whether those consumers' numbers are on the Do
Not Call Registry, the FTC alleged. Consumers who asked that the calls
be stopped often were met with "abusive behavior" or were simply hung
up on, according to the papers filed with the court. Some of the
defendants used offshore shell corporations to try to avoid scrutiny,
and a top officer in the telemarketing company bragged to prospective
clients that he could operate outside the law without any chance of
being caught by the FTC, the papers stated. This defendant also claimed
that he makes 1.8 million dials per day and that he had done more than
$40 million worth of dialing for extended warranty companies, including
one billion dials on behalf of his largest client, according to the
court papers filed by the FTC.
In addition to the
robocalls, the FTC charged that the company selling the warranties
mails out deceptive postcards to consumers, warning them about the
imminent expiration of their auto warranties. The postcards are
designed to mislead consumers into believing that they are being
contacted by their dealer or manufacturer, and the postcards offer
consumers the chance to "renew" their original warranties.
The complaints charge that the defendants' deceptive practices violate
the FTC Act, and that the defendants also have violated the FTC's
Telemarketing Sales Rule ("TSR") by calling consumers whose numbers
were on the National Do Not Call Registry. The complaints further
charge that the defendants violate the TSR by calling consumers who
previously had asked not to be called; by concealing their phone
numbers so they would not show up on caller ID, a practice known as
"spoofing"; by failing to identify themselves to the consumers they
called; and by failing to disclose that the call was a sales pitch.
The FTC is asking the court for Temporary Restraining Orders that would
halt the illegal practices while the cases proceed, impose an asset
freeze on all the defendants, and put two of the corporate defendants
under the control of court-appointed receivers. The agency also is
seeking a permanent injunction that would force the defendants to give
up their ill-gotten gains so they can be used for consumer redress.
The complaints were filed in the U.S. District Court for the Northern
District of Illinois on May 14, 2009. The complaint against the
robocaller names as defendants a Florida-based company called Voice
Touch Inc., and two of its principals, James and Maureen Dunne. It also
names an Illinois-based company affiliated with Voice Touch called
Network Foundations, LLC and a principal in that company, Damian
Kohlfeld. The second complaint names a Florida-based company called
Transcontinental Warranty Inc., which sells extended auto warranties,
and the company's president and CEO, Christopher D. Cowart.
The Commission would like to acknowledge the extraordinary cooperation
that telecommunications carriers AT&T Mobility and Verizon Wireless
provided in the investigation of the case. The Commission also greatly
appreciates the help of several state attorneys general.
The Commission votes authorizing the staff to file the complaints were 4-0.