Nine actions taken by FTC, states against unscrupulous telemarketers

| Friday, December 14, 2001

The Federal Trade Commission, in cooperation with six states, is taking action to reduce telemarking abuse. The FTC, along with the attorney generals of North Carolina, Virginia, Wisconsin, Oklahoma, Oregon and Illinois, in October announced nine FTC, state or joint law enforcement actions designed to protect consumers nationwide from unscrupulous cold callers and telemarketing fraud.

In addition to bringing these cases through the federal-state "Operation Ditch the Pitch," the commission is launching a consumer education campaign, including a redesigned web site on telemarketing fraud (www.ftc.gov/telemarketing) to help consumers tell the difference between con artists and legitimate telemarketers.

"Using masterful misrepresentations, fraudulent telemarketers are making cold calls to offer worthless credit card protection services, 'guaranteed loans,' and so-called 'protection' from identity theft," said Howard Beales, director of the FTC's Bureau of Consumer Protection. "In doing so, they are stealing billions of dollars from unwary consumers. The fact is that consumers should feel as comfortable telling a cold caller not to phone them again as they do refusing entry to a stranger at their front door."

The most recent figures available, he said, put estimates of consumer loss due to such fraud at more than $40 billion a year. About one-third of all complaints received by the FTC in the first quarter of 2001 began with a phone call to a consumer.In October, the FTC and its state partners took action against the following companies and individuals: Membership Services Inc. (MSI) and President James M. Schwindt, of Delaware and San Diego; Farpoint Services International Ltd.; Garrison Corporation Inc.; American Card Services S.A. (ACS); Hyperion LLC; Consolidated Group of Companies LLC; Roberta Galway, a.k.a Robin Galway and Robin Arcand; and Phillip Arcand of British Columbia, Canada, and Las Vegas; Icon America Inc. and its principals Mete Suatac and Jonathan Parks, of Swanton, VT, and Hollywood, FL; R&R Consultants Inc., d/b/a Consumer Alert, Peace and Quiet, Coast to Coast Cost Benefits Inc. and Consumer Information Services, and its corporate officer, Reuben Ross of Montreal, Canada; Millennium Industries, d/b/a Premier Consumer Services (PCS); and Anthony V. DeAngelis of Mesa, AZ; Tungsten Group Inc. and Tungsten Group II, both d/b/a American Savings Discount Club; and Robert J. Demellweek and David Vincent Jensen, of Portsmouth, VA, and Largo, FL; and The Pendleton Group Inc., d/b/a Product Distribution Center and Lakeshore Industries, and its principal, James C. Caouette of Carson City, NV, and Huntington Beach, CA. The complaints address cases of credit card loss protection fraud, advance-fee credit fraud and the fraudulent sale of toner and office supplies to small businesses.

The FTC filed independent actions against R&R, Icon, ACS, PCS and Pendleton. Filing jointly with the FTC, the states of Virginia, North Carolina and Wisconsin are co-plaintiffs in the complaint against ASDC. The state of Illinois is co-plaintiff with the FTC in the complaint against MSI. In addition to the FTC and FTC/state complaints, the states of Oklahoma and North Carolina took separate actions against R&R. The states of Virginia and Oregon filed Assurances of Voluntary Compliance against six additional defendants as part of the federal/state operation targeting cold call telemarketing fraud.

In the Commission's complaints against the companies targeted in "Operation Ditch the Pitch," each defendant is accused of violating Section 5 of the Federal Trade Commission Act and the Telemarketing Sales Rule (TSR) through its fraudulent and deceptive cold calling and telemarketing operations. In the joint FTC/state complaints, each defendant is alleged to have violated the FTC Act, the TSR and various state consumer protection laws.

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free consumer information, call toll-free 1-877-FTC-HELP (382-4357), or use the complaint form at www.ftc.gov.

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