Federal, State, Local Law Enforcers Target Bogus Telemarketers

Four federal agencies, eight state Attorneys General officials, local law enforcers and consumer and civic organizations today announced 26 law enforcement actions against telemarketers who target consumers nationwide from Georgia-based boiler rooms. The scams covered telemarketing and direct mail schemes that ranged from advance fee credit card promotions that never delivered the credit cards to a group that peddled "luxury" cruises that turned out to be ferry rides.

"Peach Sweep sends a strong signal," said Anthony DiResta, Director of the FTC's Atlanta Regional Office. "We want the bad apples out of the Peach state," he said. "Telemarketing fraud robs consumers in every part of the country. Georgia is famous for its southern hospitality. But we're not a friendly haven for con artists who target victims in other places. With the help of the largest neighborhood watch ever and an aggressive consumer education campaign, we're targeting telemarketing scammers. We want them out of Georgia and out of business in every other state."

Attorneys General from Arkansas, Georgia, Illinois, Michigan, Minnesota, North Carolina, Pennsylvania and Wisconsin brought law enforcement actions against fraudulent telemarketing operations. The U.S. Postal Inspection Service, the Federal Bureau of Investigation and the U.S. Attorney's Office in Atlanta also participated as enforcement partners as part of "Peach Sweep."

"Telemarketing scam artists can set up boiler rooms anywhere in the country," according to Wisconsin Attorney General James E. Doyle, who is the president of the National Association of Attorneys General. "When they break the law, we need to take strong action to shut them down. Joint state and federal crackdowns, such as this one, put fraudulent telemarketers on notice. They can run, but they cannot hide."

The American Association of Retired Persons, American Express, Atlanta Better Business Bureau, Atlanta Public Schools, DeKalb County District Attorney's Office and DeKalb County Police Department, Georgia Consumer Fraud Task Force, Georgia Office of Consumer Affairs, National Association of Attorneys General, National Fraud Information Center, and Metropolitan Area Rapid Transit Authority (MARTA) also participated in the sweep and consumer education campaign.

"As Attorney General for the State of Georgia I have made consumer fraud one of my top priorities," said Thurbert E. Baker. "It is a burgeoning problem that we estimate is costing hard working Georgia taxpayers over $300 million dollars each year. I firmly believe that the Office of Attorney General should play a major role in attacking this crime. I want to protect our elderly and other citizens who are being preyed upon by these unscrupulous con artists and operators. In this state, if anyone commits this type of crime, I will find a way to make them pay," he said.

-- THE FTC CASES

In a case brought jointly with the Arkansas Attorney General, the FTC alleged that SureCheK Systems, doing business as Consumer Credit Corp., telemarketed unsecured major credit cards for "processing" fees ranging from $79.95 to $129.95. The defendants promised that consumers with past credit problems were approved for a card with no security deposit. The defendants persuaded consumers to divulge their checking account information, and, in some instances, debited checking accounts without the authorization of the consumers. The FTC charged that SureCheK did not provide any credit cards to the consumers who paid the fees. They received only application forms allowing them to apply for credit cards, with additional fees, through banks that issue cards based on the banks' own credit criteria.

In another case, the FTC and the Attorney General of North Carolina charged Resort Sales Group, Inc. and its principals with fraud in telemarketing "luxury vacations." Using cold calls, unsolicited faxes or direct mail solicitations, the defendants promoted "fantastic, world-class" vacations in Florida and the Bahamas. They said their vacation package, including accommodations in Florida and the Bahamas and a round trip cruise, was worth $1,500 but claimed to be giving consumers a discounted rate of $498 or $598. They conned consumers into "registering for" or "securing" their vacations immediately by charging their trips to major credit cards or debiting checking accounts.

Consumers did not get "luxury accommodations" for their money, the FTC alleged. They got a "confirmation package" containing a short video, some advertisements, and a "reservation request form." To book the accommodations, consumers were told they would be required to pay an additional $198 or $298. Consumers who took the vacation discovered that the "luxury" cruise was, in fact, a ferry boat ride to the Bahamas. Consumers who wanted to stay at the hotels and resorts referred to in the defendants' ads and sales pitches were required to pay "upgrade" fees.

Consumers who didn't "upgrade" lodged in vermin-infested accommodations in the Bahamas provided by the defendants, the FTC alleged.

Both operations assisted others in setting up and running similar scams by providing scripts for phone pitches and processing and depositing bank drafts drawn on customers' accounts. All the defendants were charged with violations of federal law, including multiple violations of the Telemarketing Sales Rule.

At the request of the FTC and the Attorneys General, in both cases federal district courts have issued temporary restraining orders to halt the deceptive practices and freeze the companies' assets, pending trial.

In another case, Thornton Communications, Inc. and its owner will pay $8,000 in consumer redress to settle FTC charges that they ran a fraudulent advance fee credit card mill similar to the SureChek Systems scheme. Thornton offered unsecured MasterCard or Visa accounts and charged a $100 "processing fee." The FTC charged that few consumers, if any, received the promised card.

In addition to the $8,000 redress payment, the FTC settlement bars future misrepresentations, prohibits violations of the Telemarketing Sales Rule and bars Thornton from distributing any customer lists.

DiResta commended the law enforcement agencies that participated in Peach Sweep. He stressed that consumer education is another effective way to fight telemarketing fraud. "Working together to pursue aggressive law enforcement and provide proactive consumer education, we're getting out the message about telemarketing fraud," he said.

The Commission votes to file the complaints and authorize the filing of the stipulated final judgment were 5-0.

Copies of the complaints and the stipulated final judgment are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710 FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov

(SureCheK Systems, Inc., FTC File No. 972 3120, Civil Action No. 1-97-CV-2015)
(Resort Sales Group, Inc., FTC File No. 972 3117, Civil Action No. not available at press time)
(Thornton Communications, Inc., FTC File No. 972 3118)