Public Private Partnership Tackles Con ArtistsWho Prey On Seniors
More than 1,500 private sector volunteers have joined a coalition of federal, state and local law enforcers to target direct mail con artists who prey on senior citizens. The Federal Trade Commission, U. S. Postal Inspection Service, the National Association of Attorneys General (NAAG), 25 state Attorneys General and local law enforcement officials and AARP announced 190 law enforcement actions against fraudulent direct mail schemes, including one firm that used over 200 different business names and bilked consumers out of $100 million a year.
"Even though we live in the hi-tech age, the old fashioned 'snail mail' is still a favorite medium for con artists," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Today we're announcing a four pronged, federal/state, public/private initiative to target the scammers who use the mails to con consumers. First, efforts by federal, state and local agencies have resulted in 190 law enforcement actions. Second, the FTC, Postal Inspection Service, state Attorneys General, NAAG and AARP have formed a strike force to collect and review direct mail for future law enforcement action. Third, AARP has announced a "Project Senior Sting" mail collection and ongoing state-wide "Project Senior Sting" efforts in
Massachusetts and Arizona -- where unsolicited mail is being turned over to law enforcement agencies to search for possible examples of fraud. Finally, in conjunction with the U.S. Postal Inspection Service, and the Yellow Pages Publishers Association, we're launching a consumer education campaign to help consumers and small businesses spot mail fraud," she said.
"AARP believes that the law enforcement actions announced today are an important step in the war against consumer fraud," said AARP President Margaret A. Dixon. But it is equally important to educate consumers about these types of crimes to help them avoid becoming victims in the first place."
The scams targeted in the law enforcement sweep conned consumers with a range of deceptive claims, including misrepresentations that a mailing was from the government; deceptive claims that consumers have won something; misrepresentations that consumers have unclaimed assets; phony billing scams; bogus advance fee credit card offers; and false contest claims.
"Those who target our mailboxes with fraudulent offers are cunning and clever. They play the numbers game," according to Winconsin Attorney General James E. Doyle, President of the National Association of Attorneys General. "If they send out enough offers and only a small number of consumers respond from each state, they can still make a bundle."
In one FTC case, a U.S. District Court issued a temporary restraining order, ordered an asset freeze and appointed a receiver to oversee the business assets of National PC Systems, of Encino, California, and its principals. The FTC charged that the company sent mailings that appeared to be bills for computer service contracts to organizations that had not ordered these services, including churches and non-profit organizations. Many mailings indicate that they are "renewals" or "upgrades of service" to previous contracts, or warn that an account is "past due." The defendants also deceptively claim to have "1200 convenience centers located Coast to Coast" and list a local or regional return address. Their solicitations provide an 800 number for consumers to call for "unlimited maintenance and repair service" including assistance by telephone.
Many organizations mistakenly paid the defendants hundreds of dollars after receiving the deceptive mailings. Other organizations purposely paid them to receive the promised services.
According to the FTC, the defendants rarely if ever, provided any of the services promised. In fact, the complaint states that return addresses on the defendants mailings are actually leased mail drops, not service facilities; the defendants' 800 number that organizations call in attempt to recover their funds or seek services, lands the organization in what one called a "phone mail jail"; and rather than "1200 convenience centers," defendants operate out of one location, in Encino, California.
The FTC is seeking to bar future violations by National PC and its principals and obtain redress for consumers who lost money. The U. S. Postal Inspection Service provided invaluable assistance to the Commission on this case.
The FTC also expects to file a federal court settlement in another case in the near future with Direct American Marketers, Inc. (DAMI). DAMI sent mail to consumers using more than 200 different company names. Many of the names, such as "Awards Claim Center," "Consumer Cash Claims," and "Prize Transfer Sweepstakes," suggested that DAMI was a sweepstakes judging or payout operation. Their mailings notified consumers that they had won prizes or cash awards. Using statements like,
"THIS DOCUMENT CONFIRMS AND GUARANTEES YOUR AWARD IN A NATIONAL SWEEPSTAKES," and
"PLEASE CONTACT OUR OFFICE AT ONCE. WE ARE HOLDING A $15,000 CERTIFIED AWARD CHECK WHICH MUST BE CLAIMED BEFORE THE END OF THE CURRENT DISBURSEMENT PERIOD,"
DAMI directed consumers to call a 900 number to redeem their prize. What consumers got for making the call was a $25 phone bill and the chance to enter a sweepstakes in which the odds of winning the grand prize were about one in five million, according to the FTC. In fact, "in virtually all cases," consumers won either one dollar or no prize at all, the FTC complaint says. To settle the FTC charges, DAMI and its president, Anthony C. Brown, will be barred from engaging in any prize promotions that involve pay-per-call services in the future. In addition, they will pay $500,000 for consumer redress. Four state Attorneys General also have sued or settled with the defendant.
The Commission votes to file the FTC cases were 4-0.
The National PC Systems case was filed in U.S. District Court for the Central District of California, in Los Angeles.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the legal documents in the FTC cases, an FTC Tip Sheet, "Is There A Bandit In Your Mailbox?" and a Business Alert, "When Yellow Pages Directories Are Bogus" are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov and also 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.
(National PC Systems)
(FTC File No. 962 3232 (DAMI))
(FTC File No. 972-3129 (National PC Systems/Checkwriter Systems))
Office of Public Affairs
Bureau of Consumer Protection
Hugh G. Stevenson
Elaine D. Kolish or Maureen Enright
202-326-3042 or 202-326-3160