FTC Joins FBI and California Officials in Law Enforcement Sweep
The Federal Trade Commission, the Federal Bureau of Investigation, and California law enforcement officials today announced a joint action against telemarketers who allegedly violated California’s Telephonic Sellers Registration Act.
As part of “Operation Cold Call,” state and local law enforcers charged a number of California telemarketing businesses, including their officers and employees, with failing to register or post the state’s required $100,000 bond. Telemarketing in California without registering is a criminal misdemeanor for both sellers and owners, and violators are subject to fines of $10,000 and/or imprisonment of not more than one year. FTC attorneys will assist in the local prosecutions.
A recent court decision will allow the FTC to collect against the $100,000 bond when the agency is awarded judgments against California telemarketers.
“Although many consumers are catching on to fraudulent telemarketers, others still are being victimized, and losing billions of dollars a year to telephone scam artists,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “Today’s actions are a powerful reminder to telemarketers to comply with the law, which provides a source of funds for consumer redress.”
In the past two years, the FTC and other law enforcement agencies have brought a combined total of 730 enforcement actions against businesses that use telemarketing to promote fraudulent investments, business opportunities, advance fee loans, and other schemes.
"Los Angeles is the epicenter of telemarketing," Bernstein said. "Telemarketing firms in Los Angeles prompt more complaints than firms in any other metropolitan area. And data collected by the FTC’s Consumer Response Center show that the number of telemarketing complaints about companies in California is almost twice the number lodged against telemarketers in any other state."
Noting the benefits of working with other law enforcement agencies, Bernstein said, "Partnering with federal, state and local law enforcement agencies in Southern California is an efficient way to signal con artists that their misdeeds will not go unpunished."
The agency’s participation in "Operation Cold Call," follows within a week of its "Project Risky Business," a nationwide, joint effort with the Securities and Exchange Commission and the North American Securities Administrators Association that targeted a combined total of 60 promoters of fraudulent entertainment and media-related investment opportunities. Many of the defendants in these actions used telemarketing to solicit consumers who, allegedly, lost an estimated $100 million.
In addition to its partnerships with other law enforcement agencies, the FTC devotes considerable resources to consumer education as a way to fight telemarketing fraud. "Consumer education is one of the best defenses against fraud, and today we are releasing our newest alert -- 'Putting Cold Calls on Ice' -- to tell consumers how to protect themselves from telemarketing fraud," Bernstein said.
Among the tips offered in the alert are:
- Telemarketers must tell you it’s a sales call, the name of the seller, and what they’re selling before they make their pitch. If they’re pitching a prize promotion, they must tell you that no purchase or payment is necessary to enter or win.
- It’s illegal for telemarketers to lie about their goods or services; earnings potential, profitability, risk, or liquidity of an investment; or the nature of a prize in a prize- promotion scheme.
- It’s illegal for a telemarketer to withdraw money from your checking account without your express, verifiable authorization.
- Telemarketers cannot lie to get you to pay, no matter what method of payment you use.
- It’s illegal for a telemarketer to call you if you have asked not to be called.
In addition, consumers can use these tips to spot potentially fraudulent telemarketers:
- Say no to high pressure sales tactics. Legitimate businesses respect the fact that you’re not interested.
- Check out the company with your state and local consumer protection office before you buy any product or service, make an investment, or donate money over the phone.
- Hang up if a telemarketer calls before 8 a.m. or after 9 p.m. That’s a tip off to a rip off.
Copies of the press releases and consumer education material about telemarketing fraud, including "Putting Cold Calls on Ice," are available from the FTC’s web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202- 382-4357); TDD for the hearing impaired 1-866-653-4261. Information about the recent court decision permitting the FTC to enforce surety bonds posted under the California Telephonic Sellers Registration Act (FTC v. MTK Marketing Inc., et al. No. 97-55280 (9th Cir.)) is available by calling 310-824-4343. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. P988402)
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