Canadian Firm Charged with Telemarketing Fraud Settles FTC Complaint; Will Pay More than $111,000 in Consumer Redress

Action Brought As Part of 2001's "Operation Ditch the Pitch" Enforcement Sweep

Consumers allegedly defrauded by a Montreal, Canada-based telemarketer and his related businesses will receive more than $111,000 in consumer redress under the terms of a court settlement with the Federal Trade Commission announced today. According to the FTC, the defendants cold-called tens of thousands of U.S. consumers in an attempt to sell them bogus identity theft protection services and supposed advance-fee, low-interest credit cards. The order also bars them for life from all marketing of credit-related goods or services and protection services.

Today's settlement was reached with Reuben Ross, individually and as an officer of R&R Consultants, Inc. (R&R) and Coast to Coast Benefits, Inc., also doing business as R&R, Peace and Quiet, Consumer Alert, R&R Financial, Consumer Information Services, and with the respective companies. The FTC brought this case through the 2001 "Operation Ditch the Pitch" federal-state law enforcement sweep targeting a wide range of out-bound telemarketing fraud.

The Commission's Complaint

According to the FTC's complaint, the defendants promised to remove consumers' personal information from the Internet, thus purportedly protecting them from identity theft. The Commission alleged that the defendants told consumers that their personal information, including credit card numbers, was available on the Internet and that they faced unlimited liability if it was obtained by crooks. To help prevent this loss, the defendants allegedly promised to remove all consumers' personal information from the Internet and to delete consumers' names from all telemarketing lists.

In addition, in a separate scheme, the defendants allegedly told consumers that, for an advance fee of several hundred dollars, they would receive a low-interest credit card. In fact, the FTC alleged, consumers only received a list of banks and a booklet of tips on how to obtain a credit card. Each of these actions, the FTC said, violated Section 5 of the FTC Act and/or the Telemarketing Sales Rule.

Terms of the Stipulated Order

Under the terms of the court order, the defendants are banned for life from marketing both "credit-related goods or services" and "protection services." Credit-related goods or services include any business activity involving credit or debit cards, credit repair, grants, loans, financing, or other extensions of credit. Protection services include any claim that the defendants can remove or safeguard consumers' information online or offline, or ensure that their information is removed from telemarketers' lists. Although the companies in this case used telemarketing to pitch their products, the ban covers any form of sales activity, including telemarketing, direct mail, and Internet marketing.

In addition, the order provides "fencing-in" relief to prevent similar deceptive marketing practices in the future should the defendants attempt to sell other types of goods or services. These provisions bar the defendants from a number of specific marketing abuses that were alleged in this case, including misrepresentations involving the nature, attributes, and cost of a product; the purpose of the solicitation; consumer authorization to pay for any goods or services offered; and any other information that is material to a consumer's decision to purchase the goods or services offered. The fencing-in relief also bars the defendants from assisting other telemarketers to engage in the same conduct. Finally, the order requires that they pay $111,354 in consumer redress.

The Commission vote to accept the proposed stipulated final judgment and order for permanent injunction was 5-0. It was filed in the U.S. District Court for the Northern District of New York on April 12, 2002 and signed by the judge on April 25, 2002.

NOTE: Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Stipulated final orders have the force of law when signed by the judge.

Copies of the Commission's stipulated final judgment and order for permanent injunction are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. 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 information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. X020003)

Contact Information

Media Contact:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161
Staff Contact:
David R. Spiegel or Brian Huseman,
Bureau of Consumer Protection
202-326-3281 or 202-326-3320