Cross-Border Telemarketers Barred From Deceptive Phone Card Pitches

Court Order Also Prohibits Violations of Do Not Call Registry Rules

For Release

The Federal Trade Commission has settled charges it brought against a group of Canadian telemarketers who allegedly deceived U.S. consumers through the fraudulent sale of telephone calling cards. As a result of the settlement, the court has permanently barred the defendants from engaging in similar cross-border fraud.

In July 2007, the agency charged 9131-4740 Québec, Inc., JPE Holdings, Inc., and the companies’ principals with numerous violations of the FTC Act and the Telemarketing Sales Rule (TSR), including: 1) falsely representing the defendants were with consumers’ banks or credit card companies; 2) misstating that consumers would receive a calling card; 3) billing consumers without their authorization; 4) using false or misleading statements in their telemarketing; 5) calling consumers whose numbers are on the National Do Not Call (DNC) Registry; and 6) failing to pay the fee to access the Registry’s phone numbers. The court order settling the FTC’s charges bars the defendants from engaging in the conduct alleged in the complaint, and imposes a suspended monetary judgment of $3.46 million.

According to the Commission’s complaint, beginning in 2004, the defendants fraudulently marketed telephone cards from Canada to U.S. citizens. The defendants’ telemarketers allegedly falsely posed as consumers’ bank or credit card companies and promised that for $1 they would send a long-distance calling card for a seven- or 10-day trial period, with the dollar being billed to the consumers’ credit cards or debited from their bank accounts. Consumers were told that if they accepted the offer they would receive the calling card, along with information on how to use it and how to cancel it if they decided they were no longer interested in the program. Consumers who agreed to the offer had $1 billed to their credit cards or debited from their bank accounts.

In many instances, the defendants did not send the calling card and information, but continued billing consumers as if they had agreed to keep the service -- a $19.95 one-time “activation fee” plus a $49.95 monthly fee. When consumers complained, the defendants typically insisted that the card and information had been sent. Sometime in the fall of 2005, the defendants also allegedly billed consumers for $24.95 without notice or any other prior contact. Finally, the Commission’s complaint alleged that, to pitch the plan, the defendants called people whose numbers are on the National Do Not Call Registry, and never paid the fee required to access the Registry.

The court judgment settling the FTC’s charges contains strong injunctive provisions, as well as monetary relief. It prohibits the defendants from making misrepresentations about any goods or services, from causing consumers’ bank accounts to be debited or their credit cards charged without their express informed consent, and from violating the TSR, including its Do Not Call provisions. It also limits their ability to transfer customer lists and other business information.

Finally, the order imposes a monetary judgment of $3.46 million, the Commission’s estimate of the consumer injury caused by the defendants’ illegal actions. All but $10,000 of the judgment has been suspended, however, based on the defendants’ inability to pay. If they are later found to have misrepresented their financial condition, the entire amount would become due.

The Commission vote authorizing the staff to file the stipulated final judgment, including an injunction, consumer redress, and other equitable relief, was 4-0. The documents were filed in the U.S. District Court for the Northern District of Ohio, Eastern Division, and approved by the Court on November 24, 2008.

The court action announced today settles the FTC’s charges against the following defendants: 9131-4740 Québec, Inc., a corporation, also d/b/a Fusion Telekom; JPE Holdings, Inc., a corporation, also d/b/a Fusion Telekom; Jean-Pierre Brault, individually and as an officer of 9131-4740 Québec, Inc., and Eli Foner, individually and as an officer JPE Holdings, Inc.

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

Copies of the stipulated final judgment 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, DC 20580.The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No. 052-3081; Civ. No. 1:07-cv-2242)
(Fusion Telekom Settle..final.wpd)

Contact Information

MEDIA CONTACT:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161
STAFF CONTACT:
Jonathan L. Kessler,
FTC East Central Region, Cleveland
216-263-3436