Court Action Requires Companies to Comply with 900-Number Rule and Halt Abusive Billing Practices
A federal judge has entered a stipulated preliminary injunction in the Federal Trade Commission case filed last week against Access Resource Services, Inc. (ARS), and Psychic Readers Network (PRN). The Florida-based companies and their officers are the largest providers of "psychic" audiotext services in the United States, and make their services available to consumers who call 900-telephone numbers and bill for each minute spent on the line at a per-minute rate. The defendants use a national network of "psychic readers," including the purportedly renowned psychic, "Miss Cleo," to provide "readings" to consumers who call the 900 number.
The FTC's complaint alleged that the defendants misrepresented the cost of services both in advertising and during the provision of the services; billed for services that were never purchased; and engaged in deceptive collection practices. The defendants also allegedly harassed consumers with repeated, unwanted, and unavoidable telemarketing calls that consumers could not stop. The FTC also alleged that the defendants often responded to consumers inquiries with abusive, threatening, and vulgar language.
The defendants in the FTC's action have stipulated to a preliminary injunction, which was entered by U.S. District Judge Alan Gold, on February 20, 2002. The injunction, which will be in effect until the court issues a final ruling on the FTC's allegations, addresses the practices alleged in the FTC's complaint and will prevent the defendants from:
- falsely advertising that a "reading" will be provided at no cost;
- misrepresenting the cost of the calls by claiming that consumers' free minutes had not expired, that the consumer had been awarded additional free time, or that the consumer would not be charged while on hold;
- calling consumers frequently and repeatedly, and failing to provide consumers with a reasonable method to stop such calls; and
- representing that consumers are legally required to pay for services even when no such legal obligation exists.
The complaint also alleged that the defendants violated the FTC's 900-Number Rule by failing to make required cost disclosures in their ads and threatening consumers with legal action. The stipulated preliminary injunction will require the defendants, among other things, to:
- disclose in their advertisements the cost of their pay-per call service;
- stop representing that callers receive a "free reading" or "free tarot reading" when in fact they do not receive a reading at no cost;
- stop representing that the 900 number provided to callers has been "prepaid," or that the service can be reached through a "free call"; and
- stop using toll-free telephone numbers in advertisements without disclosing that the advertised service is accessed through 900 numbers.
In addition, once a consumer submits a notice of billing error, the defendants must conduct an investigation of their billing errors before threatening further action.
Under the terms of the stipulated preliminary injunction, the court appointed Gerald Wald as an auditor to monitor all of the past, present and future activities, assets and financial transactions of the corporate defendants. Accordingly, the auditor shall have unfettered access to all information he deems necessary to carry out his duties as outlined in the order.
The FTC announced the case against ARS, doing business as Aura Communications; Circle of Light; Mind and Spirit; and PRN, doing business as Psychic Readers Network, Inc., and their officers, Steven Feder and Peter Stolz, on February 14, 2002.
Copies of the stipulated preliminary injunction will be available shortly 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.
(Civil Action No.: 02-60226-CIV-Gold)
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