FTC Shuts down Unauthorized Billing Operation

An operation posing as a nonprofit organization that violated the Federal Trade Commission’s Do Not Call Rule and billed tens of thousands of consumers’ credit cards without their consent has been permanently shut down in response to FTC action. The FTC charged that the defendants had acquired consumers’ account information without their knowledge and billed those accounts without consumers’ consent. A federal district court has entered a consent order barring the defendants from all telemarketing and unauthorized billing in the future.

According to the FTC, beginning in 2002, Frankly Speaking, Inc.; Plasticash, Inc.; Donald J. Lasker; and Bonnie Kriebel (a/k/a Bonnie Lasker) telemarketed to consumers using automated dialing machines and leaving pre-recorded messages offering “free” vacation travel packages, magazine subscriptions, and other goods. The defendants claimed that, to receive the goods, consumers needed to pay $9.95 in shipping and handling fees. The messages instructed consumers who were not interested in the offer to “press one now” or hang up the phone.

The FTC charged that the defendants then billed consumers $9.95, regardless of whether they received or ended the calls, and without telling them that the defendants had their credit card information and intended to bill their accounts. According to the FTC, the defendants had consumers’ credit card and other account numbers ahead of time, which allowed them to make unauthorized charges. The FTC’s complaint stated that many consumers did not remember getting a call and only noticed the charges on their credit card statements, others ignored answering machine messages from the defendants and still got charged, and others didn’t notice the charge until they received a letter from the defendants, thanking them for their “purchase”.

The FTC also alleged that the defendants made telemarketing calls to consumers who had registered their phone numbers on the National Do Not Call Registry, and, in some cases, failed to pay the required access fee to download the National Registry and “scrub” their call lists as the law requires.

The FTC charged the defendants with violating the FTC Act and the Telemarketing Sales Rule by billing consumers without their consent after making telemarketing calls; failing to inform consumers that their accounts would be charged; and violating the provisions of the National Do Not Call Registry.

On May 16, 2005, District Court Judge W. Louis Sams entered a stipulated order permanently barring the defendants from engaging in telemarketing of any kind in the future; billing consumers for any good or service without their express consent, or disclosing customer information. The order contains a $138,000 suspended judgment that will become immediately due if it is found that any of the defendants lied on their sworn financial statements. The order also contains standard recordkeeping requirements to assist the FTC in monitoring the defendants’ compliance.

The Commission vote to authorize staff to file the complaint and stipulated final order was 5-0. They were filed in the U.S. District Court for the Middle District of Georgia on May 11, 2005.

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.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the Commission’s complaint and stipulated final order 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 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 in English or Spanish (bilingual counselors are available to take complaints), 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. 042-3072)
(Civ. No. 1:05-CV- 60(WLS))