FTC takes action vs. telemarketing firm

For those of you who, like Dorothy, think you are still in Kansas and that you can trust telemarketing companies, take heed of the following:

A federal court has ordered a temporary halt to an Arizona-based telemarketing operation that the Federal Trade Commission believes has used deceptive and unfair practices to bilk consumers across the country out of millions of dollars.

The FTC alleges that Harvey and Tye Sloniker telemarketed nonexistent products and services through a maze of interrelated companies including: Corporate Marketing Solutions Inc., Corporate Industries Inc., ATM Machine Wrap Inc., Bankcard Recovery Services Inc., Direct Wireless Inc., National Consolidation Foundation Inc. and Sierra Management Properties Inc. The court has frozen the defendants’ assets and appointed a temporary receiver pending a hearing on the FTC’s motion for a preliminary injunction. The FTC sought this relief to bring an immediate halt to the defendants’ fraud and to prevent the destruction of evidence and dissipation of assets pending the preliminary injunction hearing.

The complaint, filed in the U.S. District Court for the District of Arizona, alleges that since at least 1998, the Slonikers and their various companies have been engaged in deceptive telemarketing on behalf of a string of third-party client companies. According to the FTC, the defendants operated numerous telemarketing boiler rooms known as “contract rooms” that employed large numbers of telemarketers trained to deceive consumers.

From these contract rooms, the defendants sold nonexistent credit cards and bogus identity theft and telemarketing fraud protection services to consumers for hefty advance fees.

The complaint alleges that the defendants violated the FTC Act and the Telemarketing Sales Rule by engaging in numerous misrepresentations in the sale of advance-fee credit cards and various consumer fraud protection services. The defendants often began their sales pitches by representing to consumers that they are affiliated with, or calling on behalf of, a bank or financial institution or, depending on the product or service, a consumer protection agency. They then represented that the consumer had been pre-approved for a major credit card and was guaranteed or highly likely to receive such a card in exchange for an advance fee. In some instances, the defendants also represented that the consumer would receive additional bonus products or services in conjunction with obtaining a credit card. In fact, the defendants are not affiliated with any banks, financial institutions or consumer protection agencies, and no consumers ever received the promised credit cards or the promised bonus products or services.

The complaint further alleges that the defendants represented to consumers that criminals are stealing from the Internet consumers’ personal information, such as their Social Security numbers and credit card numbers. The defendants then allegedly told consumers that without the defendants’ protection service, the consumers would be liable for any unauthorized charges on their credit card accounts. The defendants promised the consumers that, in exchange for a fee, they would remove the consumers’ identity information from the Internet and remove the consumers’ names from lists used by telemarketers and merchants. According to the FTC, neither of these services was ever performed by the defendants, nor are they even possible to perform.

The complaint also alleges that the defendants routinely obtained consumers’ personal financial information through false pretenses, and that the defendants engaged in the unauthorized charging or debiting of consumers’ credit card or bank accounts.

What’s the moral of this story? Just say “NO” to telemarketing or Internet solicitations unless you are familiar with the company and can confirm its legitimacy.

For information on how you or your business can join a statewide coalition fighting back against this kind of fraud, write the address below.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast COMBAT/The Maine Center for the Public Interest, Maine’s membership-funded nonprofit consumer organization. For help or to request individual or business membership information write: Consumer Forum, Bangor Daily News, P.O. Box 1329, Bangor 04402-1329.