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The Federal Trade Commission today announced it is seeking public comments on whether and how to strengthen the Caller ID provisions of the Telemarketing Sales Rule. By requiring telemarketers to provide Caller ID information, the Rule allows consumers to screen out unwanted calls. The FTC seeks comments on how to make Caller ID more useful to consumers and combat technologies that hide telemarketers’ identities.

“Beefing up the Rule’s Caller ID provisions will help the FTC keep pace with rapidly changing technologies and more effectively fulfill its consumer protection mission,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection.

Currently, the Rule’s Caller ID provisions require telemarketers to provide consumers who use Caller ID services with either a telephone number for the telemarketer or the number of the seller or charitable organization represented by the telemarketer. Some Caller ID services also display names of up to 15 characters to identify the caller. The Rule promotes telemarketer accountability and helps the FTC and other law enforcement agencies to identify telemarketers that engage in improper telemarketing, including telemarketers that call numbers on the Do Not Call Registry.

Under the Rule, telemarketers must provide the name of the telemarketer, seller, or charitable organization to such Caller ID services, if the telemarketer’s carrier makes this available. The Caller ID regulations give telemarketers flexibility in determining what telephone numbers to transmit, and in determining whether the name of the telemarketer, or the name of the seller or charity, is displayed on Caller ID services.

Not all businesses abide by the these Caller ID requirements, however, as seen in recent FTC cases that charge telemarketers pitching fraudulent extended auto warranties and credit card interest rate reduction programs with violating the Caller ID requirements. Since 2005, the FTC has initiated 10 enforcement actions that charge abusive telemarketers with concealing their identities from consumers. The FTC’s request for comments notes that “spoofing” or manipulating Caller ID names and numbers may become more common as telemarketers increasingly use advanced telecommunications technologies.

The Advance Notice of Proposed Rulemaking announced today does not put forward a specific plan for strengthening the Telemarketing Sales Rule’s Caller ID provisions. Instead, it provides information on how Caller ID services work, and explains how the benefits of Caller ID services are undermined when telemarketers use technology to block transmission of Caller ID, to transmit false information, or to transmit a telephone number or name that does not clearly identify the source of the call.

The FTC is seeking comments on a range of Caller ID-related questions to help inform its understanding of this issue, including:

• How widespread is consumer use of Caller ID services to screen unwanted calls, and do consumers use other services that rely on the transmission of calling party numbers (CPN), such as call-blocking equipment, to avoid unwelcome telemarketing calls?
• Would changes to the Telemarketing Sales Rule improve the ability of Caller ID services to accurately disclose the source of telemarketing calls or improve the ability of service providers to block calls in which information on the source of the call is not available, or has been spoofed?
• Should the FTC amend the Caller ID provisions of the Rule to recognize or anticipate specific developments in telecommunications technologies relating to the transmission and use of Caller ID information, and if so, how?
• Should the FTC amend the Caller ID provisions of the Rule to further specify the characteristics of the phone number that a telemarketer must transmit to a Caller ID service? For example, should the Rule require that the phone number transmitted be one that is listed in publicly available phone directories, a number with an area code and prefix that are associated with the physical location of the telemarketer’s place of business, a number that is answered by a live representative, or automated service that identifies the telemarketer by name?
• Should the FTC amend the Caller ID provisions to allow a seller or telemarketer to use trade names or product names, rather than the actual name of the seller or telemarketer, in the name information displayed by Caller ID services?

The Commission vote approving the Advance Notice of Proposed Rulemaking was 5-0. It can be found on the FTC’s website and as a link to this press release, and will be published in the Federal Register soon. Comments submitted in response to the questions in the notice must be received by January 28, 2011. Comments can be submitted here. All comments received will be posted on the FTC’s website at: www.ftc.gov/os/publiccomments.shtm.

Copies of the Federal Register Notice is available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 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 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.

(FTC File No.: P104405)
(TSR-Caller ID.final.wpd)

At the Federal Trade Commission’s request, a U.S. district court has approved a settlement shutting down two groups of Florida-based telemarketers that allegedly flooded consumers with misleading pre-recorded robocalls falsely promising to reduce their credit card interest rates.

The agency reached a settlement that permanently bans the two related operations from making robocalls and selling debt relief services. The settlement orders are the latest in a series of enforcement actions the FTC has taken to rein in robocallers, especially those who try to take advantage of consumers affected by the economic downturn.

According to the FTC, JPM Accelerated Services and related defendants made thousands of illegal pre-recorded robocalls to consumers, identifying themselves only as “card services” and offering lower credit card interest rates. Consumers who pressed “1″ after hearing the automated pitch were transferred to live telemarketers who falsely told consumers that JPM’s services would allow them to dramatically lower their credit card interest rates.

The complaint alleged that the telemarketers charged an up-front fee typically ranging from $495 to $995, and promised consumers they would save thousands of dollars in a short period of time as a result of the lower interest rates, and that they would be able to pay off their debts faster. The defendants also falsely stated that if consumers did not save thousands of dollars from lowered interest rates, they would receive a full refund of the up-front fee.

After collecting the fee from consumers, however, JPM allegedly failed to deliver the promised interest rate reductions and savings, and routinely refused to honor its money-back guarantee. The FTC complaint also charged the defendants with violating the Telemarketing Sales Rule by calling consumers on the Do Not Call Registry, blocking or “spoofing” caller ID, and making unlawful robocalls.

The settlement orders also impose judgments of $5.9 million against defendants associated with JPM, and $3.2 million against six individual defendants associated with an affiliated operation called IXE Accelerated Financial Centers, LLC. The judgments represent the amount of money consumers lost through these robocall schemes. The judgments are suspended, based on the defendants’ inability to pay, but will become due if the defendants are found to have misrepresented their financial condition. Two of the defendants in the IXE operation, Ivan X. Estrella and Jaime Hawley, also are liable for an unsatisfied $75,000 judgment recently entered against them in a case brought by the Florida Attorney General.

The Commission vote authorizing the consent orders settling the court action against the individual defendants was 5-0. The orders were filed in the U.S. District Court for Middle District of Florida, Orlando Division on November 9, 2010, against: 1) Ivan X. Estrella, Jamie M. Hawley, and Kimberly Nelson; and 2) Jeanie B. Robertson, Brooke Robertson, Alexander J. Dent, Micha S. Romano, Paul Pietrzak, and Ashley M. Westbrook. Estrella, Hawley, and Nelson worked with the IXE corporate defendants listed below. The rest of the individual defendants worked with the JPM corporate defendants. At the FTC’s request, the court also has dismissed the charges against Paige Dent.

The court is reviewing the FTC’s request for a default judgment against the corporate defendants in this case, including the IXE corporate defendants (IXE Accelerated Financial Centers, LLC; and IXE Accelerated Services Inc.), and the JPM corporate defendants (JPM Accelerated Services Inc.; IXE Accelerated Service Centers Inc.; MGA Accelerated Services Inc.; World Class Savings Inc.; Accelerated Savings Inc.; and B&C Financial Group Inc.). The proposed default judgment includes monetary judgments of $3.2 million against the IXE corporations, based in Orlando, Florida, and $5.9 million against the JPM corporations, based in Melbourne, Florida.

International Cooperation

The FTC brought this action with valuable assistance from other law enforcement agencies in the U.S. and Canada, including: the U.S. Postal Inspection Service; the Attorney General of Florida; the Florida Department of Agriculture and Consumer Affairs; the Canadian Radio-Television and Telecommunications Commission; and the Toronto Strategic Partnership, which includes as member agencies the Competition Bureau Canada; the Toronto Police Service Fraud Squad – Mass Marketing Section; the Ontario Provincial Police Anti-Rackets Section; the Ontario Ministry of Consumer Services; the Royal Canadian Mounted Police; and the United Kingdom’s Office of Fair Trading. Valuable assistance also was provided by the Better Business Bureau of Central Florida.

The FY 2010 National Do Not Call Registry Data Book

The FTC today also issued the National Do Not Call Registry Data Book for Fiscal Year 2010, which can be found on the FTC website and as a link to this press release. In its second year of publication, the Data Book contains a wealth of information about the Registry for FY 2010, including:

• The number of active registrations and consumer complaint figures since the Registry began in 2003;
• FY 2010 complaint figures by month and complaint type;
• FY 2010 registration and complaint figures for all 50 states by population;
• The number of entities accessing the Registry by fiscal year; and
• An appendix on registration and complaint data by consumer state and area code.

According to the Data Book, at the end of FY 2010 (September 30, 2010), the Do Not Call Registry contained 201,542,535 actively registered phone numbers, up from 191,453,515 at the end of FY 2009. In addition, the number of consumer complaints about unwanted telemarketing calls decreased from 1,808,354 at the end of FY 2009 to 1,633,819 at the end of FY 2010.

This year’s Data Book also reveals trends in complaint data. In addition to providing information on the total number of consumer complaints per month, it also has data on the number of monthly complaints specifically related to pre-recorded telemarketing, or robocalls, and requests for a telemarketer to stop calling. After the FTC issued a Rule banning virtually all telemarketing robocalls starting on September 1, 2009, for example, the data show that the number of complaints about such calls decreased from 66,574 in October 2009 to 58,161 in November 2009 and just 51,882 in December 2009. The FTC remains committed to stopping deceptive, misleading, and otherwise unlawful robocalls, and will take action against entities violating the new rule.

Click here for information about the Do Not Call Registry or to register a phone number. Once a number is on the Registry, it never has to be re-registered.

NOTE: The stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of law violations. Stipulated final orders require approval by the court and have the force of law when signed by the judge.

Copies of the stipulated final orders and default judgment are available now on the FTC’s website and as a link to this press release. 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 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.

(FTC File No. X100009;
Civ. No. 6:09-cv-2021-ORL-28-KRS)
(JPM Orders.final)

A deceptive advertising operation has been banned from the debt relief business under a settlement agreement with the Federal Trade Commission. As part of a continuing crackdown on scams that target consumers in financial distress, the FTC charged the defendants with deceptively claiming they could save consumers thousands of dollars by reducing their credit card debt.

According to the FTC’s complaint, an operation that did business under the names 800 Credit Card Debt and Debt.com deceptively claimed they would eliminate or reduce consumers’ debts quickly and put an end to calls from debt collectors. In ads that ran nationally, they used statements such as, “We’re 800 Credit Card Debt, America’s leader in helping settle debt . . .
[W]e have programs available to help you eliminate your debt by up to 60%.” The ads allegedly featured phony testimonials from people posing as the defendants’ customers.

The complaint also alleges that the defendants falsely claimed they provided the debt settlement services they advertised. In some cases, they also claimed their services were part of a public, non-commercial program, through statements such as, “The following is a public announcement . . . Americans who are behind on their credit card payments must take action immediately. If YOU have ten thousand dollars or more in credit card debt, a new relief program is now available. . .”

In reality, the defendants had no substantiation for their debt elimination or reduction claims, and did not provide debt settlement services, according to the FTC’s complaint. Instead, the FTC alleged, they merely sold the sales leads generated by their ads to debt settlement providers, or to other lead generators or lead brokers that re-sold them. The complaint alleges that the defendants had no information about whether the companies that bought the leads could fulfill the promises the defendants made in their ads. In fact, the FTC charged that because many of their leads were sold to other lead generators and lead brokers, the defendants typically did not even know the identity of the debt settlement providers that ultimately purchased the leads.

The defendants are Debt.com Marketing, LLC; Media Choice, LLC; 800 Credit Card Debt, LLC; and Stephen Todd Cook. The settlement order imposes a $28.2 million judgment that will be suspended when the defendants surrender all funds in their corporate bank accounts, as well as the proceeds from the sale of Cook’s two properties in California, his real estate in the Virgin Islands, and his ownership interests in two overseas investment funds. The full judgment will be imposed immediately if the defendants have misrepresented their financial condition.

In addition to banning the defendants from the debt relief business, the settlement order prohibits them from making unsubstantiated claims about financial related products or services, or misrepresenting material facts about any product or service. The order also prohibits the defendants from disclosing or otherwise benefitting from customers’ personal information, and failing to dispose of this information properly.

The FTC recently amended its Telemarketing Sales Rule to require debt relief companies to make certain disclosures and prohibit them from making false claims or collecting fees before delivering the services they promise. Because the defendants’ advertisements predated these amendments, the FTC did not allege any violations of the Rule in this case.

The Commission vote to file the complaint and stipulated final order was 5-0. The documents were filed in the U.S. District Court for the Central District of California.

Click here for more information about settling credit card debts.

NOTE: The Commission authorizes the filing of 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 defendants have actually violated the law. Stipulated court orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated orders have the full force of law when signed by the judge.

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 1,800 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. 0923040)
(800 Credit Card Debt)

As part of its continuing crackdown on scams that target consumers in financial distress, the Federal Trade Commission has charged three debt relief operations with making unsubstantiated claims to lure consumers nationwide into paying thousands of dollars in up-front fees, but failing to reduce credit card debts as promised.

According to the FTC’s two complaints, the defendants made deceptive claims that consumers who enrolled in their programs could eliminate 30 to 60 percent of their credit card debt and be out of debt in 18 to 36 months. The defendants marketed their services via websites and TV and radio ads that urged consumers to call toll-free numbers for a free consultation and to enroll in their debt relief programs. One operation claimed to use “secret programs most credit card companies won’t tell you about.” The other operation touted its “established relationships” with creditors and claimed that its program would “save you literally thousands of dollars.” The defendants charged consumers up-front administrative fees, monthly maintenance fees, negotiation fees, and in some instances, a cancellation fee.

The FTC’s complaints charge that few consumers received the promised results. Many consumers canceled or dropped out of the programs before their debt was reduced because they couldn’t afford to pay the defendants’‘ sizable advance fees and accumulate money to pay off their debts.

Consumers looking for help with credit card debt should be wary of anyone who tells them to stop paying their bills, to pay someone other than their creditors, or to stop talking to their creditors. Consumers should also be careful about paying for financial assistance before they receive it. The FTC recently announced changes to the Telemarketing Sales Rule that prohibit companies that sell debt relief services over the telephone from charging fees before they settle or reduce a customers’ credit card or other unsecured debt. This ban on advance fees protects all consumers who enroll in a debt relief service after October 27, 2010, and specifies that fees for debt relief services may not be collected until:

• the debt relief service successfully settles or changes the terms of at least one of the consumer’s debts;
• there is a settlement agreement, debt management plan, or other agreement between the consumer and the creditor that the consumers has agreed to; and
• the consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider.

The new provisions of the Rule also prevent debt relief providers from front-loading their fees if a consumer has enrolled multiple debts in one debt relief program. Click here for more information about the advance-fee ban. In addition, the Rule requires debt relief providers to make truthful and substantiated claims about their services. The FTC will actively enforce the Rule and these new provisions, as will the states, which also have enforcement authority under the Telemarketing Sales Rule.

The defendants in one of the two cases announced today are Financial Freedom of America, Inc., now known as Financial Freedom Processing Inc., Corey Butcher, and Brent Butcher. The second case names Debt Consultants of America Inc., Debt Professionals of America Inc., Robert Creel, Corey Butcher, and Nikki Creel, also known as Nikki Vrla.

The Commission vote to file the complaints was 5-0. The complaints were filed in the U.S. District Court for the Northern District of Texas, Dallas Division.

Click here for facts about settling credit card debts.

NOTE: The Commission authorizes the filing of 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 defendants have actually violated the law.

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 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.

(FTC File Nos. 0923056, 0923152)
(Financial Freedom, Debt Consultants)