Saturday, May 23, 2009

FTC Shuts Down Massive 'Extended Warranty' Robocall Scam


We spend so much time worrying about Internet fraud. But it’s easy to forget that many con artists still make their living the old-fashioned way: dialing for dollars.

Last week, the Federal Trade Commission shut down one of the biggest and most flagrant telemarketing scams ever.

The automated calls (known as robocalls) pitched extended car warranties. They went to phones across the country, including cell phones and home phones on the national Do Not Call Registry. Federal law prohibits such calls.

The FTC sued both the promoter of the phony extended warranties, Transcontinental Warranties, and the company making the robocalls Voice Touch. Both firms are based in Florida.

The sheer volume of these robocalls – tens of millions a week – was staggering. “We think they were just dialing every phone number in the U.S. more or less in order,” says Steve Baker, an attorney for the FTC. They even called Secret Service offices and 911 dispatchers.

“This is the most widespread and blatant Do Not Call violation we’ve ever seen,” Baker says. More than 30,000 people filed complaints with the commission. Since most people never complain – they just hang up the phone – 30,000 complaints is an astounding number.

To some, the recorded message was alarming: Your vehicle warranty is about to expire and you should “extend coverage before it’s too late.”

Anita Topolinski of Seattle got one of the calls. She knew right away something was fishy, because her car was brand new and its warranty was not about to expire. "I feel this is really wrong,” she told me. “They're just trying to cheat me and steal my money.”

In its lawsuit, the FTC claims that's exactly what Transcontinental Warranty, was trying to do: trick people into buying an expensive service contract with lots of limitations and exclusions.

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