FTC, States Crack Down on Phone Fraud

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The Federal Trade Commission yesterday announced a crackdown on companies accused of telephone fraud and said it would renew efforts to educate consumers about scam artists.

The crackdown, dubbed Operation Ditch the Pitch, led to the filing of FTC enforcement actions in seven cases. The attorneys general of Virginia, North Carolina, Wisconsin, Oklahoma, Oregon and Illinois participated in the operation.

Companies involved in the crackdown are accused of selling advance-fee loans, credit protection schemes and low-cost office supplies, the FTC said. Such products are commonly marketed fraudulently by telephone.

Cases filed against the firms as part of Operation Ditch the Pitch include:

* Membership Services Inc., San Diego, accused of selling credit card fraud protection for $299 or more, when consumers are responsible only for up to $50 in unauthorized charges.

* American Card Services, Las Vegas, accused of marketing credit protection services for $239 to $300, as well as advance-fee loans.

* Icon America Inc., Swanton, VT, accused of marketing credit card protection for $299 to $369 and of using scare tactics and falsely claiming to represent the consumer's credit card issuer.

* R&R Consultants, Montreal, accused of falsely promising to remove all of the consumer's credit information from the Internet and to protect him from identity theft.

* Premier Consumer Services, Mesa, AZ, accused of selling credit card protection for $369.

* American Savings Discount Club, Portsmouth, VA, accused of operating a "vast" advance-fee loan scam, in which the company is alleged to have billed consumers for $100 but never delivered the loans and instead sent information about how to obtain loans.

* The Pendleton Group Inc., Carson City, NV, accused of operating a "toner phoner" scam in which callers pretended to be the regular supplier of printer toner for businesses and offered a supposed discount preceding an upcoming increase in prices, when the "discounted" price was well above the usual price of the real supplier.

To increase consumer awareness about unscrupulous marketers, the FTC has launched a Ditch the Pitch Web site at http://www.ftc.gov/bcp/conline/edcams/telemarketing/. It contains information about telephone fraud, a recording of an example of a fraudulent call and an online complaint form. The campaign includes brochures, which are also available on the Web site, and public service message banner ads.

Telephone fraud costs consumers $40 billion a year, according to the FTC. One-third of consumer complaints received by the FTC stem from calls to consumers.

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