Walter Karl Drops Miss Cleo List Following Allegations

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List brokerage firm Walter Karl Inc. has ceased marketing a consumer list from the Miss Cleo psychic network after New York state authorities unveiled allegations of deceptive marketing by the operators of the hotline.


The New York Consumer Protection Board accused Access Resource Services, Fort Lauderdale, FL, of more than 100 do-not-call list violations and criticized its marketing practices in a 22-page report released Oct. 31. The company operates the Psychic Readers Network, whose late-night DRTV spots have made an icon of self-proclaimed psychic Miss Cleo.


Upon learning of the allegations and the board's report, Walter Karl, a business unit of InfoUSA, Omaha, NE, the nation's largest list company, stopped acting as a broker for a Miss Cleo mailing list, said Ed Mallin, president of Walter Karl.


Direct marketing firm Traffix Inc. and Walter Karl share a building in Pearl River, NY. Mallin said Traffix approached his company and asked it to act as a broker for a list of hotline customers, but not to house or maintain the file.


According to the board's report, the list contained names of members of the Miss Cleo Astrology Club and included 500,000 e-mail addresses and 250,000 postal addresses. Walter Karl only conducted preliminary tests on the marketability of the list and processed a "handful" of orders, Mallin said.


While declining to make any judgments about Miss Cleo's marketing practices, Mallin said Walter Karl was "taking the high road," given the circumstances.


"I've no idea if there is anything wrong with the names," he said. "I'm just saying that if there are any concerns, we don't want to market these names."


Traffix formerly conducted telemarketing for the Miss Cleo hotline and currently operates e-mail marketing for the operation and sells the Miss Cleo customer list, according to the report. Calls to Traffix and an attorney for Access Resource Services were not returned yesterday.


Access Resource Services violated New York's DNC list on no fewer than 112 occasions and is subject to about $224,000 in fines, the board charged in its report.


Though enforcement of New York's DNC list -- which contains about 2 million consumers -- began in May, the company did not obtain a copy of the list until August, the board said. The charges allege that Access Resource Services is the largest single violator of the state's DNC list and that in the past it has denied wrongdoing after receiving previous warnings from the board.


In its report, "Dialing for Dollars," the board criticized the company's marketing tactics, which the board said aim to keep unwitting consumers on the phone as long as possible to run up charges from the hotline's $4.95-a-minute toll-call service. The board charged Access Resource Services with providing service that does not live up to promises made in its direct response television ads, e-mails and telemarketing calls.


According to the report, suspect marketing practices by the Miss Cleo hotline operators include:


* Use of voice-over actors in DRTV spots that appear to include real users of the Miss Cleo service.


* Suggestions in DRTV ads that callers to the hotline will speak to Miss Cleo herself, when in fact callers to the toll-free number advertised are directed to call a 900 number, whereupon they are connected with a work-at-home telemarketing agent.


* Targeted e-mails and telemarketing calls, purporting to be directly from Miss Cleo, to previous hotline customers urging them to call the hotline again due to "life or death" circumstances, "once in a lifetime" opportunities or cash rewards that may be in their future.


Many consumers said that hotline agents told them they would hear a "beep" tone when the three "free" minutes of their toll call, as promised in Miss Cleo ads, were over, the board said. Consumers reported hearing no tone or being told it meant they were "special callers," and still others said they were placed on hold during their three free minutes.


The report also took aim at the hotline's use of work-at-home agents, none of whom could be construed as "psychic," the board said. "Psychic readers" used scripts and faced firing or suspension of pay if they failed to keep callers on the phone for long periods, according to the report.


Miss Cleo's real name is Youree Cleomili Harris of Miami, the report said. She insists that she still takes calls.


The full report is available at the New York Consumer Protection Board Web site at www.consumer.state.ny.us.


Access Resource Services was the target of a lawsuit this year by the Missouri attorney general's office, which accused it of committing 94 violations of that state's DNC list. The company settled the suit in August for $75,000.


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