Two telemarketing firms got slammed by the FTC with a 2.06 million fine for false advertising and deceptive marketing. As part of the FTC’s “Operation Tele-PHONEY,” law enforcement cracked down on companies that sell overpriced magazine subscriptions and worthless medical discount plans.
But how can this age old process of scamming consumers finally be prosecuted? The FTC says that the lawsuit stems from false advertising and directly violates certain U.S. laws. For example, U.S. Magazine Services, a large seller of magazine subscriptions and a target of Operation Tele-PHONEY, would advertise magazine subscriptions at a certain price. When customers actually ordered the subscriptions and provided their credit card information, only then would they be informed of the real price. If the consumer would try to then cancel, they would be told that cancellations were not allowed. This direct violation of the FTC’s Telemarketing Safe Rules is what is being targeting in the crack down.
Another company being prosecuted is Union Consumer Benefits, a company that sells worthless medical discount packages to elderly consumers. Using similar deceptive techniques to persuade sales, Union Consumer Benefits would get sensitive financial information by pretending they were calling from the Social Security Administration, Medicare, or other consumer banks offering a lifelong discount in exchange for a one-time fee. Once obtaining the financial information, the company would withdraw $399 and send consumers a defunct prescription card.
Both companies are looking at huge fines over a million dollars each. Finally, someone is taking action against these scam artists!
(Via Media Newswire)