Robo-calls may be terminated, if Feds get their way

Federal regulators said Thursday they're cracking down on three companies accused of making more than a billion unwanted automated phone calls to tens of millions of land-line and cell phones.

Apparently no phone was safe from the calls, including 911 dispatchers, according to the Federal Trade Commission.

The firms, Voice Touch of Daytona Beach, Fla., Network Foundations of Chicago, and Transcontinental Warranty of Fort Lauderdale, Fla., and their owners skirted federal do-not-call laws with recorded phone messages to consumers saying that their auto warranties were expiring, according to suits filed Thursday in U.S. District Court in Chicago. The firms knew nothing about people's warranties, the suits allege.

The FTC is seeking a restraining order to halt the robo-calls and wants financial redress if necessary for people who purchased the warranties.

"This is one of the most aggressive telemarketing schemes the FTC has ever encountered," said FTC

Chairman Jon Leibowitz. "I'm not sure which is worse - the abusive telemarketing tactics of these companies or the way they try to deceive people once they get them on the phone.

"Either way, we intend to shut them down."

Consumers can expect even stricter rules later this year.

Beginning Sept. 1, almost all robo-calls will be banned unless the consumer specifically gives permission in advance to the business doing the calling. There are exceptions: Robo-calls for political causes and non profit fundraising will still be legal.

In Thursday's court filings, Voice Touch and Network Foundations were accused of making the robo-calls on behalf of Transcontinental Warranty, which was selling the warranties. Representatives from Voice Touch and Transcontinental Warranty couldn't be reached for comment Thursday afternoon.

The firms ignored the federal Do Not Call Registry, the suit states. The callers "simply dial every telephone number within a particular area code and prefix sequentially. As a result, no one was spared" from the robo-calls.

The FTC affirmed what tens of thousands of people know: When consumers tried to complain, the callers simply hung up.

Leibowitz said the FTC probe was difficult because the companies made extraordinary efforts to hide their identities by masking their own phone numbers - a violation of federal law.

In the suit filed against Transcontinental Warranty, FTC officials said, the evidence is overwhelming, including statements from consumers who were victimized, testimony from a former employee, and company telemarketing scripts.

The firm "flatly ignored" federal rules to identify itself to customers and falsely stated that its warranties were affiliated with manufacturers or car dealers, the suit states.

Transcontinental Warranty is accused in court papers of mailing deceptive postcards that falsely warned about expiration of auto warranties.

While seeking the return of allegedly illegal profits from the companies, the FTC isn't seeking civil fines against them but may consider doing so later on, agency officials said.

Attorneys general in Arkansas, Indiana and Missouri have taken similar action over the calls offering deals on extended warranties. The calls have brought 300,000 inquiries and 4,000 complaints to the Better Business Bureau from consumers over the past two years.

The Associated Press contributed to this report.

Bill Bartel, (757) 446-2398, bill.bartel@pilotonline.com