MSNBC
FTC Shuts
Down Massive Robocall Scam
May 20,
2009 -- 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.
Technology works against you
Computer technology makes it possible for fraudulent
telemarketers to cut their costs. Robocalls are incredibly
cheap.
The FTC provided me
with the transcript of a phone conversation between Jim Dunne,
owner of Voice Touch, and a potential new client. Dunne compares
the cost of mail to robocalls and says “For what you're paying
for one postcard, I mean, we can call somebody once a month
for three years"
Phone bandits can also
use readily available software or the Internet to fool your
caller ID. They can make a bogus number appear instead of
their true phone number. It's called “spoofing” and it's illegal
for telemarketers to do. But phone swindlers don't exactly
follow the rules.
“Spoofing is a serious
concern,” says Susan Grant, director of consumer protection
at the Consumer Federation of America. “They do this to make
it harder to cancel and harder for you to complain because
you're not really sure who you are complaining about.”
The FTC's Baker tells
me Voice Touch spoofed the phone numbers for the Transcontinental
Warranty calls which made it tough for investigators to link
the companies to the Do Not Call complaints.
According to federal
investigators, here's how the scam worked. Robocalls from
Voice Touch blanketed the county for Transcontinental's warranties.
The message gave people a number to push if they wanted to
be connected to a salesperson.
In preparing its case,
FTC lawyers interviewed Mark Israel of Boca Raton, Fla. He
worked the phones at Transcontinental for a few days in February.
Israel says he left the company because he felt consumers
were being “cheated out of their money.” His written declaration
provides a fascinating look at the sales operation at the
other end of the phone line.
There were two levels
of sales people. The “opener” takes the incoming calls and
works from a script to get the basic information about the
consumer's car. It's the opener's job to convince the caller
to agree to buy a warranty. If he can do that, a more skilled
salesperson known as a “closer” would take over.
Israel told investigators
a closer could “say whatever was necessary” to get the consumer's
credit card number. That included making callers believe they
had called a company that was somehow affiliated with the
person's car manufacturer or dealership. They were not.
Herb Weisbaum
MSNBC.com
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