The operators of Miss Cleo’s psychic hot line have agreed to forgive $500 million in outstanding customer charges in an agreement settling a Federal Trade Commission lawsuit charging that the operators fleeced callers.
Florida companies Access Resource Services Inc. and Psychic Readers Network Inc., which operated the hot line, also agreed on Thursday to stop using pay-per-call numbers and to stop all collection efforts on customer accounts. The companies must also pay a $5 million fine to the FTC.
“I’m no psychic, but I can foresee this: If you make deceptive claims, there is an FTC action in your future,” said J. Howard Beales III, director of the FTC’s Bureau of Consumer Protection in a statement.
Under the settlement, the companies did not admit to breaking the law.
The FTC filed the complaint in federal court in February, charging that ARS, PRN and their officers, Steven L. Feder and Peter Stolz engaged in deceptive advertising, billing and collection practices.
The Miss Cleo told consumers that they would receive psychic readings at no charge, but consumers calling a toll-free number were directed to a 900 line charging $4.99 a minute, according to the FTC. Nearly 6 million people made such calls and were charged about $60 each.
The FTC also charged that operators made the calls last as long as possible and misled the callers into believing that they would not be charged while on hold, according to the complaint. Consumers didn’t realize they’d been charged until they received telephone bills of hundreds of dollars.
The FTC alleged that the operators called consumers who asked to be on a do-not-call list.
During the three years the psychic service charged people about $1 billion and collected half of it.
The service’s spokeswoman Youree Dell Harris is known as “Miss Cleo.”
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