The FTC Wins Injunction Against Gift-Card Scam
The Federal Trade Commission is enforcing a temporary injunction against telemarketers who offer free gift cards to get consumers to give out their bank account information.
In the so-called “Wal-Mart shopping spree scam,” the telemarketers allegedly cold-called consumers and promised them gift cards, “shopping sprees,” movie passes and gas vouchers they say are worth $200 to $500, then asked consumers to pay a small shipping and handling fee in order to collect consumers’ bank account data. The telemarketers then coerced consumers to buy memberships in purported discount-buying programs, the FTC charges.
The FTC’s complaint, filed Feb. 28 in federal district court in Los Angeles, also says the defendants called reluctant consumers repeatedly until they bought memberships, and wouldn’t let consumers cancel those memberships.
The temporary injuction prohibits the defendants from making misrepresentations to consumers and from engaging in deceptive or abusive telemarketing practices. It also freezes their assets and appoints a temporary receiver over the corporate defendants.
The complaint was filed against five corporations and nine individuals: Universal Premium Services, Inc. (also known as Premier Benefits, Inc.), Orange, CA; Consumer Reward Network, Canoga Park, CA; Star Communications, Los Angeles; Membership Services Direct (aka Continuity Partners), Las Vegas; Connect2USA, of Las Vegas; and Brian K. MacGregor; Harijinder Sidhu; Joseph F. Larosa, Jr.; Pranot Sangprasit; William Thomas Heichert; Michael Howard Cushing; Paul P. Tosi; and Manh D. Cao.
The FTC settled a similar telemarketing case last month with Conversion Marketing, which offered “free” samples of tooth-whitening kits, then charged consumers’ bank accounts without permission by enrolling them in a program for monthly shipments
Conversion Marketing agreed to pay $474,000 ($463,000 in consumer redress, $11,000 in civil penalties) and is prohibited from misrepresenting its products or the terms of its programs.
