FTC shuts down massive robocall scam

Herb Weisbaum • Profile • E-mail

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.”

Restricting robocalls Prerecorded telephone sales calls, even from legitimate companies, can be annoying. Thanks to the FTC it's now easier to make these calls go away. All prerecorded calls are required to give you (at the beginning of the call) an automated way to opt-out of future calls from that company. In September, the Telemarketing Sales Rule gets tougher. Telemarketers will be required to get your permission in writing to send you a prerecorded message. Remember, calls that are not trying to sell you something are exempt from the Do Not Call list and exempt from the new restrictions on pre-recorded messages. This includes surveys and political calls. Rule will halt prerecorded sales calls unless the seller obtains consumer's permission

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 Barker 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.

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