FTC Puts Halt to Fraudulent Do Not Call “Service”


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For Release: June 29, 2004

Defendants Falsely Claimed for $399 They Could Safeguard Consumers’ Financial Information

The Federal Trade Commission today announced a stipulated final court order effectively shutting down a scheme in which an Arizona-based company defrauded consumers nationwide by offering a $399 “service” to safeguard their personal financial information from unscrupulous telemarketers. The defendants allegedly told consumers that their information – including their social security and bank account numbers – was for sale on a large number of telemarketing lists. The defendants allegedly told consumers that a $399 call screening device could help them avoid becoming victims of identity theft. Most consumers received little more than a $34.95 call-screening device that they could have bought themselves at many retail locations.

The stipulated court order prohibits the defendants from making similar false representations to consumers about their financial information, and from billing them or debiting their accounts without their prior authorization. Finally, the order bars the defendants from violating the FTC’s Telemarketing Sales Rule, based on their past abusive phone-collection practices, and subjects them to a monetary judgment of nearly $811,000, which has been suspended due to their inability to pay.

The Commission action announced today settles all charges against defendants Vector Direct Marketing, LLC and its principals, Mike Stafford and Lisa Miller. The company also did business under the names National Solicitation Guard and Anti-Solicitation Guard.

The Commission’s Complaint

The Commission’s February 2, 2004, complaint against the Vector defendants contained five counts, two alleging violations of the FTC Act and three of the TSR. First, the FTC alleged the defendants violated the FTC Act by unfairly causing charges to be billed on consumers’ credit cards – or causing their bank account to be debited – without their authorization. Next, the FTC alleged the defendants misrepresented that they would remove from telemarketing lists consumers’ personal information, such as social security, credit card, and bank account numbers.

The complaint further alleged that the defendants violated the TSR by engaging in abusive telemarketing practices and by causing consumers’ bank and credit card accounts to be debited and/or charged without their express informed consent. The FTC also alleged that the defendants misrepresented material aspects of the performance, efficacy, nature, or central characteristics of the products or services they were selling, including, but not limited to, claims that consumers’ personal information was on telemarketing lists, making them likely targets for fraud, and that they would cause the consumers’ personal information to be removed from all telemarketing lists that included that information. Finally, the FTC alleged that the defendants engaged in abusive telemarketing practices by threatening and intimidating consumers in an attempt to induce them to pay for their products or services.

Terms of the Order

The stipulated final order announced today settles the Commission’s charges against the Vector Direct defendants. It permanently prohibits the company, along with Stafford and Miller – as well as any of their associates – from a range of activities related to the advertising or sale of any products or services via telemarketing. Specifically, the defendants are barred from:
1) making, or assisting others in making, a material fact that is false or misleading, including, but not limited to, statements that a consumer’s personal information, such as their social security number, appears on telemarketing lists, making the consumer a likely target for fraud; and that the defendants will cause this personal information to be removed from such lists; 2) causing charges to be billed on consumers’ credit cards, or causing their bank account to be debited, without the consumers’ authorization and express informed consent; 3) using threats or intimidation to induce consumers who have tried to stop payment to pay for their products and services; and 4) failing to comply with the Commission’s TSR.

In addition, the order contains a monetary judgment of $810,972.46 as restitution for consumer injury caused by the defendants’ conduct. This judgment has been suspended, based on the defendants’ inability to pay, but will be immediately due if the defendants are found to have misrepresented their financial condition. Finally, the judgment prohibits the defendants from distributing their customer lists, and contains monitoring and reporting requirements to ensure their compliance with the terms of the order.

The Commission vote to approve the stipulated final order was 5-0. It was filed in the U.S. District Court for the District of Arizona at Phoenix on June 28, 2004, and requires the signature of the judge.

NOTE: The Commission issues or files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the named parties have violated the law.

Copies of the proposed stipulated final judgment and order for permanent injunction, as well as related consumer education material, are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

MEDIA CONTACT:

Mitchell J. Katz,
Office of Public Affairs
202-326-2161

STAFF CONTACT:

Eleanor Durham or Mary Benfield
FTC Northwest Region
206-220-6350

(FTC File No. X040027; Civ. No. CV04 0095 PHX SMM)

(http://www.ftc.gov/opa/2004/06/vectordirect.htm)