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United States of America (for the Federal Trade Commission) v. Richard L. Prochnow, et al.
The Federal Trade Commission announced settlements with Cross Media Marketing, Media Outsourcing, dba Consolidated Media Services (CMS) and one individual defendant in this matter. The complaint alleged that the defendants deceptively telemarketed magazine subscription packages, violated a 1996 FTC order, and deceptively upsold buying club memberships. The companies agreed to extensive injunctive relief, and a $1 million penalty, suspended upon payment of $350,000 because of their financial status. The separate settlement with the individual includes injunctive relief, a $1 million bond requirement, and a $100,000 penalty, suspended upon payment of $10,000, based on his financial status.


Alleged telemarketing scam bilks residents

By TOVIN LAPAN - Santa Cruz Sentinel Correspondent

04/25/04 - SANTA CRUZ — The District Attorney’s Office is investigating a possible telemarketing scam originating from a Nevada company that has more than 850 complaints lodged against it with the Las Vegas Better Business Bureau.

The district attorney’s Consumer Affairs Office has received six complaints pertaining to Continuity Partners Inc., which offers pre-paid gas cards and other services.

"From the complaints we’ve received, it is possible that this company is either misrepresenting the services they offer or charging more than a customer agrees to on the phone, both illegal practices," said Consumer Affairs Coordinator Robin Gysin.

The company also identifies itself to consumers as American Values, Utalk Unlimited, Wellnet and Blitz Media, according to Gysin. Because it uses several names, complaints may have come in during the past few months that haven’t been connected to the parent company, she said.

The Iowa attorney general’s office has prohibited the company from soliciting in that state due to the high number of complaints there.

A telemarketer contacted Ron Williams, 62, of Boulder Creek three times and offered him a $200 gas card for only $3.95 if he would give them his bank account information so they could transfer the money, Williams said. During the third call, a free seven-day calling card was added to the deal.

"I kept telling them, ‘Send me the stuff, and I’ll write you a check,’ but they didn’t want to do it," Williams said.

Felton resident Joe Shumake, 62, said he was approached with a different offer, but by the same company under another name. He was contacted by a telemarketer who claimed to be from Verizon, and was offered a new cell phone and calling plan for less than $20 a month. Once Shumake showed interest, the caller mentioned a $3.95 shipping and handling fee and a $90 setup charge.

"In the end I agreed to pay $3.95 for a package from the company," Shumake says. "I didn’t like it while I was agreeing to it and then I felt bad afterward so I went and transferred money out of the bank account I had given them. I left $35 to cover the shipping fee."

Shumake’s bank had overdraft protection and paid the company for two package fees of $3.95 and an additional $99 charge. In all, he received three bills from three different company names, but all of the charges were deposited in the same account in Sacramento.


Loyal Only to Themselves

09/06 - Customers of several popular online retailers, including Fandango.com, Priceline.com, and Staples.com, were victims of an alleged Internet scheme in which their credit cards were charged a monthly fee for a ``discount club" membership they had never requested, according to a class action lawsuit filed yesterday in US District Court in Massachusetts.

The lawsuit accuses Webloyalty.com, an online marketing services company in Norwalk, Conn., of engaging in a ``coupon click fraud" scam in which credit card information was transferred to Webloyalty by its dozens of online partners -- such as Movietickets.com, Petco.com, and FTD.com -- without consumers' consent.

``These are huge retailers, and they are complicit in the scheme," said Boca Raton, Fla., lawyer Stuart A. Davidson, whose San Diego law firm, Lerach Coughlin, filed the lawsuit. ``They are reaping a percentage of the money that Webloyalty is stealing from the nation's consumers."

Webloyalty, which is accused of violating consumers' privacy rights and engaging in deceptive business practices that have netted the company huge fees, denied any wrongdoing.

``The allegations are completely without merit, and the lawsuit misrepresents the manner in which we conduct business," said Rick Fernandes, Webloyalty's chief executive. ``It's chock full of inaccuracies, and we intend to win the case and collect our attorney fees in the process."

Fernandes declined to detail those alleged misrepresentations or inaccuracies, saying, ``I'd rather not talk about that at this time."

Los Angeles-based Fandango, a codefendant in the case, did not return a call for comment.

The alleged scheme worked this way, according to the suit: After consumers made online purchases from various Web retailers, a pop-up window appeared on their computer screens promising a $10 coupon on their next purchase. If consumers entered their e-mail addresses to redeem that coupon, their personal information, including credit or debit card number, was automatically transferred to Webloyalty.

Webloyalty then automatically billed the consumer's credit or debit card a $9 or $10 monthly fee for a membership in its ``Reservations Rewards" discount club.

If consumers did not cancel the membership by contacting Webloyalty within 30 days, they were charged a recurring monthly fee.

E-mails notifying consumers of the cancellation policy were typically disregarded by consumers as spam, or automatically screened out as spam by e-mail systems, according to the suit.

Furthermore, the Reservations Rewards program offered no benefit to consumers, according to the suit; instead, Webloyalty kept the monthly fees and paid its Web retailer clients a ``per-customer" fee for each consumer who "signed up" for the club.

``In our mind, this company was run just like a securities fraud boiler room, and just like those companies they earned millions of dollars off the backs of consumers," said Davidson, who added that ``tens or hundreds of thousands" of consumers have been victims of the alleged scheme.

Boston Globe


 

 

 

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