Telephone Scammers Ordered To Pay $50M

coondoggie writes "The Federal Trade Commission said a group of telephone scammers will pay out nearly $50 million to settle charges they deceived over a million people in a bank information fraud scheme. As is unfortunately the situation in many of these case, the $50 million restitution, while substantial, is dwarfed by the almost $172 million the FTC says Suntasia Marketing bilked out of its victims." The company used "negative option" programs, including memberships in discount buyer's and travel clubs, to keep dinging victims' bank accounts. The FTC said the eight interrelated companies running the scam employed more than 1,000 people.

Bastards.

[Anonymous Coward]

Hanging's too good for them!

1K Unemployed

[conureman]

At least no one is talking "Bail-out".

Re:

[MiniMike]

They'll be ok if they figure out how to work that 'negative option' into their job applications:
"By not responding to this cover letter, you are agreeing to hire applicant..."

Re:

[dontmakemethink]

At least no one is talking "Bail-out".

What else would you call the $122M difference between the $172M scammed and the $50M fine? A grant?

Re:

[conureman]

Using the bank model, we'd send them additional funds, so they could re-structure their operation into a more highly profitable enterprise. Stop offshoring our telemarketing! These are 'good jobs' for Florida residents!

"negitive" options?

[djsmiley]

Anyone shed some light on this?

I'm guessing its some way of getting people to agree without them knowing they have, or being unable to not agree. Double negitives etc? Or Opt-out system - Unless you tick this box and return it in 2 seconds then you agree to pay us?

Someone help :|

Re:

[morgan_greywolf]

Think AOL or memberships to porn sites or (sometimes) Web hosts. They deduct charges automatically until you tell them to stop.

Re:"negitive" options?

[mraudigy]

Negative options is a situation where unless you elect or explicity tell the company not to charge you for or enroll you in their services, they take it as a "yes" and continue to bill the costs. The sneaky bit here is that people were enrolled in "free-tial" programs and then tricked into revealing their back account information. When they failed to explicitly say no at the end of the free-trial period, *bam* the scammers started billing.

Re:"tricked into"

[Lord Bitman]

"Hi, I've got this free trial, want it?"
"sure, what's the harm. You said free, right?"
"Yeah, completely free. Just give me your credit card number and agree to this payment authorization."

This is what MOST of the so-called "tricks" are: Just plain asking for the number and permission. It's how the so-often-complained-about AOL did it, it's how "Free Credit Report".com does it, it's likely how these guys were doing it.

If you're stupid enough to hand over PAYMENT DETAILS to use a service, and expect it to be free, your bank should not have issued you an account in the first place.

Re:

[Bengie]

Reminds me of when I signed up for a free magazine online. It was a reputable magazine so I wasn't worried about spam. Anyway, it said 'free' and as long as something says free and never asks for my Credit Card, I have no issues.

Anyway, after the first free edition, they sent several more. After 3 months they sent me a bill and said to pay up. Called them and said F.U. it wasn't me. Other than a name and address, they had nothing on me.

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[account_deleted]

Comment removed based on user account deletion

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[commodore64_love]

I hope they don't do that to me. I receive Time, Business Week, National Geographic, and Entertainment Weekly for a year-long subscription. In exchange I had to pay $2 per magazine to cover postage costs, which I thought was still a good deal. I hope they don't do something dishonest and bill me at the end of 2009.

BTW I just did the math:
- Each consumer gets a $200 refund check from the FTC and Wachovia.
- That hardly makes-up for the losses incurred.

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[terraformer]

No, most likely the magazine deal is they suck you in for the first year @ $2 per mag, and presumably in the future you will re-up the subscription at some "full" rate, which is less than news-stand prices, because you see how cool the mags are. You are probably OK in this case, but there is no such thing as a free lunch, period.

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[Wicked Zen]

If it's the same group I got mine from (the one the folks at Best Buy offer to sign you up with) you can expect to be charged at the full subscriber rate for the next year. If you want to keep receiving the magazines, I suggest refusing renewal and going directly with the magazine's regular fulfillment house, who will still offer a fairly substantial discount for a year's subscription.

I was receiving Entertainment Weekly and was sent a bill for renewal for some ninety-plus dollars. EW will only charge y

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[josecanuc]

My wife opted to get Entertainment Weekly as a promotion from a Best Buy purchase. It was to be 6 months.

She continued to receive it for 3 or 4 years with no bills and she never got charged or even gave payment information. Because the parent company is the same as for Time Magazine, when she changed her mailing address with Time, EW was also updated.

Finally, we got a bill for EW for renewal for 1 year. I told them the situation and they said ignore the bill. We don't get EW anymore, but it was interesting

Re:"tricked into"

[cthulu_mt]

In the US items sent via mail like this are legally considered gifts. Attempts to charge for them after the fact can be prosecuted as mail fraud.

Re:"tricked into"

[GeekWithGuns]

I think that my wife was tricked into this one. I'm not sure if it is the same company, but here is what happened to her:

1. Bought Tickets on TicketMaster.com (paid 50% in "fees" - bastards)
2. After she finished paying she was sent to a site where they offered a "free trial" for some kind of discount service. Being that it came after the checkout she just closed the web browser.
3. Company starts billing the card she paid TicketMaster with several months later.
4. We notice the change and have it charged back.
5. They claim we signed up by _NOT_ explicitly doing anything on that page after the checkout. We should have unchecked the "sign me up" and then submitted the form to not sign up.
6. We and our bank disagree and charge them back anyway.

The real kicker is that they never even tried to deliver the login details to their "discount" website to her. I never thought that I could have a lower opinon of TicketMaster, but that did it. Bunch of rat sucking, baby raping, bastards.

Re:"tricked into"

[Sun.Jedi]

Here's the one I got messed up in.

The bride tells me we need new curtains for the living room. We surf, and shop, and surf, and shop and end up at JCPenny. I use my debit card and the bride got new curtains.

JCPenny turns around my info to a subsidiary called Stonebridge [stonebridgebenefit.com], and I get spammed for insurance, and other stuff. Other stuff like a bullshit 'membership' [ripoffreport.com] which somehow I failed to opt-out of that charges my card $10/mo. Well, 3 months later I finally get that charge removed, with large amounts of swearing on the phone (hey, if 2 months of 'nice' phone calls won't work, break out the profanity).

I still recieve Stonebridge insurance scams in my snail-mail, after months and months of calling them and asking (yep ... more swearing too, although unsuccessful so far).

Never do business with JCPenny [jcpenney.com] as they appear to have other instances [ripoffreport.com], and multiple [ripoffreport.com] ways [ripoffreport.com] to rip you off [complaintsboard.com].

Re:

[Ihmhi]

My mom wanted some of those "get X coins for $CHEAP_PRICE" in the newspaper ads". We get charged more than the initial amount.

After a few months worth of charges (which included a couple overdraft fees), I gave up on calling the company and talked with my bank. I didn't get the charges back (no wonder), but I got every extra red cent back beyond the initial $25.

I really wish debit cards had chargeback protection like credit cards did... I'm a freelance worker so it's difficult for me to get credit due to be

Re:

[dloseke]

Sounds like WLI*ReservationRewards. I know they have a new company name now...same scam. I saw their stuff on the back end of a purchase from buy.com the other day. Blogged about it a couple years ago, and had literally hundreds of people state the same thing happened to them. And you literally have to ready very carefully and select the right option to get your order confirmation without "joining" their scam.

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[b4upoo]

The salesman's excuse for collecting payment information has some validity. In other words the company is willing to provide something for free as long as there is some chance of selling you more in the future. Since over the phone purchases are normally made with a charge card there is no hope of eventually making a sale if you don't even own a charge card and therefore the expense of giving you a free sample can not be justified.
Perhaps the law needs to def

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[conlaw]

From TFA,

[This is in addition to] the $33 million already settled upon between the Office of the Comptroller of the Currency and Wachovia Bank, which allegedly processed thousands of unauthorized demand drafts on Suntasia's behalf.

I'm not exactly sure why the Comptroller of the Currency, or anyone else for that matter, believes that Wachovia was the only bank player in the game. I've received these "try a month for free" offers from a couple of other large banks. These include the "buyer's discount clubs," the "save money on travel clubs" and my newest favorite, the "death or disability" plans. They jumped to the top of the list when the salesperson explained that my premium would only be equal to 3% of my current balan

Re:

[HungryHobo]

What form of payment options do they use?
I ask as I tend to be conservative when it comes to my bank account and pay my bills with direct debit and the way that's set up if I wanted to cancel something like this I'm fairly sure I could just call my bank and cancel the DD and mail off the forms to actually refuse the service only for good forms sake.

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[b4upoo]

If these scammers are half way smart at their black art they won't have any visible assets to pay off that 50 million dollar judgment. Those announcements of large judgments may placate the public's cry for justice but the realities of collection issues are not apparent and the news media won't have any coverage on the sums actually collected.

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[x_IamSpartacus_x]

As another poster has said the 'negative option' deal is very similar to pretty much any 'free trail' out there.

A company calls you, tells you they have a bunch of free stuff for you and if you don't want to keep getting it in three months then just don't renew! It's pretty simple! Just fill out this quick form with me over the phone and your free stuff is on the way! They just don't tell you that in three months if you don't:
1. fill out a virtually impossible to find form
2. fill it out PERFECTLY (up t

$50M Vs. $172M

[Manip]

The summary questions why they're being fined for less than the $172M taken from customers...

Well the answer is very simple: Tax and costs. Even running a somewhat illegal operation has running costs particularly if they had 1,000 people on the payroll.

So the "take home" net might have been $50M which is where the fine was set. Otherwise you're fining them money that they've already paid in tax.

Re:$50M Vs. $172M

[Anonymous Coward]

Whatever happened to punitive damages? This seems like the opposite.

Re:

[Joce640k]

Even if that's true it's not much of a deterrent, is it?

Most people will see the headline and think "122 million bucks!"

They should be jailed and/or fined everything they own. Even if you don't jail them they should be confined them to a tiny room eating ramen noodles for the next ten years.

The high life? Not for them.

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[conureman]

I'm sure it's a corporation or LLC, probably got some boiler plate fine print on the contract their customers agreed to that will keep everyone out of gaol.

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[x_IamSpartacus_x]

The summary just quotes TFA so I can't fault the editors TOO much, but further down TFA actually has a refreshing bit of information.

The court's orders include a $171.9 million suspended judgment against defendants FTN Promotions; Guardian Marketing Services; Strategia Marketing; Co-Compliance; Bay Pines Travel; Suntasia Properties; Bryon Wolf; and Roy Eliasson, provided the other restitution money is paid out. Suspended judgments also were entered against JPW Consultants, and JeffreyWolf for $60 million, and against Alfred H. Wolf for $115 million.

So it looks like, once it is shown the $50M is paid, the companies still have a $346.9M bill to pay.

Man... why didn't anyone from these companies call me? Looks like you get twice the amount of money back that you got scammed out of!
1. Get a call from someone offering nifty free thingiojiggas
2. Say 'FREE??? AWESOME! HERE'S MY DEBIT CARD NUMBER!!!
3. Wait for lawsuits and

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[aralin]

Am I the only one who looks at this article and thinks: "These guys just helped the government to collect $172M in additional taxes." While the $122M is already in govt. pockets, the $50M will soon join it and I don't believe the victims will see a dime back. Now I'd like to know where is the incentive for the government to act quickly on those scams? As long as they act "eventually" to actually collect the money they get more with waiting longer.

Suntasia Marketing's answer

[nabil2199]

To:FTC
On:Case XXXX-XXXXX

In order to proceed with the financial restitution banking information is required.

Criminal Fraud charges anyone?

[ACK!!]

Isn't there some sort of criminal justice recourse for the victims at some point here? It seems like there should be at least one hotshot DA willing to take up the case. Or am I missing something about their deceptive practices that somehow does not translate to criminal action?

Re:Criminal Fraud charges anyone?

[bartok]

yeah I don't understand how the US legal system works but it looks like if an individual commits fraud, he is a criminal but an individual commiting it in the name of a company can get away with it because the company pays a 50 million settlement. Who gets that money? the state? Cause this awfully look like a bribe. these people should go to jail.

Profit!!!

[It doesn't come easy]

Hmmm, 172 - 50 = $122 million profit. Doesn't sound like that $50 million fine will do too much deterring...

Re:

[Vectronic]

The other 122 million was spent on the lawyers to get it knocked down to 50 million.

Cash for freedom

[DoofusOfDeath]

So once again, people who ran a criminal organization can just give the government a part of their profits, in exchange for getting of Scott free?

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[Alistar]

I don't think so.

Even if fined or charged by a federal/state/provincial body I think the victims are still allowed to attempt civil charges against the company (please correct me if I am wrong).

Although that $50 million fine will probably "wipe out" all their assets so they have nothing left to pay the victims.

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[DoofusOfDeath]

But still no jail time. That's what really bugs me.

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[Yvanhoe]

Car thieves go to jail. These people don't ? Even a few days ? A short but firm jail time would convince the whole jazz that white-collared stealing is on par with burglars. Just having to pay a fine makes it look like a legit business plan where you have to balance the act of getting caught against your profit.

Amazon Prime? - slashdot saved me £50

[Chrisq]

This sounds like Amazon prime [amazon.co.uk] They offered me a free trial before Christmas and I just remembered when I read this. They would have charged me £47.97 if I hadn't cancelled by tomorrow!

Re:

[Anonymous Coward]

Except with Amazon prime you can cancel immediately and still use the remainder of the trial period. I think they are completely reasonable in their offer.

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[russotto]

I had a free trial of Amazon Prime and after they charged me for the first non-free year (because I'd forgotten about it) but before I attempted to use the service, I canceled, and they refunded the fee before I even asked. They're not scammers.

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[Failed Physicist]

Same thing happened to me, except that when I wanted to get out of the program I had some internet problems and never got to do it. Forgot about it for a bit more than a month, then I saw the charge on my credit card.

Turns out that if you cancel, even after the trial has run out and your card has been charged, they will refund you up to a year if you haven't used the service.

Great...

[minvaren]

...so now they can tackle the caller-id spoofers who phone me every day or two on my cell phone from another random number telling me that the "factory warranty on my vehicle is about to expire" and refuse to answer any questions about their company or how to get off of their list.

And yes, before you ask, my number is on the do-not-call list.

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[Kozz]

For what it's worth, I'm not certain there are any US laws prohibiting spoofing of caller ID data (which isn't to say there aren't any), but I've seen plenty of spoofed caller ID data in the last few years, too. So I don't think you've got anything to go on there. If these companies are really bugging you, you can always play along as a highly interested customer (i.e. a sucker) in order to get more information. Pretend you're ready to make a transaction with them, getting the name of the person you're s

Re:

[philspear]

That happened to me too, which makes me think their real goal is not outright scamming. I don't know what it would be though, maybe to generate a list of unlisted numbers that are connected and have real people at the other end, to be used for a targeted scam at a later time? Maybe just to target individuals? They spoof someone's caller ID so that anyone calling the number back will call that person and their phone line will basically be tied up for a while, maybe anyone who positively responds will also

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[russotto]

I'm fairly sure there was a regulation passed making it illegal for telemarketers to spoof caller-ID data. Add that to the fact that these car-warranty scammers are calling cell phones and phones on the do-not-call list, and it's clear they're doing quite a few things illegally. Not to mention that the "product" they offer is almost certainly a scam.

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[mrchaotica]

For what it's worth, I'm not certain there are any US laws prohibiting spoofing of caller ID data (which isn't to say there aren't any)

They solicit you on your CELLULAR PHONE, which is blatantly illegal whether the caller ID is spoofed or not!

you can always play along as a highly interested customer (i.e. a sucker) in order to get more information. Pretend you're ready to make a transaction with them, getting the name of the person you're speaking to, name of the company, say you want to call him/her back a

Re:

[Kozz]

"Hello? Oh, it's you again? Thank God you finally called me. The FBI was concerned we wouldn't hear from you again..."

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[mrchaotica]

It's not even a Real Person that calls. It's an automated recording, and to reach a Real Person you have to press a button (which they'll of course claim means that you "accepted" the fraudulent call), and then wait on hold for about 10 minutes!

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[snspdaarf]

Yes, I want those people stuck in hell. The cold one the Norse feared. I have not had a factory warranty on a vehicle since '96, but thanks to these assholes, anything not in my contacts list has to go to voice mail. Sometimes they beat on my phone several times a day, day after day.

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[philspear]

I was in a classroom at a public university a few years ago. There was a phone on the wall that none of us noticed until one day it rang. When I answered I heard the horrible news: the classroom's vehicle was about to lose it's warranty.

In other words, I'm pretty sure they're calling numbers completely at random. That phone number would never have been listed in any public directory and is not a recycled number. I guess there's always the chance someone could have listed it as their number just by chanc

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[swb]

The better explanation is that a University employee listed their work number in relation to their car and the numbers got transposed.

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[philspear]

No, there is no link to cars. My cellphone number has never been written down on any forms relating in any way to any car. In fact, I've never written it down on any form besides university forms, and not anything car related either. It could have been a transposed number on a junk form, but several other phone numbers which have never would have been connected to any vehicle or even likely written down on a form have also recieved the calls.

I'd bet good money it's an autodialer set to run through all pe

Re:

[philspear]

Uh, just to clarify that first bit, I've recieved the calls on my cell phone several times now.

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[Siridar]

I've got a better one than that - the elevator I was in once got a offer of a much better phone plan.

One again, fraud is endorsed

[Anonymous Coward]

the $50 million restitution, while substantial, is dwarfed by the almost $172 million the FTC says Suntasia Marketing bilked out of its victims.

Either the the government is endorsing fraud or the laws are inadequate. Anytime a company profits from fraud, if the penalty is anything less than 100% plus all gains received off of the fraudulently obtained money, it is nothing short of an endorsement of such fraudulent activities.

If the laws are inadequate, why haven't they been changed unless this is an endorse

Negative Option

[Detritus]

They should just ban negative option service contracts. There's too much incentive, even for legitimate companies, to structure them in a way that rips off their customers. I'm tired of being told that all I had to do to cancel was to send a passenger pigeon to Tierra del Fuego between the hours of 0300 and 0400, exactly 13 days before the contract is automatically renewed.

Re:

[witherstaff]

Ah I see you've had an ISP contract with giganews too!

Huh?

[whisper_jeff]

Ok, maybe I'm daft, but shouldn't the punishment fit the crime, or something like that? If the punishment for illegally making $172 million is only a $50 million fine, then one could just work that fine into the equation and still profit. Easily. By $122 million. Last time I checked, a $122 million profit (ok, let's say $121 million because I'm sure Suntasia had some overhead costs in their scam) is well worth the effort (I certainly wouldn't complain if someone (or lots of someones) gave me $121 million...). You'd think the obvious fine would be $222 million - the illegally-gotten $172 million PLUS $50 million in fines. Then again, what do I know?...

Re:

[nabsltd]

The various scammer companies employed around 1000 people. If they took in $172M in 9 years, that's $19,111 per employee per year.

I'm not saying that someone didn't make some money out of this scam, but it's hard to make a lot of profit at even $30K income/year/employee, no matter how poorly paid your employees were.

Unless these companies were complete scammers and didn't pay any bills during that time (which is actually pretty unlikely), then there had to be some actual costs associated with peforming the

fines fines fines

[night_flyer]

victims get scammed, and the gov't gets paid...

WTF?

[rhook]

In cases like this they should be ordered to pay back DOUBLE what they made.

Who gets the money, if it comes?

[gsgriffin]

My bet is that the attorneys walk about with about $20M for their "expenses" and the remaining money (if they actually collect it from these turds) will be put into an organization to help prevent these things from happening. I lost $800 this year from a company doing debt consolidation. They started to mis payments to my creditors and then disappeared after two year. Thousands of us lost money, and I don't expect to ever get a dime back.