Bankruptcy

FTC?s Ban on Robocalls in Effect

By Chris Kramer

The FTC reported last week that its rule prohibiting automated phone calls about vehicle maintenance took effect September 1, 2009. What does that mean for you? Hopefully, one more way to prevent scammers from tricking you into giving away your money.

The Scam: Threats of Ending Car Warranty

According to the FTC, the scam worked like this:

• Customers received pre-recorded phone calls suggesting that their vehicles? warranties were about to expire.
• Scammers then prompted victims to pay for pricey and unnecessary car service contracts unrelated to their original warranties.

Thanks to legal action taken by the Federal Trade Commission, such telephone calls are no longer legal, and the companies accused of setting them up could face criminal penalties.

Who?s Involved and the Penalties They?ll Face

The chief company named by the FTC is Transcontinental Warranty, Inc. It and its parent company have reportedly been banned from making any more prerecorded calls. The first of September was significant to this case because it marked the beginning of the FTC?s planned enforcement of the ban on prerecorded commercial calls enacted a year ago.

Some organizations are exempted from the prerecorded call ban, though. These include:

• Groups delivering strictly informational messages
• Politicians
• Banks
• Telephone Carriers
• Most charitable organizations

Debtors should know that debt collection agencies fall under the “informational” group, and will still be allowed make make automated calls. Debtors may only be able to end these calls by making arrangements to repay the debt or by filing bankruptcy.

Groups that choose to ignore the restriction could face fines up to $16,000 per call.  Telemarketers may be able to place automated calls to customers who opt-in to receive them.

It seems that Transcontinental has temporarily been excused from paying the proposed settlement ($24 million) because the company lacks sufficient funds to make payments, but that information is subject to change.

Your Consumer Rights

The Federal Trade Commission and other government entities exist to protect you the consumer from deceptive and unfair business practices. If you suspect you have been victimized by an illegal scam, consider telling a lawyer or filing a complaint online with the FTC.

To learn more about what types of protection you can expect, check out this page on your consumer rights.

Full post as published by The Bankruptcy Blog on September 15, 2009 (boomark / email).