Markets Wired

At the Federal Trade Commission’s request, a federal court has halted a Florida-based telemarketing operation that the FTC alleged was deceptively promoting so-called “extended auto warranties” to consumers nationwide.

The court has issued a temporary restraining order against Fereidoun “Fred” Khalilian and his company, The Dolce Group Worldwide, LLC, d/b/a My Car Solutions. Khalilian is well-known to the FTC from a 2001 settlement that banned him from all travel-related telemarketing and required him to pay $185,000 in consumer redress for making deceptive pitches for travel packages.

The Commission filed a complaint against Khalilian and Dolce Group on June 2, 2010, alleging that since at least 2009, they have marketed purported “extended” auto warranties by blasting prerecorded phone messages, or robocalls, to consumers, warning them that their car’s warranty is about to expire and instructing them to “press one” to talk with a representative. According to the complaint, consumers are then transferred to the defendants’ telemarketers who identify themselves as from the “service contract department,” and state that they will “verify” information about the consumers’ cars and “confirm” other information, including their zip code.

These telemarketers then transfer consumers to a “senior specialist” who allegedly makes more misrepresentations about the company’s affiliation with the consumer’s car manufacturer or dealer. The “senior specialists” often go to great lengths to convince consumers that they are affiliated with car companies or dealers, the FTC charges, making claims such as, “I’m from Honda,” or “I’m from your authorized Honda dealer.”

According to the FTC’s complaint, only after consumers buy the supposed warranties do they discover that My Car Solutions is not affiliated with their car manufacturer. When they receive their warranties in the mail, they also learn that, contrary to what the marketers promised, the warranties do not cover “the entire engine,” do not provide “bumper-to-bumper” coverage, and exclude certain “pre-existing conditions.” Consumers who try to get their money back – typically between $1,300 and $2,485 per warranty – find it nearly impossible, due to the company’s stonewalling.

The complaint charges the defendants with violating the FTC Act by falsely representing:

• that they are calling on behalf of consumers’ car dealers or manufacturers;
• that they know that consumers’ original auto warranties are about to expire;
• that they are offering extensions of consumers’ original auto warranties; and
• that the products they sell provide complete and/or specified coverage for automobile repair.

The FTC’s complaint seeks to permanently stop the defendants’ allegedly illegal conduct. Some of the defendants’ calls were made by Asia Pacific Telecom, Inc., another company the FTC recently took action against (see press release at: http:///www.ftc.gov/opa/2010/06/asiapacific.shtm).

The Commission vote approving the complaint was 5-0. It was filed on June 2, 2010, in the U.S. District Court for Southern District of Florida and the court issued a temporary restraining order against the defendants the same day halting their conduct. Named in the FTC’s complaint were Fereidoun “Fred” Khalilian and The Dolce Group Worldwide, LLC, doing business as My Car Solutions, iCost Direct, and Insurance Cost Direct, all based in Miami, Florida.

NOTE: The Commission issues 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 issuance of a complaint is not a finding or ruling that the defendants have violated the law.

Copies of the complaint are available from the FTC’s Web site at http://www.ftc.gov and 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 and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click: http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.

(FTC File No. 1023173; Civ. No. 10-21788-Civ.-Cooke/Bandstra)
(Dolce Group.final.wpd)