Markets Wired

The Federal Trade Commission has charged a group of Canadian telemarketers with deceiving U.S. consumers through the sale of telephone calling cards. According to the Commission, Fusion Telekom and its principals violated the FTC Act and the Telemarketing Sales Rule (TSR) by misrepresenting that they were from consumers’ banks or credit card companies, falsely stating that the consumers would receive a calling card from them, billing consumers without their authorization, using false or misleading statements in their telemarketing, calling consumers whose numbers are on the National Do Not Call (DNC) Registry, and failing to pay the fee to access the Registry’s phone numbers.

The complaint announced today was filed against: 9131-4740 Quebec, Inc., a corporation, also d/b/a Fusion Telekom; JPE Holdings, Inc., a corporation, also d/b/a Fusion Telekom; Jean-Pierre Brault, individually and as an officer of the corporations, and Eli Foner, individually and as an officer of the corporations.

The Commission’s Complaint

According to the Commission, beginning in 2004, the defendants fraudulently marketed phone cards from Canada to U.S. citizens. Their telemarketers allegedly posed as consumers’ bank or credit card companies and promised that for $1 they would send a long-distance calling card for a trial period. However, they did not send the cards, instead billing consumers fees on a monthly basis. In many cases, consumers were offered a seven- or 10-day trial period for unlimited use of the calling card. The dollar was billed to the consumers’ credit cards or debited from their bank accounts. Consumers who accepted the offer were promised the calling card, along with a letter containing details on how to use it, as well as how to cancel the card if they decided they were no longer interested in the program.

From January 2005 on, these items never were sent, so consumers who signed up after that never learned they had to cancel the card during a trial period or they would be charged a second time, for $69.90 – consisting of a $19.95 activation fee and a $49.95 monthly fee. When consumers complained, the defendants allegedly insisted that the card and other information had been sent out. While some consumers were able to get refunds, the defendants subsequently billed others another $24.95 without any notice or other contact. Finally, the Commission contends that in pitching the plan to consumers, the defendants called people whose numbers are on the National Do Not Call Registry, and never paid the fee required to access the Registry.

The Commission’s complaint charges the defendants with violating the FTC Act through their misleading and fraudulent practices, as well as the TSR, including its DNC provisions.

The Commission vote authorizing the staff to file the complaint was 5-0. Through the complaint, filed in the U.S. District Court for the Northern District of Ohio, Eastern Division, the FTC is seeking to permanently bar the defendants from violating the FTC Act and the TSR – including its DNC provisions – in the future and to secure financial redress or other equitable relief for consumers defrauded by the defendants’ alleged conduct.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has or is being violated, and it appears to the Commission that a proceeding is in the public interest. A complaint is not a finding or ruling that the defendants have actually violated the law.

Copies of the Commission’s complaint 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 more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.