Markets Wired

American consumers won’t be getting any more telemarketing pitches from robocaller Fereidoun “Fred” Khalilian, under a settlement reached by the Federal Trade Commission. Khalilian has agreed to be permanently banned from the telemarketing business in order to settle FTC charges that he and his company allegedly used pre-recorded robocalls to sell consumers auto service contracts.

Khalilian and his company, The Dolce Group Worldwide, LLC, are the latest robocall operation shut down as part of the FTC’s crackdown on deceptive prerecorded calls. According to the FTC, the operation, doing business under the name My Car Solutions, conned consumers into paying thousands of dollars by leading them to believe that the company was affiliated with auto dealers and manufacturers, and that it was offering to sell them extended auto “warranties.”

Khalilian is well-known to the FTC as a result of 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.

In June 2010 the FTC filed a new complaint against Khalilian, alleging that since 2009, he and his company marketed “extended” auto warranties by blasting consumers with pre-recorded robocalls. These calls warned people that their car warranties were about to expire and instructed them to “press one” to talk with a representative. Consumers were then transferred to telemarketers who said they were from the “service contract department,” and they would “verify” information about the consumers’ cars and “confirm” other information, including their zip code.

The telemarketers then transferred consumers to a “senior specialist” who allegedly made more misrepresentations. Only after consumers bought the warranties did they discover that My Car Solutions was not affiliated with their car manufacturer, and that the contracts did not cover “the entire engine,” did not provide “bumper-to-bumper” coverage, and excluded certain “pre-existing conditions.” Consumers who tried to get their money back – typically between $1,300 and $2,485 per warranty – found it nearly impossible.

The court order settling the FTC’s charges bans Khalilian and The Dolce Group from telemarketing or helping others to telemarket, prohibits them from making any misrepresentations or omissions when selling any goods or services, and includes a monetary judgment of more than $4.2 million, the amount of consumer harm the operation caused. Under the order, Khalilian will satisfy part of the judgment by turning over corporate and personal property totaling approximately $50,000. The FTC is authorized to take action to collect the remainder of the outstanding judgment from the defendants. The settlement order contains additional provisions to ensure the defendants comply with its terms.

The Commission vote authorizing the staff to file the consent order settling the court action was 5-0. It was filed in the U.S. District Court for the Southern District of Florida on November 24, 2010, and resolves the FTC’s charges against Khalilian and The Dolce Group Worldwide, LLC, doing businesses as My Car Solutions. The Order has been signed by the judge and entered by the court.

The Commission also has authorized the staff to withdraw a contempt action pending against the defendants in the Middle District of Florida related to violations of Khalilian’s previous FTC Order.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the stipulated final order are available now on the agency’s website and as a link to this press release. The Federal Trade Commission works for consumers 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, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters 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. The FTC’s website provides free information on a variety of consumer topics.

(FTC File No. X100037;
Civ. No. 10-21788-Civ-COOKE/BANDSTRA)