illegal calls probed by ftc
The despised robocall companies that send out illegal recorded calls nationwide to try and get people to buy car warranties or apply for credit cards are among the most secretive operations outside the CIA.
Employees are told they can be fired merely for mentioning the name of their employer.
But court documents filed this month in a Federal Trade Commission case against a Florida company -- Transcontinental Warranty Inc. -- provide what authorities say is a look inside a telemarketing operation that used widespread recorded calls and misrepresentations in selling its product.
A declaration from a former employee describes how he was supposed to go through hundreds of calls in a shift, trying to sell auto service warranties, which the FTC said typically cost $2,000 to $3,000, without giving up too much information about the company, especially if consumers became combative or suspicious.
“Transcontinental’s company motto was ‘Hang up. Next,’ ” said Mark Israel, who worked the evening shift with about 30 other operators at company headquarters in Ft. Lauderdale. “Essentially, this meant that if the consumer did not readily go along with the scripted telemarketing pitch, I should immediately hang up.”
On May 14, the U.S. District Court in Chicago, where the FTC investigation into recorded telemarketing calls was based, imposed a restraining order on Transcontinental, freezing its assets and putting a receiver in charge of the company.
A further hearing is set for Thursday.
The chairman of Transcontinental, Christopher Cowart, declined to be interviewed for this article. But in a statement he said the company was cooperating with the investigation.
“As to the charges that our vehicle service contracts were improperly or deceptively sold; this is patently false,” he said.
He blamed unspecified problems on an unnamed company to which Transcontinental had outsourced some of its operation.
“It was never, nor does it remain now our position that we have knowingly violated the best practices of telemarketing,” Cowart said.
Israel, who did not respond to requests for an interview, worked for the company only four days in February before quitting and contacting the FTC.
His description of the calls mirrored those received by angry people nationwide, the FTC said, who complained to government agencies and consumer organizations. The FTC said some Transcontinental calls went to numbers registered on the national Do Not Call list. But all recorded sales calls are illegal with the exception of those that go to people with whom there’s an established business relationship.
But it was tough for consumers to report a company if they couldn’t get its name.
“I understood it to be an acceptable practice at Transcontinental to say whatever was necessary to get the consumer to divulge his or her credit card number,” Israel said in the court documents. “Telemarketers were only disciplined for disclosing Transcontinental’s name.”
Steven Baker, who is director of the FTC’s Midwest region, said Israel’s declaration was key to the case.
“It really helps to have someone who was there,” Baker said. “We also needed to show materials from a variety of customers who heard the same thing on the other end of the calls.”
The FTC said calls from Transcontinental began with a recorded warning that the unnamed recipient had a car warranty that had expired or was running out.
Recipients were told they could “press 2” to be removed from the call list. But Israel suspected that was in vain.
“I remember one consumer complaining of receiving 14 calls from Transcontinental,” he said, “even after opting out of the calls.”
Israel had been hired as an opener. He spoke to call recipients who pressed “1” to speak to a person.
According to telemarketer scripts filed in the case, the opener was supposed to greet the consumer and ask for the year and model of “your car or truck” and its mileage.
Then the script directed the opener to say, “Please allow me to put you on hold while I pull up your information.”
While on hold, Israel said, the opener would look up the location of the person from an online directory. “But the telemarketing scripts continued as if we knew something specific about the consumer’s warranty.”
Some consumers made it their mission to unmask the company that had repeatedly called them.
Chris Davis, a Minnesota Web designer and video producer whose encounter with Transcontinental is in the court file, said he had received at least a dozen car warranty calls. He first decided to test whether the sales person had real information on him.
He told the opener he had a 2005 Ford Taurus, even though he had never owned such a car.
Davis said the telemarketer never missed a beat. “He said ‘Yes, the 2005 Taurus,’ as if he was familiar with it,” Davis said in an interview.
According to the script, if the customer expressed interest in buying a warranty, the opener is supposed to put the call on hold and call out, “T.O.,” which stands for “Take over.” Then a closer gets on the line to finish the sale.
On his call, Davis continued his ruse with the closer while pretending to look for his credit card. “I was making small talk,” he said, “and asked, ‘When I get my credit card statement, what name will I see on it?’
“She said, ‘Transcontinental Warranty.’ ”
Having gotten a name, Davis filed an FTC complaint.
The agency is not alone in taking action. Also this month, attorneys general of Indiana and Kentucky sued telemarketers who use recorded calls. One of the companies Indiana targeted is Transcontinental.
But recorded calls have not stopped. Alison Southwick, spokeswoman for the Council of Better Business Bureaus, got one at work last week.
“I just got a call saying that my satellite dish is going to be delivered,” she said, “and I get a free vacation.”
Southwick played along to get a salesperson. “ ‘Do you know you called the Better Business Bureaus?’ ” she asked him.
“And he said, ‘OK.’ Then I said, ‘And the FTC is probably going to come after you.’
“That’s when he hung up.”
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