FTC Stops Robocaller That Made 2.6 Billion Calls Selling Bogus Car Warranties, Interest Reduction Plans

The phone calls came from "Stacey with account holder services." She prompted consumers to "press 1" to get more information. Waiting on the other end was a live telemarketer who pitched worthless car warranty extensions or interest-reduction programs.

It was all bogus. And now it's all over.

On Wednesday, the Federal Trade Commission put a stop to Stacey and the major telemarketing operation behind her. Since January 2008, the Los Angeles-based operation carpet-bombed U.S. consumers with more than 2 billion illegal phone calls. In April 2009, the company made 2.4 million calls in one day alone--that is the equivalent of 27 calls per second--according to information a telephone service provider shared with the FTC.

“Telemarketers need to understand that blasting consumers with ‘robocall’ pitches is no longer legal,” said FTC Midwest Region Director C. Steven Baker, in a prepared statement. “Unless you have someone’s consent up-front and in writing to receive a robocall, just don’t do it. The rules could not be simpler than that, and we will go after telemarketers who ignore them.”

At the government agency's request, a federal judge ordered the robocalling company called SBN Peripherals, Inc., to stop its business and froze its assets and ordered the defendants to give up about $3 million. (It's not clear how much money the company made off its scam.)

This is not the first call center scam the FTC has nabbed. Last month, the government agency put a stop to a phony debt collection agency that was operating out of a call center in India.

The robocalling crooks violated several laws, according to the FTC, including contacting consumers without their permission and calling numbers that had been listed in the national Do Not Call Registry. The company used a shell operation called Asia Pacific Telecom, along with vague caller ID information, to mask its identity and make it hard for consumers to track down the caller.

"This is the latest evolution of scams," said Bill Bartmann, president of CFS II, a call center company with several locations in the United States. His company specializes in debt collection calls. "Now crooks are going to next level with modern call center technology and now that call centers are [offshore], they can send scam phone calls." He said that 2 million calls per day is not an extraordinary number.

Businesses must get written permission from consumers before they call with prerecorded messages if they are trying to sell a service or product. Yet politicians don't need to get permission to robocall. Debt collectors are also permitted to use prerecorded messages--but not if they are selling debt-reduction services.

The FTC has set up consumer website to help consumers learn how to spot a phone scam.