The Federal Trade Commission, with assistance from local police and the United States Postal Inspection Service, has halted the operations of a massive, Largo, Florida-based telemarketing scheme operated by Suntasia Marketing, Inc.
The FTC charges that over the last several years, Suntasia used at least fifteen different business names to defraud consumers across the United States out of tens, and perhaps hundreds, of millions of dollars.
According to the FTC, when Suntasias telemarketers called consumers to offer supposedly free trial memberships in discount buyers and travel clubs, they deceived consumers into divulging their bank account information and later charged consumers without authorization for a series of negative option programs.
With a negative option agreement, a company takes a consumers silence or failure to cancel as acceptance of the offer, and permission to bill them.
The essence of this massive telemarketing scam was simple: trick people into giving out their checking account numbers, send them a brochure on a travel and buyers club, take money out of their bank accounts for as long as possible, and make it very difficult to cancel and get a refund, said C. Steven Baker, Director of the FTCs Midwest Region.
Consumers complained in near-record numbers about Suntasias practices. In total, the FTC collected and reviewed more than 5,000 formal consumer complaints against Suntasia that were submitted to various law enforcement agencies and the Better Business Bureau.
According to the FTCs complaint, telemarketers typically began their sales pitch by indicating that they were calling in regard to the banking account of their valued customers, to make consumers believe that Suntasia was affiliated with their banks.
The telemarketers explained that the consumers had been chosen to receive a series of free gifts, typically a combination of either $100 in gas coupons, $400 in airlines savings vouchers, or two free nights of hotel accommodations. Consumers were told that they could keep these gifts even if they ultimately canceled Suntasias negative option program.
These gifts turned out to be laden with undisclosed conditions and restrictions that rendered them effectively worthless. Also, the FTC alleges that the defendants honored the gift vouchers only if consumers maintained enrollment in their programs, despite the telemarketers promises.
After offering the free gifts, Suntasia telemarketers quickly attempted to obtain consumers account numbers. They indicated that they needed to verify this information to confirm consumers eligibility to receive the gifts.
Having already pretended to be affiliated with consumers banks, the telemarketers now purported to already possess consumers bank account numbers. They read consumers their publicly available bank routing numbers, and then asked consumers to verify the remainder of the account number from the bottom of a check.
According to the FTC, many consumers disclosed their account numbers because they believed they were simply verifying information that the telemarketers already had.
The FTC also alleges that consumers frequently thought their account number was being verified solely to confirm their eligibility to receive the free gifts, not to authorize any future charges to their accounts.
According to the FTCs court documents, after consumers divulged their bank account number, the telemarketers quickly began recording a verification, asking consumers to repeat the account number they had just provided.
At the end of the recording, Suntasia telemarketers quickly offered consumers two additional negative option programs, commonly referred to as upsells. The FTC alleges, however, that these upsell offers were presented in such a way that consumers did not realize they were being asked to authorize the purchase of additional products and services.
The FTC maintains that Suntasia never disclosed key information about its negative option programs. For instance, the telemarketers did not tell consumers the date that Suntasias charges would be debited from their accounts, or the telephone numbers consumers must call to cancel to avoid being charged.
Nor did Suntasia tell consumers that they would be required to call three separate telephone numbers to cancel the initial program and the two upsells.
At the FTCs request, a U.S. district court in Tampa has entered a temporary restraining order that temporarily halts the allegedly deceptive scheme, freezes the assets of all defendants, and appoints a temporary receiver over the schemes corporate participants.
According to the FTC, the scheme is run by nine interrelated companies that employ more than 700 people.
