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Warranty ‘robo-callers’ may hear from D.C.

Federal regulators are close to filing lawsuits against companies behind a national wave of spam “robo-calls” that warn people their auto warranties are about to expire.
/ Source: The Associated Press

Federal regulators are close to filing lawsuits against companies behind a national wave of spam “robo-calls” that warn people their auto warranties are about to expire and offer new service plans, two senators said Tuesday.

The Federal Trade Commission has started investigations into several companies involved in the deceptive calls, and the agency expects to bring cases against them within days, Sens. Charles Schumer, D-N.Y., and Mark Warner, D-Va., said at a news conference. The FTC also is providing a link on its Web site for consumers to file complaints.

The message “Your Car Warranty Has Expired,” offering a deal on an extended warranty, already has brought some 300,000 inquiries and 4,000 complaints to the Better Business Bureau from consumers who received the calls over the past two years. The calls come even if the consumer has signed up for the national “Do Not Call” registry, which is maintained by the FTC.

“Law enforcement action in this area can be expected imminently,” FTC Chairman Jon Leibowitz said Monday in a letter to Schumer. A spokeswoman for the agency declined further comment Tuesday.

Schumer had asked for an investigation by the agency into what he calls a scam of “robo-dialer harassment.” The computerized calls can eat up a consumer’s cell phone minutes, possibly jacking up phone charges, Schumer said.

The calls target people regardless of whether they have warranties or even own cars and have become such a nuisance that officials in 40 states are investigating the companies behind them.

About three dozen companies offer contracts similar to insurance policies, pledging to pay for car repairs in exchange for fees paid up front, according to the Better Business Bureau. They call numbers randomly and leave messages with a computerized voice telling people, falsely, that their auto warranties are about to expire.

“Out of warranty? You are still eligible to reactivate warranty coverage. This is the final call before we close the file.” The recording typically gives the caller an option to stop receiving calls, but they continue to come even if consumers opt out, the officials say.

If people call back and agree to buy policies, the companies often don’t let them see the contracts until they agree to pay, the BBB says. And some people don’t learn until they’ve spent thousands of dollars that the deals don’t cover many types of repairs.

Schumer and Warner have received the calls themselves on their personal cell phones.

“It’s about time these robo-calls were terminated,” Schumer said. “This prompt, aggressive action by the FTC should provide a bit of relief to the Americans besieged by these fraudulent calls.”

Leibowitz noted in his letter to Schumer that such “robo-call” or “voiceblasting” phone campaigns may violate a number of telemarketing sales and other FTC rules.

Indiana’s attorney general, Greg Zoeller, last week sued two companies, Fortress Secured and SVM Inc., for alleged violations of state laws governing telephone privacy, including “Do Not Call.” The suits accuse the companies of using illegal auto-dialed messages to contact phone numbers on the state’s restricted list.

Zoeller’s office said it has received more than 100 complaints about “robo-calls” from telemarketers selling auto warranties or service contracts.

Spokesmen for Fortress Secured and SVM couldn’t immediately be reached for comment Tuesday evening.

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