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FTC hangs up on robocalls from 'Rachel'

November 01, 2012|By Laura J. Nelson
  • Federal Trade Commission Chairman Jon Leibowitz, right, released a statement that "Rachel from Cardholder Services is public enemy No. 1."
Federal Trade Commission Chairman Jon Leibowitz, right, released a statement… (J. Scott Applewhite / AP…)

“Rachel from Cardholder Services” may not be calling you anymore.

A federal court order Thursday morning temporarily halted operations at five telemarketing firms that the Federal Trade Commission said illegally dialed up consumers with millions of prerecorded messages – often saying they were from "Rachel."

“Rachel from Cardholder Services is public enemy No. 1,” FTC chairman Jon Leibowitz said in a statement.

The FTC receives 200,000 complaints a month about robocalls. The agency has shut down companies responsible for 2.6 billion telemarketing calls since such calls were outlawed in 2009, but that’s a drop in the bucket, FTC said. 

The agency says it can’t trace or block about 59% of phone spam because the calls route through a web of automatic dialers, caller ID spoofing and voice-over-Internet protocols.

The problem is so bad that earlier this month the FTC offered a $50,000 prize to anyone who could come up with a way to stop telephonic spam. The contest runs until Jan. 17.

FTC said the "Rachel" telemarketing companies, all based in Arizona and Florida, told consumers that they could drastically reduce their credit card interest rates if they paid initial fees. Asking for such an up-front fee for debt-reduction services is illegal, FTC said.

Calls from “Rachel” told listeners that there was an “important message” for them regarding high credit card interest rates, the FTC said. Listeners were then told to press 1 to speak with an operator, or 2 to stop getting the calls.

Pressing 1 led consumers to a live telemarketer, some of whom promised to save consumers up to $2,500 in finance charges or pay off their credit card balances faster by using the company's service, the FTC said.

If consumers said they were interested, the telemarketing company then conducted an “audit” to make sure the customer qualified, according to the complaint filed by the FTC. That usually required the consumer giving out credit card and financial information over the phone.

The fee for the interest-reduction service ranged from several hundred dollars to $3,000, the FTC said. In some cases, consumers were charged without their consent. In others, the telemarketers did not disclose that there was a fee.

In the complaint, the FTC said the companies were violating various consumer protection laws including misrepresenting to consumers that their services would save them money and reduce credit card interest rates.

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