A few weeks ago, we noted that the FTC was offering up $50,000 to anyone who could help stop
"Rachel from cardholder services" robocalls. It appears they don't really need that much help, as the agency has filed complaints against five such operations
based in Arizona and Florida (why is it that so many scammy operations seem to be based in Florida and Arizona?). FTC boss Jon Leibowitz overstates his organization's infatuation with robocalls:
“At the FTC, Rachel from Cardholder Services is public enemy number one,” said FTC Chairman Jon Leibowitz. “We’re cracking down on illegal robocalls by bringing law enforcement actions and pursuing technical solutions to the problem.”
Of course, I think that it's important not to get confused about what the real problem is here. While robocalls are both annoying and illegal, the real problem isn't the calling, but the scams behind the calls
. They're basically trying to get people to fork over money for services that are never actually delivered.
In the robocall cases announced today, the FTC alleges that the defendants place automated calls to consumers, typically with a prerecorded message from “Rachel” or someone else from “Cardholder Services.” The calls purport to have an “important message” regarding an opportunity to reduce high credit card interest rates. Consumers are urged to “press 1” to connect with a live representative, or “press 2” to discontinue getting such calls. Consumers who press 1 are connected to live telemarketers. Most consumers have no way to screen the calls using Caller ID, as the incoming number allegedly is often “spoofed,” or displayed as a false number. In many cases, the name displayed on the Caller ID is so generic, such as “Card Services,” that it provides little information about who is calling.
According to the FTC, consumers who reach a live telemarketer are then pitched allegedly deceptive offers to have their credit card interest rates substantially reduced, sometimes to as low as 6.9 or even zero percent. The telemarketers allegedly guarantee that lowering card interest rates will save the consumers thousands of dollars in finance charges in a short period of time and will allow them to pay off the balances more quickly. Some telemarketers allegedly claim that consumers will save at least $2,500 in finance charges and will be able to pay off their balances two to three times faster, without increasing their monthly payments.
In some cases, according to the FTC, the telemarketers claim to be calling from the consumer’s credit card company. In other cases, they use “Cardholder Services” to suggest a relationship with a bank or credit card company. If the consumer expresses an interest in the rate reduction offer, the telemarketer sometimes conducts a purported “audit” to determine whether the consumer qualifies. Consumers provide their financial and personal information, and are then put on hold while the “audit” is completed. According to the FTC, the “audit” typically is used only to determine whether consumers have enough credit available on their credit cards to pay the company’s fee.
The charges filed against the operations include both charges for making false claims and also for violating telemarketing laws, but it seems that the false claims/fraud stuff is the much bigger deal. Instead, however, the FTC seems to focus the publicity aspect on its "fight against robocalls." I realize that may generate publicity, but isn't the fraud aspect the bigger deal?