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Crack down on auto service telemarketers

2009-05-11 00:00:00

The Texas Attorney General's Office is charging three telemarketing firms with unlawfully trying to sell vehicle service contracts that were falsely marketed as extended warranties.

The lawsuit was filed Thursday against SCM Media Inc. and On Point Media Inc., both based in California, as well as Pacific Guard Warranty LLC of Nevada.

The state’s lawsuit cites multiple violations of the Texas Deceptive Trade Practices Act, the Texas Telemarketing Disclosure and Privacy Act, the Telephone Consumer Protection Act, and the Federal Trade Commission’s Telemarketing Sales Rule.

SCM and On Point are so-called lead generators, which are hired to make solicitation calls on behalf of their clients. State investigators indicate that SCM was hired by Pacific Guard Warranty LLC, as part of a campaign to sell extended vehicle warranties nationwide.

According to state investigators, the defendant telemarketing companies used “spoof numbers” to falsify their identities. As a result, recipients’ Caller ID devices displayed false numbers when they received calls from the defendants.

The defendants are also charged with misleading call recipients about the status of their vehicle warranties. Recorded calls distributed by the defendants not only claimed that recipients’ warranties were “about to expire”—but also that the recipients were receiving their “final call” before their car warranties expire. The state’s lawsuit – filed in federal court – alleges that these companies harassed countless Texas consumers through a consistent campaign of deceptive and abusive telemarketing calls to consumers’ homes and cellular telephones.

Further, call recipients who spoke with the defendants’ sales personnel were not offered extended vehicle warranties on their vehicles. Instead, they were pitched extended vehicle service contracts—not warranties.

The state’s enforcement action also indicates that the defendants failed to adequately inform call recipients about the limitations of the extended service contracts they were selling.

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