Home > Uncategorized > Federal Judge Orders Telemarketer to Pay $5.1 Million to Reimburse Victims of Car-Buying Scam

Federal Judge Orders Telemarketer to Pay $5.1 Million to Reimburse Victims of Car-Buying Scam

Telemarketing and Auto Sales can both get a bad wrap sometimes (much like lawyers, so I hear :))

A federal District Court Judge’s ruling on October 29th, certainly did nothing to help the reputation for either.

The Federal Trade Commission brought a lawsuit against a Canadian telemarketer and four companies he owns for violations of federal law related to unfair and deceptive practices against consumers (Section 5 of the FTC Act, 15 U.S.C § 45, and the Telemarketing Sales Rule, 16 C.F.R. Pt. 310 – to be exact). See the FTC’s report of this matter here: http://www.ftc.gov/opa/2013/12/automarketing.shtm

The Court ordered the telemarketer and his four companies  to pay more than $5.1 million to  American and Canadian consumers who  were duped into paying hundreds of dollars based on false claims that the  defendants had buyers lined up for their cars, and that refunds would be provided  if the cars weren’t sold.  The court also  permanently banned the defendants from telemarketing and payment processing.

You can read the Federal Court’s Order and Opinion here: http://www.ftc.gov/os/caselist/1123104/131202automarketingorder.pdf

FACTS:

The FTC alleged Defendants made three misleading representations in Defendants‘ telemarketing pitch to consumers:

1) Defendants had found a buyer for the consumer‘s vehicle, and Defendants would put the consumer in contact with the buyer for a fee, typically $399.00.

2) Because of the high demand for the consumer‘s vehicle at the price the consumer was offering, a consumer who used Defendants‘ service was highly likely to sell her vehicle in a short period of time.

3) If the consumer purchased a refund insurance policy for an additional $99, then Defendants would refund the $399 initial fee if Defendants failed to secure a buyer for the vehicle within 90 days.

According to the lawsuit the “pitch” kind of went this way:

  •  consumers who listed on Craigslist the sale of their vehicles  were contacted by Defendant’s telemarketing entities.

 

  • In the initial pitch, Loewen‘s telemarketers contacted people who were attempting to sell used vehicles on Craiglist.org or similar websites.

 

  • After informing the seller that the caller represented one of Loewen‘s various D/B/As the caller in most cases explained that one or two buyers had been located for the exact vehicle the seller had put up for sale, and that in exchange for a fee of around $399, the caller would put the buyer or buyers in touch with the seller.

 

  • caller represented that there were several buyers in the area looking for that sort of vehicle and that he was confident Vehicle Stars could sell it

 

  • caller represented that there was great demand for that type of vehicle in the area and that she was sure it would sell quickly.

 

  • The caller frequently stated that the company provided financing for buyers with poor credit histories.

 

 

Liability under the FTC

Section 5(a) of the FTC Act prohibits ―unfair or deceptive acts or practices in or affecting commerce.‖ 15 U.S.C. § 45(a)(1). In order to establish Defendants‘ liability under Section 5(a), the FTC must demonstrate

―(1) that there was a representation;

(2) that the representation was likely to mislead consumers acting reasonably under the circumstances; and

(3) that the representation was material.

The Judge held that the Defendant’s representations were misleading and deceptive in violation of the FTC Act. It therefore ordered “monetary relief totaling $5,109,366.62″

 

questions? comments?

Email: Jeshua@dwlawpc.com

www.dwlawpc.com

 

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