IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NEW YORK

FEDERAL TRADE COMMISSION
Plaintiff
v.
1306506 ONTARIO LIMITED, a Canadian Corporation;
T.S.I. SERVICE CORP., a Nevada Corporation;
VINNY BUBIC, individually and as a director and officer of 1306506 Ontario Limited and T.S.I. Service Corp.; and
ERROL ALEXANDER, individually and as a director and officer of 1306506 Ontario Limited and T.S.I. Service Corp.;
Defendants.

Civil Action No.

COMPLAINT FOR INJUNCTIVE AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("FTC" or "the Commission"), for its complaint alleges:

  1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 53(b) and 57b, and the Telemarketing and Consumer Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. § 6101 et seq., to obtain temporary, preliminary, and permanent injunctive relief, rescission or reformation of contracts, restitution, disgorgement, and other equitable relief for defendants' deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the FTC's Telemarketing Sales Rule ("TSR"), 16 C.F.R. Part 310.

JURISDICTION AND VENUE

  1. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), and 1345, and 15 U.S.C. §§ 45(a), 53(b), 57b, 6102(c), and 6105(b).
  2. Venue in the United States District Court for the Western District of New York is proper under 28 U.S.C. § 1391(b), (c), and (d) and 15 U.S.C. §§ 53(b) and 6103(e).

PLAINTIFF

  1. Plaintiff, FTC, is an independent agency of the United States Government created by statute. 15 U.S.C. §§ 41 et seq. The Commission is charged, inter alia, with enforcement of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission also enforces the TSR, 16 C.F.R. Part 310, which prohibits deceptive or abusive telemarketing acts or practices. The Commission is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and the TSR, to secure such equitable relief as may be appropriate in each case, and to obtain consumer redress. 15 U.S.C. §§ 53(b), 57b, 6102(c), and 6105(b).

DEFENDANTS

  1. Defendant 1306506 Ontario Limited is incorporated in Ontario, Canada. Its office and principal place of business is located at 286 A Danforth Avenue, Toronto, Ontario, Canada, M4K 1N6. Defendant 1306506 Ontario Limited transacts or has transacted business in the Western District of New York and throughout the United States.
  2. Defendant T.S.I. Service Corp. is incorporated in Nevada. Its registered address is c/o Michelle Voorhis, 678 Wells Road, Boulder City, Nevada, 89005. Defendant T.S.I. Service Corp. transacts or has transacted business in the Western District of New York and throughout the United States.
  3. Both 1306506 Ontario Limited and T.S.I. Service Corp. transact business using the names TSI, TSI Financial Services, TSI Services, TSI Security, and TeleConsultant Service International/TSI (hereinafter collectively referred to as "TSI").
  4. Defendant Vinny Bubic is one of the owners and principals of TSI. At all times relevant to this complaint, acting alone or in concert with others, she has participated directly in, or has had authority to control the acts and practices of TSI, including the acts and practices set forth in this complaint.
  5. Defendant Errol Alexander is one of the owners and principals of TSI. At all times relevant to this complaint, acting alone or in concert with others, he has participated directly in, or has had authority to control the acts and practices of TSI, including the acts and practices set forth in this complaint.

COMMERCE

  1. At all times relevant to this complaint, defendants have maintained a substantial course of trade in the offering for sale and sale, through telemarketing, of credit card protection services, in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

DEFENDANTS' BUSINESS PRACTICES

  1. Since at least September 1998 and continuing thereafter, defendants have deceptively telemarketed credit card protection services to consumers throughout the United States.
  2. To induce consumers to purchase credit card protection services, defendants have represented, either expressly or by implication, that defendants are calling from, or are affiliated with, legitimate credit card companies, such as Visa, MasterCard, or the bank issuing the consumer's credit card.
  3. During telephone solicitations, defendants have told consumers that consumers need to purchase defendants' credit card protection service because consumers are not currently protected against unauthorized use of their credit card accounts. Defendants have claimed that, if a consumer's credit card number is stolen or misappropriated, a consumer can be held liable for all unauthorized charges to the consumer's credit card account.
  4. Defendants have claimed that purchase of their credit card protection service protects consumers from liability for unauthorized credit card charges.
  5. Defendants have persuaded consumers to divulge their credit card numbers by stating that they already know the numbers but need verification, or by reciting one or more of the digits of the consumers' credit card account numbers and then requesting the consumers to state the remaining digits of the consumers' credit card account numbers.
  6. Defendants have obtained consumers' credit card account numbers and, without consumers' authorization, have caused charges to be posted on those accounts.
  7. Defendants have charged consumers fees ranging from $199 to $279 for their services.

SECTION 5 OF THE FTC ACT

  1. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), provides that "unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful."

VIOLATIONS OF SECTION 5 OF THE FTC ACT

COUNT I

  1. In numerous instances, in connection with the telemarketing of credit card protection services to consumers, or in the course of billing, attempting to collect, or collecting money from consumers, defendants have represented, expressly or by implication, that:

a. Defendants are affiliated with, are calling from, or are calling on behalf of, the consumer's credit card issuer;

b. If consumers do not purchase defendants' services, consumers can be held fully liable for any unauthorized charges made to their credit card accounts; and

c. Consumers purchased or agreed to purchase goods or services from defendants, and therefore owe money to defendants.

  1. In truth and in fact:

a. Defendants are not affiliated with, or calling from, or calling on behalf of, the consumer's credit card issuer;

b. Under Section 226.12(b) of Regulation Z, 12 C.F.R. § 226.12(b), and Section 133 of the Truth in Lending Act, 15 U.S.C. § 1643, a consumer cannot be held liable for more than $50 for any unauthorized charges to a credit card account; and

c. In numerous instances, consumers did not purchase or agree to purchase goods or services from defendants, and therefore do not owe money to defendants.

  1. Therefore, defendants' representations, as set forth in paragraph 19, are false and misleading and constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

THE FTC'S TELEMARKETING SALES RULE

  1. In the Telemarketing Act, 15 U.S.C. § 6101 et seq., Congress directed the Commission to prescribe rules prohibiting abusive and deceptive telemarketing acts or practices. On August 16, 1995, the Commission promulgated the TSR, 16 C.F.R. Part 310. The TSR became effective on December 31, 1995.
  2. Defendants are "sellers" or "telemarketers" engaged in "telemarketing," as those terms are defined in the TSR, 16 C.F.R. §§ 310.2(r), (t), and (u).
  3. The TSR prohibits telemarketers and sellers from "[m]aking a false or misleading statement to induce any person to pay for goods or services." 16 C.F.R. § 310.3(a)(4).
  4. Pursuant to Section 3(c) of the Telemarketing Act, 15 U.S.C. § 6102(c), and Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), violations of the TSR constitute unfair or deceptive acts or practices in or affecting commerce, in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

VIOLATIONS OF THE FTC TELEMARKETING SALES RULE

COUNT II

  1. In numerous instances, in connection with the telemarketing of credit card protection services, or in the course of billing, attempting to collect, and collecting money from consumers, defendants have represented, expressly or by implication, that:

a. Defendants are affiliated with, or are calling from, or are calling on behalf of, the consumer's credit card issuer;

b. If consumers do not purchase defendants' services, consumers can be held fully liable for any unauthorized charges made to their credit card accounts; and

c. Consumers purchased or agreed to purchase goods or services from defendants, and therefore owe money to defendants.

  1. In truth and in fact:

a. Defendants are not affiliated with, or calling from, or calling on behalf of, the consumer's credit card issuer;

b. Under Section 226.12(b) of Regulation Z, 12 C.F.R. § 226.12(b), and Section 133 of the Truth in Lending Act, 15 U.S.C. § 1643, a consumer cannot be held liable for more than $50 for any unauthorized charges to a credit card account; and

c. In numerous instances, consumers did not purchase or agree to purchase goods or services from defendants, and therefore do not owe money to defendants.

  1. Therefore, defendants' representations, as alleged in paragraph 26, constitute false or misleading statements to induce a person to pay for goods or services, and are deceptive telemarketing acts or practices in violation of Section 310.3(a)(4) of the Telemarketing Sales Rule, 16 C.F.R. § 310.3(a)(4).

CONSUMER INJURY

  1. Consumers in many areas of the United States have suffered substantial monetary loss as a result of defendants' unlawful acts and practices. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers and harm the public.

THIS COURT'S POWER TO GRANT RELIEF

  1. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant injunctive and other ancillary relief, including consumer redress, disgorgement, and restitution, to prevent and remedy any violations of any provisions of law enforced by the Commission.
  2. Section 19 of the FTC Act, 15 U.S.C. § 57b, and Section 6(b) of the Telemarketing Act, 15 U.S.C. § 6105(b), authorize this Court to issue a permanent injunction and grant such relief as the Court finds appropriate to halt and redress injury resulting from defendants' violations of the TSR, including the recission and reformation of contracts, and the refund of money.
  3. This Court, in the exercise of its equitable jurisdiction, may award other ancillary relief to remedy injury caused by defendants' law violations.

PRAYER FOR RELIEF

WHEREFORE, plaintiff requests this Court, pursuant to Sections 13(b) and 19 of the FTC Act, 15 U.S.C. §§ 53(b) and 57b, and Section 6(b) of the Telemarketing Act, 15 U.S.C. § 6105(b), and pursuant to its own equitable powers:

  1. Permanently enjoin defendants from violating the FTC Act and the TSR, as alleged herein;
  2. Award such relief as the Court finds necessary to redress injury to consumers resulting from defendants' violations of the FTC Act and the TSR, including but not limited to, rescission or reformation of contracts, restitution, refund of monies paid, and the disgorgement of ill-gotten monies; and
  3. Award plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper.

Respectfully Submitted,

DEBRA A. VALENTINE
General Counsel

Dated: ____________________

DAVID A. O'TOOLE
PATRICIA POSS
Federal Trade Commission
55 E. Monroe St., Suite 1860
Chicago, IL 60603
(312) 960-5634
(312) 960-5600 (fax)

Attorneys for Plaintiff
FEDERAL TRADE COMMISSION