Canadian Scammers Permanently Banned from Telemarketing

Canadian telemarketers who duped consumers into revealing their bank account information and debited hundreds of dollars from their accounts have been permanently banned from engaging in telemarketing in the future under a settlement with the Federal Trade Commission. The settlement provides that accounts with companies that processed the debits will be turned over to the FTC for consumer redress. It also bars the operators from using or selling the personal or financial information they have about U.S. consumers.

In November 2004, the FTC charged three Ontario, Canada-based companies and their principals with violating federal laws by masquerading as Social Security or Medicare representatives, and claiming that, due to a Social Security Administration computer failure, the consumers’ personal information had been erased from the system. The defendants told consumers that they had to provide their bank account and routing information to remedy the problem. Consumers who were reluctant to comply were told they risked losing their Social Security payments. The FTC also charged that the defendants told consumers they would enroll them in a new Medicare insurance program that would give them discounts on medication purchases and eyeglasses. According to the FTC, the defendants debited consumers’ accounts $299 each for their “enrollment” but the consumers received nothing in return.

The FTC charged that the defendants violated the Telemarketing Sales Rule and provisions of the Gramm-Leach-Bliley Act that bar people from making false or fraudulent statements to obtain financial information about another person. U.S. District Court Judge James B. Zagel ordered a halt to the illegal practices and froze the defendants’ assets, pending trial. The settlement announced today ends that litigation.

The settlement permanently bans Xtel Marketing, Navin Baboolal, and Annilla Ramkissoon, doing business as Millenium Consulting and Med Supply, from telemarketing or assisting others to telemarket. It bars them from making deceptive claims in advertising, promoting, or selling any good or service, and bars them from fraudulently obtaining or attempting to obtain consumers’ financial institution account information. The settlement also bars the use or sale of confidential consumer account information that they fraudulently obtained.

It contains reporting and record-keeping provisions to allow the FTC to monitor the defendants’ compliance with the order and a $623,000 suspended judgment that would become due if the court determines that the defendants misrepresented their financial situation. Under the settlement, accounts with companies that processed the defendants’ debits will be turned over to the FTC for consumer redress.

The FTC brought this matter with assistance of the members of the Toronto Strategic Partnership, a cross-border fraud law enforcement effort that includes, in addition to the FTC: Competition Bureau Canada, the Ontario Provincial Police Anti-Rackets, the Toronto Police Service Fraud Squad, the Ontario Ministry of Consumer and Business Services, and the United States Postal Inspection Service. The Toronto Police Service executed search and arrest warrants and charged the defendants with fraud. The FTC also received significant assistance from the Social Security Administration’s Office of the Inspector General.

The Commission vote to accept the stipulated final judgment and order was 4-0.

NOTE: Stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. Consent judgments have the force of law when signed by the judge.

Copies of the complaint and stipulated final judgment and order are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

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(FTC File No. X05-0011)