Operators of Telemarketing Recovery Room Agree To Settle FTC Charges Brought in "Project Jackpot" Sweep

A telemarketing "recovery room" operation in Muskogee, Oklahoma, and its principals, have agreed to settle federal charges that they falsely claimed that they would recover a substantial portion of the money that consumers had previously lost in prize promotion or other scams perpetrated by fraudulent telemarketers. The Federal Trade Commission filed the complaint against Telecommunications Protection Agency, Inc. (TPA) and Charles Fulton and Jennifer Fulton in July 1996 as part of a broader telemarketing sweep named "Project Jackpot" --a major enforcement effort targeting firms that fraudulently offered purportedly valuable prizes to consumers to induce them to purchase products. As a result of the FTC’s action, TPA has ceased all business operations.

According to allegations in the FTC’s complaint, TPA told customers that, for an up-front fee of $500 or more, it would assist them in recovering monies lost in previous telemarketing scams. The complaint further alleged that TPA claimed that it had been successful in recovering significant amounts of money that the consumers had lost. In fact, according to the allegations, in most if not all instances, TPA did not recover any money for its customers. In addition to these misrepresentations, the complaint alleged that TPA violated the FTC’s Telemarketing Sales Rule, which became effective on December 31, 1995. The Rule prohibits recovery room operators from requesting or receiving payment until seven business days after a company recovers and returns the money to the consumer.

According to the proposed agreement settlement with the defendants, which requires the court’s approval to become binding, the defendants are prohibited from misrepresenting:

• that consumers are reasonably likely to recover a substantial portion of the money that they lost in previous telemarketing transactions;
• that TPA's customers have recovered a substantial portion or money that they lost in previous telemarketing transactions;
• any fact material to a consumer’s decision to purchase recovery services; and
• any fact material to a consumer’s decision to (1) purchase any item, product, good, service, or interest of any kind; (2) to donate to a charity; or (3) to enter a contest for a prize.

In addition, the order would prohibit the defendants from violating, or assisting others in violating, any provisions of the Commission’s Telemarketing Sales Rule.

The Commission vote to file the final order for permanent injunction was 5-0. The proposed final order was filed in U.S. District Court for the Eastern District of Oklahoma, in Muskogee, on November 27, 1996. The settlement is subject to approval by the court.

NOTE: This Stipulated Final Order for Permanent Injunction is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Final Order have the full force of law when signed by the judge.

The FTC has developed a free Facts for Consumers brochure that offers tips for consumers on protecting themselves from reloading and double-scamming frauds. Copies of the "Telemarketing Recovery Rooms Scams" brochure, the Final Order, and the July 1996 complaint in this case are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov

(Civil Action No.: CIV-96-344-S)

(FTC File No. X960085)