FTC Details ‘Shopping Spree’ Scam

A federal judge in Los Angeles has issued a temporary restraining order barring several telemarketing companies from making false representations or engaging in deceptive and abusive marketing techniques.

The U.S. District Court judge also froze the companies’ assets and appointed a temporary receiver, Federal Trade Commission officials said Tuesday.

The FTC claims that the telemarketers -- Universal Premium Services Inc., which is also known as Premier Benefits Inc. of Orange; Consumer Reward Network Inc. of Canoga Park; Star Communications of Los Angeles; Las Vegas-based Membership Services Direct Inc., which is also known as Continuity Partners Inc.; Connect2USA Inc., also of Las Vegas; and a number of individuals -- engaged in a scam that regulators dubbed the “Wal-Mart Shopping Spree.”

According to a complaint unsealed Monday, telemarketers hired by the firms called consumers and told them that they had won valuable prizes -- gift cards, shopping sprees, gas vouchers and movie passes -- worth $200 to $500. The “winners” were then asked to disclose a bank account number to cover a mailing fee, the complaint said.

After consumers provided their banking information, the callers would pressure them into joining discount shopping clubs with substantial membership fees, the complaint said.

Regulators said they had received more than 2,000 complaints about the companies. In some cases, they said, consumers who hung up on the telemarketers were badgered with repeated and often profane phone calls until they relented and agreed to buy the products.

FTC officials said they did not know how many consumers fell victim to the ploys, but said the companies had collected at least $11 million in the last five months.

Representatives of the companies could not be reached for comment. Listed numbers for all the companies were no longer in service.