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Telemarketers, Check Processor Settle Consumer Claims
CONTACT: Elliot Burg, Assistant Attorney General, (802) 828-5507
December 4, 2007
Vermont Attorney General William H. Sorrell announced today that his office has settled a lawsuit filed against Canadian telemarketers and their Vermont-based check processor. The settlement requires, among other things, payments to the State totaling $20,000, future payments of up to $200,000, refunds to consumers, and a permanent and global ban on telemarketing by the Canadians.
Named in the suit are Stanley Gibbons and Wendy Gibbons of Montreal; their companies, American United Benefits, Inc., Consumer Aid USA, 3627136 Canada, Inc., and Stanwenco; Steve Selby of Swanton, Vermont; and his company, Small America Corporation.
In a Consumer Fraud Complaint filed in Washington Superior Court, the Attorney General alleged that from 2001 to 2004, the Canadian defendants made unsolicited calls to consumers around the United States and offered them discounts on medical, legal and other services (through a program called “Fun2$ave”), grocery discount coupons, a “credit card registry program,” an anti-telemarketing device, and a silver “medical alert” bracelet, for $199 to $299. To obtain money from consumers, the telemarketers contracted with Selby and Small America Corporation to provide them with a Swanton, Vermont address, and to print “demand drafts”—unsigned checks bearing bank account information obtained from the consumers over the telephone, which were then deposited to the telemarketers’ credit and resulted in charges to the consumers’ own bank accounts.
The Attorney General further alleged that some of the promised discounts did not exist; that by late 2004 or early 2005, the discount program had been completely terminated, even though it was marketed without a time limit; that the telemarketers deceptively described their company as being located in Vermont; that written authorization was not obtained from consumers for the charges to their bank accounts, as required by Vermont law, and that some consumers gave no authorization at all; and that the telemarketers failed to provide consumers with a legally-required opportunity to cancel their purchase.
Between 2001 and 2004, the Canadian defendants sold their program to some 6,600 consumers, for a total of over $1.7 million. In all, the Canadian Defendants initiated, and Selby and his company processed, over 2,000 demand drafts totaling more than $500,000.
In a Consent Decree agreed to by all parties, the Gibbonses and their companies are permanently barred from telemarketing, directly or through anyone else, to or from any location in the world. For their part, Selby and his company must comply with the federal Telemarketing Sales Rule, with Vermont’s consumer regulation prohibiting the use of a Vermont address to describe the location of a company that does not discharge substantial functions in the state, and with the Vermont Consumer Fraud Act, including provisions imposing restrictions on the processing of demand drafts and electronic bank debits for telemarketers.
In addition, the Gibbonses must provide a full refund to any of their telemarketing customers who have complained to the Vermont Attorney General’s Office, directly or through another office, on before January 26, 2008.
Finally, the Gibbonses and Selby must each pay $10,000 to the State of Vermont as civil penalties and costs; in recognition of their present limited ability to pay, no further payments are due at this time. However, for each of the next five years, the defendants must file with the Attorney General’s Office copies of their income tax returns and sworn statements of their assets and liabilities; if these documents show that the Gibbonses, or Selby, have pre-tax income exceeding $100,000, and/or net assets exceeding $150,000, they must pay the State 15 percent of the amounts exceeding $100,000, up to a total of $100,000 for the Gibbonses and $100,000 for Selby.
Commenting on the settlement, Attorney General Sorrell stressed the importance of imposing liability for any unfair or deceptive conduct on cross-border telemarketers and on people in the United States who provide them with essential services. “The permanent worldwide ban on telemarketing by the Canadian defendants in the case,” he said, “and the provisions requiring future payments if the Canadian or Vermont defendants have an ability to pay, underscore our intention to hold such individuals legally accountable.”
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