A Canadian enterprise that targets elderly consumers, dupes them into revealing their bank account information, then debits hundreds of dollars from their accounts is facing Federal Trade Commission charges that its operation violated federal law. According to the FTC, Xtel Marketing, Inc., and its principals cold-called consumers across the United States and, masquerading as Social Security or Medicare representatives, told consumers that they must provide bank account information or risk losing their Social Security payments. The FTC has asked the court to bar the defendants’ illegal business practices and award consumer redress. On November 9, a U.S. district court issued a temporary restraining order barring the illegal activities and freezing the defendants’ assets.
According to the FTC, since at least 2002, Xtel Marketing, Navin Baboolal, and Annilla Ramkissoon, doing business as Millenium (sic) Consulting and Med Supply, have been making cold calls to elderly consumers and claiming that, due to a Social Security Administration computer failure, the consumers’ personal information had been erased from the system. The defendants tell consumers that they must provide their bank account and routing information to remedy the problem. The FTC’s complaint states that, if consumers are reluctant to provide the information, the defendants often threaten them with delays or complete loss of their Social Security benefit payments.
According to the FTC, the defendants also tell consumers they will enroll them in a new Medicare insurance program that will give them discounts on medication purchases and eyeglasses. The defendants allegedly claim that they will debit $299 from consumers’ bank accounts to enroll them in the program, and will send them a Medicare insurance card or drug discount card. Although the defendants debit consumers’ accounts, the consumers receive nothing in return. According to papers filed with the court, consumers lost approximately $1 million in this scam.
The FTC also charges that the defendants have violated the FTC Act by falsely claiming that: (1) they are employees of Medicare or the Social Security Administration; (2) consumers must give the defendants their bank account information to replace information lost in a computer failure; (3) consumers may lose their Social Security benefits if they do not provide the requested information; and (4) the defendants will enroll consumers in a Medicare insurance program after debiting $299 from consumers’ accounts.
The FTC further charges that the defendants have violated the Telemarketing Sales Rule (TSR) by misrepresenting that they can provide consumers with Medicare insurance or drug discount cards in exchange for the $299 they debit from consumers’ bank accounts and by misrepresenting an affiliation with the Social Security Administration or Medicare. Finally, the FTC’s complaint alleges that the defendants violated the Gramm-Leach-Bliley Act by claiming they were affiliated with a government entity to trick consumers into divulging their bank account information. The FTC has asked the court to bar the defendants’ illegal operation and award redress for consumers who have fallen victim to the scam.
The FTC brought this matter with assistance from 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 Commission vote authorizing staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division on November 9, 2004.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the Commission’s complaint 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.