FTC goes after warranty robocallers

FTC is suing two telemarketing companies and a company peddling car warranty extensions--which the agency says are unnecessary and false--to put a stop to the calls.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
2 min read

Those annoying robocalls asking if you'd like to extend the factory warranty on your car may soon come to an end.

Last week, the Federal Trade Commission filed lawsuits against three companies--Voice Touch and Transcontinental Warranty, both of Florida, and Network Foundations, based in Illinois--alleging these companies violated the Do Not Call registry law by making more than 1 billion robocalls since 2007 to residences, businesses, and mobile phones.

The suit also alleges that the calls, which have generated more than $10 million since 2007, offer unnecessary and false warranty extensions for several thousands of dollars. And that the firms placing the calls also violated laws by blocking caller ID.

FTC Chairman Jon Leibowitz in a statement called these telemarketing schemes one of the most aggressive the commission has ever encountered.

"I'm not sure which is worse, the abusive telemarketing tactics of these companies or the way they try to deceive people once they get them on the phone," Leibowitz said. "Either way, we intend to shut them down."

Voice Touch and Network Foundations are telemarketing firms that were supposedly making the calls for Transcontinental Warranty, which was selling $2,000 to $3,000 extended car warranties.

The FTC has received tens of thousands of complaints about these calls since 2007. People answering the prerecorded robocalls would hear a message telling them that the original factory warranty on their cars was about to expire and that they should extend coverage before it's too late.

Many consumers receiving these calls were already on the national Do Not Call list. Apparently, the telemarketers were calling nearly every phone number in an area code, regardless of whether these consumers even had a car or not. For example, I live in New York City and haven't owned a car in 11 years, and over the past two years, I've received several of these calls both at home and on my cell phone. Even emergency 911 call centers have been harassed with these calls.

The FTC has asked for temporary restraining orders to halt the illegal robocalls. And the agency is also seeking financial compensation from the companies that can be used to pay back victims of the scam.

A Network Foundations spokesman told CNNmoney.com that the FTC's lawsuit against the company "is a misunderstanding." And representatives from Voice Touch and Transcontinental Warranty have not been reached for comment.