Telemarketing Scammers Shut Down

February 13, 2003
Two brothers who allegedly used deceptive and unfair practices to bilk consumers across the country out of millions of dollars, have been permanently banned from telemarketing as part of a settlement with the Federal Trade Commission.

According to the FTC, Harvey and Tye Sloniker, operating out of Arizona, employed large numbers of telemarketers trained to deceive consumers. From their "contract rooms," the defendants allegedly telemarketed nonexistent advance-fee, low-interest credit cards, and bogus identity theft and telemarketing fraud protection services, often on behalf of third-party client companies. In addition to the lifetime ban from telemarketing, the settlement requires the Slonikers to pay a $525,000 judgment.

In a complaint filed in July 2002, the FTC alleged that the Slonikers telemarketed their fraudulent products and services through a maze of interrelated companies, which included the corporate defendants

• Corporate Marketing Solutions, Inc.;
• Corporate Industries, Inc.;
• ATM Machine Wrap, Inc.;
• Bankcard Recovery Services, Inc.;
• Direct Wireless+, Inc.;
• National Consolidation Foundation, Inc.; and
• Sierra Management Properties, Inc.

The complaint alleged that the defendants violated the FTC Act and the Telemarketing Sales Rule (TSR) by engaging in numerous misrepresentations. The complaint also alleged that the defendants engaged in illegal "pretexting" - obtaining consumers' personal financial information through false pretenses. The complaint further alleged that, upon obtaining the consumers' personal financial information, the defendants charged consumers' credit cards or electronically debited fees from consumers' bank accounts without having obtained the consumers' authorization to do so.

The final order, entered by the Court on February 3, 2003, contains a comprehensive lifetime telemarketing ban on Harvey and Tye Sloniker. The ban also prohibits them from assisting and facilitating in telemarketing. In addition, the final order prohibits the Slonikers from misrepresenting:

• they are affiliated with a bank, financial institution, VISA, MasterCard, or a consumer protection agency;
• consumers will receive the promised products or services; and
• any information material to a consumer's decision to purchase goods or services promised.

The settlement further prohibits the defendants from misrepresenting that they already possess and are merely verifying a consumer's credit card numbers, or that they require a consumer to provide evidence of a valid personal bank account to establish the consumer's eligibility for a credit card. Further, the settlement prohibits the defendants from debiting money from a consumer's bank account, or causing a consumer's bank account to be debited, without the consumer's written authorization.

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