Schumer Calls for Probe into Phone Spam

By: Karen Matthews AP Email
By: Karen Matthews AP Email

NEW YORK (AP) - Unsolicited calls to home and cell phones warning of a final notice and an expiring vehicle warranty are a nuisance and harassment and should be the subject of a federal investigation, a U.S. senator said Sunday.

More and more Americans are receiving calls with a computerized voice saying, "This is the final notice. The factory warranty on your vehicle is about to expire," or something similar, several times a day on their cell or land lines. The calls come even if a person has signed up for the national "do not call" registry.

Now, Sen. Charles Schumer of New York wants a federal investigation into the "robo-dialer harassment."

"Not only are these calls a nuisance, but they tie up land lines and can eat up a user's cell phone minutes, possibly leading to a higher cell phone bill due to overage charges," said Schumer, D-N.Y.

Meanwhile, officials in 40 states are investigating the companies behind the car-warranty calls.

Michelle Corey, president and CEO of the Better Business Bureau in St. Louis, Mo., said the industry is based largely in the St. Louis area and generates thousands of complaints a year.

She said a group of companies began operating in Missouri in the mid-1990s that offered extended repair warranties to people whose manufacturer-issued warranties were about to expire. Within a few years, about 35 firms were offering similar services.

"It's a very lucrative industry," Corey said.

The companies offer contracts akin to insurance policies, pledging to pay for car repairs in exchange for fees paid up front.

The companies call numbers randomly and leave messages telling people that their auto warranties are about to expire - whether or not they own a car.

Some companies also send out cards that mislead recipients into thinking that their vehicle has been subject to a safety recall, Corey said.

If people call back and agree to buy a policy, Corey said, the companies often don't let them see the contract until they agree to pay.

Some scam victims don't learn until it is too late that the deals don't cover many types of repairs, Corey said.

"Some people are losing thousands and thousands of dollars in purchasing a product that turns out to be useless," she said.

The Federal Trade Commission, which already operates the do-not-call list, should work with state and local authorities "to find the scam artists and shut their operations down," Schumer said.

"This is an annoying scam whose perpetrators have found a way around the do-not-call list," he said at a news conference in his Manhattan office. "The FTC has to track them down and then shut them down to put an end to this nuisance once and for all."

Missouri authorities filed a lawsuit last month against one of the largest car-warranty companies, Wentzville, Mo.-based USfidelis, charging that company officials ignored a subpoena demanding that they answer questions about their business.

A spokeswoman for USfidelis, which has more than 1,000 employees, did not return a call seeking comment Sunday, but the company says on its Web site that it stopped making unsolicited marketing calls last year.

"Frankly, we've identified more effective ways of connecting with our customers," the Web site's "Frequently Asked Questions" section says.

USfidelis charges on the Web site that its competitors "use variations on our name and materials, masking their calls by using the USfidelis name, ultimately confusing and alienating consumers."

Corey of the Better Business Bureau said it is often difficult to know who is making the calls, because companies change names frequently and use telemarketing subcontractors.

Schumer, who received a call last week, said a federal crackdown
is needed.

"A few states have tried, but we need national action," he said.

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