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SCAT -- Senior Citizens Against Telemarketing -- a Las Vegas-based "recovery room," and its president have agreed to pay approximately $25,000 to settle Â鶹´«Ã½ Trade Commission charges that they engaged in an allegedly deceptive telemarketing scheme that preyed on elderly consumers. The FTC alleged that the defendants falsely represented to consumers that they were affiliated with a government consumer protection agency and would, for a fee ranging from $200 to more than $1,000, recover money that the consumers had lost to other fraudulent telemarketers. The proposed settlement also would permanently prohibit the defendants, in connection with any type of telemarketing, from misrepresenting any fact material to a consumer's decision to make a charitable contribution, to enter a contest, or to purchase any good or service, including recovery services.

In July 1995, the Commission filed a complaint in federal district court against U.S.M. Corporation, doing business as Senior Citizens Against Telemarketing and SCAT Services; and its president, Anita Sowards. The complaint alleged that the defendants made unsolicited telephone calls throughout the United States to victims of previous telemarketing scams. In these telephone calls, the defendants' salespeople identified themselves as working for Senior Citizens Against Telemarketing, or SCAT, which they identified as an organization that could

recover money lost by persons to previous telemarketers. The SCAT salesperson allegedly told the consumer that, for a fee of 5 or 10 percent of what the consumer had lost, SCAT would initiate actions that would result in the recovery of money the consumer lost.

The proposed settlement of the charges, which requires the court's approval to become binding, would prohibit the defendants from misrepresenting:

• that money previously lost to, or a prize that was never received from a firm engaged in telemarketing will be, or is likely to be, recovered;
• the defendants' success in recovering money lost to telemarketers or promised prizes that consumers never received from telemarketers;
• that defendants have been acting in cooperation with government agencies, such as the FTC, to recover money or prizes for victims of telemarketing fraud;
• that lawsuits will be filed against telemarketers when necessary to obtain refunds;
• that a consumer's money likely can be recovered from bonds posted by other telemarketers; or
• any other fact material to a consumer's decision to purchase recovery services.

In connection with engaging in telemarketing of any kind, the settlement would prohibit the defendants from, misrepresenting any fact material to a consumer's decision to:

• make a charitable contribution;
• enter a contest for a prize or award; or
• purchase any good or service, including recovery service.

In addition, the settlement would require the defendants to pay approximately $25,000 in cash to be used for possible consumer redress. Also, the settlement would require the defendants to assign to the FTC certain monetary claims that they hold against third parties. If the FTC determines that consumer redress is impractical, any money received from the defendants SCAT--01/18/96) will be deposited in the U.S. Treasury. The order further includes a provision that would allow the FTC to reopen the proceeding in the event that defendants are found to have made material misrepresentations regarding their financial condition.

Finally, the settlement contains various reporting requirements that would assist the FTC in monitoring the defendants' compliance.

The Commission vote to authorize staff to file the stipulated order for permanent injunction and final relief in federal court was 5-0. The final judgment was filed in the U.S. District Court for the District of Nevada, in Las Vegas, on Jan. 17. The matter was handled by the FTC's Division of Service Industry Practices and the FTC's San Francisco Regional Office.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. The order has the force of law when signed by the judge.

The FTC has developed a free fact sheet that offers tips for consumers on protecting themselves from reloading and doublescamming frauds. Copies of the "telemarketing recovery room scams" brochure, the FTC's stipulated order in this case, as well as other documents associated with this case, are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest FTC news as it is announced, call the FTC's NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov

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(FTC Matter No. X950067)
(Civil Action No. CV-S-95-00668-LDG (LRL))