Pretty Sleazy, AG Tells Mother & Son

     DENVER (CN) – A mother and son bilked magazine subscribers of thousands of dollars in a brazen telemarketing scam, the Colorado attorney general claims in court.
     Attorney General John Suthers sued Raymond B. Jones Jr., his mother, Cora Jones, and a long list of their businesses, in Denver County Court.
     Defendants include Publications@Mile High, Publications@Mile High 2, Subscription Solutions, C&R Marketing & Associates, 5280 Publication LLC, and Magazine Man.
     Raymond, of Denver, and his mom, of suburban Morrison, are accused of duping victims of as much as $1,300 at a time by calling them, pretending to be the publisher of a magazine to which they subscribe, and asking to “verify” some financial information. Then the Joneses call that a “contract” and defraud them of up to $1,300, the attorney general says.
     The state claims the Joneses have been running the scam since 2007.
     “Defendants’ nominal business is the solicitation of magazine ‘packages’ over the telephone,” the complaint states. “However, defendants’ true business model is to trick consumers into providing or confirming their confidential financial information and deceive consumers into expensive, duplicative ‘contracts’ for magazine solicitations valued at up to $1,300.”
     The Joneses do this by buying “lead lists” with addresses and telephone numbers of real magazine subscribers, then hiring telemarketers to offer them bogus deals in a closely scripted three-step process, the state says.
     “Defendants’ sales calls are carefully orchestrated into three steps,” the complaint states. “In the first two steps, defendants pretend to be the company that is currently providing magazines to the consumer, tell the consumer they are calling to verify and update the consumer’s accounts, and trick the consumer into disclosing his or her confidential financial information. Defendants also use the first two steps to prime the consumer for the third step: a recorded ‘verification’ that defendants will later claim is an ‘oral contract’ under which the consumer has agreed to purchase the defendants’ magazine subscription package. Defendants utilize a distinct script for each of the three steps.”
     As if that’s not enough, the Joneses “warn” their victims that other, unscrupulous companies might try to sell them subscriptions they don’t want, the state says.
     “Defendants refer to the first step as the ‘Sales Pitch.’ This step is completed by a low-level and relatively unskilled telemarketer. This telemarketer calls a consumer and begins by falsely telling the consumer, ‘I’m calling with the credit department for the publishers we are the people who send the magazines out there to you.’
     “Next, the telemarketer assures the consumer that ‘I’m not calling to collect any money … we’re actually calling to pre-warn you. To let you know that if any other company should happen to give you a call and want you to add on, extend or renew your account with their company, we are asking that you do not.’
     “The telemarketer then falsely tells the consumers that he/she is ‘still a preferred customer set on your magazines for the 60 months of service at $3.99 a week.’
     “The telemarketer then asks the consumer a series of questions, including ‘How do you make you [sic] payments for your magazines? Visa, Mastercard, American Express, or Discover?’ After getting this information, the telemarketer puts the consumer on hold and transfers him/her to the ‘capper,’ who completes the second and third steps.”
     The “capper,” a more advanced cheat, then asks for the sucker’s Social Security, bank account and/or credit card numbers, the state says.
     “To begin the second step, the capper falsely tells the consumer that ‘you are a preferred customer and receiving your magazines at the $3.99 a week.’ … The capper then falsely tells the consumer that the company is calling to provide the consumer the company’s ‘New Master Switch List’ and new phone number.
     “Then, the capper takes the first step in deceiving the consumer into providing her confidential financial information. The capper says, ‘We have also changed the billing system, again we have gone strictly automated … and your monthly billing was going through your credit card/checking account? Correct?’ …
     “Next, the capper says that the capper needs to ‘verify’ certain demographic information, including the consumer’s address, age, birth date, and details about the consumer’s employment. … The capper also asks for the consumer’s social security number. The purpose for this, according to the capper script, is to ‘lock in’ the consumer’s information through the company’s ‘privacy act.’
     “Equipped with the information gained earlier in the process, the capper then says, ‘Now I show your first payment went through your credit card [or[ checking account.’ … If the consumer confirms that she is paying for magazines with a credit card, the cappers says, ‘And it is still the same card and you haven’t reported it lost or stolen in the past year, have you?’ … The capper then says ‘Now I do need you to verify the card numbers.’ The capper also asks to ‘verify’ the card’s expiration date and three-digit CVV (‘Card Verification Value’) code on the back of the card.
     “If the consumer says that he/she is making payments through his/her checking account, the capper asks the consumer to ‘verify’ the bank account number.”
     The process ends in a recorded “verification” of the shady deal, during which consumers aren’t allowed to ask any questions, the attorney general says.
     “Having convinced the consumer that the company has called merely to verify and update an existing order, the capper then employs the third step, the recorded verification.
     “Before beginning the recorded verification, the telemarketers instruct the consumers not to ask any questions during the recording and that the questions will be answered after the recording.
     “The verification begins, ‘We do record this part for your protection and to make a permanent record of your account.’ … The capper then lists a payment amount and payment plan. Believing that they are merely verifying and existing order, consumers sometimes indicate their agreement with the verification. Defendants will later use this recording as proof of a brand new ‘oral contract’ under which the consumer has agreed to defendants’ magazine package,” according to the complaint.
     But wait, there’s more: The Joneses and their cohorts coach the telemarketers how to lie their way into consumers’ bank accounts, the complaint states.
     “Defendants give their telemarketers a list of ‘Rebuttals,’ which the telemarketers are to use in response to questions that consumers frequently ask. … The rebuttals contain a number of false statements, all of which are designed to lead the consumer to believe that the call ‘is not for anything new, you already have an account with our company,’ and that the sole purpose of the call is ‘to update your file in our system.’
     “From their experience, defendants know that other companies, perhaps several other companies, have purchased the same lead lists as defendants and are calling the consumers. Defendants’ rebuttal to the question ‘Why do I need [to] update my account,’ is ‘So we can put you on the DO NOT call list to refrain from getting any add ons, extensions or renewals from any other company.’ … Of course, defendants have no affiliation with publishers and no ability to place consumers on any ‘do not call lists.’
     “Once they have a consumer’s financial information, defendants begin taking money out of the consumer’s credit or bank accounts on a monthly basis. If a consumer attempts to cancel the order or closes her credit card of bank account, defendants begin to aggressively collect on the ‘contract.’ Defendants send letters to consumers that threaten the addition of a ‘late fee’ to the consumer’s account and warn consumers that failure to pay will ‘have a negative effect on your credit rating here.’ This last misrepresentation is designed to make consumers believe that their credit score will be adversely impacted by failure to pay defendants.”
     As a final insult, consumers who insist on canceling the phony contract face a $350 “cancellation fee,” the complaint states.
     The attorney general said his office had received more than 140 complaints about the Joneses and their companies.
     He seeks disgorgement, restitution, penalties for deceptive trade, false representations, and consumer law violations, and an injunction.

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