CHICAGO – A federal judge has issued two temporary restraining orders designed to stop what officials describe as a wave of deceptive "robo-calls" warning people their auto warranties are expiring and offering to sell them new service plans.
"Today the FTC has disconnected the people responsible for so many of these annoying calls," Federal Trade Commission Chairman Jon Leibowitz said Friday.
"We expect to see a dramatic decrease in the number of deceptive auto warranty calls, but we are still on high alert," Leibowitz said in a statement posted on the agency's Web site.
The FTC filed suit against two companies and their executives on Thursday, asking a federal court in Chicago to halt a wave of as many as 1 billion automated, random, prerecorded calls and freeze the assets of the companies.
Officials say the calls have targeted consumers regardless of whether they have warranties or even own cars and ignore the Do Not Call registry. They say telemarketers have misrepresented service agreements consumers have to buy for warranties that come with the price of the car.
Sen. Charles Schumer, D-N.Y. had asked for an FTC investigation into what he described as the scam of "robo-dialer harassment."
"These calls are annoying, but worse, many Americans have been fleeced," he said.
U.S. District Judge John F. Grady issued the temporary restraining order against Transcontinental Warranty Inc. on Thursday and Voice Touch Inc. on Friday.
Grady's orders also applied to Transcontinental CEO and President Christopher Cowart, Voice Touch executives James and Maureen Dunne, Voice Touch business partner Network Foundations LLC and Network Foundations executive Damian Kohlfeld.
Network Foundations attorney Adam Solomon said the company "is not engaged in the conduct alleged in the complaint."
Attorneys for Transcontinental, Voice Touch and Kohlfeld did not immediately return messages Friday from The Associated Press.
Besides ordering a halt to the automatic telephone sales calls, Grady's order froze the assets of the two companies. The FTC alleged in its complaints that the calls were part of a deceptive scheme and asked the court to assure the assets will not be lost in case they might be needed to repay consumers who have been victimized.
The temporary restraining orders are to remain in effect until May 29, when Grady scheduled a hearing on the FTC's request for a preliminary injunction.
Grady said he would assess then what else to do before a possible trial in the case.
The FTC isn't immediately seeking civil fines against the companies but may do so later, agency officials said.
Attorneys general in Arkansas, Indiana and Missouri have taken similar actions over calls offering extended warranties on automobiles.