A Canadian telemarketer and his four companies were recently hit with a $5.1 million judgment for allegedly fooling American and Canadian consumers into giving up hundreds of dollars in a car buying scheme.
A federal court ordered the payment at the request of the Federal Trade Commission to reimburse the consumers. The court also permanently banned the defendants from telemarketing and payment processing.
Matthew J. Loewen and his companies allegedly made false claims to consumers that the buyers were lined up to buy their cars and that they would get refunds if the cars weren’t sold. The defendants reportedly used a series of ever-changing corporate names, including Auto Marketing Group, Secure Auto Sales, and Vehicle Stars.
According to the FTC complaint, the defendants called people who had listed their vehicles for sale on websites such as Craigslist or eBay and falsely claimed that they would put them in contact with a buyer–in exchange for a fee, typically $399. They often told consumers their cars were undervalued and the price difference would cover their fee. The defendants also offered $99 “refund insurance” that was supposed to reimburse the consumer’s initial fee if the vehicle didn’t sell in 90 days.
According to the U.S. District Court for the Western District of Washington, the defendants’ telemarketing operation violated the FTC Act and the FTC’s Telemarketing Sales Rule. According to the court, promises to match consumers with car buyers was false and the impression the defendants gave of easily obtainable refunds was deceptive.