Federal Trade Commission says crackdown of service-contract sellers “expected imminently”
Federal regulators are investigating the telemarketing practices of companies selling extended auto-service contracts — an industry that is largely based in the St. Louis area.
The Federal Trade Commission won’t confirm or comment on the investigation, yet it is something of an open secret.
In a news conference Tuesday, Sens. Charles Schumer, D-N.Y., and Mark Warner, D-Va., said the FTC soon would file lawsuits against service-contract brokers for violating telemarketing laws, including calling numbers listed on the national "Do Not Call" registry and cold-calling consumers’ cell phones — including the mobile-phone numbers for the senators themselves.
In a letter to Schumer dated Monday, FTC Chairman Jon Leibowitz wrote, "Law enforcement action in this area can be expected imminently compare car insurance prices." Schumer told the Post-Dispatch Tuesday that Leibowitz "basically assured me that they’re going after these guys."
The St. Louis area is home to at least 32 companies that sell extended auto-service contracts, and insiders say the area is acknowledged within the industry to be its hub. Consumers might not realize that, however, because unsolicited sales calls placed by so-called "robo-dialers" seldom show local numbers on Caller ID screens. Consumers are connected to area call centers only after they’ve shown an interest.