Irvine Telemarketer to Settle Claims by States

Direct American Marketers Inc. will pay $3 million to settle deceptive-practices allegations in 30 states, the Irvine telemarketer and the attorneys general of several of the states announced Monday.

The Federal Trade Commission and dozens of states claimed the telemarketer had sent mailers to consumers urging them to dial toll numbers to claim sweepstakes prizes.

But after being charged an average of $30 per call, the “winners” later found out the prizes were worth about a dollar or even nothing at all.

“These schemes are nothing more than pure trickery,” Maryland Atty. Gen. J. Joseph Curran Jr. said in a statement announcing Monday’s settlements.

“Any time you are told to call a 900 or any pay-per-call number in order to claim a prize, that should be a big red flag,” he said.

Direct American sweepstakes mailings also were sent under the names ACG Independent Judging Organization, Audit Control Bureau and Equity Disbursement Group.

Some of the victims didn’t realize they were dealing with the same company, and so they made five or more calls to the 900 numbers, each losing $150 or more, the Maryland attorney general said.

Direct American stopped mailing the prize solicitations in August 1997 and filed for Chapter 11 bankruptcy, which provides for the continued operation of a business while it attempts to reorganize its finances.

Under the settlement approved by a bankruptcy court, Direct American agreed to pay $3 million to settle claims filed by 30 states.

The Federal Trade Commission reached agreement with Direct American, which did not admit any wrongdoing, in January 1998.

The company got out of the sweepstakes business about two years ago and has been reaching final settlements with the states involved, Direct American spokesman Ron Trumbley said Monday.

“We’re hopeful that with the settlements we’ll exit Chapter 11 in the near future,” he said.