Uncle Sam Vs. Miss Cleo: Regulators Take on Psychic Hot Line for Deceptive Tactics
WASHINGTON (AP) - Federal fraud fighters say Miss Cleo's psychic hot line should have seen it coming: A lawsuit accusing the service of rampant deception.
Describing the hot line as "permeated with fraud," the Federal Trade Commission said Thursday it wants to shut down Access Resource Services Inc. and Psychic Readers Network. The two companies in Fort Lauderdale, Fla., are behind the telephone psychic reading service advertised by mail, on television and the Internet.
Florida authorities announced a separate lawsuit, challenging the service's spokeswoman, Youree Dell Harris, known as "Miss Cleo," to prove that she really is a renowned shaman from Jamaica. Harris appears on national television commercials promising insights into love, money and other personal matters.
A person who answered a gate intercom at Harris' home west of Fort Lauderdale said she had no comment. An attorney for the service, Sean Moynihan, said, "The only unfair and irresponsible practices involved in the lawsuit are those of the FTC."
The companies also have been sued by Arkansas, Illinois, Missouri, New York, North Carolina, Oklahoma, Pennsylvania and Wisconsin.
The FTC complaint, filed Wednesday, accuses the service of misdeeds including false promises of free psychic readings, tricky billing tactics to squeeze money out of consumers and unrelenting and abusive telemarketing calls.
"Considering the laundry list of unfair and deceptive practices in this case, it's a mystery to us why Miss Cleo and her employers haven't seen this coming," said Howard Beales, the agency's director of consumer protection. He said the FTC acted after getting more than 2,000 consumer complaints over the past 18 months. Moynihan said the consumer complaints are only a "handful" out of millions of satisfied callers and that the psychic service would fight the charges.
"If the FTC had only bothered to call, we would have explained that their allegations are based on erroneous information and a basic lack of understanding," he said.
Beales said the service promises a free psychic reading, but when consumers call a toll-free number they are directed to a 1-900 number charging $4.99 per minute. The fees add up after an initial free period of three minutes with callers usually on hold.
An average call costs more than $60, Beales said, noting that nearly 6 million people have called the service. A telephone bill that can run into the hundreds of dollars is the first sign for many callers that they are being charged. Callers who refused to pay had their credit ratings threatened, Beales said.
The psychic operators go to great lengths to make the calls last as long as possible, including inaccurately telling callers they will not be charged while on hold, the agency said.
Leonard Vickers, 49, of Woodbridge, Va., said that two years ago his 12-year-old daughter Malaika saw a commercial for the hot line and, thinking it was free, ran up a $289 bill for a single call. He said he called to complain, telling the service his daughter had provided her birthday to the operator.
"They said they didn't care that she was a minor," Vickers said. "It was child abuse as far as I was concerned. They should have hung up."
The FTC is seeking a restraining order requiring the companies and their officers, Steven Feder and Peter Stolz, to stop their deceptive advertising and tactics. Beales said the suit, which also seeks to freeze the service's assets, is a step toward shutting down the service permanently and returning money to consumers.
Florida Attorney General Bob Butterworth said the telephone psychics do not actually do tarot readings as promised, but simply read from a prepared script.
"We actually had a lady at home who was barefooted with a night coat on, sitting at a breakfast table with a Froot Loops box and she was just reading from the script that was given to her," he said.
The psychic service also allegedly violated telemarketing rules by harassing people and making calls to those who asked to be on a "do not call" list, according to the FTC complaint, filed in the District Court for the Southern District of Florida.
Beales said many consumers received up to 10 calls a day, usually automated messages telling them that "Miss Cleo had a dream about them and they should call back." Some consumers received up to 50 calls within a few weeks.
"That's not a dream," Beales said. "It's a nightmare."