PINDROP BLOG

$4 Million in Restitution Going to Victims of Auto Warranty Phone Scam

More than five years after reaching a settlement with a notorious telemarketer behind several robocall schemes, the FTC has begun refunding the more than $4 million that the government says the man duped victims into paying for non-existent extended auto warranties.

The payments to the nearly 6,000 consumers who lost money in the scam are the result of a settlement with Fereidoun Khalilian in 2011. The FTC says Khalilian and his company Dolce Group Worldwide were making illegal robocalls to consumers, saying that their auto warranties were about to expire and pressuring them to buy an extended service plan.

“These calls warned people that their car warranties were about to expire and instructed them to ‘press one’ to talk with a representative. Consumers were then transferred to telemarketers who said they were from the ‘service contract department,’ and they would ‘verify’ information about the consumers’ cars and ‘confirm’ other information, including their zip code,” the FTC said in its original settlement statement with Khalilian.

“The telemarketers then transferred consumers to a ‘senior specialist’ who allegedly made more misrepresentations. Only after consumers bought the warranties did they discover that My Car Solutions was not affiliated with their car manufacturer, and that the contracts did not cover ‘the entire engine,’ did not provide ‘bumper-to-bumper’ coverage, and excluded certain ‘pre-existing conditions.’ Consumers who tried to get their money back – typically between $1,300 and $2,485 per warranty – found it nearly impossible.”

As part of the settlement, Khalilian agreed to a permanent ban from telemarketing and has to pay more than $4.2 million in restitution. It’s the second time that Khalilian has been sanctioned by the FTC for robocall violations. In 2001 he reached a settlement with the commission over charges that his company was making illegal travel-related robocalls. The scams rely on the use of robocall technology, which is a staple of many phone fraud scams and allows fraudsters to dial many numbers in rapid succession. Many of those scams also use software to disguise the real number that the call is coming from.

The FTC has been putting quite a lot of pressure on telemarketers who use robocalls as part of their sales ploys. The commission last month shut down a scam that was pressuring consumers to donate to fake charities. And in May the FTC warned consumers about a phone scam that pressured college students to pay a fictional student tax.