Irvine Firm’s Prize Program Is Investigated
The state attorney general’s office confirmed Friday that it is investigating Direct American Marketers for alleged consumer fraud stemming from a telemarketing program.
“We have received a lot of inquiries, and we are looking at some of their practices,” said Deputy Atty. Gen. Al Shelden.
The Irvine-based telemarketing firm sends out postcards telling recipients they’ve won a prize and should call a 900 telephone number. Consumers have complained that a call to the 900 number costs $6 to $9, although they are not told that ahead of time.
Direct American is holding an “Everyone Wins Sweepstakes” in which homeowners are sent postcards urging them “to collect your cash or award.” For instance, a postcard addressed to a Michigan woman tells her she should “go ahead and claim the award now.” The prizes include cars and cash, but some are just a collection of coupons.
Direct American President Anthony C. Brown said another prize was “the opportunity to make a wish for up to $5,000.” He refused to elaborate.
“We take great pride in the fact that in every case the caller receives an award that greatly exceeds the value of the call,” Brown said.
The 5-year-old company, which has not been charged with any wrongdoing, said the attorney general’s probe is simply a routine matter.
“The attorney general has asked us some questions about how the program is structured, more particularly how the cards are written,” said George S. Howard, a San Diego attorney representing the company. “I wouldn’t call it an ‘investigation.’ I don’t believe Direct American has broken any laws.”
Direct American has had previous run-ins with regulators.
Two years ago, the company paid a $35,000 fine after the state attorney general filed a lawsuit charging it had bilked thousands of people across the country in a telemarketing scheme. The company allegedly sent people letters requesting between $4 and $9 to play phony word-puzzle games. Shelden said the company had some 50,000 responses a week to its letter campaign.
