Southland Firms Included in Telemarketing Probe

Five Southern California telemarketing firms are among 70 companies targeted by several state attorneys general in a nationwide crackdown on allegedly fraudulent boiler-room and direct-mail operations.

Many of the telemarketers are alleged to have operated scams that bilked consumers by telling them they had won a prize, then tried to collect money from them in order to receive it.

But the president of one, Anthony Brown of Direct American Marketers Inc. of Irvine, said his company is being unfairly singled out. He said his company complies fully with all laws and guidelines issued by the states and that it operates in a manner similar to the nationwide contests offered by national magazine distributors. None of the other targeted companies could be reached for comment.

Ten state attorneys general are participating in the sweep, taking various legal actions against telemarketers that they believe have defrauded consumers in their states. Such frauds cost consumers, who are often elderly victims, from $10 billion to $40 billion a year, according to the attorneys general.

The California telemarketers were targeted by Oklahoma Atty. Gen. Susan B. Loving, who indicated she plans to demand that each company produce records and other evidence that could result in legal action to enjoin it from further purportedly fraudulent acts.

The companies are Direct American Marketers Inc. of Irvine, which does business as Disbursements Division from a post office box in Laguna Hills; Cash Claims Payment Center in Redlands; Mid-America Promotions in Sherman Oaks, and Awards Distribution Center and Awards Prize Office, both of Santa Ana.

Direct American agreed to stop sending deceptive mailers and to pay $555,000 in penalties in a settlement with California Atty. Gen. Dan Lungren’s office last November. The company was mailing 150 million post cards a year to consumers that falsely implied they had won $3,500 to $7,500, Lungren’s office alleged.

Brown said his company still offers prizes but that contestants are advised on how to mail in their entries if they do not want to pay $3.98 a minute by using a 900 telephone number. “Over half our total respondents are non-callers,” he said.