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A raft of similar complaints over the past two years has prompted a growing band of state attorneys general to respond to ARS's tactics. Now, seven states are suing ARS, alleging a variety of misdeeds: letting callers eat up their "free" reading time on hold, switching callers to pay lines without telling them, promising gifts that never materialized, and billing minors without parental consent. The collection service for ARS has also sent bills to people who never called psychic lines, bills for numbers that recipients never had, and even bills to the dead. Speaking for ARS, attorney Moynihan maintains that all such calls were really made and that callers are just trying to weasel out of paying by bashing Miss Cleo. "Because Miss Cleo is a very topical, very controversial type of person, I guess there's a lot of political pressure to bring lawsuits against her," he says.
The company's major trouble began in December 1999, when North Carolina Attorney General Mike Easley filed suit in Wake County Superior Court after receiving complaints from 80 people that ARS billed people hundreds of dollars for calls that were advertised as free. North Carolinians also complained that what free time they did get was spent on hold and that they got demanding collection letters for phone numbers that weren't theirs. ARS agreed to pay the state $58,600 in June 2000 to settle the case, plus any claims above that amount from the more than 8000 North Carolinians to whom ARS sent collection letters.
Pennsylvania filed next in November 2000, suing several "psychic entertainment" businesses, including ARS, for charging up to $700 for supposedly free psychic readings -- sometimes for longer calls than were shown on customers' phone bills. Even after customers disputed the charges and had them removed from their phone bills, ARS continued to send harassing letters. The suit in Cambria County Court of Common Pleas seeks refunds, an injunction against such practices, thousands of dollars in fines for each illegal act against a person over 60, and "the forfeiture of all profits derived by the defendants as a result of their alleged illegal business practices." The injunction was approved in November 2001; the case as a whole is set for a hearing in January 2002, says Barbara Petito, the Pennsylvania attorney general's deputy press secretary.
Missouri Attorney General Jay Nixon was next in line. He filed suit in St. Louis City Circuit Court against ARS in July 2001 for violating the state's no-call list some 100 times. In August, ARS paid $75,000 in fines. Nixon also filed a second suit in Jackson County Circuit Court for various consumer-fraud violations -- including the by-now-standard complaint that people who were billed never called at all and didn't even have the correct phone numbers. "We also believe there were misrepresentations made about what services were free," says Scott Holste, spokesman for the Missouri attorney general. That suit is ongoing.
More than 200 complaints piled up in Illinois Attorney General Jim Ryan's office before he filed a lawsuit in Sangamon County Circuit Court against ARS in October 2001. "As of now, the defendant has not answered, but we have spoken to their attorneys," says Elizabeth Blackston, Illinois's assistant attorney general. About 70 more complaints have arrived since the suit was filed.
"You dial this 800 number and they give you this 900 number to call," says Blackston. If customers do dial a pay number, they spend all of their "free" time on hold or answering preliminary questions, she says. "The clock is running, one way or the other, while they are on hold."
Nasty and threatening collection letters also went out to people for calls they never made, on phone numbers they didn't have. "The collection letters were really troubling," Blackston says. If people want to get off ARS's call list, they have to listen to an extremely long recorded message to get a (toll) number to call for that purpose. The lawsuit seeks to stop such business practices, get restitution for Illinois consumers, and impose a fine on ARS.
At the end of October, the New York State Consumer Protection Board slapped ARS with a $224,000 fine for 112 violations of that state's no-call law, and more reports are still coming in.
Kansas is investigating the same sort of charges that ARS faces in other states. As of November 8, the attorney general had gathered 179 complaints about ARS and several of the other companies Feder and Stolz run from the same location, says public information officer Mark Ohlemeier. Feder and Stolz have settled 135 of those complaints, he added.
The biggest blow has fallen in Arkansas. Attorney General Mark Pryor accused ARS in Pulaski County Chancery Court of the same practices other states have condemned: billing for supposedly free calls, charging for time spent on hold, violating the state's no-call law, and billing people who'd never called Miss Cleo at all. In November, ARS agreed to write off a whopping $3.2 million in bogus bills from 2000 and 2001.
Most recently, Wisconsin Attorney General Jim Doyle joined in, jumping on the legal bandwagon December 5, with a suit in Milwaukee County Circuit Court naming ARS, PRN, Feder, and Stolz. Lest other attorneys general think their suits solved the problem, Doyle reported about 200 complaints alleging the same old things: charging for supposedly free calls, keeping callers on hold throughout their free time, and billing people who never called. The suit seeks fines, restitution, and an injunction against such acts.