by Andrew Murray | August 12th, 2019
On July 29, 2019, Iowa’s Attorney General announced a temporary injunction that has shut down several companies alleged to have defrauded consumers. The telemarketing companies are accused of defrauding small businesses on a national scale. The Press Release states:
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District Judge Robert B. Hansen granted a temporary injunction sought by Iowa Attorney General Tom Miller against owner Alphonso Barnum of Davenport, several of his associates, and 10 companies. The injunction bars the defendants from conducting any business activity involving telemarketing and the sale of advertising and promotional items.
In December, Miller filed a lawsuit against Barnum and the others. When the defendants changed business names allegedly to avoid detection, Miller added new defendants and requested the injunction in February.
The lawsuit alleges the defendants violated the Iowa Consumer Fraud Act by using deception, confusion and high-pressure tactics purportedly to sell advertisements for direct-mail pieces and promotional items, such as high school sports posters and city information guides. In many cases, the companies delivered no products, the lawsuit alleges.
The Attorney General’s Office presented evidence from small business owners in Iowa, Illinois, Missouri, Wisconsin, Texas, Idaho and Michigan, all of whom reported that defendants used deceptive practices.
Judge Hansen cited one version of the alleged scam: Barnum’s agents called businesses and falsely told consumers that they had previously agreed to purchase advertising on some nonexistent promotional items, that the items had been printed and distributed, and that their accounts would be sent to a collection agency unless the consumers paid that day. The consumers would give the defendants credit card or bank account numbers as a result.
Defendants then made unauthorized charges against the victims’ accounts, including creating checks that were run through victims’ bank accounts, the judge found. One business owner in Michigan had more than $80,000 in checks remotely created by defendants run through her account, and another in Illinois had more than $47,000 taken.
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