Feds Accuse Miss Cleo Hot Lines of Fraud

"Miss Cleo's" psychic hot lines are "permeated with fraud," the government charged in a two-count complaint.

The 900-number service has used false promises of free "psychic readings" and other deceptive and abusive practices to bilk as much as $360 million from callers, the Federal Trade Commission alleges in a complaint filed Wednesday.

Miss Cleo, a woman with a West Indian accent, colorful garb and gold bangles who touts her psychic powers in television ads, was not named in the complaint, but the companies that run the hot line and two company directors are listed as defendants.

Despite Miss Cleo's offer of free readings and the presence of a toll-free 800 number on the screen, it is nearly impossible to get the hot line's service for free, the FTC charges.

"Readers consume the entire free portion of the call without starting the advertised 'free reading,'" the complaint says. "In truth and in fact, in numerous instances, consumers do not receive a 'tarot reading' or a 'reading' at no cost."

"We want consumers to know that when companies make a promise in an ad, they need to deliver," said J. Howard Beales III, director of the FTC's Bureau of Consumer Protection.

Bills Can Reach $300 for One Call

The complaint alleges that the company's "psychic readers" are trained to prolong calls to maximize the cost, and employees who do not keep callers on the line long enough are fired.

Calls can last up to 60 minutes, the complaint alleges, resulting in bills of up to $300 at the typical rate of $4.99 a minute.

When people asked questions about the cost of the call, the complaint says, "Defendants often respond to consumer inquiries with abusive, threatening, and vulgar language."

The complaint names the two Florida corporations that run the 900-number service the hot lines advertise, Access Resource Services and Psychic Readers Network, accusing them of deceptive advertising, billing and collection practices.

All Our Practices Are Lawful, Company Claims

Peter Stolz and Steven L. Feder, identified as directors of the companies, were also named in the complaint.

A lawyer for the two companies denied the charges.

"We can demonstrate that all of the existing practices are lawful. The FTC made no effort to discuss the charges before filing," Sean Moynihan told Reuters.

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