WASHINGTON - The operators of Miss Cleo's psychic hot line agreed yesterday to cancel $500 million in customer bills to settle federal charges that the service fleeced callers while promising mystical insights into love and money.
The settlement requires Fort Lauderdale-based Access Resource Services Inc. and Psychic Readers Network Inc. to stop using pay-per-call numbers to sell their soothsaying services, the Federal Trade Commission said. The companies, which promoted a national network of "psychic readers" on television and the Internet, also must pay the FTC a $5 million fine.
"I'm no psychic, but I can foresee this: If you make deceptive claims, there is an FTC action in your future," said Howard Beales, director of the agency's consumer protection bureau.
The FTC lawsuit, filed in February, was prompted by more than 2,000 consumer complaints. It accused the companies of numerous misdeeds including false promises of free psychic readings, tricky billing that squeezed money out of callers, and unrelenting and abusive telemarketing calls.
The FTC said the psychic service promised a free reading, but consumers calling a toll-free number were directed to a 900 number charging $4.99 per minute. The agency said almost 6 million people made such calls and were charged an average of about $60.
Under the settlement, the companies did not admit to breaking any law but agreed to stop trying to collect about $500 million in charges that customers had complained about and refused to pay. The service also must return all uncashed checks to customers.
Beales said during three years of operation the service charged people about $1 billion and collected half of it. The service's business fell sharply after the FTC filed a lawsuit in February, he said.
"They're getting out of the business," Beales said. "It won't resume."
The agreement with the FTC follows settlements the companies reached with eight states in the past month, said Sean Moynihan, an attorney for the companies.
The companies are in negotiations to settle the lone remaining civil lawsuit: the one Florida's attorney general filed against them and Youree Dell Harris, known in advertising as the Jamaican mystic "Miss Cleo," Moynihan said.
Harris' lawyer, William Cone, could not be reached for comment.
Terri Somers writes for the South Florida Sun-Sentinel, a Tribune Publishing Co. newspaper. The Associated Press contributed to this story.