Entertainment

It's All In The Cards

By CBSNews.com staff CBSNews.com staff

February 15, 2002 / 1:20 PM EST / CBS

Some might argue that self-described television psychic "Miss Cleo" should have seen it coming.

The Federal Trade Commission said Thursday it had filed a complaint in U.S. District Court in Fort Lauderdale, Florida, accusing Miss Cleo's backers of using deceptive television advertisements to scam as much as $360 million from hotline callers.

In addition, the state of Florida Thursday filed a similar complaint in Broward County Circuit Court, but also accused Miss Cleo herself, whose real name Youree Dell Harris, of violating state law on deceptive trade practices.

Miss Cleo, a familiar face on television advertisements, offers viewers an insight into their lives through free psychic readings or Tarot cards.

"Call me now," she implores in her husky Caribbean accent, as a toll-free number flashes up on the screen.

Federal regulators said the two Florida-based companies behind the smiley psychic -- Access Resource Services Inc. and Psychic Readers Network -- were reaping huge profits from so-called free readings that on average cost consumers $60. The two companies have also been sued by Arkansas, Illinois, Missouri, New York, North Carolina, Oklahoma, Pennsylvania and Wisconsin.

A person who answered a gate intercom at Harris' home west of Fort Lauderdale on Thursday said Harris had no comment. Sean Moynihan, 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," he said. "The only unfair and irresponsible practices involved in the lawsuit are those of the FTC."

But Howard Beales, head of the FTC's consumer-protection division, said the two firms, previously the target of legal action in nine separate states, were "permeated with fraud."

"Considering the laundry list of unfair and deceptive practices in this case, it's a mystery to us why Miss Cleo and her employers haven't seen this coming," said Beales,

"Our goal would be full redress for all of the consumers that were injured," he added.

The federal agency said it has received more than 2,000 complaints about Miss Cleo over the past 18 months.

Moynihan said the complaints are a "handful" out of millions of satisfied callers and that the service would fight the charges.

But officials estimate that up to 6 million people might have been affected, and with the average cost of a call at $60, the companies might have scammed as much as $360 million.

The federal complaint, filed Wednesday, seeks to put a permanent stop to the deceptive advertisements, appoint a receiver to preserve company assets that could be used to compensate misled consumers, and freeze the assets of the firms' chiefs, Steven Feder and Peter Stolz.

Florida Attorney General Bob Butterworth said his state wanted fines of up to $10,000 per incident plus refunds to customers who were duped.

"Rather than consulting a Tarot card, Ms. Cleo and the Psychic Reades Network had better consult their lawyers. ... I foresee some potentially dire consequences in their future."

The FTC said when consumers called the toll-free number to speak to Miss Cleo, who promises a free reading on anything from love-life to career path, they were given another number to speak to a psychic.

Only if the consumer stayed on the line were they told the first three minutes at the new 900 number would be free and after that they would be charged $4.99 a minute.

"In many instances, in the course of obtaining and verifying ... the caller's name, birth date, address and e-mail address ... 'readers' consume the entire free portion of the call without starting the advertised 'free reading,"' the FTC complaint said.

Regulators said some calls could last up to 60 minutes and the companies required psychic readers to keep callers on the telephone for an average of 12 to 15 minutes.

"Readers whose call-averages fall below these established minimums can be terminated," the complaint said.

Other fraudulent practices detailed in the filing include operators telling callers their free minutes had not yet expired and that they would not be billed for any time they were put on hold.

Moynihan said the companies had tried to liaise with the FTC in the past.

"We contacted them to advise them the principals of the companies have been stalked and harassed, and attempts have been made to extort money with the threat of false allegations," Moynihan said.