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Legal troubles escalate for embattled psychic network

Matt Bean
Court TV

NEW YORK (Court TV) -- It doesn't take a fortune teller to see that the future looks bleak for Miss Cleo.

Already facing a spate of state lawsuits and consumer complaints, the company that employs the late-night infomercial fixture was sued earlier in February for the first time by the federal government.

The suit filed by the Federal Trade Commission charges Access Resource Services (ARS), the Fort Lauderdale company behind Miss Cleo, with consumer violations ranging from misleading advertising to overly aggressive collection efforts. The action could prove a major blow for ARS and its sister company Psychic Reader's Network, already facing lawsuits brought by seven states. (Florida weighed in as the eighth state when its attorney general filed a similar suit this week.)

"I think that this investigation will inform the public to be wary before trusting their money to a television psychic," said Brenda Mack, an FTC spokesperson.

As a investigation found in January, the networks 'psychics' are pressured to keep the caller on the phone at all costs. Some, such as the one called, are encouraged to used scripts that help them dupe their unwitting callers. The company's readers are independent contractors located throughout the country, most operating out of their homes.

A lawyer for ARS told in January that the company runs a fair business, that its subcontractors have actual control of its psychics, and that most of the complaints filed against the company with consumer protection boards across the nation were caused by unavoidable billing errors. The company did not return a call by Court TV seeking comment on the latest suits. The companies are controlled by South Florida businessmen Larry Feder and Peter Stolz and generate as much as $400 million a year, according to a study by the New York State Consumer Protection Board.

The Federal Trade Commission's suit demonstrates that Miss Cleo's problems are now of national concern. The agency says the network, which it claims is "permeated with fraud," has had more than six million people call seeking help for their personal problems since it started in 1999.

The agency acted after receiving more than 2,000 complaints from consumers, according to FTC spokesperson Mack. The suit isn't necessarily aimed at shutting down the network, which openly bills itself as being for entertainment purposes only. "We're trying to make sure if they stay in business that they're going to comply with the law," Mack said.

The Florida suit repeats many of the claims other states have leveled against the telemarketing Goliath, charging the company with deceiving consumers by never really providing the free tarot reading its ads promise, by pressuring readers to keep callers on the line for as long as possible, and by misrepresenting Miss Cleo as a "Nationally Acclaimed Master Tarot Reader and Psychic."

The Florida civil suit also alleges that ARS billed some customers who had never even called the 800 number (which then directs callers to a 900 number at a rate of nearly $5 a minute) and that their direct mail advertising was camouflaged to appear as important government documents.

Florida has been trying to get the business to change its tactics for years.

Before filing the suit, the state held ARS to a series of agreements meant to ensure that any curbs stemming from other lawsuits across the country would apply in Florida as well.

But the agreements simply did not work, said Florida Assistant Attorney General David Aronberg. "We've been very conciliatory in the past," he said, but "at some point, you have to stop settling and start suing. And this was the point."

The suit also seeks to shed light on Miss Cleo, the elusive shaman who claims to come from a line of Jamaican soothsayers and whose real name is Youree Harris. The suit subpoenas Harris' birth certificate, along with information about the business relationship between her and ARS.

This won't be the first time Florida has fought high-profile representatives of a company. Florida Attorney General Bob Butterworth filed a civil complaint in February 1998 charging American Family Publishers and spokesmen Dick Clark and Ed McMahon with using various deceptions to sell magazine subscriptions.

While Miss Cleo has been called an unwitting shill for ARS, Aronberg says his suit will show just what her role in the company is. "We allege that she is more than an ignorant spokesperson," he said. "We want her to be held accountable if she's involved."

The company was also dealt another blowin early February in a California civil suit in which the author of a popular tarot reading guide, "Tarot Made Easy," accused the network of using her material illegally.

Lawyers for the company had argued to get the suit thrown out because the publisher, not the author of the book, Nancy Garen, held the copyright and therefore had the right to bring suit.

But in a 22-page decision, United States district judge Victoria Phillips denied the request for dismissal, clearing the way for the suit to continue. While the suits brought by the states have reclaimed less than $4 million from ARS, Garen's suit could bring in a lot more, her lawyers say.




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